The WSJ has an article today noting the concerns that Princeton economist Alan Blinder has raised about trade. Both Mr. Blinder's concerns and the discussion seem a bit bizarre. Blinder's new concerns about trade stem from the fact that some highly skilled workers, in areas like software development and financial research, are being placed at risk by the ability to quickly and costlessly transfer information over the Internet. He notes that there will be an increased ability to outsource many of the highest skilled jobs in the years ahead. Therefore he believes that policy should focus on training people for jobs that require face to face contact, which cannot be outsourced. This is bizarre for two reasons. First, trade theory shows that the gains are every bit as large (and quite possibly larger) when the trade involves services produced by highly skilled professionals as when it involves the products produced by less educated manuufacturing workers. As economists know, trade implies both overall gains and an element of redistribution. Mr. Blinder's problem appears to be that the element of redistribution is going from highly-educated workers to less educated workers when we outsource services like software engineering and legal services. A true free trader (especially a liberal one) should applaud this development. The second point is that Blinder's focus on face to face services seems to ignore the potential for these jobs to be filled by immigrant workers. We have millions of people from developing countries who perform face to face services as restaurant workers, hospital workers, and domestic workers. A true free trader would have no objection to replacing some of these immigrant workers with immigrant doctors, lawyers, and other highly educated people performing face to face services in the United States. Clearly, the problem is that Mr. Blinder really does not want to see people like him subjected to the same sort of global competition as textile workers and autoworkers and dishwashers and custodians. We have yet another example of selective protectionism, which the WSJ has helped to conceal.
--Dean Baker
