Here’s a letter to a new reader of my blog:
Ms. E__
Thanks for sharing Jeff Ferry’s new piece on some prominent economists – specifically, Angus Deaton, Mario Draghi, Paul Romer, and Janet Yellen – rejecting free trade.
I put no stock whatsoever in pronouncements by Draghi and Yellen, for each is now principally a politician. And like too many politicians, they’ll insist that the earth is flat if taking such a stance furthers their political goals.
Deaton and Romer are more credible. Nevertheless, for at least two reasons I believe them to be mistaken. First, both men ignore the realities of government. Even if in principle more restrictions on trade are desirable – and even if, contrary to fact, government officials had access to the detailed knowledge necessary to impose these restrictions ‘optimally’ – all trade restrictions are imposed by officials who are inevitably pressured by interest groups. Deaton and Romer simply assume that the costs of these political distortions will be outweighed by the benefits of trade restrictions. I see no warrant for this assumption.
Second, Deaton and Romer, seeing and pitying people who lose jobs because of economic change, err in assuming that this change is uniquely and overwhelmingly caused by international trade. Yet while increased trade does destroy some particular jobs, the vast majority of job destruction in a country as large and as dynamic as the U.S. is caused by factors having little or nothing to do with trade – factors such as changes in consumer tastes, the introduction of new products, and improvements in technology. What Deaton and Romer really decry is economic change. Therefore, to be consistent they would have to endorse not only government efforts to restrict Americans’ freedom to trade with foreigners, but Americans’ freedom to trade with each other and to innovate.
Unless and until the likes of Deaton and Romer (and, for that matter, Draghi and Yellen) explicitly endorse government efforts to restrict domestic trade and innovation in addition to foreign trade, I’ll continue to believe that their stated objections to free trade are poorly thought out.
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
