When people talk about the benefits and harms from trade, they usually refer to the labor market. That makes sense, since losing a job has a huge impact on a person’s life. Even if you can find another job, it takes time and money and causes lots of stress. It disrupts your life, and sometimes you can’t find as good a job as the one you had before. That’s why recent research from economists David Autor, David Dorn and Gordon Hanson, showing that trade with China hurt lots of U.S. workers, made such a splash -- we can all imagine the stress, the fear, the humiliation and the hopelessness of workers whose careers are destroyed in a day, leaving them dependent on welfare or working at a job paying half as much. If Autor et al. are right, the “China shock” of the 2000s hurt more workers than it helped.
Defenders of free trade will often respond that labor markets aren’t the only markets affected by trade. Many of the things we buy, from TVs and phones to toys and clothing and food, are traded in international markets. Opening up to trade doesn’t always reduce the price of everything we buy, but it tends to make most stuff less expensive, in two ways. First, consumers get to buy things from companies that make those things overseas more cheaply -- some of that cost saving gets passed on in the form of lower prices. Second, trade allows countries to shift their own production toward the things that they’re the most efficient at making, which also tends to push down prices.
QuickTake Free Trade Feud
