What free trade really does. Donald Boudreaux‏

There are many good economic arguments for free trade. It intensifies competition. It enables producers worldwide to specialize in tasks for which each enjoys a comparative advantage. By expanding markets, free trade makes it possible for more and more industries to cut costs by taking advantage of economies of scale. All in all, free trade makes us more prosperous. It even discourages military hostilities.

But the most common argument of pro-free-trade politicians and pundits is wrong: Free trade does not "create jobs" -- if that means adding to the total number of paying jobs in the domestic economy.

Free trade neither creates nor eliminates jobs overall. (Likewise for protectionism.) What free trade does do is create different and better jobs by destroying older and worse jobs.

Recognizing that moving from protectionism to free trade (or vice versa) has no long-run impact on the total number of jobs in the economy strikes the non-economist as odd. This recognition, however, is nearly universally shared by economists. The reason is straightforward: Economists understand that most of what is popularly believed to be unique to international trade is, in fact, not unique to international trade.

A change in the volume of trade that crosses political borders is merely one among countless different changes that occur constantly in modern economies. And this change -- like the great majority of other changes -- is driven by voluntary consumer choices.


Read full in Pittsburgh Tribune.

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