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Response to Murphy

January 12, 2004

Many seem to have forgot that free trade rests on a case and is not an absolute virtue in itself.  The case for free trade is that it results in shared gains to the countries involved.  For this to be true, free trade must be based on comparative advantage.  For comparative advantage to hold, factors of production cannot be internationally mobile or as I would put it today, factors of production must not be as mobile as traded goods.  This is the known case for free trade. Those who argue to the contrary argue with economic theory, not with me.  Anyone who can show that free trade produces shared gains for the countries involved when factors of production are as mobile as traded goods will win a Nobel Prize. Those who think they can show this should get to work.

 

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