Truth About Free Trade

Korea Times column Lex Pro Bono Wednesday Korea Times
Sean Hayes

Dear Professor Hayes: We are not ready to compete with the U.S. in many areas and the FTA will simply lead to the destruction of many Korean jobs including farming and service sector jobs. Why does it seem so many are pushing for free trade against the interest of the Korean people?
Angry Korean in Kwangju.
Dear Angry in Kwangju: Nearly all non-Marxist economists believe that free trade agreements benefit all countries involved. Those educated in economics are strongly pushing for free trade agreements, while many others are either questioning or strongly opposed to free trade agreements.

Our experts in this matter, nearly universally, agree that free trade will benefit both countries, so why do so many in the population question their professional belief?

The reason for the discrepancy stems from what I like to call the “intellectual reality’’ vs. the “political perception.’’

The intellectual reality is that free trade will benefit Korea and the United States, but the political perception, of many, is that free trade will lead to little benefits and many detriments for the “average family.’’

The political perception will not quickly change because a vast majority of the population is not willing to understand the Keynesian macroeconomic model and the nature of the complicated interactions between equations applied to the model. Additionally, many who do understand basic economic principles and realize that free trade will benefit Korea are self-interested and are pushing their own political or economic desires through opposition to the FTA.

Presently, radically liberal NGOs, politicians, academics and even some journalists, either because of their misunderstanding of economics or more likely because of a selfish desire to push their ends, don’t concentrate on the complex interactions and only focus on the losses that will occur. They don’t explain how some losses for a specific individual may also lead to many more benefits for the same individual.

I think the only way for this issue to be properly resolved is for journalists to take a more active role in the discussion. Journalists need to explain not only one side of the story. They need to explain the three key sides to every FTA issue: who personally benefits, who personally loses and also the net gains and losses for the country as a whole. Too often the explanations only focus on one of the three.


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