Still, the arguments against the global trading system that emerged first in Seattle and then spread over the past year arguably touched a chord in many people, in part by raising the fear that they would lose local political control of their destinies. Clearly, the risk is that support for restrictions on trade is not dead, only quiescent. In many important respects, the past half century has represented an uneven struggle to repair the close linkages among national economies that existed before the First World War. The hostilities bred of war, the substantial disruptions to established trading patterns associated with that conflict, and the subsequent poor economic performance over the next few decades triggered the erection of trade barriers around the world that have taken even longer to dismantle. To repeat that error would be a tragic act of foolishness and waste.
Central bankers can make two contributions to ensure an open trading system.
For one, we should not hesitate to remind our fellow citizens of the manifest net benefits of free trade in goods, services, and assets, benefits that accrue not only to all trading partners on average but also especially to some of the least fortunate within those trading societies. I would further emphasize that the free market system has proven itself better than all other forms of organization dedicated to harnessing the underlying competitive forces of the division of labor and comparative advantage. For another, we monetary policymakers must keep hold of the anchor provided by price stability so as to support maximum sustainable economic growth over time. By fostering such economic performance, our arguments for free trade and open markets should find a receptive audience.