Source: EconLog
by Jon Murphy
“A major objection by protectionists is that international trade with other countries, especially low-wage countries, will undermine American workers. As a consequence, there will be a ‘giant sucking sound’ (to use Ross Perot’s phrasing) as jobs are pulled from the United States to these countries. From a purely theoretical perspective, there is little reason to think this will happen. Wages are determined by the marginal productivity of workers. Workers across countries are not identical, which is why firms do not necessarily pursue low wage workers. … Standard theory gives us good reason to doubt protectionist claims. But the protectionists present an alternative theory. We can test the empirical claims of the protectionists to see which theory better explains the empirical evidence.” (08/04/26)