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Busting Yet Another Myth About the Case for a Policy of Free Trade

Here’s a letter to Mike Andrews:

Mr. Andrews:

Thanks for your e-mail.

You write that “the theory of free trade, worshiping only money, ignores noncommercial values like a worker’s attachment to his job and craft.”

With respect, your description of the theory of free trade is mistaken. Workers’ attachments to their jobs and crafts – as well as to their fellow workers and to the locales in which they live – are not ignored by those of us who make the case for a policy of free trade. The reason is that the value of each such attachment affects the supply of labor across various occupations. These values are thereby reflected in the wages that workers earn.

The greater is the non-monetary attachments that workers have to their current jobs, the lower are their money wages. And so if and when such jobs are ‘destroyed’ by imports, it’s only because fellow citizens, as consumers, value the lower prices of the imports by even more than those workers value the non-wage aspects of their jobs. If this weren’t so, workers could keep their current jobs by agreeing to work at even lower wages.

Workers who don’t agree to accept lower wages as a means of keeping their current jobs reveal that they in fact value the non-wage aspects of those jobs less than they value the money wages that they’d have to sacrifice in order to keep those jobs.

Central to the case for free trade is the proposition that fellow citizens as consumers – and as workers in other particular jobs that are created by free trade – should not be forced by tariffs to pick up the tab to keep workers in jobs that those workers themselves are not willing to pay to keep.

In short, if the value of the non-monetary aspects of certain jobs is really so great that those jobs are worth keeping, let the workers who attach such high value to these non-monetary aspects pay for them in the form of lower wages. It makes no sense either economically or ethically to off-load that expense onto others.

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