The NYT has a stern neoclassical defence of free trade (by Stephen Landsberg) with outsourcing. Landsberg is clearly discussing US-Chinese trade from the US viewpoint. The gist is that just as we should not feel morally obliged to compensate a restaurant owner when we shop for food at a cheaper McDonalds store so too the US should feel no obligation to compensate a worker when his job disappears because of outsourcing of work to China.
A couple of weeks ago I outlined the non-new thesis by Paul Krugman that significantly higher levels of US trade with low labour cost countries promotes inequality. I argued that education and compensatory tax transfer policies could address these issues while leaving the benefits from free trade intact.
Landsberg’s argument seems to confuse efficiency and equity issues. Both he (and Krugman & myself) believe price reductions from trade liberalisation do provide ‘gains-from-trade’ to the community as a whole but there is still an issue of inequality that most of us are concerned with addressing. As far as I can see there is no substantial intellectual case against free trade. But there is recognition that inequality will worsen as most manufactured goods in developed countries are produced in low wage countries and this needs to be addressed. Indeed it wouldn’t make much difference how the inequality was generated it would need to be addressed.
By the way twice in my life I have been in situations where job layoffs occurred. I saw the psychic misery and anxiety that was generated. I have also had friends and colleagues who unsuccessfully sought paid work for long-periods – one did charity work for a time because he felt so useless and despondent.
Since these events I have always been fairly hostile towards well-paid economists whose attitude to people losing their jobs is, ‘oh well, that’s life’. Landsberg’s ‘ho-hum’ attitude does not impress.