The Conservative Cave
Current Events => Economics => Topic started by: gurn on April 14, 2011, 07:41:04 AM
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The paper here: http://econ-www.mit.edu/files/6613
WorldNetDaily article about the paper:
http://www.wnd.com/index.php?fa=PAGE.view&pageId=286581
Growing import exposure spurs a substantial increase in transfer payments to individuals and households in the form of unemployment insurance benefits, disability benefits, income support payments, and in-kind medical benefits.
Quite. But don't think the butcher's bill is paid for by all this welfare-state generosity. The authors conclude that all this government assistance doesn't cover the harm done by free trade:
Nevertheless, transfers fall far short of offsetting the large decline in average household incomes found in local labor markets that are most heavily exposed to China trade.
Now here's the real kicker: the authors calculate that the economic efficiency lost due to increased transfer payments is quite likely big enough to cancel out all the supposed gains in economic efficiency due to trade with China!
Our estimates imply that the losses in economic efficiency from trade-induced increases in the usage of public benefits are, in the medium run, of the same order of magnitude as U.S. consumer gains from trade with China.
Read more: Economists 'shocked' by jobs-to-China report http://www.wnd.com/index.php?fa=PAGE.view&pageId=286581#ixzz1JV6PF27p
That is a stunning finding (in bold). The increase in transfer payments cancels out the savings to consumers from lower prices for cheap Chinese imports.
In the words of Conway Twitty, "Think about it, darlin'.