Nations Gain When They Trade...But What About Me?

What do we really know from international trade theory, and how does it compare to what we see on the ground? Are all international trading partners created equal? EconTalk host Russ Roberts sat down with MIT’s David Autor for a hard-hitting conversation about the impact of trade with China on US labor markets.

1. What is the “redistributive face of trade”? What has the opening of China taught us about international trade theory, according to Autor?

2. What does it mean for a nation to run a trade deficit? Is running a trade deficit bad? What is the basis of Roberts’s and Autor’s disagreement about the impact of the US trade deficit with China?

3. By the end of the conversation, Roberts still doesn’t seem convinced that China is behind the long-term impact on communities and employment. He says that instead the challenge may be that “we’re [the US labor force] not so good at adapting, perhaps, as we once were, for all kinds of reasons.” What are some of those reasons? Is Roberts’s argument plausible?

4. What policy recommendations does Autor offer to help those displaced workers? To what extent do you agree these suggestions would be effective? What do you think we should do for such workers?