Thursday, October 04, 2007

Is free trade bad for the US economy?

Anyone who has studied international economics at even the most basic level should be thinking "what a pointless question to ask" - obviously free trade is good for the economy (although of course there will be some losers who can theoretically be compensated by the winners). Think Ricardo, think Heckscher, Ohlin and Samuleson.

However, never overestimate the ability of economists to get their ideas across to the general public.

Today's Washington Post has a good article entitled "Republicans Grow Skeptical on Free Trade". This is a long article with some interesting facts and figures thrown in. An interesting read.

Republicans Grow Skeptical On Free Trade

WASHINGTON -- By a nearly two-to-one margin, Republican voters believe free trade is bad for the U.S. economy, a shift in opinion that mirrors Democratic views and suggests trade deals could face high hurdles under a new president.

The quote below shows that the republicans are in a bit of a mess over this issue:

Six in 10 Republicans in the poll agreed with a statement that free trade has been bad for the U.S. and said they would agree with a Republican candidate who favored tougher regulations to limit foreign imports. That represents a challenge for Republican candidates who generally echo Mr. Bush's calls for continued trade expansion, and reflects a substantial shift in sentiment from eight years ago.

At least the republican candidates appear to have a good grasp of the issues. The final quote shows a good turn of phrase.

The leading Republican candidates are still trying to promote free trade. "Our philosophy has to be not how many protectionist measures can we put in place, but how do we invent new things to sell" abroad, former New York City Mayor Rudy Giuliani said in a recent interview. "That's the view of the future. What [protectionists] are trying to do is lock in the inadequacies of the past."

The presidential race needs to be watched carefully - trade wars could do a lot of damage to the US economy. There is not that much difference between the two main parties however. The question is whether the populist rhetoric is subsequently translated into policy.


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