The NYT editorial board warned readers about the dangers the economy faces if a new president abandons the Bush-Clinton-Bush (BCB) trade agenda. It tells us that “throttling trade — say, by reconsidering existing agreements — would hurt a lot more people than it helped.” It would be interesting to see any evidence that supports this assertion. But let’s put this point aside. We can grant that removing protectionist barriers does in general lead to more economic growth. The biggest protectionist barriers in the economy at present are those that protect highly educated professionals like doctors and lawyers and the reporters that work at the NYT. If we could bring in enough fully qualified doctors from the developing world to bring the wages of our physicians down to West European levels it would save patients in the United States close to $80 billion a year on their health care. This swamps the gains from NAFTA, CAFTA, and the other trade deals that the NYT editorial board is concerned about. Why does the NYT never say anything about protection that benefits professionals and keeps their wages far above world market levels? The models are the exact same whether the item in question is “shoes” or “physicians’ services.” Does the NYT editorial board not recognize professional restrictions as a form of protectionism? Does it not recognize visa rules that require employers to first seek out a citizen and to pay a comparable wage as a form of protection? Suppose that Wal-Mart was required to first try to buy domestically made shoes before it could import them from China, and even then had to pay the domestic price? Wouldn’t that be protectionist? [For the record, highly paid workers have been the big winners from trade. Profit margins have not increased over the last decade.] And, while we’re on the topic, why doesn’t patent protection that raises the prices on prescription drugs by four or five hundred percent count as protectionist. Does the NYT have any studies that show that patent protection is the most efficient way to finance research? I very much doubt this. The basic story is that the NYT editorial board is very upset by forms of protection that have the effect of protecting low and middle income workers. It is perfectly willing to accept those forms of protection that redistribute income upward – even when these forms of protection impose very large costs on the economy.
--Dean Baker
