Lions and Tigers and Trade, Oh My!

Campus Report ^ | November 9, 2007 | Bethany Stotts

[bs9021]

Lions and Tigers and Trade, Oh My!

by: Bethany Stotts, November 09, 2007

American antipathy toward trade has been growing rapidly as American citizens increasingly fear that globalization (and outsourcing) will undermine their job security. However, world-renowned economist Jagdish Bhagwati argues that the current free-trade phobia is unjustified. “But you know, there is no accounting for fear... I would also add that fear has deaf ears, because once you’re really frightened you don’t listen to [experts],” asserted Bhagwati at a CATO book forum.

Most studies point to the negligible negative effect that trade with underdeveloped countries has had on their more industrialized counterparts, and 90% of economists believe that the effect of international trade is positive, argues Bhagwati. Dartmouth Economics Professor Matthew Slaughter estimates that the U.S. economy has gained $1 trillion annually compared to its potential earnings without trade liberalization. Worldwide free trade, he argued at the forum, could add another $500 billion annually to the American economy.

Yet Slaughter argued at the forum that American fears are not necessarily misplaced, so much as reflecting a lack of real wage gains. He pointed out that “over the last few years, the majority of Americans have not seen sustained real income growth,” and most growth has been concentrated in the wealthier classes. Americans “understand they benefit as consumers from globalization but they think in real income terms,” he said. He noted that “skill-biased technological change” has had the largest impact on employment, with technological changes forcing workers to shift out of obsolete industries.

But fears of globalization continue to persist in the face of extensive research of its positive benefits. A Columbia University Economics Professor, Bhagwati feels that irrational fears of the global market have overcome common sense, and eroded the American public’s acceptance of the law of comparative advantage.

[Realism]

I would also add that fear has deaf ears, because once you’re really frightened you don’t listen to [experts],” asserted Bhagwati

Seems an expert should know the difference between outsourcing and offshoring.

He noted that “skill-biased technological change” has had the largest impact on employment, with technological changes forcing workers to shift out of obsolete industries.

The industries themselves have not become "obsolete" they were just relocated.

[bert]

Pat’s fault