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Globalization's Real and Really Big Benefits

Gary Hufbauer and Paul Grieco of the Institute for International Economics have this nice op-ed in today’s Washington Post.  In it, they report that their empirical research finds that freer trade has a significant material payoff to Americans.

No surprise.

Here’s their summary of their research findings:

Using four different methods, we estimate that the combination of shrinking distances — thanks to container ships, telecommunications and other new technologies — and lower political barriers to international trade and investment have generated an increase in U.S. income of roughly $1 trillion a year (measured in 2003 dollars), or about 10 percent of gross domestic product. This translates to a gain in annual income of about $10,000 per household.

This op-ed draws on research reported more extensively in this paper by Hufbauer and Grieco and Scott Bradford.

My only disagreement with Hufbauer’s and Grieco’s op-ed is their claim that "it is morally imperative to address private losses incurred by dislocated workers."

Perhaps addressing such losses is imperative politically.  But there’s nothing at all imperative morally.  One reason — which I earlier explained here — is that there’s absolutely nothing unique about job losses caused by changes in the pattern or intensity of international commerce compared with job losses caused by changes in the pattern or intensity of purely domestic commerce.  Ditto with job losses caused by changes in technology.

Job losses — like job creation — are a natural part of a market economy.  A related explanation is here.