[lrajlich]

While no economist is yet advocating tariffs, except perhaps Peter Navarro (who's not taken that seriously), the attitude among economists that free trade is unequivocally a good thing is starting to change. There is traction for the work of David Autor where he argues that the effects of trade are unevenly distributed and thus some people do not benefit from free trade. The policy ramifications of this gaining traction could wind up with economists favoring tariffs in some cases.

The grocer example isn't really applicable. We both use the same currency so the grocer can use the local currency I pay for groceries to buy goods elsewhere or pay their employees. With foreign trade you have different currencies and a current account, the trade equation isn't as straightforward. An accurate analogy would be buying groceries via a barter system where I'd exchange good or services for groceries or a promise for future goods or services (eg, "luke-bucks") in exchange for groceries.

[anomatopoeia]

Yes this is critical - free trade benefits the economy/country as a whole but the benefits do not accrue evenly across society.

Laymen have basically been saying this for years while being ignored by the ruling elites but economists have been slowly starting to get on board.

Even post Trump I suspect that the global attitude toward free trade will become much more nuanced than it had been over the past 20+ years.

[Nokinside]

No economist has ever claimed that global trade is Pareto-optimal inside nations. It's well known fact that some industries suffer and some thrive. It's just that the total sum is positive.

The trade shocks should not be handled with tariffs or restricting trade. It's domestic policy issue.

[lrajlich]

The issue is that distributional losses historically have been significantly underestimated in terms of scale and persistence or glossed over as insignificant. Economists traditionally have held that workers who lose their jobs to free trade, while losing their job in the short term, find a new job elsewhere and ultimately are better off. This is turning out to not be the case, some workers persistently remain worse off.

[resters]

To be fair, the rate of economic change is increasing, so part of the problem is that workers over-invest in skills only to have those skills obsoleted by the changing landscape.

So of course the worker who over-invested in job A and was compensated based on that over-investment is going to be worse off in job B when he/she has under-invested in the skills needed for job B.

The fields that are best for workers today are those that have built in required continuing education, or fields in which rapid change is widely acknowledged and understood by the workforce (software engineering, etc.)

[_dps]

> No economist has ever claimed that global trade is Pareto-optimal inside nations.

This is an important point, and I think plays into the question about tariffs (which, to be clear, I think are probably net negative).

The conventional argument is that free trade is a Kaldor Hicks [0] improvement, not a Pareto improvement. KH means that the sum of benefits and costs is positive, and it would be possible (in principle) to tax the beneficiaries and pay off the people harmed and create a synthetic Pareto outcome.

You could view tariffs as a clumsy attempt to apply the Kaldor-Hicks concept. I personally think there are much better ways, but I think the argument is at least plausible.

[0] https://en.wikipedia.org/wiki/Kaldor%E2%80%93Hicks_efficienc...

[Tyrek]

This needs to be emphasized more - Economics is given a bad rep for creating inequalities, but the field is playing with half the handbook - domestic policy in the form of fiscal policy (i.e. decision on how much and where to spend $), as well as distribution policy (i.e. how much redistribution to engineer via taxation/subsidies, etc.) has never been in the hands of any real economists - domestic politics has always taken the forefront in these decisions, and rightfully should take the blame for the results.

[resters]

I think this is a fair point, but I'd argue that there are two separate issues, trade policy and job training programs, etc.

We've seen a lot of innovation in the area of free trade, commerce, etc., but virtually no innovation in education, on the job training, and other areas where policy can help make the economy stronger overall.

So in my view, tariffs are used in a way that is meant to undo the damage from decades of neglect of our educational and skills training infrastructure.

This doesn't call for a more nuanced view on trade (freer is always better), it is a call for us to begin to think rationally about job training.

Whatever job anyone has today, whatever product is demanded today, etc., will not necessarily be the same tomorrow. When we pretend otherwise -- such as the fiction that first world nations should manufacture steel -- we invite all sorts of bad policy when what we really needed was honest understanding that economies change.

Keep in mind that most moral progress over time is not the result of rational people convincing others of something that was previously opaque, it is due simply to economic progress. In other words, moral progress is a luxury we buy with prosperity.

Where we lag in this area most today is that we fail to understand that we must invest heavily in job training, education, entrepreneurship, and other areas that create new life when industries change, move abroad, or shrink.

It so happens that in US politics there are some influential electoral districts that contain steel mills and which have suffered from economic globalization. Sure the easiest way to placate those districts is to introduce tariffs or use other means to offer welfare that prevent those impacted from adapting.

Most of the buildings that house startups in urban parts of the US were once used for manufacturing or meat packing. This is a good thing in the medium term.

But creating job training or investing in new industries to replace old ones is not economics, it's social policy. We should not make the mistake of confusing it with economics.