Free Trade: Why Are Economists and Noneconomists So Far Apart?

Article excerpt

Free trade--are you fer it or agin it? Why? I'm sure that this audience knows that most economists support free trade policies; however, public support for these policies can be characterized as lukewarm at best and certain groups are adamantly opposed. It is not unusual to hear the following reservations expressed about trade: "Trade harms large segments of U.S. workers." "Trade degrades the environment." "Trade exploits poor countries." We have all heard these criticisms and lots of others.

Many economists, including me, try to change public attitudes by explaining the advantages of free trade in speeches and articles intended to reach a wide range of audiences. But, let's face it: We are not very successful in changing public attitudes. Why, and how can we become more persuasive? What I will explore today is the gap that separates economists from the general public. (1)

I'll first present some evidence on the gap between economists and the general public on attitudes toward trade. I'll then outline two principles that help to understand this gap and that help to frame revealing questions when studying particular disputes. Finally, I'll offer a few suggestions on closing the gap.

Before proceeding, I want to emphasize that the views I express are mine and do not necessarily reflect official positions of the Federal Reserve System. I thank my colleagues at the Federal Reserve Bank of St. Louis for their comments; Cletus Coughlin, vice president in the Research Division, was especially helpful. However, I retain full responsibility for errors.

THE GAP

A 1990 survey of economists employed in the United States found that more than 90 percent generally agreed with the proposition that the use of tariffs and import quotas reduced the average standard of living. (2) These results are somewhat dated; however, most observers agree that "[t]he consensus among mainstream economists on the desirability of free trade remains almost universal." (3) I don't have any data to report economists' views on particular trade disputes, but am willing to offer the following assertion: In most specific cases, disinterested economists do not defend trade restriction. By "disinterested economists" I mean economists not hired by firms engaged in the particular disputes and not employed by government agencies involved in the disputes.

If fact, I suspect that disinterested economists' attitudes about specific disputes are even more lopsided in favor of free trade than the 90 percent who generally favor free trade policies. The reason is that specific disputes almost always involve in a pretty obvious way special favors to particular industries. In contrast, economists' attitudes in general are influenced by theoretical cases in which protection may make some sense. I do not want to try to explain these theoretical cases here, but do want to note that actual trade disputes rarely fit such cases.

Let's now consider attitudes held by the general public. Public opinion polls reveal that the attitude of the general public toward free trade is not simply one of either being for free trade or for protectionism. (4) Questions asking about free trade in principle reveal support for free trade, albeit not as strong as economists'. However, questions asking about free trade in practice reveal strong reservations. That is, when we get to specific trade disputes, public support for free trade tends to crumble, whereas economists rarely support trade restriction in specific disputes.

A majority of Americans do support free trade in principle. A February 2000 survey by the Pew Research Center asked the following question: "In general, do you think that free trade with other countries is good or bad for the United States?" "Good" was the response of 64 percent of the respondents, while "bad" was the response of 27 percent of the respondents. The remaining 9 percent "did not know." The general public's support for free trade is, therefore, a good bit lower than economists' support. …