« Captain Planet -- Yeck! | Main | Not Everything is Rotten in Denmark» Don Boudreaux
April 24, 2005
Paul Craig Roberts Rails Again
Don Boudreaux
Paul Craig Roberts aims a cheap shot against those of us who advocate free trade in services as well as free trade in goods. Overlook his name-calling, and focus on the substantive allegation in this sentence:
No-think economists assume new, better jobs are on the way for displaced Americans, but no economists can identify these jobs.
He implies that unless economists can "identify" the specific new jobs that will emerge to replace jobs lost to increased international trade, claims that new jobs will emerge are baseless.
P.C. Roberts is writing nonsense. The economists’ case for free trade does not rest upon the proposition that the particular jobs made possible by free trade (to replace jobs lost to free trade) are, or even ought to be, foreseeable. As I wrote in a letter to the Washington Times,
Few of today’s jobs were predictable before they emerged. Who in 1900 foresaw Americans working, say, as nuclear engineers, airline pilots, and automotive technicians? Who in 1950 predicted jobs in biomedical engineering and computer-software design? Who as recently as 1985 envisioned people working as computer-network administrators and web designers?
I invite P.C. Roberts and everyone else to look at the different types of current jobs listed in this Occupational Wages and Employment Survey, released in November 2004 by the Bureau of Labor Statistics. Some of these jobs were familiar to our grandparents – for example, boilermakers, stone masons, and mail clerks. But notice how very many of these jobs didn’t exist 100, 50, 25, or even 15 years ago. How many of these newer jobs could possibly have been identified in advance?
None. None could have been identified in advance. Such is the nature of an open, free, entrepreneurial economy: it is creative. (A recent insightful explanation of the inherent dynamism and creativity of free markets and free trade is found in this speech, by Vernon Smith, celebrating globalization.)
No economist worth his salt would ever insist, as P.C. Roberts does, that the case for free trade and free markets rests upon the future’s details being foreseeable.
Nor would any respectable economist ever write the following:
American economists are so inattentive to outsourcing's perils they fail to realize the incentive that leads to outsourcing one tradable good or service does the same for all tradable goods and services.
Not so. People specialize and trade based upon comparative advantage. The very logic of comparative advantage is that if Ann finds it profitable to produce and sell apples, those who find it worthwhile to buy Ann’s apples have incentives to produce and sell to Ann things that she finds worthwhile to buy. To paraphrase P.C. Roberts, the incentive that leads to outsourcing one tradeable good or service is one and the same incentive that leads to insourcing some other tradeable goods or services. Put differently, foreigners export goods and services to us only because they want to import, now or in the future, goods or services from us.
Indeed, this last-quoted statement from P.C. Roberts is utter nonsense. It implies that the end, equilibrium result of unregulated outsourcing is that we Americans will import all of our "tradeable goods and services" and export no "tradeable goods and services" in exchange. Roberts says, in other words, that every tradeable good and service that Americans consume will be supplied by foreigners for free.
No more need be said. P.C. Roberts’s take on trade isn't merely confused; it's incoherent.
Posted by Don Boudreaux in Trade | Permalink
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