The American Spectator

Special Report

End of a Free-Trade Era

By Doug Bandow on 6.29.07 @ 12:07AM

(Page 2 of 2)

"Off-shoring" has become politically contentious, but economist Jacob Funk Kirkegaard figures that this process is responsible for only about five percent of lay-offs. Moreover, notes Fed chairman Bernanke, "for some considerable time, outsourcing abroad will be uneconomical for many types of jobs, particularly high-value jobs."

That the number of job losses is small in a macro-economic sense obviously does not lessen the pain for those who end up unemployed. But attempting to preserve jobs with trade barriers costs on average more than $230,000 per job; in some industries American consumers have effectively paid nearly $1.4 million per job "saved."

If there is a role for government, it should be to provide modest, temporary income support, such as wage insurance. That is, the goal should be to ease people's transition as they find new employment, not to close off the extraordinarily beneficial process of economic change.

Unfortunately, growing numbers of Republicans and Democrats alike have abandoned their past support for open international markets. Even though the House Democratic leadership has committed to work with President George W. Bush, it might not be able to deliver its party. Moreover, incorporating expensive First World environmental and labor standards into FTAs will simply create another form of trade barrier.

The reason low-income countries don't meet Western standards is that they are poor, and until they begin to escape poverty they will be unable to meet Western standards. Keeping people out of work in the name of improving their employment conditions is false charity. Indeed, had the United Kingdom or other wealthier states applied such a rule to the U.S. 200 years ago, America might not have turned into today's global economic powerhouse.

If there is one incontestable axiom of economics, it is that open markets yield growth and prosperity, rising employment and income, and accelerating technological advance. Thus, it is imperative that the Republican president and Democratic Congress cooperate in support of an open international economy. That means extending presidential trade promotion authority. America's prosperity is too important to sacrifice for the political advantage of either party.

Letter to the Editor

topics:
Trade, Ben Bernanke, Economics, Business, Environment, Immigration