IS FREE TRADE HARMFUL?

IS FREE TRADE HARMFUL? Kids, this is probably an important development. Two eminent economists—a Nobel Prize winner and a former Vice Chairman of the Federal Reserve—have changed their minds about whether free trade is a good thing. Since Adam Smith and David Ricardo, a majority of economists have supported the proposition that free trade is on the whole beneficial. (An intuitive argument is that specialization is usually good for both individuals and nations.) Of course, there were always qualifications and caveats which acknowledged that some individuals would be harmed by free trade unless they were compensated in some way. Here is an elegant summary of the advantages of free trade by Professor Alan Blinder, who has now changed his mind. This article, which describes Blinder’s change of position, points out that Blinder had been a staunch defender of free trade: “‘Like 99% of economists since the days of Adam Smith, I am a free trader down to my toes,’ he wrote back in 2001.” This article (link via realclearpolitics) describes how Paul Samuelson, another long-time defender of free trade, has also changed his mind, predicting that the force of the coming economic tsunami “will destroy many things… including what is left of American industry. What it will leave behind, in the best case, is what Samuelson calls ‘an American office economy.'” Both Blinder and Samuelson have been influential advisers to Democratic candidates, and the article points out that, ” Free trade critic Hillary Clinton now bases her arguments on Samuelson’s.”