Thursday, March 30, 2017

Robert Wade on Trumponomics vs. Free Trade

Echoing some of the arguments discussed here in the blog (for a list of posts on free trade go here, and for the effect of free trade on the Trump election here, here and here) Robert Wade suggests that the economics profession defense of "Free Trade" might have something to do with the election of Trump.

Wade's phrase is perfect (apparently Adrian Wood came up with it): "Like Gresham’s Law, 'alternative facts' drive out facts." The alternative fact here is the theory of comparative advantage and the notion that free trade is the best of all possible policies for all countries (and people within the country) at all times. As Keynes, quoted in Wade's epigraph, said:
Free trade assumes that if you throw men out of work in one direction you re-employ them in another. As soon as that link is broken the whole of the free-trade argument breaks down (J. M. Keynes, evidence to the Macmillan Committee on Finance and Industry, 1930)
Read paper here.

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