Robert Reich wants to tell us that free trade’s just old hat, that David Ricardo isn’t always right and, well, let’s have some of that old time protectionism:
The age-old economic doctrine of “comparative advantage” assumes that more trade is good for all nations because each trading partner specializes in what it does best. But what if a country’s comparative advantage comes in allowing its workers to labor under dangerous or exploitative conditions?
Why shouldn’t the US’s trading partners be required to have the same level of worker safety as that of the United States or give their own workers the same rights to organize unions?
One answer is that therefore all the dangerous jobs will be done elsewhere which would be pretty good for American workers and their lifespans. But the really argument is that comparative advantage does not assume that more trade is good, it proves it. We are not working with a petitio principii that must be proven, we are using the proof itself. Comparative advantage is what proves that more trade is good, not something that assumes it.
But much more fun is to point out that Paul Krugman dealt with exactly this some 30 years ago:
The same principle applies to international economics. Comparative advantage is an old idea; intellectuals who want to read about international trade want to hear radical new ideas, not boring old doctrines, even if they are quite blurry about what those doctrines actually say. Robert Reich, now Secretary of Labor, understood this point perfectly when he wrote an essay for Foreign Affairs entitled "Beyond free trade". (Reich 1983). The article received wide attention, even though it was fairly unclear exactly how Reich proposed to go beyond free trade (there is a certain similarity between Reich and Gould in this respect: they make a great show of offering new ideas, but it is quite hard to pin down just what those new ideas really are). The great selling point was, clearly, the article's title: free trade is old hat, it is something we must go beyond. In this sort of intellectual environment, it is quite hard to get anyone other than an economics student to sit still for an explanation of the concept of comparative advantage. Just imagine trying to tell an ambitious, energetic, forward-looking intellectual who is interested in economics -- William Jefferson Clinton comes to mind -- that before he can start talking knowledgeably about globalization and the information economy he must wrap his mind around a difficult concept that was devised by a frock-coated banker 180 years ago!
As we say, amazing how long some people can persist in being wrong. Paul Krugman’s expertise is in trade too - this isn’t just the repetition by rote from the textbooks. We’d certainly consider our prejudices if a Nobel Laureate addressed us by name and pointed out that, well, actually, you’re wrong. We do think Reich should have done the same.