You should check out this TNR piece by Chris Hayes, Washington editor of the Nation (and friend of this blog). Chris talked to a bunch of economists from across the political spectrum and noted a distinct sea change in attitudes toward free trade agreements (FTA). In essence: FTAs provide a measureable, though slight, increase in a country’s wealth but tend to redistribute those gains upward. Also, economists are coming around to the need for more robust measures to compensate the “losers” and to ameliorate the widening gap between the rich and everyone else.
"Man is but a reed, the most feeble thing in nature, but he is a thinking reed" – Blaise Pascal
4 responses to “Re-thinking free trade”
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That was an interesting article, Lee, and I’m grateful that you linked to it. What would you make, though, of the argument that one hears consistently from the likes of Will Wilkinson that the declining wages among the lower class are more than offset by the declining costs of consumer goods (as I take it that they are)? The idea, as I seem to recall, is that what economists call “real” inequality – that’s to say, inequality of purchasing power – actually declines even as wage inequality increases. I understand that there are other – perhaps non-quantifiable – negative effects of free trade that this sort of argument leaves untouched, but then again the criticisms Hayes was making were primarily quantitative, too.
Ahh, I need to read it again and try to come up with some more coherent thoughts.
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Yeah, it’s a good question. Though I think one has to ask whether that purchasing power translates into, say, being able to afford health care or education for your kids. It’s quite possible for consumer goods to go down in prices and yet if you trade your manufacturing job for a job at Wal-Mart those big ticket things can be put out of your reach.
But the other takeaway point here, I think, is that FTAs are just not as important as their propagandists (and many of their detractors) made them out to be. That is, the difference they make just isn’t as huge as we were all led to believe.
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Also, I think it’s worth highlighting the point that developed countries were led to believe that they had to drastically scale back their regulatory and welfare states in order to remain competitive and reap all the wonderful benefits of free trade. But if the benefits were oversold, then it would seem to follow that they were also sold a neoliberal bill of goods on that front.
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Give them another decade and they’ll finally admit the working class is actually worse off in real terms as a result of free trade.
Exactly what the protectionists and the unions and the workers have complained of since all this started in the last quarter of the last century.
A Thinking Reed 
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