Who Benefits From Free Trade?

Free trade can be a tough issue sometimes, in large part because free trade — even that which produces an unambiguous positive overall good — can cost some individuals jobs and wages in the short term. When this happens rapidly in some sectors, vocal minorities make their opposition known, and they can often produce sizable shifts in public opinion. This is happening right now, as we see that even amongst Republicans, skepticism about trade is growing. In a recent poll, 60% of GOP voters reported that they believe free trade has been bad for the U.S., despite clear evidence to the contrary (American factory output has increased more than 50% since the advent of NAFTA and the WTO).

Yet opposition persists, and political candidates like John McCain and Mitt Romney offer plans to spend taxpayer money on those who’ve experienced losses as a result of trade. Is this good policy? Do those people deserve to be compensated by the gains of free trade? In today’s New York Times, economist Steven Landsburg says no, and helps put the question in perspective:

One way to think about that is to ask what your moral instincts tell you in analogous situations. Suppose, after years of buying shampoo at your local pharmacy, you discover you can order the same shampoo for less money on the Web. Do you have an obligation to compensate your pharmacist? If you move to a cheaper apartment, should you compensate your landlord? When you eat at McDonald’s, should you compensate the owners of the diner next door? Public policy should not be designed to advance moral instincts that we all reject every day of our lives.

In what morally relevant way, then, might displaced workers differ from displaced pharmacists or displaced landlords?

Of course, it’s doubtful that any argument or evidence will stop folks like John Edwards from going on like this.