Extreme Free Trade
By Arnold Kling
What happens when you take free trade to extremes among states with uneven incomes? Virginia Postrel suggests looking at the fifty United States as an example.
The United States is one giant free trade zone. Businesses can move their plants, investors can move their money and workers can move themselves from region to region without government permission.
Over the last century, a lot of that movement has occurred. Rich and poor regions have converged to about the same standard of living. But the results haven’t been anything like the “race to the bottom” of protectionist imaginations.
…Over the last half-century, “once-poorer states have been growing faster than richer ones,” says Professor Mitchener of Santa Clara University in California. “That’s going to cause the poor ones to catch up to the richer ones.” But, he adds, that doesn’t mean impoverishing the rich ones.
For Discussion. Edward Lotterman wrote, “There is no historical example of a nation where overall employment or average incomes fell because of greater trade.” Is that disputable?