Trade requires a difference in value

Most economists have been trained in accounting.  Accounting requires the books to be balanced:  for every entry, there must be an equal and opposite entry.  There is no doubting that this is a sound accounting practice. However in human terms, the reality of trade is that it requires a difference in value.  Sellers must value the money they are to receive as greater than whatever they are offering for sale,  and buyers must value what they are buying more than the money they are paying.

People will buy what they can’t do or what they don’t want to do.  I don’t want to cut my son’s hair, so I will pay someone else to do it.  People will sell what they can do better or more easily than others.  For example, a brick layer will build a better brick wall faster than someone who is not a bricklayer.  Goods or services represent accumulated effort.  For example, it takes a lot of effort from many people to create a modern house or car.

What people do and do not want to do, what they can and cannot do more easily than others, is different for different people.  This difference in value and effort creates a difference in relative value between people, which in turn creates the possibility for trade.

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