Dani Rodrik: Free-Trade Blinders
CAMBRIDGE - I was recently invited by two Harvard colleagues to make a guest appearance in their course on globalisation. 'I have to tell you,' one of them warned me beforehand, 'this is a pretty pro-globalisation crowd.' In the very first meeting, he had asked the students how many of them preferred free trade to import restrictions; the response was more than 90 per cent. And this was before the students had been instructed in the wonders of comparative advantage!
We know that when the same question is asked in real surveys with representative samples - not just Harvard students - the outcome is quite different. In the United States, respondents favour trade restrictions by a two-to-one margin. But the Harvard students' response was not entirely surprising. Highly skilled and better-educated respondents tend to be considerably more pro-free trade than blue-collar workers are. Perhaps the Harvard students were simply voting with their own (future) wallets in mind.
Or maybe they did not understand how trade really works. After all, when I met with them, I posed the same question in a different guise, emphasising the likely distributional effects of trade. This time, the free-trade consensus evaporated - even more rapidly than I had anticipated.
I began the class by asking students whether they would approve of my carrying out a particular magic experiment. I picked two volunteers, Nicholas and John, and told them that I was capable of making $200 disappear from Nicholas's bank account - poof! - while adding $300 to John's. This feat of social engineering would leave the class as a whole better off by $100. Would they allow me to carry out this magic trick?