From: kenr@orleans.storage.tandem.com (Ken Rose)
Subject: Re: STUDY: NAFTA TO CAUSE U.S. JOB, INCOME LOSS
Organization: Tandem Computers Inc, Cupertino CA
Date: Fri, 14 Aug 1992 16:47:22 GMT

In article <1992Aug12.153525.14298@ils.nwu.edu>, hooker@aristotle.ils.nwu.edu (Bob Hooker) writes:
> In article <1992Aug9.102017.5190@leland.Stanford.EDU>,
> foster@leland.Stanford.EDU (Pablo Estrada) writes:
> 
> > 
> > 	If you want to do some in-depth research yourself into free-trade and 
> > its likely effects on the different types of economies, I would recommend to 
> > you the topic of "Comparative Advantage," which should be covered by any 
> > worthwhile basic-economics text. 
> 
> The Comparative Advantage theory,  that consumers in different
> countries benefit if they trade goods where each has a unique
> advantage, is so simplistic I can't see how anyone could make
> decisison on trade based upon it.
>


Labelling something "simplistic" is not a convincing refutation, nor
is it necessarily the case that a "sophisticated" theory is more
accurate.

Surprisingly enough, most professional economists seem to share 
the view that free trade is advantageous.  In his book
"Hard Heads -- Soft Hearts", economist Alan Blinder of Princeton
reports that "A poll of more than two hundred American economists
in 1978 found that an astonishing 97 percent agreed that tariffs
and quotas on imported goods reduce general economic welfare"
(pg. 2).  Blinder is hardly a conservative apologist; the book
contains strong attacks on supply-side economics (in a section
entitled "Professor Laffer's Flight of Fancy") and monetarism.

Blinder devotes an entire chapter ("Who Will Protect Us From
Protectionism") to the free trade issue.  In the introductory
chapter of the book he writes:
  
   ... economists have long favored free trade among nations and
   opposed trade barriers like tariffs and import quotas.  They
   believe that protectionist measures usually rob from the many
   to give to the few and harm the efficiency of the world economy
   in the bargain.  Opposition to trade barriers is probably the
   issue on which economic opinion is the most uniform and always
   has been.

   To economists, the theoretical case for free trade is as natural
   as mother's milk.  In addition, mountains of evidence have been
   offered to show that the costs of protection are often titanic.
   A recent study estimated that quotas on imported Japanese
   automobiles cost American consumers about $160,000 per year for
   each auto worker's job that was saved. ... Wouldn`t most auto
   workers have gladly taken a single cash payment of $160,000 in
   return for leaving the industry to look for work elsewhere?  Is
   in not, therefore, obvious that the quotas were bad economic
   policy?

   Unfortunately, much of what economists find obvious is totally
   unpersuasive to others. ... Time after time we battle ineffectively
   against powerful business, labor, and political forces lined up
   on the side of protectionism.  That makes for lopsided contests.
   Economists, with their logic and dull statistics, are no match 
   for powerful vested interests armed with catchy slogans
   ("Buy American, save your job") and campaign contributions.




____________________________________________________________________
Ken Rose    (kenr@storage.tandem.com)
The Usual Disclaimer:  Any opinions expressed above are mine alone, not
those of my employer (who is kind enough to allow me Usenet access).
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