Free Trade Rules
Free trade, despite it enormous benefits, is constantly under attack. Yesterday I heard a radio ad, with the sound of a toilet flushing, and the a voice over saying something like "that is the sound of 3 million jobs being lost due to NAFTA". Since the US unemployment rate when NAFTA was passed was over 7% and is currently under 5.5%, its hard to figure out just how they did their math. The problem is that it is relatively easy to spot job losses due to foreign competition (cars, apparel, memory chips) and much harder to find the jobs that were created due to lower cost materials supplies and increased exports.
Virginia Postrel has a really nice article in the NY Times (yes, reg required) on how industries and jobs have prospered due to NAFTA.
Economists argue for free trade. They have two centuries of theory and experience to back them up. And they have recent empirical studies of how the liberalization of trade has increased productivity in less-developed countries like Chile and India. Lowering trade barriers, they maintain, not only cuts costs for consumers but aids economic growth and makes the general public better off.
Even so, free trade is a tough sell. "The truth of the matter is that we have one heck of a time explaining these benefits to the larger public, a public gripped by free trade fatigue," the economist Daniel Trefler wrote in an article last fall in The American Economic Review.
If you don't want to register, she has a longer excerpt at her site here.
