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Prestowitz on Global Trade

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Regardless of the merits or demerits of Clyde Prestowitz [2]‘s opposition to U.S. foreign policy, his skepticism of free trade continues to rest on a weak foundation.

He says [3]:

While globalization may not automatically lead to development, it does let everybody see how others are living, thus sometimes fueling envy and resentment of our wealth.

First, the data are very clear that countries more open to trade have higher per-capita incomes. See, for example, Douglas Irwin’s Free Trade Under Fire [4] for a review of this evidence.

Second, because greater openness to trade increases prosperity, those people most likely to envy and resent the wealth of others are precisely those people whose governments most vigorously interfere with their right to participate in the global economy. The South Koreans, the Taiwanese, and the Mexicans, for example, while still noticably less wealthy than the Americans with whom they trade extensively, are not noted for suffering fits of terror-inducing envy of us.

People who are excluded by government from participating in the global economy have little choice but to be envious. Observing the greater wealth of others is not sufficient to generate destructive envy. Rather, destructive envy seems far more likely to arise in people who can observe other people’s greater wealth but who are also not free to seek their own wealth by participating in the global economy.

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