The Continuing Phony Debate on “Free Trade”

01/10/2022 12:00am

The national debate on free trade is one where honesty has no place. The purpose of our trade agreements, which were not free trade, was to reduce the pay of manufacturing workers, and non-college educated workers more generally, to the benefit of more highly educated workers and corporations. This was the predicted (by standard economics) and actual result. 

We made our manufacturing workers compete with low-paid workers in China and elsewhere in the developing world. This led to a massive loss of manufacturing jobs as the trade deficit exploded. The hit to workers in manufacturing was so large that the historic wage premium in the industry has largely disappeared.

While the massive upward redistribution of income from our trade deals was sold on the principle of “free trade,” it has nothing to do with actual free trade. Our trade deals did almost nothing to make it easier for foreign-trained professionals, like doctors and dentists, to work in the United States. As a result, our doctors and dentists earn roughly twice as much as their counterparts in other wealthy countries.

For some reason (please guess) this fact literally never enters in discussions of free trade. It seems that the advocates of free trade can’t get access to data on doctors’ pay. Just for beginners, if our doctors got paid the same amount as their counterparts in Germany or Canada, it would save us around $100 billion a year (about $700 per household). While that might seem like big money, our “free traders” can’t be bothered with it. They only want to save money by lowering the wages of autoworkers.

The other item that never enters into discussions of free trade is patent and copyright monopolies. These forms of protections raise the price of items like prescription drugs, medical equipment, and vaccines by many thousand percent above their free market price. In other words, they are equivalent to tariffs of many thousand percent. While “free trade” economists go nuts over tariffs of 10 or 20 percent on shoes and steel, they somehow can’t be bothered to pay attention to government-granted patent monopolies that raise the price of prescription drugs by 2000 percent. 

And, guess what, these monopolies redistribute an enormous amount of money from the rest of us to folks like the Moderna billionaires.  This really is not subtle. The overwhelming majority of “free trade” economists don’t give a flying f**k about free trade. They are interested in policies that redistribute income upward.

Let’s stop with the stupid games. We are not having arguments about free trade. We are having arguments over policies that are designed to redistribute even more income from the bulk of the population to those at the top.

 

Comments

Support Cepr

APOYAR A CEPR

If you value CEPR's work, support us by making a financial contribution.

Si valora el trabajo de CEPR, apóyenos haciendo una contribución financiera.

Donate Apóyanos

Keep up with our latest news