A few more thoughts on free trade

No, It Is Really Not Harder to Make the Case for Free Trade These Days…

This is a very quick read on free trade. The argument that it is more difficult to make a positive case for free trade today comes from the notion that free trade hurts almost all US workers with a high school diploma or less. Anecdotally, the evidence for “no more free trade” is President Trump. Statistically, 46% of Americans have an associate’s degree and 36% a bachelor’s degree. Therefore, logically, the 54% who do not have an associate’s degree and 64% who do not have a bachelor’s degree are negatively affected by free trade. But painting with a broad brush is dangerous.

The benefits of free trade are comparative advantage and higher global growth. An example of the former is that China is better suited to create widgets and the US is better suited for devising creative things to do with the widgets. Instead of US workers spending time making widgets they should spend their time devising what to do with the widgets while China makes them. So, China will ship the widgets in and the US will sell them to the world. The other benefit is that free trade helps other countries grow and build their own infrastructure. Over time this creates wealthier regional economies and wealthier economies lead to a safer world.

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