Rodrik uses some interesting economic theory to undercut the story that globalization benefits everyone, and those who object to it are misinformed. j....The Stolper-Samuelson theorem assumes very specific conditions. But there is one Stolper-Samuelson-like result that is extremely general, and which can be stated as follows. Under competitive conditions, as long as the importable good(s) continue to be produced at home – that is, ruling out complete specialisation – there is always at least one factor of production that is rendered worse off by the liberalisation of trade. In other words, trade generically produces losers. Redistribution is the flip side of the gains from trade; no pain, no gain.Economic theory has an additional implication, which is less well recognised. In relative terms, the redistributive effects of liberalisation get larger and tend to swamp the net gains as the trade barriers in question become smaller. The ratio of redistribution to net gains rises as trade liberalisation tackles progressively lower barriers.....
....The Stolper-Samuelson theorem assumes very specific conditions. But there is one Stolper-Samuelson-like result that is extremely general, and which can be stated as follows. Under competitive conditions, as long as the importable good(s) continue to be produced at home – that is, ruling out complete specialisation – there is always at least one factor of production that is rendered worse off by the liberalisation of trade. In other words, trade generically produces losers. Redistribution is the flip side of the gains from trade; no pain, no gain.
Economic theory has an additional implication, which is less well recognised. In relative terms, the redistributive effects of liberalisation get larger and tend to swamp the net gains as the trade barriers in question become smaller. The ratio of redistribution to net gains rises as trade liberalisation tackles progressively lower barriers.....
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