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As many others have stated in these comments, free trade doctrine makes the assumption that the gains from said trade will be redistributed to the losers (if we
by Futurebot 11y ago
As many others have stated in these comments, free trade doctrine makes the assumption that the gains from said trade will be redistributed to the losers (if we did this properly there would be far, far less opposition to the system.) That we do not actually do very much (our "Trade Adjustment Assistance" programs are incredibly weak and stingy) is probably well known. What's less appreciated is that some to much of what we have doesn't even meet the Ricardian definition of Free Trade.
"Few economists have bothered to think about the issue of offshoring, preferring to dismiss concerns about it as manifestations of the old protectionist fallacy. They learned in graduate school that free trade is always mutually beneficial and ceased to think when they passed their exams. This is especially true of “free market economists” who believe that economic freedom, which they identify with the freedom of capital, is always good. Thus, most economists mistakenly believe that offshoring is protected under the authority of free trade doctrine.
However, free trade doctrine is based on the assumption that domestic capital seeks its comparative advantage in its home economy, specializing where its comparative advantage is best and, thereby, increasing the general welfare in the home economy. David Ricardo, who explicated the case for free trade, rules out an economy’s capital seeking absolute advantage abroad instead of comparative advantage at home.
...offshoring, or the pursuit of absolute advantage, breaks the connection between the profit motive and the general welfare. The beneficiaries of offshoring are the corporations’ shareholders and top executives and the foreign country, the GDP of which rises when its labor is substituted for the corporations’ home labor. Every time a corporation offshores its production, it converts domestic GDP into imports. The home economy loses GDP to the foreign country which gains it." - Paul Craig Roberts, former Assistant Secretary of the US Treasury and Associate Editor of the Wall Street Journal.
- Futurebot 11y agoThis is all yesterday's news, though. Even if we ripped up all our FT agreements, those jobs are gone permanently. The debate at this point is largely academic. Instead, we should focus on how to help those who lost their jobs with what we have to work with now (free training, free college, cash, etc.)