The Human Side of Trade

by Russ Roberts on December 14, 2016

in Creative destruction, Trade

The depressingly inaccurate standard story of trade these days is that we got cheap toys and gadgets from China and in return, we destroyed millions of American jobs, particularly in manufacturing. If this increasingly common view of trade were the whole story, I too, would start to question the virtues of free trade. But this standard story misunderstand the value of trade. Yes, it leads to lower prices for consumers. Yes, it destroys jobs in sectors that compete with foreign producers. But it also creates jobs and contrary to a different standard story, not just jobs in export sectors.

Trade and innovation have the same effects: they lead to lower prices, they destroy some jobs, but they create other jobs and though that process, increase the standard of living for many people. Trade and innovation are the engines of growth and prosperity. They, of course, do not increase the standard of living for every single person at every point in time, but over time, they almost certainly do. The children and grandchildren of the farmer or manufacturing worker who is made unemployed by trade or technology live much better and fulfilling lives than they would in a static world without trade and without innovation.

I explore these issues in a lengthy essay over at Medium if you are interested and at even greater length in my book, The Choice. The simplest way to understand the point I am making is that when considering the costs and benefits of economic change, you have to take a dynamic perspective or you will miss the role that trade and innovation play in allowing us to flourish as human beings.

Don gets at one aspect of this process, here. And I thank him, as always, for his kind words about my book, The Choice.


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