“The trade agreements that the United States has negotiated over the last three decades have been about getting low cost auto workers, steel workers, and textile workers. In addition, immigration policy has been designed to ensure that custodians, farmworkers, and dishwashers all work for low wages. These policies have been successful in pushing down wages for large segments of the work force, not only those who were directly displaced by trade or immigrant workers, but also those who face heightened competition from workers who were displaced by trade or immigration.Of course, even some of these people are starting to feel the effects of mass immigration on their employment prospects too, but Dean Baker’s general point still stands.
But trade does not have to depress the wages of less-skilled workers. Trade agreements can also be structured to get us low cost doctors, lawyers, accountants, economists, reporters, and editorial writers. There are tens of millions of smart and energetic people in the developing world who could do these jobs better than most of the people who currently hold these positions in the United States. And they would be willing to do these jobs for a fraction of the wage. Real free traders would be jumping at this opportunity to increase economic growth and aid consumers in the United States, while at the same time increasing prosperity in developing countries.
But the economists, editorialists, and political pundits are not likely to raise the call for eliminating the barriers that prevent competition from professionals in the developing world. The truth is that the ‘free traders’ don’t want free trade – they want cheap nannies – but ‘free trade’ sounds much more noble.” (Baker 2006: 26–27).
Logically, free movement of people and open borders are the natural corollary of free trade, as Ha-Joon Chang has noted here. But your average idiot neoclassical economist has nothing to say about this. The small fringe of hard libertarians and anarcho-capitalists love open borders, not least of all because they see (correctly) that it would destroy the welfare state.
Unlike Baker, however, who does seem at one point to endorse mass immigration of some Third World professionals to the West (Baker 2006: 103) to lower costs and increase supply, I don’t think this can be a sensible solution. The long-term solution is: educating more people in the West to overcome any supply issues with, say, doctors or health care professionals.
Baker, Dean. 2006. The Conservative Nanny State: How the Wealthy use the Government to Stay Rich and Get Richer. Center for Economic and Policy Research, Washington, DC.
I’m on Twitter:
Lord Keynes @Lord_Keynes2