Compensating The Losers Of Free Trade

I've often had debates with people about free trade where I say I'd be willing to along with some sort of compensation scheme for the losers in free trade deals, like South Carolina sock factory workers -- stuff like that.  But Julian Sanchez offers a clever response to these concessions:

Here's a modest proposal, then: Let's permit whatever restrictions on trade and globalization people like, but with the "winners" under those rules compensating the "losers" via some sort of special targeted tax. We'll levy this on the workers and stockholders enriched by whatever form of protection from international competition they want to demand, and cut a check to workers, stockholders, and consumers in other sectors that would have benefited from lower prices or operating costs as a function of trade and outsourcing, in the amount of whatever the benefit to them would have been of less restricted trade. (We won't even insist on their compensating the third world workers who remain in penury for the deprivation of their new higher salaries.)   This is, if anything, far more intuitively fair than the reverse proposal, since the "winners" here are the ones proposing to impose actual legal restrictions on the freedom of the "losers" to interact in global markets.

From the perspective of justice, Julian's makes a great point.  But my willingness to see South Carolina sock workers  compensated isn't based on a desire for economic justice.  Rather it's all about pragmatism.  In other words, I'd like to see more trade barriers torn down, and if the only way to accomplish this is to to transfer some money from the winners to the losers, then it might be worthwhile, though of course the specifics of any given deal would need to be weighed, so as to be confident that it's all worthwhile.

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[Joe]

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