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Trade Is Not Unique

Here’s a letter to a Facebook commenter on my missives on trade:

Mr. Matěj Šuster

Mr. Šuster

Referencing work by Anne Case and Angus Deaton on the difficulties that many poorly educated middle-aged white Americans are having adjusting to economic change, you write on Facebook that you are “frustrated by [my] continual and ‘tone deaf’ denial that there is a big problem on the other side of the ledger” of trade.

You misunderstand my arguments.

Chief among my economic arguments for free trade is that trade, being simply one of countless avenues over which economic change occurs, does not uniquely cause particular job losses (or, for that matter, particular job gains).  Yes, some particular domestic jobs are destroyed when people buy more goods made by foreigners. But some particular domestic jobs are also destroyed when people buy more goods made by machines – when people, often faddish, buy more goods ‘made locally’ or go on this or that diet – when people’s health improves, allowing them to spend less on medical care – when people’s health worsens, encouraging them to spend more on medical care – when people break expensive habits such as smoking, drinking, and gambling – when people have fewer children – when people attend college in greater numbers – when people’s taxes change – when, in short, people today spend their incomes differently than they did yesterday.

Because any economic change causes disruption and some job losses, it is indeed mistaken to identify job losses as a cost of trade – as if trade is unique on this front.  To speak of job losses as a cost of trade gives the impression that, if government manages to reduce the volume of international trade, one happy result will be fewer job losses.  But as long as consumers are free to spend their money domestically as they choose, this impression is wholly and dangerously mistaken.

The destruction of particular jobs is an unavoidable result of economic change and growth.  Trade is merely one of myriad avenues over which such change is made and is manifested.

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