In this Econtalk podcast, Russ Roberts interviews David Autor on the impact of trade with China on US workers. The interview discusses Dr. Autor's research showing that there are distributional consequences of trade with China.
It is important to stress that Dr. Autor supports free trade for the reasons we will discuss in the opening weeks of the class: it improves allocation of resources, it improves competition, it improves innovation, and so on.
The basic idea that these gains from trade are based upon is comparative advantage. For example, New England Patriots head coach Bill Belichik majored in economics, but his ability to coach football far exceeds his advantages in analyzing economic issues (and in fact he has applied economics to his coaching philosophy!).
Trade clearly creates winners and losers in the short run. Russ Roberts argues that even though some people lose in the short run, many people (even the losers) would take that trade because trade also leads to competition and innovation and growth that makes everyone better off in the long run (even if some groups might be relatively worse off). Autor Challenges this claim by arguing - and supporting with data - the view that trade has had dramatic long-run consequences. Importantly, he has shown that some groups have not only lost in the long run in relative terms, but also in absolute terms.
A policy implication of this is that when we look at things like trade adjustment assistance it might be the case that it would be unwise to make this assistance "temporary." More permanent wage subsidies may be more necessary to maintain the political feasibility of free trade. Whether taxpayers will foot the bill is an open question.