Wednesday, April 11, 2007

A Convenient (and Excellent) Truth

From Donald Luskin's article on trade:

If you question whether global warming is happening, or whether human activity is causing it, or whether it’s worth doing anything about it, then you must be a crack-pot. You are standing athwart the “consensus of scientists.” You are disputing “settled science.” You are a “global warming denier,” the moral equivalent of an apologist for the Nazi holocaust.

But no such accusations are made against the protectionists who question the benefits of free trade among nations. Such people are in fact standing athwart 250 years of economics, and an overwhelming consensus of living economists. These protectionists are denying the enormous gains in standards of living and human freedom that are the direct result of free global trade.

Make no mistake about it. The benefits of free trade are settled science. It goes all the way back to the 18th century, beginning with the path-breaking work of Adam Smith and David Ricardo. From then till now, the science of economics has deepened its virtually unanimous embrace of free trade. Today’s best-selling college economics textbook, Macroeconomics by Harvard’s N. Gregory Mankiw, enshrines among the “ten principles of economics” the axiom that “Trade Can Make Everyone Better Off.”

Indeed it can, and indeed it has. During the last several decades of unprecedented global economic growth we have witnessed increasing global trade and falling trade barriers. For all the worry about “outsourcing American jobs,” the U.S. unemployment rate stands today at a low 4.5 percent. On the other hand, the Great Depression of the 1930s involved a collapse of global trade, triggered by the Smoot-Hawley Tariff Act. Back then there was no outsourcing. But the unemployment rate exceeded 20 percent.

Economic theory aside, and real-world results aside, there’s another fundamental argument for free trade. Simply, free trade is a human right. People have an unalienable right to trade with each other as they choose, be they next-door neighbors or half a world apart.

So why is it that when people question the free-trade consensus — when they deny the manifest evidence of its success or challenge its status as a human right — they are not treated like those who question global warming? Question the global warming consensus and you’re something between a fool and a Nazi. But question free trade? Ah … that’s different. That’s politically correct.

HT Carpe Diem


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