Sumner's Free Trade Example
By Bryan Caplan
Assume that imports of Barbie dolls will eliminate 1000 jobs in
South Carolina. Each job loss will have a devastating effect on the
lives of the former workers. We’ll put a monetary value on the loss at
$100,000, but keep in mind that these costs also involve things like
divorce, alcoholism, etc., and not just foregone wages. Set against
these losses, 60 million Americans will be able to go out and buy dolls
at a “China price” that is $2 lower than the U.S. price. How do we go
about determining whether free trade is the way to go?
1. Do a cold-blooded cost/benefit analysis. (Note, I understand
that in the real world these would be done on broad principles, not on
a case by case basis, but it wouldn’t change the logic of the argument.)
2. Go with our moral intuition. Which outcome seems worse? Which outcome do we find more intolerable to think about?
I don’t know about Bryan, but if I used the second procedure, I might end up on the anti-free trade side.
Frankly, I think this is a softball, because Scott’s forgetting about all the Chinese who benefit! When you factor foreigners’ benefits (including reduced divorce, alcoholism, etc.) into the example, there is a chorus of unanimity from liberty, efficiency, and utilitarianism.
Furthermore, even if you share Sumner’s moral intuition, I think it’s pretty weak compared to this competing intuition: If you were a small businessman on the verge of bankruptcy, it would still be wrong to use or threaten violence against customers who take their business elsewhere. And what is protectionism but a large-scale version of this?