It seems to me you want a theoretical argument against free-trade (I might be wrong that this is what you are looking for), but it’s hard to separate theoretical arguments from real-world considerations.
Let’s start with the Econ 101 argument in favor of free trade. Let’s say Country A can produce apples much cheaper than oranges. And Country B can produce oranges much cheaper than apples. If Country A and Country B allow apples and oranges to trade freely, then everyone in both countries gets apples and oranges at the cheapest price. Which means that everyone has more money to spend on other stuff. That’s a win-win.
Ok, fine, that’s the theory. But we have to live in the real world. Say a country is producing goods using slave labor. And this is happening right now in the real world. Well, of course they can produce their goods cheaper than us. But why should I want to trade with them freely when they are doing that? If someone wants to convince me that a particular free-trade agreement is good, then I will want to hear their explanation on how to deal with the slave labor issue. Pointing at the Econ 101 model is beside the point. I know what the model says. That’s not my concern.
And this applies to a whole range of issues, whether its labor rights, environmental issues, national security issues, income inequality issues, intellectual property issues–this list goes on and on. It’s not racist or xenophobic or economically naive to be worried about these issues.
When it comes to climate change, most people on this MB insist that we listen to the consensus of scientists. When it comes to free trade, there is not the same interest in listening to the consensus of economists.
Hysterical. The global agreements to reduce greenhouse gas emissions all have mechanisms which restrict trade. I don’t think they are significant restrictions, and I think things like international emissions trading are beneficial. But that’s not free-trade. That’s structuring trade in a very specific way to achieve a specific purpose.
Responding to concerns about pollution with a “comparative advantage” argument is not responding to the concern at all.
The closest thing to grudging acceptance for protectionism you’ll get in orthodox circles is developing economies protecting infant industries. Even then you’ll get a lot of booing. Comparative advantage doesn’t have an imagination. Without a deviation against its advantage, an agricultural nation will always be agricultural, plus it won’t have a snowball’s chance of competing with advanced economies. More generally, a diversified economy, even if it’s not efficient according to theory, is better able to handle shocks to the system. If you mostly sell bananas and a blight comes through or there’s a drought you’re screwed.
This is a good point because criticisms of current neo-liberal practices are often called anti-free trade. This is probably why the left started talking about “free, but fair” trade. There’s different ways to do free trade, especially since it’s such a fuzzy term.
A lot of man on the street anti-free trade rhetoric is worried about first worlders like them, but it seems most of the academic/leftist criticism of current implementation focuses on the developing world and how they’re abused by the IMF, World Bank, and multi-nationals. They’re more vulnerable, at least. For example, if a first worlder is a “free trade loser” he’ll have universal health care, unemployment, re-training programs, access to education, welfare, etc. If you’re in a poor or developing country and you’re a “free trade loser” then you’re pretty much boned.
I think the most prominent anti-free trade heterodox economist is Ha-Joon Chang. Certainly celebrated in leftist circles. I think he’s more against implementation than free-trade per se, but I could be wrong. I’ve read summaries and he talks a lot about Western hypocrisy. His “Kicking Away the ladder” article sounds a lot like Chomsky, except with more charts.
The comparison is fair to the extent that the overall benefits of free trade are overwhelmingly positive and protectionism overwhelmingly negative.
There may be specific reasons for protectionism that are valid, just as there may be specific reasons why global warming is good(it will make more of Canada and Russia habitable). But the overall consensus in both cases is pretty clear, and those who argue against free trade should avoid arguments that try to portray it as bad for the country in an overall sense. It’s actually just bad for very specific interests in the country.
Quiet, you! There’s no such thing as an exogenous shock in Econ 101.[/kidding]
Yep, although I’d add that the elite in the developing world tend to make out just fine under free trade regimes. The US has an immense amount of economic clout in the world. It could use that to push for things like environmental protection or labor rights. I’m not saying that workers in Bangladesh need to be paid $10/hour, but something is seriously wrong when a building collapses on a bunch of Bangladeshi workers, because the bosses decided to cheap out.
I don’t disagree with anything you’ve said here. However, I live in a country where a lot of people fight tooth and nail against providing safety net programs for “free trade losers” (or anyone in general). Although I’m not anti-free trade, I’m not going to support new trade agreements under the existing model when safety-net programs are this vulnerable.
Sure, for very wide definitions of “specific”. Maybe growing the Canadian manufacturing sector is more important than making more of the stupid country habitable when we’ve got more land than we need anyways. So all the economists agree Canadian GDP will rise with freer trade? How spread out amongst the voters will that money go? How many jobs will be killed or created during that GDP rise? I guess if we all happily lived in some oligarchy controlled country we could follow whatever their economists told us.
Wanting a manufacturing base is quite legitimate, although no first world country’s manufacturing base is threatened. Manufacturing output in the US is still outstanding, it’s employment that is dropping, but that has as much to do with automation as trade. Plus if you’re going to blame trade you also have to blame the illegal worker trade that occurs in the manufacturing industry, where they employ hundreds of foreigners per plant, undocumented.
As for GDP growth, there are no outcomes where GDP growth is bad and GDP shrinkage is good for overall prosperity. There are just specific situations where you accept that prosperity is a little less than it would otherwise be.
A free market doesn’t always work as well in the real world as it does in theory. Keep in mind no company wants to have competitors; from a company’s point of view, the ideal situation is when they’re the only business selling their product so every customer has to buy from them.
So a really big company is going to discourage rival start ups. So government action to assist start ups can just be an effort to cancel out that effect and keep the free market working. A free market usually needs government intervention in order to exist.
Whenever we impose a tax, a regulation, or a protectionist measure, or restrict immigration, or decide NOT to produce something we could be(such as oil or coal), then we are reducing GDP. Everyone supports reducing GDP, it’s not a strawman. We just don’t like to think of our views as reducing GDP.
Nope. You might be reducing GDP from where it could have been without the tax, regulation, etc., but that doesn’t necessarily mean that you are reducing actual GDP. You can still get GDP growth with these things. It depends on the tax/regulation/etc. in question.
It could possibly mean that you’ve reduced potential GDP, but that’s not even uniformly true. It’s specific to the tax/regulation/etc.
Potential GDP and actual GDP are two different things. I’m amazed that you keep posting in economics threads without actually knowing anything about economics.
My point is that you can still get both actual and potential GDP growth with a new tax/regulation/etc. It depends on the specifics of what the tax/regulation/etc. is.
The words your looking for aren’t “potential” vs. “actual”, but overall GDP. It’s true that you can do all kinds of things that would reduce GDP, but that doesn’t mean you get negative GDP. You just get less than you would otherwise get, in the same way that every person makes less money than they could because they do things other than making money with their time.