With protectionist and isolationist sentiments rising around the world, this week's special report on globalization by The Economist is timely and well worth a read.
Yes, globalization has left many behind, particularly those working in the manufacturing sector of wealthy Western nations. A growing body of research shows that for those who lose their jobs to trade, the negative effect can persist for a lifetime.
The benefits of trade are often more diffuse and felt less acutely. Yet, in the aggregate, a decrease in prices, increase in consumer choice, and gains in efficiency more than compensate. Indeed, as the report notes, it is the poor, not the rich, who stand to lose the most purchasing power when borders are closed.
The report also suggests that much-maligned economic migrants don't compete with native workers so much as they complement them. Skilled migrants are net contributors to the welfare system, and unskilled ones satisfy labor requirements not met domestically.
For those who have lost their livelihoods, the report presents solutions—including wage insurance and retraining schemes—that governments would do well to heed. Weak action so far has incubated the discontent that created demagogues like Trump and Farage.
We need an open world. This case is closed.
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