Free Trade and Higher Taxation of the Wealthy [View all]
Free trade arguments often get into sides arguing past each other, really debating entirely different issues.
Free trade does, in fact, increase the size of the pie. Efficiencies of scale and specialization are real. Free trade makes economies more productive.
Trade policy does not, however, dictate the distribution of the pie. And promising a bigger pie means nothing if you get a smaller slice.
And free trade does have a bias toward increasing inequality, all things being equal.
"Free trade is good" is a religious statement. It means nothing, really.
"Free trade creates wealth—it usually increases the economies of both sides," is a true statement, but does not in itself say anything about what that means to the average person, on either side.
The right solution is, of course, probably politically impossible. Make the pie bigger and rake off enough of the benefit of free trade and distribute it such that ordinary people benefit from it... that ordinary people are better off than they were before.
If something increases GDP while making people poorer then the problem is distribution of GDP, not free trade itself.
Since we are not likely to do much to improve distribution then that political fact becomes part of the effective analysis of free trade.
If we were likely to distribute the benefits of free trade equitably that political fact would become part of the analysis, and precisely the same trade policy would have a different net effect, socially.
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