Alan Blinder v. Josh Bivens on Free Trade
I always like this query from AB:
Speaking of trade, wandering through the grocery store today, I noticed that they were selling tax software. This naturally lead me to wonder why it’s viewed as a great thing when people can do their taxes quickly and cheaply using a computer and software, but a bad thing when people can do their taxes quickly and cheaply using Indian accountants.
Alan Blinder must have liked this query as well:
It has long been a mystery to economists why so many people view creative destruction that stems from technology as okay, while similar creative destruction that stems from international trade is something to be opposed.
Josh Bivens replies:
And I have to raise my hand to being “opposed” to both, if thinking that we should be honest about the damage done and calling for efforts to alleviate some of it constitutes “opposition,” which sounds to me like par for the course in this debate.There is, of course, a difference between the two: technology can cut a bunch of different ways: sometimes it can favor blue-collar labor (say industrialization in the early 20th century) or it can favor already-privileged workers (economists blame “skill-biased” technological change for some of the inequality growth that characterized the 1980s and 1990s. I’m a skeptic, but it’s a pretty common belief). Trade, on the other hand, is fully predictable in its impacts on the US: it leads to losses for the worst-positioned and benefits for the already well-off. Blinder is right about something, though; certain types of protectionism do indeed have their most pernicious impact on people in developing countries. It’s not agricultural subsidies or the MFA, the effects of which are a pretty mixed bag (and whose abolition would benefit US consumers to a much larger degree than the world’s poorest).