October 4, 2010

Fear, Not Facts, Support Trade Anxiety

  • Donald J. Boudreaux

    Senior Fellow, F. A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics
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The latest WSJ/NBC poll showcases an overall increase in anxiety about free trade. However, what is most striking, is that even those who would seemingly benefit from it-well-educated and higher-income individuals-are increasingly skeptical. Economist and Mercatus scholar Don Boudreaux says most of these sentiments come from misinformation and fear.

“This poll really isn’t that surprising,” said Boudreaux. “Even the most educated people are not economically educated, and that’s the problem.”

Every time unemployment rises, the anxiety over trade also rises, because of increased attention, says Boudreaux. And, it’s a seemingly easy solution to blame someone else; we’re just victims of a foreign power.

“Actually, all science shows trade makes you wealthier over time with increased per capita income and more economic growth,” said Boudreaux. “If you look at the facts, they show countries that have high trade restrictions may save some jobs today, but the cost over the long-term is reduced or eliminated economic growth.”

It’s understandable that people are frantic about the economy, but it’s this fear that allows politicians to exploit this anxiety for their own gain and special interests, says Boudreaux. The real problem with our economy is a burst housing bubble and restricting trade will not solve that problem.