Should Those Who Gain from Women Entering the Workforce Compensate the ‘Losers’?

by Don Boudreaux on April 14, 2018

in Myths and Fallacies, Trade

Hers’s another open letter to frequent Cafe Hayek commenter Warren Platts:

You continue to insist that a policy of free trade is justified only if the “winners” compensate the “losers” – the latter of whom you suppose are those suppliers and workers who lose business and jobs to imports.  But because no producer has any property right in consumer patronage, you are mistaken.

I quote from New York Times op-ed of ten years ago by University of Rochester mathematician and economist Steven Landsburg: “One way to think about that is to ask what your moral instincts tell you in analogous situations.  Suppose, after years of buying shampoo at your local pharmacy, you discover you can order the same shampoo for less money on the Web.  Do you have an obligation to compensate your pharmacist?  If you move to a cheaper apartment, should you compensate your landlord?  When you eat at McDonald’s, should you compensate the owners of the diner next door?  Public policy should not be designed to advance moral instincts that we all reject every day of our lives.”

Let me add my own example to those offered by Steve.  As more and more women enter the workforce they necessarily compete with men (and other women) who have been in the workforce for some time.  In many particular instances, then, the increased competition from women entering the workforce produces what you describe as “losers.”  Do you, then, believe that government should prevent women from entering the workforce if they and other “winners” do not actually compensate those business owners and workers who, as a result, must compete harder for consumer patronage and who, in some cases, actually suffer decreases in their incomes or even lost jobs?

Increased competition that comes from the entry of more women into the workforce differs in no essential way from increased competition that comes from the entry of more imports into economy.  Therefore, unless you and other protectionists are willing to prevent women from entering the workforce if they and other “winners” don’t compensate those existing producers who compete against these women, you have neither an economic nor an ethical case for using the absence of compensation as a pretext for preventing more imports from entering the economy.

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

P.S.  It is an inadequate response to point out that some Nobel-laureate economists have carelessly sometimes said that the case for free trade requires actual compensation, for to such economists I would put the same questions asked by Landsburg and myself.  (Also, of course, other Nobel-laureate economists – including, but not limited to, F.A. Hayek, Jim Buchanan, and Ronald Coase – would undoubtedly dissent from the claim that compensation is necessary.)


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