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The Case for Free Trade Is Stronger Than Protectionists Imagine It to Be

The market doesn’t ‘fail’ by not satisfying desires that are too idiosyncratic to justify the costs of supplying such desires.

Mr. Y__:

Thanks for your reply to my note in which I argue that workers can protect their jobs against imports by offering to work at wages low enough to make it profitable for these workers’ current employers to continue to employ them.

You describe my argument as “an academic’s daydream because even a lone worker who willingly would take a pay cut to retain his job will still lose that job unless almost all of his co-workers would do the same thing.  No one worker has the power to protect himself against imports like you [Boudreaux] postulate.”

You’re correct that no worker – call him or her “Jones” – can alone keep his or her employer solvent, and thus keep his or her current job, by offering to work at lower wages. Unless most of Jones’s co-workers make the same offer to work at lower wages, Jones will indeed lose to imports the current job to which he or she attaches much non-monetary value.

But the reality that you identify only reveals my argument’s strength. Precisely because so few workers are willing to ‘pay,’ in the form of taking wage cuts, to keep jobs threatened by imports, today’s commonplace assertions that most, or even many, workers who lose their current jobs to imports thereby lose a great deal of non-monetary amenities that they value highly – non-monetary amenities allegedly ignored by competitive markets – are simply mistaken. If these assertions were correct, enough workers would willingly take pay cuts to protect their employers – and hence their jobs – from the competition of imports. That too few workers in reality are willing to ‘pay’ for these alleged non-monetary amenities of their current jobs is evidence as powerful as evidence gets that these amenities exist more in the minds of intellectuals and rent-seekers than in the minds of the workers themselves.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

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