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Federal Reserve Bank of St. Louis. "September/October 2004, Vol. 86, No. 5," Review (Federal Reserve Bank of St. Louis) (September 2004). https://fraser.stlouisfed.org/title/820/item/620730, accessed on September 30, 2025.

Title: September/October 2004, Vol. 86, No. 5

Author: Federal Reserve Bank of St. Louis
Date: September 2004
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image-container-0 Free Trade: Why Are Economists and Noneconomists So Far Apart? William Poole F ree 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 espe- cially helpful. However, I retain full responsibility for errors. 1 See Coughlin (2002) for additional discussion of this gap. 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, dis- interested 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 indus- tries. In contrast, economists’ attitudes in general are influenced by theoretical cases in which pro- tection 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 protection- 2 See Alston, Kearl, and Vaughan (1992). 3 See Mayda and Rodrik (2001, p. 1). William Poole is the president of the Federal Reserve Bank of St. Louis. This article was adapted from a speech of the same title presented at the Trade, Globalization and Outsourcing Conference, Reuters America Inc., New York, New York, June 15, 2004. The author thanks colleagues at the Federal Reserve Bank of St. Louis for comments; Cletus Coughlin, vice president in the Research Division, was especially helpful. The views expressed are the author’s and do not necessarily reflect official positions of the Federal Reserve System. Federal Reserve Bank of St. Louis Review, September/October 2004, 86(5), pp. 1-6. © 2004, The Federal Reserve Bank of St. Louis. S E P T E M B E R / O C TO B E R 2 0 0 4 1
image-container-1 Poole R E V I E W 2 S E P T E M B E R / O C TO B E R 2 0 0 4 ism. 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 sup- port for free trade tends to crumble, whereas econ- omists 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 coun- tries 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. Much evidence exists suggesting that the general public understands the benefits from free trade in terms of increased product selection, higher quality, and lower prices. The Pew Research Center found that 81 percent of the respondents said that it was either “very good” or “somewhat good” that trade makes available different products from different parts of the world. 5 Despite an intuitive understanding of many of the benefits of free trade, the general public has strong reservations about embracing such a policy. One set of reservations concerns distributional effects of trade. Workers are not seen as benefiting from trade. Strong evidence exists indicating a per- ception that the benefits of trade flow to businesses and the wealthy, rather than to workers, and to those abroad rather than to those in the United States. A poll taken by the Gallup Organization in November 1999 found that 56 percent believed that increased trade helped American companies, but that only 35 percent believed that increased trade helped American workers. In fact, 59 percent believed that trade hurts American workers. Related to concern about adverse distributional effects of trade is the view that trade is disruptive. Regardless of whether a sufficient number of new jobs are created to compensate for the jobs lost, many Americans are reluctant to support free trade because trade causes painful adjustments for those who lose their jobs even if they find new jobs rela- tively quickly. The costs incurred by these workers are not necessarily offset by the creation of new and possibly better jobs. 6 Especially noteworthy is that the sentiments of poll respondents likely reflect altruism rather than self-interest. First, only a small minority of Americans perceive the effects of trade on themselves to be negative. Second, Americans tend to view others as more vulnerable to increasing trade than themselves. Thus, it appears that the concern about the disrup- tive effects of job loss is for others rather than for themselves. The concern for workers appears to go beyond U.S. borders. Based on a June 2002 survey conducted by the Chicago Council on Foreign Relations, it is clear that the majority of respondents—93 percent to be exact—think that member countries in inter- national trade agreements should be required to maintain minimum standards for working condi- tions. Both moral concerns for the foreign workers and economic concerns for U.S. workers appear to affect the respondents’ views. Roughly three-quarters of the respondents to an October 1999 survey by the Program on International Policy Attitudes felt that the United States has a moral obligation to attempt to ensure that workers in foreign countries making goods for the United States do not work in harsh or unsafe conditions. Only 23 percent of the respondents felt that the United States should not judge what working conditions should be in another country. A country’s national sovereignty was not viewed as a compelling reason to remain silent. Moreover, the possibility that trade expansion might improve working con- ditions abroad, even if not to the point of matching 6 An October 1999 survey conducted by the Program on International Policy Attitudes asked respondents to choose between the following two statements. First: “Even if the new jobs that come from freer trade pay higher wages, overall it is not worth all the disruption of people losing their jobs.” Second: “It is better to have the higher paying jobs, and the people who lost their jobs can eventually find new ones.” The first statement was favored by 56 percent of the respondents, while 40 percent favored the latter statement. 4 A wealth of information on trade opinions can be found at the following website maintained by the Program on International Policy Attitudes: www.americans-world.org/digest/global_issues/intertrade/ trade-general.cfm. 5 Other polls find similar results. EPIC-MRA—a polling firm conducting educational, political, industrial, and consumer market research analysis—found large majorities agreeing that trade allows American consumers to have a larger selection of goods to choose from (87 percent), improves the quality of American goods (80 percent), and allows low-income families to buy many products that they might not otherwise afford (74 percent). Polling by EPIC-MRA also found that Americans expected that they would either be paying much more (24 percent) or somewhat more (37 percent) if they were able to buy only American-made goods.
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Date: September 2004
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publisher: Federal Reserve Bank of St. Louis
place: St. Louis
Table of Contents
  • Author: Poole, William
    1
  • Authors: Wheelock, David C., Wilson, Paul W.
    7
  • Author: Thornton, Daniel L.
    21
  • Authors: Ravn, Morten Overgaard, Sola, Martin
    41
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  • article
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  • DOI: William Poole, "Free Trade: Why Are Economists and Noneconomists So Far Apart?," Federal Reserve Bank of St. Louis Review, September/October 2004, pp. 1-6. https://doi.org/10.20955/r.86.1-6
  • DOI: David C. Wheelock and Paul Wilson, "Trends in the Efficiency of Federal Reserve Check Processing Operations," Federal Reserve Bank of St. Louis Review, September/October 2004, pp. 7-20. https://doi.org/10.20955/r.86.7-20
  • DOI: Daniel L. Thornton, "Testing the Expectations Hypothesis: Some New Evidence for Japan," Federal Reserve Bank of St. Louis Review, September/October 2004, pp. 21-40. https://doi.org/10.20955/r.86.21-40
  • DOI: Morten O. Ravn and Martin Sola, "Asymmetric Effects of Monetary Policy in the United States," Federal Reserve Bank of St. Louis Review, September/October 2004, pp. 41. https://doi.org/10.20955/r.86.41
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