International Law

Greg Mankiw bemoans the huge gap between the economics profession and the common people on free trade. Unlike him, I tend to think the fault lies with economists, who have traditionally proselytized free trade rather than communicated what economics really teaches on trade.

Amidst all the back and forth on free trade and globalization (I noted four separate articles in my Inbox today), Rodrik’s comment really encapsulates one of the big problems, which is perception.

My recent grad school experience included a whole lot of econ classes. For the most part, the professors I had were moderate politically and did not do any proselytizing. When we discussed trade, it was fairly straightforward, with the profs noting that most models show that free trade is an aggregate benefit for nations, while it also involves winners and losers. We discussed the sociopolitical dislocations that can result and some of the potential solutions for mitigating these negative effects of trade. Sounds fine, yes?

Very few academics dispute these fundamentals, yet the political debate appears to involve people that are diametrically opposed to one another. Maybe Rodrik has a point: maybe some free trade advocates are pushing the "aggregate benefit" meme so hard that they forget about the winners and losers. At the same time, I would argue, the people at the opposite end of the spectrum are highlighting the dislocations of trade so much that the aggregate benefits are not even being acknowledged. Instead trade is demonized and, in places like the US where manufacturing jobs have been lost for a variety of reasons, nations like China are blamed for the job losses.

Sounds a lot like most political debates. Unlike social issues, however, when discussing trade we actually have a lot of common ground. Too bad that advocates on both sides are too wrapped up in their respective positions to admit it.