Should winners from trade compensate the losers?
Steven Landsburg says no.
I agree with him in principle, but I still think that publicly-funded education and re-education programs are worth it. There are strong reasons for believing that these programs provide a positive social surplus and can lead to strong productivity growth.
But the idea that winners from trade should directly compensate losers has no basis in economic theory. We should encourage education and training for its own sake; not because of some utilitarian ethical concern.
UPDATE: Dani Rodrik kind of disagrees:
Second is the double standard, whereby we refuse to allow people to sell us their goods because we disapprove of the lax standards of production, but we gladly sell our goods to the same people regardless of those standards and without a second thought.
By some European standards (say, France), American labor protections are incredibly lax. Yet how would we respond if they started putting tariffs on American exports because our labor standards are "unfair"? We would respond with outrage and incredulity, and we would be right to do so. We should expect nothing less from other countries.
If we choose to trade off economic freedom and efficiency in exchange for tighter labor standards, that is our right. But we cannot pretend that the balance we have found is the perfect one for all countries and regions. States and individuals should be free to decide these matters on their own. Anything less is what would actually be "unfair". After all, it's not as if we don't have the option, as consumers, to not purchase goods made under laxer policies than our own. Forcing foreign nations to abide by standards that we have created and modified over time, and preventing Americans from exercising their own economic freedom as consumers, is not a more "fair" system for anyone.
Now, obviously, Rodrik would not advocate for protectionism outright. And yet, when he and others maintain that we should require labor and environmental standards be negotiated into trade contracts, and that we should subsidize (i.e. "protect") American jobs through government intervention, he is really advocating a type of non-tariff trade protectionism in disguise.
I agree with him in principle, but I still think that publicly-funded education and re-education programs are worth it. There are strong reasons for believing that these programs provide a positive social surplus and can lead to strong productivity growth.
But the idea that winners from trade should directly compensate losers has no basis in economic theory. We should encourage education and training for its own sake; not because of some utilitarian ethical concern.
UPDATE: Dani Rodrik kind of disagrees:
Similarly, what is at issue in globalization debates is the procedural fairness of some types of outsourcing. Trade is controversial because it involves exchanges of the type we routinely block at home (e.g., exchanges that involve unfair labor or environmentally harmful practices). This often makes trade look different from other instances of redistribution.There's some trouble here. First of all, which is more unfair: allowing imports of products from countries with different labor standards than the U.S., or requiring every other nation in the world to adopt the exact same standards as the U.S. as a prerequisite for trading with us?
Second is the double standard, whereby we refuse to allow people to sell us their goods because we disapprove of the lax standards of production, but we gladly sell our goods to the same people regardless of those standards and without a second thought.
By some European standards (say, France), American labor protections are incredibly lax. Yet how would we respond if they started putting tariffs on American exports because our labor standards are "unfair"? We would respond with outrage and incredulity, and we would be right to do so. We should expect nothing less from other countries.
If we choose to trade off economic freedom and efficiency in exchange for tighter labor standards, that is our right. But we cannot pretend that the balance we have found is the perfect one for all countries and regions. States and individuals should be free to decide these matters on their own. Anything less is what would actually be "unfair". After all, it's not as if we don't have the option, as consumers, to not purchase goods made under laxer policies than our own. Forcing foreign nations to abide by standards that we have created and modified over time, and preventing Americans from exercising their own economic freedom as consumers, is not a more "fair" system for anyone.
Now, obviously, Rodrik would not advocate for protectionism outright. And yet, when he and others maintain that we should require labor and environmental standards be negotiated into trade contracts, and that we should subsidize (i.e. "protect") American jobs through government intervention, he is really advocating a type of non-tariff trade protectionism in disguise.

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