It all seems so obvious. For every winner there must be a loser. This is true in sports, gambling, love and war. Shouldn’t it also be true for economics?

But in economics, as we shall see, what at first glance appears to be obvious often turns out to be false.

Suppose you buy a toaster for twenty dollars. You buy it because you feel that the toaster, for you, is worth more than twenty dollars. You gain from the transaction, otherwise you wouldn’t make the purchase. You are a winner.

But the seller is also a winner. He sells the toaster because, for him, the twenty dollars is worth more than the toaster. If he didn’t feel that way, he wouldn’t make the sale.

In this simple example, both parties, by their own standards, are winners. And this is true for every transaction freely entered into, in which fraud and coercion are absent.

But sometimes examples seem to be more complicated. Suppose, for instance, the toaster was made in a foreign country. Wouldn’t that change things?

To be sure, this would change some of the details. But the basic principle remains the same: The customer will buy only if he feels he will be better off. The same holds for the seller. In free trade, both parties are winners.

This principle helps us to understand every economic transaction. Whenever we see someone buy a product, take a job, or enter into a contract in the absence of force and fraud, we know that he expects to be a winner.