How to Make the World $600 Billion Poorer, the recently most commented article on The Economist’s website, criticizes Obama sacrificed free trade due to his narrow economic nationalism. The author of the article warns the President to push democrats back to their “senses,” or “the world will lose its best opportunity in two decades for a burst of liberalization,” which may consequently cause America to lose its defender role of an open global economy, as the author emphasize.
Before I comment on whether I agree with the author or not, I want to clarify one thing: Has the author thought about why Obama has done something that is obviously wrong, based on the author’s reasoning? Probably not. Based on trader theories, we understand that free trade benefits any country overall in the long run, although it benefits industries that have comparative advantage(CA industries) while hurts those that do not have(non-CA industries). One possible reason about Obama’s policy is that the people who are working in those non-CA industries have a very strong disagreement against free trade. It may be caused by their lack of comparative advantage. One may argue that since the overall country benefit will increase in free trade environment, the benefits that CA industries gain should be larger than the lost that non-CA industries have. However, it neglects the population factor in these two groups of industries. If the citizens in non-CA industries are more than CA industries, it is obvious that Obama has listen to the non-CA industries in order to keep his presidency. I admit that this is a very simplified analysis. However, if we assume that is the case, one feasible conclusion from the above analysis is that this is the cost of democracy. The author points his criticism to Obama, but failed to consider the strong forces that influence or control his decision.
As an international student who is interested in increasing my possibility to stay in the US, I pay attention to how the government policy may affect the possibility. Is Obama Right to Grant Young Illegal Immigrants Work Permits?, an article on US News’ website, pointed out that supporters of the Obama’s policy claims that the policy “will allow talented young people, undocumented through no fault of their own, to step out of the shadows and contribute to American society.” This argument sounds that it makes lots of sense. However, if they really want “talented” and “young” people to “contribute” to America, why not the much better-educated international college students? One possible answer is that increase low-skilled labor by increasing illegal immigrant labor can increase the CA factor in those non-CA industries. Although there may be many more better reasons caused this idea of implementing the policy, assuming this particular reason is true, America’s CA industries’s CA factor will decrease. Although it might not be too big an impact that caused the American CA industry completely lose their CA, the advantage that America has is less than before. Use the previous analysis, one possible answer to this is that this is the cost of democracy.
Lastly, I am not against democracy at all. Indeed, I think further civilized and developed society will eventually lead to democracy. Even so, nothing is perfect.