The Utter Non-Uniqueness of International Trade

by Don Boudreaux on September 10, 2015

in Competition, Creative destruction, Myths and Fallacies, Seen and Unseen, Trade

In this post from earlier today I mentioned one final point that I wish to make in response to Bret Wallach, who objects to my failure to sympathize more openly and frequently with people whose economic fortunes take a downward trajectory because of the forces of competition and creative destruction.  This additional point harkens back to the original discussion that prompted Mr. Wallach’s original remark.

The original point has to do with international trade.  A letter writer to the Wall Street Journal objected to my criticisms of Donald Trump’s protectionist rantings.  I responded by pointing out that someone who asserts that free trade has both winners and losers takes too narrow – too squinty – a perspective.

The point I have emphasized so far in response to Mr. Wallach is the fact that a innovative market economy based upon consumer sovereignty makes everyone better off over time, even though many – indeed most – individuals experience periods when their economic fortunes decline relative to the trend line.  The point I wish to make here is different (although it’s one that I’ve made at various times in the past at this blog).  That point is: nothing about international trade renders it a distinctive source of creative destruction that eliminates some jobs and lines of business.

Even if we grant, for argument’s sake, that the pain caused today by creative destruction is so real and palpable that we should lament it – or, perhaps, even try to tame the forces that cause it – there is zero reason to focus on economic transactions that occur across political boundaries.  The worker who loses her job in the bakery because her neighbors switched to the Atkin’s Diet is no less harmed by economic change than is the worker who loses his job in the brewery because his neighbors switched to buying more imported beer.  Both job losses cause pain today to the workers, yet only the latter job loss is of the sort that is generally – indeed, commonly – mentioned in discussions of public policy as a reason for government to intervene to prevent such pain.

The upshot is that if one accepts the oft-heard arguments against free trade made by Donald Trump (and by Chuck Schumer, by Lindsey Graham, by Sherrod Brown, by Pat Buchanan, by…. the list of protectionists is long) – arguments that ultimately appeal for sympathy for American workers who suffer job losses because American consumers are buying more imports – then one must, to be consistent, oppose all sources of economic change, regardless of origin.  Yet most people are blind to this reality.  Most people mistakenly suppose, without giving the matter much thought, that there’s something unique about job and business losses created by international trade.

So to point out that all economic change – all competition – all creative destruction – every exercise of consumer sovereignty causes some workers today to lose jobs and some businesses to lose profits prompts (or should prompt) people who are prone to fall for protectionist pleas to realize that, if there is good reason to save workers from losing jobs to international trade, there is also good reason to save workers from losing jobs to any economic change.  Because most people are reluctant to restrict the ways in which consumers may shift their spending domestically – because, for example, very few Americans would tolerate a government program that penalizes consumers who want to switch from buying donuts and bread to buying sausages and steaks – by making clear the non-difference between domestic economic changes and economic changes that involve international trade the case for protectionism is stripped of much of its visceral appeal.


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