Debates of course rage about the effects of freer trade on poverty. As is often the case, nothing seems terribly settled or clear in academic studies. So, my attraction to these arguments is not based on any iron-clad evidence or proof, but rather a hunch and my own reading of history.
Freer trade undoubtedly creates winners and losers. The large difficulty is figuring out whether the benefits to the winners justify the costs to the losers, and whether overall wellbeing might be improved.
The main case for free trade helping the poor is fairly straightforward. Freer trade results in lower prices, and hence decreases the cost of living, making vital goods more affordable.The case against freer trade revolves around job losses. Most of the jobs lost to freer trade are held by lower-income workers. So, in some ways, the question is whether lower prices for all can justify the job losses of some. It's tough to put an overall price tag on those two things and figure out whether the benefits outweigh the costs.
But consider the following arguments in favor of freer trade:
1. Freer international trade is going to affect manufactured goods more than services (which are not as likely to be produced internationally), and will probably most affect manufactured or agricultural goods that are widely used. Poor people spend a disproportionate amount of their income on basic goods, so any reduction in prices helps them more than the wealthy. As a result of free trade, the inflation rate for the poor has arguably been much lower than the inflation rate for the wealthy. See http://www.newyorker.com/talk/financial/2008/05/26/080526ta_talk_surowiecki
2. Freer international trade might also help the poor in developing countries. First, the developing-country poor benefit from the same price decreases as those in wealthy countries, and they can also benefit from selling more goods to the wealthy countries. This is all very complicated and unclear, because there are winners and losers in developing countries too.
3. Freer trade can actually help increase labor standards in developing countries because major multinationals are more likely to invest in those countries. Despite the fact that major multinational corporations are accused, undoubtedly with some justification, of poor labor standards, they tend to have higher labor standards than local companies in developing countries and to be under greater consumer scrutiny. This this study recently found that labor standards in developing countries actually improve through free trade: http://www.nytimes.com/2011/10/28/opinion/free-trade-by-itself-can-lift-labor-standards-abroad.htm
So, let's say you favor free trade. Who should you vote for?
The clearest answer is Bill Clinton. It's pretty easy to argue that he presided over the largest expansion of free trade in the world in recent decades. In contrast, George W. Bush was pretty anemic in his support of free trade and Obama has been hostile at worst, and quite neglectful at best.
Alas, it's 2012 and you can't vote for Bill. So, should you look at Romney? Apparently, yes. I went to his website and was pretty surprised to see the strength of his support for free trade. I was surprised because the conventional wisdom is that free trade hurts jobs, and he is running on the platform that he knows how to create jobs. In the short run, free trade destroys some jobs, so I'm not surprised he didn't talk about free trade (or much of anything else) in his nomination speech. To be so much in favor of free trade on his website is risky because I'm not sure it's an issue that will rally supporters, and it has the serious potential to undermine his main claim that he knows how to create jobs.
Bottom Line: I'm actually pretty impressed that he takes such a strong free-trade stance, and it's one of the factors that attract me toward him.
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