Problems with Trade Rhetoric
Popular opinion is clearly rising up against the idea that free trade is a good thing. For an account of all of the problems associated with free trade, and none of the benefits, see David Sirota's piece in the Huffington Post. This is a good example of how rhetoric is used to raise fears. Notice the language used in this article to describe trade agreements:
Tearing down tariffs and protections without regard for the consequences...
... a wage-cutting, environment-destroying, union-busting race to the bottom.
... slash their own wages to compete ...
... to reduce their pollution controls and human rights ...
... these deals are managed to enrich the elite ...
... helping murderous developing-world governments continue to brutalize workers
... quadrennial cycle of deception ...
... deranged trade fundamentalists who cloak economic terrorism in the language of enlightenment. ....
This writing is very colorful. It is interesting and exciting because it suggests a terrible conspiracy. The author has written a book called Trade Uprising that explains the growing negative sentiments against "so-called" free trade agreements. (no, I won't provide a link!)
As the debate over globalization intensifies, though, these kinds of writings are extremely divisive. Sirota states that "it's hard to argue with NAFTA backers because they aren't interested in facts." That's not true at all. It's hard to argue with NAFTA backers because those with opposing views have just called NAFTA backers elite, deceptive, environment destroyers, complicit with murderers, and deranged. Why should anyone have a dialogue with someone who seems so sure of his own answers and is filled with hatred towards anyone with opposing views?
2 comments:
I'm just curious. The comment by Dugan below the Sirota article enumerated the benefits of free trade over the last 40 years. My question is: What part of the productivity gains he mentioned can be attributed to comparative advantage and what is the largest cause of the comparative advantage;i.e., H-0, economies of scale,etc. I think the answer to this question would go a long way in explaining objectively the dynamics of free trade and how relative specialization(comparative advantage) contributes to this dynamic.
Your input, please.
I don't know the answer to this offhand. I do recall that most estimates of the effects of greater trade liberalization are modest especially for countries like the US where trade only accounts for 10-20% of exports and imports.
Although, a World Economy (2006) article estimates that post WWII gains from trade in the US were as much as $13,000 additional per household and that a future movement to free trade would generate additional annual gains of about as much. Note that median household income in 2006 was about $48,000, so these estimates are quite substantial, not modest.
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