Thursday, November 10, 2005

What, free trade isn't universally good?

I wish I'd had Duncan Black for my econ prof - might have gotten something from the class:

Now we're in this world where people just scream "free trade good!" Well, it isn't good for everyone. There are winners and losers, and all basic trade theory says is that enough extra income is created so that the winners could, in theory, more than compensate the losers for what they lost. But that's "class warfare" and "socialist redistribution" so we don't do that.

It's completely in the self-interest of a nontrivial part of the population to oppose basic free trade legislation. Economists are often loathe to embrace a particular social welfare function, but too many fall prey to embracing GDP as somehow being a metric which is value neutral. In fact all it does is obscure all the things about which we could make a value judgment. A useful measure of something, but certainly not a value-free measure of the nation's economic wellbeing. The income distribution is still there, even if we close our eyes and pretend it isn't.

Finally some sense.

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