The benefits of freer international trade accrue to consumers in the form of increased choice and lower prices. More imports mean more bang for the buck, and that effectively functions like an increase in pay. Consumers either buy imported goods directly, like the finished shirt from Bangladesh, or they can buy an American-made good that includes imported components. When American producers have access to cheaper imports, they can increase production, create jobs and offer goods at a lower price.
Yesterday in my remembrance of the late Bob Tollison I mentioned Bob’s excellent 1982 article “Rent Seeking: A Survey.” Jim McClure offers this quotation from that essay:
A paramount difference between politics and the market consists of the different constraints that confront self-interested actors in the two cases. The market is a proprietary setting where individuals bear the consequences of their actions in the form of changes in their net wealth. The political setting is a non-proprietary setting where individual agents do not always feel the full benefit and cost of their decisions. Behavior will differ in the two cases, not because the objectives of behavior are different, but because constraints on behavior are different.
Aaron Steelman explores the reasons why the general public so often disagrees with good economists. (HT W.E. Heasley) A slice:
In a series of papers and in his book The Myth of the Rational Voter, George Mason University economist Bryan Caplan suggested that economists and non-economists tend to view the world through a different lens. In particular, Caplan argued that non-economists demonstrate four biases not generally shared among economists: an antimarket bias, an antiforeign bias, a make-work bias, and a pessimistic bias.
It’s true that the public has mixed feelings about financial innovation; it has seen both good and bad consequences of such. But there are good reasons for believing that unhindered financial innovation, whatever its risks, is ultimately a lot safer than heavy-handed government interference in the financial sector. Those reasons are necessarily based on the historical record, since no one, except perhaps some of you, can know just what sorts of financial innovations the future may offer.
Consider U.S. experience. Contrary to conventional wisdom, unwise regulations have been responsible for most if not all of the 19th-century woes of the U.S. financial sector, from wildcat banking and counterfeiting prior to the Civil War to recurring banking crises afterwards. I would regale, or more likely bore you, with the details if I had time. But instead I must settle for pointing out that Canada, with its then-identical gold dollar, avoided practically all of them. Yet Canadian banks were less, not more, heavily regulated than their U.S. counterparts. Nor did Canada establish a central bank until 1935. (Can anyone guess how many of its banks failed during the 1930s?)