Thursday, 31 January 2008

Don't Cry for Free Trade

Or so says Jagdish N. Bhagwati, and who would know better? In an article on the website of the Council on Foreign Relations Bhagwati points out that if you
[t]urn to the leading American newspapers these days and you will read about the "loss of nerve", even "loss of faith", in free trade by economists.
Bhagwati tries to give some perspective on the current media stories about the economists' disappearing consensus on free trade by looking at three recent episodes where journalists have sounded similar false alarms on the topic. He writes,
... let me then turn to document different episodes in recent years when false notes of alarm were sounded over free trade, similar in hype to those of the motley crew that I have just cited as the latest journalists writing in a similar vein. I will assess and dismiss the "heretical" arguments that were advanced against free trade in each episode; in fact, I was cast by the media in the role of the defender of free trade in all these episodes.
The episodes Bhagwati deals with are
  • Episode 1. The Rise of Japan: Krugman and Tyson
  • Episode 2. The Rise of India and China: Paul Samuelson
  • Episode 3. India and China and Fear of Outsourcing: Alan Blinder
Bhagwati's basic aim is to point out the obvious, that
[t]he truth of the matter is that free trade is alive and well among economists, their analytical arguments in favor of it, developed with great sophistication in the postwar theory of commercial policy, having hardly been dented by any original arguments by the few economists, including Alan Blinder in today's debate, arrayed against it.
It is an article well worth reading.

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