King Rat (gkr) wrote,
King Rat
gkr

Eco 200: W.T.O.

(group) Given the trade portion of this unit's lecture, evaluate the following comment: Given this clear example of the gains from voluntary trade, it is difficult to understand those who question the function of international institutions created to facilitate trade, such as the W.T.O.

It is difficult to understand those who question those who question the W.T.O. and other international institutions. While trade in general is good, and every trade is by definition advantageous to the traders (absent fraud), numerous people who are not directly trading are affected. Individuals who trade can be rationally expected to look out for their own interests, but not that of others who are affected or the public in general. In the short term, opening trade may cause much pain to peripheral actors. For example: eliminatng H1-B visa limits will likely result in an increase in foreign nationals working in the U.S., and lower opportunity cost for existing workers. The companies who hire foreign nationals will gain. Ultimately so might the existing workers. But abrupt change often ought to be cushioned. It is the proper place of the government to regulate commerce. Presumably the government may do so in a manner which balances short term pain against long term gain.

If the W.T.O., a quasi-governmental organization, does not do this, people ought to protest. Obviously, many who did protest were looking out for their self-interest, especially in the short term. This is a rational response. Others may look at the W.T.O., World Bank, and I.M.F., and come to the conclusion that in their operations they favor one special interest over the good of all, and wish to modify how those organizations operate. These organizations have had some notable failures, and are not above criticism for causing pain in the lives of millions.

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