Economists like to make very simple propositions seem very complex. (How else could they command large salaries?) Trade is one such case. Since there seems to be so much confusion, let me lay out the basic story here. The gains from trade stem from the possibility of getting goods or services cheaper from abroad than they can be produced here. This doesn't mean that everyone or even most people gain, it just means that the economy as a whole is richer (I'm ignoring a few qualifiers here). Suppose we find a country where people will build cars for 10 cents an hour (it doesn't matter whether these workers want the job or are slaves threatened with death). We will get cheaper cars by purchasing them from this country. Of course the wages of autoworkers in the United States will fall until they can compete with the 10 cent an hour labor, or they will lose their jobs. In other words, bad news for autoworkers, good news for all carbuyers. Suppose we find a country where people will work as doctors for 10 cents an hour (it doesn't matter whether these workers want the job or are slaves threatened with death). We will get cheaper medical services by purchasing them from this country. Of course the wages of doctors in the United States will fall until they can compete with the 10 cent an hour labor, or they will lose their jobs. In other words, bad news for doctors, good news for all people who need health care. For the last quarter century, U.S. trade policy has been about finding countries where autoworkers and other manufacturing workers earn 10 cents an hour. It has not sought to find countries where doctors and other professional workers earn 10 cents an hour. In other words, manufacturing workers and workers whose wages are likely to be affected by wages in manufacturing lose. Professionals win. It ain't the free market, it's selective protectionism. The worst part of the story is that the winners are too dumb or too dishonest to acknowledge that they won because they had the government on their side, so they go around gloating about having what it takes to succeed in the global economy.
--Dean Baker
