May 29, 2015
Brendan Nyhan had an interesting piece in the NYT’s Upshot section in which he discussed how “free trade” policies get pushed by presidents and approved by Congress even though most middle income and lower income people are opposed to them. Nyhan refers to research showing that wealthier people overwhelmingly support “free trade,” and politicians are likely to act in ways that reflect their views even when this means going against the majority.
While this is interesting and important research, it misses an important part of the story. Our trade agreements have not been about liberalizing trade in all areas, as Nyhan asserts. While trade policy has been quite explicitly designed to put U.S. manufacturing workers in direct competition with low paid workers in the developing world, it has largely left in place or even increased the protections that keep doctors and other highly paid professsionals from other countries from working in the United States.
Trade theory predicts enormous economic gains from allowing freer trade in these professionals, but because trade policy is designed largely by and for wealthy people, removing barriers to foreign professionals working in the United States rarely gets on the agenda in trade deals. Unfortunately it also doesn’t get mentioned in the media’s discussion of the issue either.
Trade deals also increase protections in the form of patent and copyright protection. These are direct transfers of money from the bulk of the population to those who benefit from these royalties and licensing fee. Most of the people in the latter category are wealthy.
The fact that the trade deals do not conform to economists’ definitions of “free trade,” but are instead designed to redistribute income upward, likely explains much of the hostility of low and middle income people to “free trade.” It is worth pointing out, that in responding to these polls, the public is not referring to the economic concept of “free trade,” but rather real world policies that have little to do with the economic concept. It is understandable that the politicians pushing the trade deals would use the economic concept of “free trade” to promote their deals, it is less clear why reporters and commentators would adopt the same approach.
At the end, the piece also cites several other policies where the most of the public takes a different view than the wealthy, but the wealthy manage to get their way. One of them is that most people would like to spend less money on foreign aid. This is not clear. Polls consistently show that most people grossly over-estimate the amount of money spent on foreign aid. While they would like us to spend less money than they imagine the government to be spending, polls typically show that they would like the government to spend more than it actually does spend.
Much of the confusion likely stems from the fact that the media routinely report spending terms in billions of dollars, which everyone knows are meaningless to almost everyone reading them. (No one knows offhand how large the budget is.) For unknown reasons, media outlets refuse to express spending and revenue items as a share of the total budget or use other context to make large numbers meaningful to their audience. As a result, there is enormous confusion about where the government’s money is spent.
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