Nationalists are not utilitarians
By Scott Sumner
Nationalists are not utilitarians, and they often don’t care very much about the poorest of the world’s poor. Here’s an example, from Vox.com:
In a new interview with the New York Daily News, Bernie Sanders said something striking — he basically doesn’t think the US should be trading very much at all with countries where wages are much lower than its own.
“You have to have standards,” the senator said. “And what fair trade means to say that it is fair. It is roughly equivalent to the wages and environmental standards in the United States.”
From Sanders’s point of view, this makes sense. He has recognized, correctly, that freer trade with countries like China has hurt a subset of American workers (while benefiting others).
But there’s one big problem, according to development economists I spoke to: Limiting trade with low-wage countries as severely as Sanders wants to would hurt the very poorest people on Earth. A lot.
Free trade is one of the best tools we have for fighting extreme poverty. If Sanders wins, and is serious about implementing his trade agenda as outlined in the NYDN interview and elsewhere, he will impoverish millions of already-poor people.
There are lots of problems with Sanders’ views on economic policy, but this is by far the worst. Sanders is not a true socialist, he’s a nationalist who doesn’t seem too concerned about the global distribution of income.
I recently did some posts discussing research by Autor, Dorn, and Hanson, on the impact of trade on US labor markets. Although this research is sometimes interpreted as anti-free trade, the authors themselves seem to think otherwise:
The TPP’s biggest provisions concern protection for intellectual property, liberalising trade in services and enforcing stricter labour and environmental standards. All this probably helps American workers. Mr Autor and two of his most frequent co-authors support the deal, arguing that the globalisation of manufacturing is a fait accompli. Blocking the TPP or other modern trade deals will not undo the failure to help those who lost out from trade with China.
To the extent that some Americans are harmed, which is inevitable, the projected gains of future free-trade agreements should be more than enough to compensate losers, if only the government can get itself organised. Peter Petri and Michael Plummer, two economists, estimate that the TPP will boost American incomes by $131 billion, or 0.5% of GDP. That is over 100 times what America spent on trade-adjustment assistance in 2009: there is plenty of scope to do more for the losers from trade.
In my view, the losers from international trade should be compensated in exactly the same way as the losers from other forms of creative destruction, such as technological progress. How did we compensate the small retailers that lost out to Walmart? It’s also important to stop protecting high-income professions, such as medical doctors, from international competition. Blue-collar workers should not be the only group exposed to international competition.