The Controversy over Free Trade: The Gap between Economists and the General Public
Coughlin, Cletus C., Federal Reserve Bank of St. Louis Review
In contrast to their divergent opinions on many public-policy issues, most economists strongly support free trade policies. Nonetheless, there is substantial public opposition for such policies-from the right as well as the left ends of the political spectrum. Because public opinion affects policy decisions, understanding why this gap exists is a first step in devising strategies to increase public support for free trade. (1) In light of arguments and evidence indicating that free trade yields substantial benefits, attempts to influence public opinion seem warranted.
In the next section I report survey information highlighting the gap between the views of economists and the general public on free trade policies. The primary focus of this paper is on the "whys" of this gap in the United States. After examining why most economists support free trade policies, I explore why free trade is controversial. To ensure that this discussion about controversial issues is of a reasonable length, I focus on trade arguments involving either labor or environmental issues. Next, I examine suggestions for increasing the support for free trade. A summary of key points completes the paper.
DIFFERING VIEWS ON FREE TRADE POLICIES
Surveys have consistently shown strong support among economists for free trade policies. In a 1990 survey of economists employed in the United States, Alston, Kearl, and Vaughan (1992) reported that more than 90 percent agreed generally with the proposition that tariffs and import quotas usually reduce general economic welfare. (2) This consensus mirrored the results of a similar survey in 1976. (3) Obviously, the 1990 results are now more than a decade old, but no compelling reason exists to expect that a similar survey today would yield substantially different results. In fact, Mayda and Rodrik (2001, p. 1) recently stated: "The consensus among mainstream economists on the desirability of free trade remains almost universal." (4)
On the other hand, the general public is not as strongly in favor of reducing trade barriers as economists. Based on answers to a question in a survey by the Chicago Council on Foreign Relations, it is clear that the general public in the United States has major reservations about free trade. (5) In response to a question in 1998 pointing out that the elimination of tariffs and other import restrictions would lead to lower prices but that certain jobs in import-competitive industries would likely be eliminated, only 32 percent of the general public were in favor of eliminating tariffs in this case. Meanwhile, 49 percent were more sympathetic to the argument that tariffs are necessary to protect jobs. (6)
Survey results presented in Scheve and Slaughter (2001a) suggest that Americans recognize both the benefits and costs of international trade. Large majorities of Americans think that freer trade generates benefits in terms of lower prices, increased product variety, and more innovation. On the other hand, a majority of Americans think that trade results in fewer jobs and lower wages for some segments of the labor force. Relative to economists, however, survey respondents tend to emphasize the costs rather than the benefits. For example, the 1999 Program on International Policy Attitudes survey asked whether free trade was a good idea because it could lead to lower prices and faster growth or a bad idea because it could lead to lower wages and lost jobs (University of Maryland, 2000). Survey respondents were nearly evenly divided, with 51 percent saying free trade was a good idea and 44 percent saying it was a bad idea. Five percent did not know or refused to answer.
WHY ECONOMISTS SUPPORT FREE TRADE POLICIES
Underlying the consensus among economists on the desirability of free trade is the judgment that nations are better off with free trade than with policies restricting trade. (7) Trade can affect a nation's income and its economic well-being through numerous channels. …