Free trade is one of those things many people either like or dislike. Many of us have a vague idea of how it all works, but not enough of an understanding that we can really justify our views.
So I was interested to read an article called The Human Side of Trade. Here is the example he uses:
Suppose a scientist invents a pill that once you take it lets you live until 120 with no health issues whatsoever. Once you turn 120, you die a peaceful death on your birthday. Suppose the scientist, in a gesture of good will, charges $10 for the pill.
As the author points out, while trade is overall good, it’s often not good for the people whose lives are disrupted by losing their jobs.
Part of the problem is that the rewards are not well distributed. We all get some rewards in terms of cheaper goods. But the big rewards tend to go to the people with the money (the investors), while the big risks are born by the people without the money (the workers) (*). It’s another case of socializing risk and privatizing profit.
So it’s curious that this last Presidential election was dominated by the fears of those left behind, often by free trade, yet nothing is being done to ease their suffering. Policies being debated and implemented seem designed to make things worse, not better.
And no one seems to be addressing the effects of automation on jobs, which is likely to be a far stronger case of socializing risk and privatizing profit.
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* You might say that the people with the money are risking their money. True, but they rarely risk enough that they will destroy their lives if things don’t work out. Whereas the workers will have their whole lives disrupted. Their jobs are gone, companies or industries have disappeared. And it’s hard for older people to retrain, and hard to uproot and move, disrupting lives and families.