Peter wrote, >I realize that the non-compensation angle is one that can be pursued. >It has the advantage of gaining sympathy from the more humane wing of >mainstream econ. I think it concedes too much, however, and politically >it is not too convincing.
I offered the compensation aspect of mainstream trade theory merely as an internal critique of free trade, not as a fundamental challege. But it is important to underline the compensation approach because this is what the mainstream theory itself says. Economists who say free trade is good (sans compensation) either do not know the mainstream theory or they are lying. >We are essentially saying, according to this argument, that economic >growth should be slowed because we haven't succeeded in compensating >the "losers" from growth-enhancing policies. Mainstream theory does not necessarily claim that free trade should lead to a higher growth rate; at best it indicates a one-time increase in output due to reallocation of production internationally. By a "fundamental challenge" (referred to by Peter) is it meant that a fundamentally different theory of the EFFECTS of trade or a fundamentally different theory of the causes of the PATTERN of TRADE? Or both? The (potentially detrimental) effect of international trade on domestic economic and non-economic institutions are what I am most concerned about. Eric
