The 2015 debate over President Obama’s free trade agreements illustrates two fundamental misconceptions about the character of globalization and the associated gains from trade. The first is the idea that the world is growing more economically interdependent and that this is without precedent in human history. Surely the profusion of abundantly available imported goods and services is evidence that the total volume of trade is increasing. This free movement of goods, services, and capital across national boundaries (what I will call “economic interdependence” or “globalization”) is made possible by lower costs of trans- portation and telecommunications and the gradual liberalization of markets as countries negotiate reductions in tariffs, quotas, subsidies, and other nontariff barriers to trade. Thus, globalization appears to be a fact of life, and there is no choice but to continue the process of liberalizing markets if we wish to move forward. In the words of the former U.S. Trade Representative and World Bank President Robert Zoellick, “Globalization is akin to a force of nature.” Globalization exerts an inexorable gravitational force, propelling us forward at an accelerating rate. This idea of what economic interdependence means is so deeply ingrained in our consciousness that it rarely merits critical examination.
The Cost of Free Trade