quote:The role of economists in trade debates is especially pernicious because there is no area of economics in which economists have been less honest about what their models show. They have consistently exaggerated the benefits that are predicted by standard trade models. At the same time they have ignored or downplayed the distributional consequences. In doing so, they consistently deride those who raise questions about the path of recent trade policy for failing to accept fundamental realities of the modern world.
It's a good and (relatively) easy to understand review of what the economics of trade has to say - and just as importantly, what it doesn't. I'm not convinced, however, by the argument advanced that the inequality-enhancing effects of liberalized trade can be dealt with as an effect of liberalizing trade in professional services. Yes, the highly educated have captured a lot of the gains from trade policy as is since it hasn't yet endangered the income of their professions, but so have the owners of capital - and that's a tougher nut to crack.
posted 01 April 2008 12:06 PM
This article implicitly accepts the claim that free trade (and by extension, the international trade agreements of the last 30 years), while possibly hurting many in the developed world, has benefited the majority in the developing and underdeveloped world. By accepting that these agreements have benefited the global poor, the article leaves it self open to the criticism that such a trade-off would be economically efficient and morally good.
The data shows that poor countries have done worse than rich ones, and that, even in poor countries, the poor have done worse than the rich. There's a great article about this at
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posted 17 March 2008 04:52 PM
