Free-trade debate: a US professor speaks out on the `con' side
John M. Culbertson maintains that the Bonn summiteers made a mistake in pressing for another round of trade negotiations. ``These people are thinking in the old slogans and symbols, that free trade is beneficial,'' says Mr. Culbertson, a University of Wisconsin economics professor. ``They are not realistic. [French President Franois] Mitterrand did a good thing by preventing them from going ahead with it.''Skip to next paragraph
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Many particular industries, corporations, trade unions, or other special interests oppose the removal of specific barriers to trade. Mr. Culbertson, however, is something of a maverick among economists. The vast majority of economists argue that free trade boosts the standard of living according to the principle of ``comparative advantage.'' One nation makes a product because it has some special advantage, such as a good supply of raw materials, low energy costs, workers with particular skills, low wages. Another nation has different advantages and thus can make other products that are better or cheaper. By trading these products, the people of both nations are better off.
Culbertson contends that recent changes in the world economic situation have thrown the workers of the high-income nations into a new kind of competition with those of efficient low-wage nations.
``All countries now have access to the same technology and management methods,'' he continues. ``Thus, all workers now are competing on equal terms. In this new situation, unregulated international trade tends to equalize wage rates in different nations.''
Thus wages in the United States, having no basis for rates that are many times higher than those of Japanese, Korean, Taiwanese, or Chinese workers, would fall to a level far below those now prevailing, he maintains.
This view is not uncommon in union circles. But Culbertson may give the idea some intellectual underpinnings. A booklet he wrote is already in circulation within the steel industry.
Here are the arguments and counterarguments, with Professor Culbertson mostly paraphrased:
Culbertson: Wage leveling has already started. For example, the auto and steel industries are moving abroad to such nations as Japan, Brazil, and Korea, where wages are low and workers and management are efficient. Many laid-off steel and auto workers have had to take other jobs at much-reduced wage levels. Soon such populous nations as China or India will be competing with US industry, and they will pay wages that are a tiny fraction of those in the US.
Free-trader: Culbertson exaggerates. Sure, free trade causes some adjustments. But the auto and steel workers had wages some 60 percent above the manufacturing average in the US and thus were especially vulnerable to overseas competition. New industries are springing up that substitute for those lost to other nations -- say in high-tech, or consulting, or finance, or other service areas. These will pay good wages, too.