On another Times editorial:
Fact 1: some people lose from globalization in the short run (high-wage Americans who are temporarily unemployed).
Fact 2: lots of people gain from globalization in the short run (masses of people in poverty-stricken countries who no longer have to scratch the ground for subsistence and can instead earn decent money working in a call center or shoe factory). Unfortunately, utilitarian rationalizations are insufficient to support free trade. We have to consider a more sophisticated ethical argument.
Specifically, Fact 3: It is illegitimate for the state to stop transactions between willing parties; therefore Fact 4: One of the fundamental characteristics of a just society is that you always have the right to offer consumers better products at lower prices, which means that Fact 5: while the globalization adjustment will in fact be painful for some, we can expect considerable downward pressure on prices.
This leads us to Fact 6: when prices fall faster than wages, everyone’s real standard of living increases. To wit, IS manager Joe is able to afford a higher standard of living even though he has to accept lower nominal wages—so long as markets are allowed to work and prices are allowed to fall—and this is to say nothing of radical new product innovations that the market produces on a daily basis. To the casual observer, the idea that free trade is beneficial is complex and counterintuitive, but it is hardly the stuff of “blind faith.” Unemployed IS workers are easily seen: they’re our friends, they’re our neighbors, and they’re the subjects of NYT photo essays. However, when markets are allowed to operate, prices fall, quality improves, and real wages increase. In short, everybody is able to buy lots of cheaper, better stuff.
I won’t bore everyone with details, but I refer interested readers to two sources that might be of interest. The first is Pepperdine University economist George Reisman’s commentary on the Roberts-Schumer editorial in the WSJ at the beginning of the year. The second is Donald McCloskey’s edited volume “Second Thoughts: Myths & Morals of US Economic History.” It approaches most of today’s major policy issues—trade, immigration, etc—and shows that the terrain has not changed. We’ve been through this before, we’ll go through it again, and the Republic will remain strong.
