Politics makes for many strange bedfellows – none stranger perhaps than the local Labour Party and its cheerleaders embracing in yesterday’s parliament the flagship policy of Donald Trump, crowing there that his victory in the US has killed the TPP freer-trade deal stone dead.
Strange to see them embrace the Donald. Stranger too to see them oppose freer trade – which raises real wages for everyone they claim to represent.
Because as Donald Boudreaux cogently explains,
the correct case for freer trade does not depend upon exports growing by more than imports. First, there’s no reason to expect freer trade to result in such an outcome. Second, such an outcome, should it occur, might well be lamentable for it could reveal that investment opportunities at home are consistently less attractive than are investment opportunities abroad.
Nor is the correct case for freer trade depend on the creation of jobs.
Politicians routinely sell freer trade as a source of net job and export creation. Yet economists since Adam Smith — and ranging across the ideological spectrum from Milton Friedman to Paul Krugman — have consistently rejected such claims as justifications for free trade.
Economists understand that freer trade neither increases nor decreases the total number of jobs in an economy. Instead, freer trade changes the kinds of jobs performed in an economy by shifting jobs from industries that are comparatively inefficient to industries that are comparatively efficient.
The result is a greater variety and distribution of goods and services at cheaper prices: the very cure to poverty that any honest Labourite (and Trumpeter) should embrace.
If they were truly honest about wanting to cure poverty.