VitalAccurateThinking

Trade: Person to Person, Nation to Nation

H/T Spryal Notebook

Grek Mankiw does smackdown on Robert Reich:

(when Reich) says that, as a requirement for free trade deals, we should tell developing countries to "set a minimum wage that's half their median wage." The proposal raises two questions in my mind:

1. Does Reich pay his nanny, cleaning person, and gardener more than half the median wage of members of his family?

2. If not, should I refuse to buy his books?

The gentlemen at Cafe Hayek have similar comments (quoting an article by Sheldon Richman):

In reality, then, there are no imports and exports. There is only what I make and what everyone else makes. Few people would want to live just on what they themselves could make. Frederic Bastiat pointed out that each of us daily uses products we couldn't make in isolation in a thousand years. Talk about poor, solitary, nasty, brutish, and short! "What makes this phenomenon stranger still is that the same thing holds true for all men," Bastiat wrote. "Every one of the members of society has consumed a million times more than he could have produced; yet no one has robbed anyone else."

This is just another way of saying that the case for free trade is conceded the moment someone eschews self-sufficiency. After that, we're just haggling over the size of the trade area. But if free trade (read: division of labor) is good, then the bigger the free-trade area the better. Globalization should be the worldwide removal of all barriers to the exchange of goods and services -- rather than trade managed through state capitalism and multinational bureaucracies. Unilateral, unconditional free trade is the smartest policy.

posted by Jim VAT @ 10:59 AM