October 17, 2009


Free Trade Has Enriched the World With More than Diverse Goods: The populists attacking globalization get it wrong again (Daniel Griswold, 10/17/09, Epoch Times)

During difficult economic times, import competition allows American families to keep their heads above water by delivering lower prices on staples such as food, clothing, and shoes. The prices we pay for goods exposed to global trade tend to rise more slowly than inflation or even fall. The expansion of product variety alone from trade delivers an estimated $400 billion a year in benefits to American families because of increased consumer satisfaction, according to a 2004 study by Christian Broda and David E. Weinstein for the National Bureau of Economic Research.

No consumers benefit proportionally more from trade than the poor, and nobody suffers more from existing trade barriers. The imported fresh fruit and vegetables, T-shirts and discounted sneakers sold at big-box retailers loom especially large in the budgets of poor and middle-class families.

Perversely, the highest remaining U.S. trade barriers are aimed at products that are disproportionately made by poor people abroad and consumed by poor people at home. The $25 billion the U.S. government collects each year through import tariffs is the most regressive tax in the federal arsenal. According to a study by the Progressive Policy Institute, a single mother earning $20,000 a year pays a much higher share of her income for import duties than a manager earning $100,000 a year. Labor unions and other groups that oppose tariff-lowering trade agreements are unwittingly serving a status quo that is punishing the poor.

Despite what the populists tell us, the consumer benefits of trade have not come at the expense of jobs or wages. As a candidate for president in 2007, Barack Obama was echoing CNN’s Lou Dobbs when he told a cheering union crowd in Chicago that importing lower-priced T-shirts from developing countries was not worth the loss of jobs. “People don’t want a cheaper T-shirt if they’re losing a job in the process,” he said. “They would rather have a job and pay a little bit more for a T-shirt.”

Like most politicians, candidate Obama chose to represent a small but noisy special interest at the expense of the large majority of Americans. Only one-third of one percent of American workers are engaged in making clothing and textiles of any kind. That compares to the virtually 100 percent of Americans who buy and wear T-shirts and other clothing. If Americans are forced to pay higher prices because of import restrictions, a small number of jobs would be “saved” but at a huge cost to working families.

Posted by Orrin Judd at October 17, 2009 11:38 AM
blog comments powered by Disqus