There Is Nothing Special About Trade that Causes Losers

by Don Boudreaux on December 24, 2018

in Myths and Fallacies, Trade

The commonplace refrain that trade with foreigners has losers makes no more sense than would the refrain “trade with women has losers” – or so I argue in my latest column for AIER. A slice:

This “loser” language, however, is completely mistaken. Saying that trade has losers suggests that stopping trade would eliminate such losses. Yet as [Brink] Lindsey himself correctly observes, jobs and businesses in market economies are routinely destroyed even when international trade plays no role. Therefore, even if (contrary to fact) people who lose jobs in market economies are appropriately described as “losers,” blaming such losses on trade conveys the impression that trade’s role in inflicting such losses is unique and, hence, that such losses could and would be eliminated if trade were stopped. But this impression is false. Trade is not unique in causing such “losses.”

Trade with people classified according to where they live differs in no ethically or economically relevant way from trade with people classified according to other criteria. This important point is almost totally ignored in both popular and academic discussions of trade. And that’s a shame, for avowing that trade among people who live in different political jurisdictions creates losers is akin to avowing, say, that trade among people with different genitalia — trade of men with women — creates losers.

It is, after all, undeniable that when women entrepreneurs introduce new products or devise more efficient means of production, or when female consumers change their spending patterns, some workers lose jobs and some business owners lose profits. Yet no one writes that it’s a “hard truth” that trade with women “creates losers.” And no one thinks it necessary to justify a policy of allowing men to trade freely with women by first demonstrating that the value of men’s gains from such free trade exceeds the value of men’s accompanying losses.

It’s obvious that competitors’ sex is wholly without economic relevance. Workers who lose jobs to innovations introduced by entrepreneurs who happen to be female are properly regarded as losing jobs simply to market competition, with nothing uniquely determined by the competitors’ chromosomes or genitalia. No analytical insight or improved perspective would be gained, and much confusion and political mischief would be sown, by singling out competition coming from women as a unique source of economic gains and losses.

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