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Removal of trade barriers is a net good, benefits are not distributed equally, and historically have accrued more strongly to those who already have the money t
by null000 8y ago
Removal of trade barriers is a net good, benefits are not distributed equally, and historically have accrued more strongly to those who already have the money to take advantage of the decreased trade barriers.
Removing tariffs on manufactured goods between the US and China, for instance, strongly benefits people who can set up factories to take advantage of the cheaper labor and materials. It weakly benefits consumers who get slightly (if at all - corporations might just take the difference as profit depending on the level of competition) cheaper goods, and it disadvantage all of the working class that now has to compete with cheaper Chinese labor.
This can be mitigated by income redistribution, funding for job skills retraining, and so on (although it kinda sucks to find yourself back at the bottom rung of a new field at 40 because you can't find job opportunities anymore) but, historically, these programs haven't received any funding, so it's pretty safe to assume they won't exist until proven otherwise.
- speedplane 8y agoEconomists always love the slight of hand that you pointed out. If there are a million losers, and a million plus 1 winners, economists see it as a sound policy.
- throwaway2048 8y agoIts more like, if there is a million people losing $100 but one person gaining $100,000,0001 its sound policy.
- rory096 8y agoRight. Trade is a Kaldor-Hicks improvement, not Pareto. Losers exist, though they could be theoretically compensated for their loss to create a Pareto-efficient outcome. The same is true of immigration and automation. https://en.wikipedia.org/wiki/Kaldor–Hicks_efficiency https://en.wikipedia.org/wiki/Kaldor–Hicks_efficiency >(if at all - corporations might just take the difference as profit depending on the level of competition) This doesn't make sense — if corporations 'absorb' that profit, consumers have no reason to purchase imports over domestic goods. Moreover goods with heavy competition from low-wage countries tend to have highly competitive markets, so the price is the marginal cost of production. >This can be mitigated by income redistribution, funding for job skills retraining, and so on (although it kinda sucks to find yourself back at the bottom rung of a new field at 40 because you can't find job opportunities anymore) but, historically, these programs haven't received any funding, so it's pretty safe to assume they won't exist until proven otherwise. Actually these programs tend to be well-funded but undersubscribed. https://www.reuters.com/article/us-trump-effect-coal-retraining-insight/awaiting-trumps-coal-comeback-miners-reject-retraining-idUSKBN1D14G0 https://www.reuters.com/article/us-trump-effect-coal-retrain... https://en.wikipedia.org/wiki/Trade_Adjustment_Assistance https://en.wikipedia.org/wiki/Trade_Adjustment_Assistance