In response to my summary on trade and prices, DM asks an important question, which goes right to the heart of the debate on globalization:
Let us say an new barber moves into my neighborhood. He offers the same quality service as my old barber, but is cheaper. So I use the new barber.
A factory in China can make the the same socks, but for less than a factory in North Carolina. So I decide to buy my socks from China.
Why is it that Dani wants interfere with my sock purchases, but not where I get my haircut?
First of all, let me be clear that I am not advocating that we interfere with purchases of socks from China (or anywhere else) as a rule. But I do believe there are circumstances under which such an interference would be warranted--and that is why DM's question is germane. Elaborating on why gives me an opportunity to revisit a theme I have already written on.
DM thinks we should not apply a different set of standards to exchanges involving international trade than we do to those that are purely domestic. I agree! What I think he overlooks is that in fact we do encumber domestic exchanges with a lot of restrictions, and in some cases even outright prohibitions. Domestic laws prevent you from selling yourself into bondage, to hire out your children for factory work, to flout minimum wage requirements, to exceed maximum hours of work, to employ workers in conditions that violate mandated health and safety requirements, and so on. DM's new barber would not remain in business long were he not to comply with standards set by the local health board--regardless of whether DM would want to use him or not. These are instances of what the political philosopher Michael Walzer has called "blocked exchanges." In each of these instances, one could have made an argument that it is improper for the state to come in between two consenting adults. Maybe DM thinks these domestic restrictions should be removed as well. But no matter. The point is that restrictions do exist in domestic exchanges as well. Individuals are never completely free to sign certain contracts.
The reasons that we routinely restrict and regulate domestic exchanges are manifold. Sometimes we do so to uphold deeply held norms and values (as with anti-slavery laws). Sometimes we want to redress bargaining imbalances (as with a lot of labor legislation). Sometimes we worry about informational shortcomings (as with health and safety standards). When we try to disassociate international trade from such concerns, we in fact create a double standard: it is not OK for me to displace American workers by employing child labor at home, but it becomes OK for me to do the same by employing child labor abroad. (A society may of course choose to condone the latter after due consideration of the alternatives for children in the exporting country; my argument is just that there cannot be an automatic presumption to that effect.)
There are of course many instances when international trade does not impinge on social and moral considerations at home, and such difficulties do not arise. But treating international trade just like domestic exchanges does raise difficult questions of fairness and distributive justice. It is hardly a solid justification for free trade.