“It's no longer safe to assert that trade's impact on the income distribution in wealthy countries is fairly minor. There's a good case that it is big and getting bigger.”
The article provides a balanced explanation of the debate on trade and inequality. An interesting read. Here are couple of additional points worth pondering.
First, trade improves incomes in poor countries. Even if income inequality is growing in the U.S., global inequality is surely shrinking. Why should we put more value on a family in Ohio not being able to purchase their third TV than a family in China being able to pull themselves out of subsistence living? What is the ethical reason for weighting a human life more if he or she happens to hold a U.S. passport?
Second, what about the benefits of trade for consumers? Trade drives down the prices of goods so that families at all points of the income distribution are able to consume a much larger bundle. The evidence I have seen shows that consumption inequality is small and decreasing. Consumption disparity is a much more meaningful measure of the differences in the standard of living.
Finally, in the words of Dick Cheney...so what. It's whether or not incomes are stagnating that should matter, not income inequality. I find the argument for relative wealth over absolute wealth competely absurd. Sure, there is a sense of competition and keeping up with the Jones. But you find me one person who would be willing to burn a $100 bill provided Ted Turner also burns two $100 bills and I will show you someone who REALLY believes in relative wealth. The bottomline is that trade creates wealth for everyone involved. This is practically the only thing that all (good) economist agree on.
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