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Folk Beliefs

It just occurred to me that the following two concepts cannot possibly exist side by side:

  1. There is a folk belief then when a rich nation trades with a poorer nation, that the income of workers in rich countries is reduced.
  2. There is yet another popular folk belief out there: that when a rich nation trades with a poor nation, that the income of workers in poor countries is reduced.

Let’s put this together. When “we” trade with a poor country, it reduces the wages of workers in both the United States and in the poor countries. Now, I can actually conjure up a scenario where this is true in a nominal sense, but is it not a tad bit inconvenient for someone to hold both of these views at the same time? What model of trade is one operating under where-upon this outcome can be predicted as a result? Please do share!

One Response to “Folk Beliefs”

  1. Harry says:

    Well, WC, maybe forty years ago someone explained to me the benefits of free trade, and that simplified my understanding, and that was before Bastiat was bedtime reading. Once one gets that out of the way, one is left to try to figure out other problems.

    Indeed, I think James Madison had the free trade problem in mind when the Commerce Clause was created, back when we were independent states, where all sorts of problems surely would have arisen.

    This is far removed from granting our rulers discretion to pass any law to regulate whatever they choose.

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