NO issue divides economists and mere Muggles more than the debate over globalization and international trade. Where the high priests of the dismal science see opportunity through the magic of the market's invisible hand, Joe Sixpack sees a threat to his livelihood.He goes on to make the point
Economists are, overwhelmingly, free traders. A 2006 poll of Ph.D. members of the American Economic Association found that 87.5 percent agreed that "the U.S. should eliminate remaining tariffs and other barriers to trade."When it comes to the general public however Mankiw notes thing are very different.
In the recent poll, however, only 28 percent endorsed globalization, while 58 percent opposed it.As Mankiw also points out
The benefits from an open world trading system are standard fare in introductory economics courses. ... The basic lessons can be traced back to Adam Smith of the 18th century and David Ricardo of the 19th century: Trade between two countries creates winners and losers, but it leaves both nations with greater overall prosperity.This lesson seems so obvious to economists that I think they struggle to understand why non-economists don't see it. Arnold Kling argues that the challenge is to make an argument for free trade in terms that everyone can understand. He offers a parable along the lines of,
Perhaps we could start with "Once upon a time," and describe an economy that works like ours today. But we decide that free trade has gone too far.Here in New Zealand Martin Richardson tried to make the case, for trade and against protection, to the layman by arguing
First, we enact national protectionism. Then, the "buy local" movement catches on and leads to effective elimination of the Constitutional provisions against trade barriers within the United States. Cities and states start enacting tariffs, quotas, and trade subsidies.
Finally, the movement moves toward its logical conclusion: only buy products made in your own household. People give up computers, cars, packaged food, electricity, and plumbing. We go back to subsistence farming and hunter-gathering.
There are at least two ways to produce a Toyota in New Zealand. First, we can import some steel, rubber and glass, employ workers, use a lot of power, set up an expensive production line and trot out some shiny new Toyotas. A second way, however, is to breed some sheep, employ workers to rear them, shear them and slaughter them, sell the products abroad and use the proceeds to buy some shiny new Toyotas from Japan. The first way only works if we force consumers to pay 22.5% more for their cars than the Japanese are willing to sell them for, which is what we pay in the second case. Again, it's not obvious to me that the orchardists of Central Otago with Toyotas ripening on their trees or the farmers of those cuddly Mitsubishis grazing on the Canterbury plains should be punished to benefit their less efficient competitors in Porirua and the Thames Valley.Is this really so difficult to get?
One needs to be very clear on this: NZ's most efficient producers of cars are farmers, boat-builders, foresters, horticulturists and other exporters.