catches David Ignatius suggesting that trade liberalization can provide
enough economic boost to offset the effects of austerity.
As Dean says, the arithmetic is totally off — almost two orders of magnitude off. ...
First, there’s an especially strong tendency to mythologize the power of
free trade. Not that open world markets are a bad thing; they’re definitely
a force for good, especially for small, poor countries. But my experience is
that the less somebody knows about international trade, the more likely he
or she is to imagine that modest moves toward or away from protectionism
will have huge effects. Trade economists, who have actually worked with the
models, have a much less grandiose view.
Second, even to the extent that trade liberalization would raise the
efficiency of the world economy, it is not, repeat not, a route to overall
job creation. Yes, everyone would export more; they would also import more.
There is no reason at all to assume that the jobs gained from export
creation would exceed the jobs lost to import competition.
Globalization is not the answer to the Lesser Depression.
Posted by Mark Thoma on Sunday, December 9, 2012 at 10:59 AM in Economics, International Trade, Unemployment |