The benefits of free trade

Do let’s hear more about how wonderful free trade is and what an intrinsic benefit it must be to everyone:

Last year, the U.S. Navy bought 59,000 microchips for use in everything from missiles to transponders and all of them turned out to be counterfeits from China. Wired reports the chips weren’t only low-quality fakes, they had been made with a “back-door” and could have been remotely shut down at any time. If left undiscovered the result could have rendered useless U.S. missiles and killed the signal from aircraft that tells everyone whether it’s friend or foe.

Apparently foreign chip makers are often better at making cheap microchips and U.S. defense contractors are loathe to pass up the better deal.

The important lesson here is that economics are not and cannot be the sole factor taken into consideration when one is contemplating the pros and cons of free trade. The fact that there is no blanket economic justification for free trade is an entirely separate matter.

HT: The Market Ticker