market economy that determines the mix of employment. when exports fall or imports rise, domestic demand and relative prices have invariably adjusted in the long run to leave total employment relatively unaffected. as economists like to say, all imports are eventually paid for with exports. i also regret that, despite the remarkable success over a near half century of gatt, the general agreement on trade and tariffs, and its successor, the world trade organization, in reducing trade barriers, our trade laws and negotiating practices are essentially adversarial. they presume that a trade concession extracted from us by our trading partners is to their advantage at our expense, and must be countered. few economists see the world that way. and i am rash enough to suggest that we economists are correct, at least in this regard : trade is not a zero sum game. if trade barriers are lowered by both parties, each clearly benefits. but if one lowers barriers and the other does not, the country that lowered barriers unilaterally would still be better off having done so. raising barriers to achieve protectionist equality with reluctant trading partners would be neither to our benefit, nor to theirs. the best of all possible worlds for competition is for both parties to lower trade barriers. the worst is for both to keep them up. for these reasons, i am concerned about the recent evident weakening of support for free trade in this country. should we endeavor to freeze competitive progress in place, we will almost certainly slow economic growth overall, and impart substantial harm to those workers who would otherwise seek more effective longer - term job opportunities. protecting markets from new technologies has never succeeded. adjustments to newer technologies have been delayed, but only at significant cost. even should our trading partners not retaliate in the face of increased american trade barriers, an unlikely event, we do ourselves great harm by lessening the vigor of american competitiveness. the united states has been in the forefront of the postwar opening up of international markets, much to our, and the rest of the world ’ s, benefit. it would be a great tragedy were that process reversed. i do not believe that will be allowed to happen. there is too much at stake for us and our trading partners.

##ciation and other cash flows of industries employing older, increasingly obsolescent, technologies are marshalled to finance the newly produced capital assets that almost always embody the cutting edge technologies. this is the process by which wealth is created incremental step by incremental step. it presupposes a continuous churning of an economy in which the new displaces the old. but there is also little doubt that this transition to the new high - tech economy, of which rising trade is a part, is proving difficult for a large segment of our workforce that interfaces with our rapidly changing capital stock day - by - day. moreover, while major advances in standards of living are evident among virtually all nations that have opened their borders to increased competition, the adjustment trauma has also distressed those who once thrived in companies that were then at the cutting edge of technology, but which have since become increasingly less competitive in both domestic and foreign markets. economists will say that workers should move from the steel districts of western pennsylvania to a vibrant silicon valley. and eventually they, or more likely their children, will. but the adjustment process is wrenching to an existing workforce made redundant largely through no fault of their own. it may be argued that all workers should have the foresight to recognize long - term job opportunity shifts and move in advance of obsolescence. this regrettably is a skill not in great abundance – among business managers or the economists who counsel them, as well as among workers. yet the protectionist propensity to thwart the process of the competitive flow of capital, from failing technologies to the more productive, is unwise and surely self - defeating. history tells us that not only is it unwise to try to hold back innovations, it is also not possible over the longer run. generation after generation has experienced episodes in which the technologically obsolescent endeavored to undermine progress, often appealing to the very real short - term costs of adjusting to a changing economic environment. from the luddites to the smoots and the hawleys, competitive forces were under attack. in the end they did not prevail and longterm advances in standards of living resumed. nonetheless, the campaign to expand free trade is never won. legislation to further lower trade barriers, for example, is becoming increasingly more difficult to pass in our congress. it is a continuing battle. further, while tariffs in industrial countries have come down sharply over the past half century, other