Description
“Free trade has long been one of the more unifying concepts among economists. In fact, with respect to the title above, unfettered trade is actually believed to more than pay for itself: It is the “free lunch” that in almost any other context in economics does not exist” (Ehrenberg, 2019, para 1).
“Trade and globalization have provided undeniable economic benefits for the vast majority of American families, businesses, and workers” (Lincicome, 2019, para 2).
“What is not always entirely clear is how free trade can better show some of the short-run dislocations that often need to be dealt with en route to the long-term gains. In short, the cheaper DVD players or cars we might get by shifting production from the U.S. to, say, Korea doesn’t look like such a great deal to unemployed U.S. electronics or auto workers” (Ehrenberg, 2019, para 2).
Defenders of free trade also have to contend with populist politicians and well-financed opponents who find foreign workers and firms easy scapegoats for domestic economic woes. Worst of all, economists may be fundamentally misunderstanding what most people value in the economy. These are hard problems to solve. Governments should do more to help those hurt by trade, but building the necessary political coalitions to do so is tricky (Blinder, 2019, para 3).
“We must always take heed that we buy no more of strangers than we sell them, for so we should impoverish ourselves and enrich them.” Those words, written in 1549 and attributed to the English diplomat Sir Thomas Smith, are one of the earliest known expressions of what came to be called “mercantilism.” Update the language, and they could easily have been tweeted by U.S. President Donald Trump, the most prominent mercantilist of today. Trump believes—or at least says—that the United States “loses” when it runs trade deficits with other countries. Many Americans seem to agree.
Ehrenberg, R. (2019). Modern Labor Economics: Theory and Public Policy, Global Edition.
Lincicome, s. (2019). Cato Institute. [online] Cato Institute
Blinder, A. (2019). The Free-Trade Paradox. [online] Foreign Affairs
Are we entering a new period of mercantilism? Is it the same as protectionism?
Is China responsible for our current trade policy?
You have just been appointed Director-General of the World Trade Organization, what advice would you give President Trump?
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