Five Free Trade Myths

Jagdish Bhagwati, professor of economics and law at Columbia, dispels five common myths about free trade such as, “Free trade may increase economic prosperity, but it is bad for the working class.” That’s myth number two, to which he says: “This claim has great credibility with labour unions that believe trade with poor countries produces paupers in rich countries. They therefore argue for levelling the playing field – ie, that the costs for their rivals in poor countries must be raised by imposing the same labour standards that exist in rich countries. Many economists have concluded, however, that continual and deep labour-saving technological change, not trade with poor countries, is a principal culprit in the stagnation seen in rich-country wages nowadays. Moreover, workers profit from lower prices for imported goods such as clothing and electronics.”