August 01, 2005

Real Free Trade, Please

In this week's Economic Reporting Review, Dean Baker makes one of his favorite points about free trade:
While [CAFTA] does reduce barriers to trade in manufactured goods, making it easier for Central American workers to compete with manufacturing workers in the United States, it does little to reduce the barriers that prevent Central American professionals, like doctors, economists, or newspaper reporters, from competing with their counterparts in the United States. Licensing barriers and other restrictions make it very difficult for professionals in Central America from selling their services in the United States.
That sounds right, especially the point about doctors. For an instance of truly appalling protectionism, hark back several years to when the federal government paid New York hospitals about $400 million to train fewer doctors; out of concern for "oversupply." That nonsense we don't need. Besides, one would think that increased competition among white-collar professionals would increase standards of living in the United States far more than increased competition among blue-collar workers. See this old Brad DeLong post for the reasoning. Suffice to say, American consumers would benefit far more from cheaper medical and legal bills than they would from a 40-cent discount on t-shirts. As an added bonus, downward pressure on white-collar wages tends to reduce inequality. Now obviously we can file this under things that will really, really never happen (because doctors, lawyers, and media people like me would all cry in our cornflakes), but Dean Baker's right: If we're going to go for free trade, we should really go for it.
-- Brad Plumer 6:44 PM || ||