Opposing free trade

I reviewed Friedrich List’s arguments against free trade here.

Ms McArdle, a proponent of free trade, makes List’s case better than he possibly could have when she says:

Yet in both places [i.e. the US and China], the worry [about losing jobs to other countries] is silly–at least on an aggregate level. For an individual with a job in a textile factory, there may indeed be displacement. Yet over the centuries, our economy has "lost" millions of jobs.

The emphasis is mine.

We can all agree that free trade works best on an aggregate level and over centuries. It’s too bad that this doesn’t tell us anything about the real world in the present.

We all live in countries. We do not live in an international aggregate. If some jobs are lost in the US and gained in China, "we" may be better off in the aggregate (we presumably being humanity – though I have no idea how anyone can know what’s best for the international aggregate of humanity). In reality, the citizens of the US will have to pay unemployment insurance to the displaced workers. Are the negatives of the lost jobs in the US offset by the positive of presumably cheaper goods we’re getting from the Chinese? I don’t know – neither does Ms McArdle. I live in the US though, not in an international superstate (at least not yet) so Ms McArdle’s argument is not applicable.

Also unfortunately, the benefits from free trade make take some time to show up. Might the US be better off with some protectionist policies for the next couple decades? For the next couple years as we recover from an economic downturn and try to absorb a newly imported underclass? Ms McArdle won’t even consider such a possibility – after all, we’ll be better after a couple centuries go by. As long as we haven’t gone broken providing benefits to all unemployed in the meantime.

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4 Responses to Opposing free trade

  1. tenkev says:

    Free trade is not the reason for high American unemployment. Unemployment is so high because it is so many labor regulations make it expensive to employ people, because over-generous unemployment benefits provide incentives not to look hard for new work or take a less than ideal job, because of the over-emphasis on going to college rather than acquiring real, productive skills and because of regime uncertainty. Blaming unemployment on free trade is sloppy thinking in my opinion.

  2. Tschafer says:

    That may be so, tenkev, but it is remarkable that in the last forty years, free trade has become one of those Things We Must Not Question on both the “respectable” right and left, especially when this country was essentially built on protectionism, right up until the 1990’s. I think that, generally speaking, free trade is a good thing, but there are downsides and exceptions to this general rule, and it disturbes me that we are no longer supposed to notice or debate these things. I am also made uneasy by the fact that free traders are so adament that there are NO downsides to free trade, which would make it unique among economic policies, which are always about tradeoffs, not absolutes. For some libertarians, free trade has become a religion, not an ordinary economic policy. (See Global warming” for an analog on the Left…)

    • tenkev says:

      I think many people still question free trade, certianly much more than those of us who question AGW. Perhaps its no longer debated amongst the fashionable people because it is actually true that trade restrictions are harmful.

      Basically, a tariff is just a tax. Taxes depress economic activity. Period. Now, of course, taxes must be acquired and different sorts of taxes have different types of impact. So if your argument is that tariffs as a means of revenue are preferable to the other types of government revenue creating activities (income taxes, sales tax, etc); then, I am all ears to that argument; but, if you are saying that protectionism is beneficial in and of itself than that is just pure rubbish.

      The Infant Industry Theory or whatever it is called just doesn’t make a lick of sense. All it does is benefit some at the expense of the nation as a whole.

      The only obvious exception to this is military production. There are benefits to having your military equipment produced within the safety of your own borders; but, that does not imply an argument for whole-scale protectionism.

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