Here’s a letter to The Free Press
Editor:
Joe Nocera’s paean to “the intellectual godfathers of protectionism” is filled with so much misunderstanding that it’s difficult to know where to begin to correct his errors (May 6).
Start with this claim: “Though most economists were at least dimly aware that globalization was causing factories to close and workers to lose their jobs, that was not something they were willing to study or even talk about.” Get it? We economists embrace free trade only because, relying as we do on austere theories in which workers’ adjustments to imports are assumed to be instantaneous, we blind ourselves to the messiness of reality in which workers actually lose jobs and suffer periods of unemployment.
Nocera’s economists are straw men, unrecognizable to any serious economist. To be better informed, your readers should consult the work of, among other eminent trade economists, Douglas Irwin, who in his popular book Free Trade Under Fire has a whole chapter titled “Trade, Jobs, and Wages.” In this chapter Irwin discusses the reality of job losses and plant closures due to greater import penetration. Likewise, in their leading international-economics textbook, Paul Krugman and Maurice Obstfeld write that “we know that in the real world workers may be unemployed and factories may be idle.” Indeed, I’m aware of no serious economics book featuring a defense of free trade in which the reality of job losses and factory closures is not discussed, taken seriously, and substantively addressed – often at great length.
Moving on. Nocera reflects that, in the 1990s when he was enthusiastic about free trade, “we believed that globalization created so much prosperity around the world that the loss of jobs in places like Flint, Michigan, and High Point, North Carolina, was a small price to pay.” Perhaps Nocera had such a belief, but that isn’t the belief that supported any serious economic case for free trade. The core case for free trade then, as now and always, was not – contrary to Nocera’s suggestion – that the gains to foreigners are so high as to outweigh the losses to us. Instead, the core case is that the gains to us– in America, to Americans – are so high as to outweigh the costs of adjusting to the economic changes that trade, like technology, brings.
This second Nocera error leads to a third – namely, his ignorance of the fact that a central feature of the economic case for free trade is the recognition that nearly every complaint that protectionists hurl at free trade is really a complaint about economic change. Trade is only one – and, in a large and entrepreneurial country like the U.S., a relatively small – source of economic change. If Nocera and his new protectionist buddies wish to argue that the government should try to seal the economy in amber, preventing all economic change and resulting job losses and factory closures, fine; they should do that. But what they cannot legitimately do is what they illegitimately attempt to do, namely, portray trade as a singular and categorically unique source of economic change.
Finally, Nocera wrongly asserts that “no one anymore, on the left or right, denies that globalization has fractured the U.S., both economically and socially.” Bookshelves and websites are filled with the work of informed people who do indeed deny – and for good reason – that globalization has so “fractured” America. Consider the work of Doug Irwin. Nobel-laureate economist Vernon Smith. Deirdre McCloskey. George Will. Former Senator Phil Gramm. Scott Lincicome. Scott Winship. Scott Winship and Bryan Riley. Mark Perry. Colin Grabow. David Henderson. Dan Griswold. Michael Strain. Robert Zoellick. This list can be greatly lengthened. In my own book with Phil Gramm, due out next week, we devote an entire chapter to busting the myth that globalization has deindustrialized America and “hollowed out” her middle class.
Nocera should reconsider his admiration for protectionists.
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
