Friday, August 26, 2016

Is Trade Adjustment Assistance Ethical?

A Don Boudreaux letter to Planet Money reporter Noel King:

Noel King, Reporter
Planet Money
Ms. King:
I enjoyed your report today on the Trade Adjustment Assistance Program.  Here are three questions about this program that you might raise in future reports.
First, because particular jobs are destroyed in America mostly by improvements in technology and by changes in consumer demands having nothing to do with international trade, what ethical or economic reasons justify government’s policy of giving special, favorable treatment to the relatively few workers who lose jobs to imports?
Second, if, as your report hints, trade-adjustment assistance isn’t very effective, then even if there is indeed something special about job destruction caused by imports, why should taxpayers be forced to continue to pay for such ineffective assistance?
Third, if trade-adjustment assistance is effective – or is believed to be effective – then it subsidizes employment in industries that compete with, or that are likely to compete with, imports.  This subsidy draws too many workers and other resources into import-competing industries.  What is the ethical or economic justification for forcing taxpayers to subsidize the artificial expansion of import-competing industries at the expense of other domestic industries – especially given that this expansion, by artificially creating more domestic exposure to imports, enhances the false appearance that international trade is a threat to the American economy?
Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

The above originally appeared at Cafe Hayek.

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