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Pittsburgh Tribune-Review: “Living in the long run”

In my January 27th, 2006, column for the Pittsburgh Tribune-Review, I defend a policy of free trade against those who assert that the short-run disruptions, including job losses, caused by increased international trade justify obstructing that trade.

(For some reason, all but two of my Trib columns from late December 2005 through early April 2006 are unavailable on-line. They appeared only in print. I thank the editors of the Trib for sending to me the texts of these columns.)

Living in the long run

John Maynard Keynes — an economist whose influence outstripped his wisdom — famously remarked that “in the long run we’re all dead.” Although three-quarters of a century old, this mantra still is trotted out today by those who ridicule specific policies whose benefits come mostly in the future rather than in the here and now.

In particular, Keynes’ quip frequently is used in debates over the merits of expanded international trade. When economists point out that jobs lost to trade are replaced by better jobs created by trade, trade foes often correctly reply that the full extent of trade’s employment gains might not come for several months or years. In the interim, some workers lose jobs and suffer unemployment.

These foes then wrongly conclude that because most of the costs of trade occur today — while many of the benefits don’t occur until tomorrow — trade policy should ignore the long run. They insist that policy-makers restrict freedom to trade in order to protect Americans from the short-run pain of job loss. And when we proponents of trade freedom continue to champion open trade despite the job losses that occur in the short run, trade foes accuse us of being eggheads who callously disregard the very real pain suffered today by workers thrown out of jobs by trade.

More than once I’ve been told “In the long run we’re all dead.”

Good public policy, however, does focus principally on long-run consequences. And even those who are quick to scream that we’re all dead in the long run when the topic is international trade would never utter such nonsense for other policies.

Someone who believed as a matter of principle that avoiding short-run pain is so important that it justifies sacrificing long-run benefits would not stop at criticizing free trade. Such a person would also oppose:

– Environmental protection. Protecting the environment involves restricting economic activity today, often only for benefits that will materialize many years later. Think of arguments to reduce emissions of greenhouse gasses in order to prevent global warming.

– Balanced budgets. By running budget deficits, government shifts the cost of paying for today’s programs onto tomorrow’s taxpayers. Why should we not save today’s citizens the pain of paying for government services if we can dump thispain onto persons in the future?

– National-defense efforts. Current expenditures on national defense require us to sacrifice in the short run in order to avoid being attacked and conquered by foreigners in the long run.

– Schooling. The vast bulk of benefits of schooling come only in the long run, well after we graduate from high school or college. In the short run, schooling is mostly a cost — time spent in classrooms when the youngest students amongst us could instead be playing with friends, and older students could be working and earning higher incomes than they earn as full-time students.

– Saving for retirement. Retirement comes only in the long run; why should we today endure the pain of saving money when the payoff from such pain won’t come until much later in life? We might die before we retire.

– Building and maintaining infrastructure, such as roads, bridges, airports and courthouses. Ensuring that we have adequate infrastructure requires spending plenty of current income and time on its construction and maintenance. But most of the benefits of sound infrastructure come only in the long run — when, presumably, we’re all dead.

Of course, no one older than 10 thinks that sacrificing today for greater benefits tomorrow is unjustified or unwise. Adults understand that the long run should be the focus of our attention. Maturity involves envisioning the long run as clearly as possible and not allowing short-run inconvenience or even pain to block pursuit of worthy long-run goals.

So what about free trade makes it different from those other long-run policies that we all understand to be meritorious? Nothing. Nothing, that is, except for the fact that domestic producers that compete at home against foreign firms greedily want government to protect them from this competition and will use any argument, no matter how spurious, attempting to justify their greed.

Yes, as trade becomes freer, some domestic firms go bankrupt and some domestic workers lose jobs. But this very process releases entrepreneurial energy and resources to create new firms — firms more productive than those that no longer exist — and new jobs that pay more than the destroyed jobs paid. And yes, many of the benefits of this process occur only in the long run.

But only a child would really want to halt this process. Adults applaud it.