The New York Times had an editorial this morning warning about the dangers of protectionism resulting from the large U.S. trade deficit with China. This should lead to gigantic "huh" from informed readers. The United States already has a wide range of barriers that make it difficult for foreign professionals (doctors, lawyers, accountants, economists etc.) to work in the United States. There is no economic theory that shows great harm from trade barriers on cars and shoes, that doesn't also show great harm from barriers to trade in porfessional services. In other words, if the NYT is so scared of protectionism, it should be railing constantly against the protectionism that keeps the pay of our doctors and lawyers so much higher than their counterparts in the developing world or even Europe. The NYT also gets the trade deficit story wrong. The proximate cause of the trade deficit is the decision of foreign central banks to buy dollars to keep the dollar high and the value of their currencies low, not the budget deficit. But we'll beat up on them for this one another day.
--Dean Baker
