Tuesday, November 14, 2006

Hello?...anybody remember free trade?...hello?...

Free traders traders are setting their sites a little lower. Far from pushing for more liberalization, they are now hoping to simply hold the ground they have gained.

One reason for this global trade gloom has been a defection from their ranks similar to the disgruntled fiscal conservatives from the GOP. William Keegan is one.

The unfortunate insistence on touting overall economic advantage while ignoring the distribution of those benefits has disillusioned many of us into thinking we have been had. What economists often fail to grasp (until their department starts filling with lower-paid professors from abroad), is that dislocation is not an academic exercise nor is it easy to change to recover at the personal level. America's 4% unemployed are 100% unemployed.

Summers, a Democrat, is no protectionist. Nevertheless he has rightly drawn attention to the way the US middle class (both employees and employers) have been hit by globalisation and its concomitant threat of cut throat competition from cheap labour. As has often been noted, globalisation has tended to benefit the very rich, and the very poor (the latter, for instance, in the shape of Chinese workers).

Now, as Summers says "economists rightly emphasise that trade, like other forms of progress, makes everyone richer by enabling them to buy goods at lower prices." But he goes on: "This offers small solace to those who fear their jobs will vanish."

With the changes in Washington, I have no doubt regrettable protectionist sentiments will find new life. But the revival of opposition could make free trade proponents consider how to spread the goodies among more people to win new converts.

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