In recent weeks, headlines about trade have arrived with unusual regularity. The United States and South Korea want a free trade agreement. The European Union will use its overseas diplomats to collect evidence for trade disputes. The World Trade Organization’s global talks may yet have some life in them.
But one question isn’t being asked: Does trade make people happier?
If you’re a disciple of economic theory, that question should be the only one that matters. After all, economics is a science whose underlying models are entirely devoted to finding ways of increasing happiness.
Yet somehow, along the way, economists and others began using income, possessions and other material measures as shorthand for good feelings.
In accordance with that approach, models of trade are usually models of money. The most basic models say that in trade, the gains to the winners always outweigh the losses to the losers. Those gains are based on things we own and consume, and, theoretically, they could be spread around enough to make everyone better off after trading.
For example, if trade means that I can buy cheap imported soccer balls, then I and other consumers of soccer balls should be able to share the money we saved with the unfortunate employees of local soccer ball factories that had to shut down in the face of foreign competition. If we could really arrange this system of compensation, trade could be a winner for everyone.
But what if those employees don’t want our money? What if they’d really just rather go back to making soccer balls?
That’s when things get difficult. Money doesn’t always translate into happiness. If it did, countries with higher average incomes would also have higher average happiness. They often don’t.
In fact, some studies of happiness—especially the ones that measure happiness by how many of people’s desires have been fulfilled—show very high levels of happiness in some very poor countries. History alone can be enough to belie the equivalence of money and happiness: Were people in your country much less happy a century ago, when incomes around the world were lower?
Politicians who ultimately make the decisions about trade agreements don’t have very precise tools for measuring happiness, if they even have the inclination to try.
Even if they were to poll their citizens every time they were thinking about signing a new pact, they might not get very reliable results. Though people who risk losing their jobs are very conscious of the perils of trade, people who take advantage of prices pushed down by imports don’t always take note—not enough to fight for trade, anyway.
Moreover, it’s hard to know exactly how trade will change a society; sometimes its effects can be transformed with time. Once, Americans feared the domination of Japanese exporters. Now, Japanese companies employ hundreds of thousands of Americans in the United States.
Once, the “Made in China” label was something that Western consumers tried to avoid. Now, big-ticket items made in sparkling new factories in China can be of a higher quality than cars and appliances made in old, labour-intensive factories in the West.
For these reasons, most likely, politicians essentially throw up their hands and revert to money as the measure of a particular trade agreement’s benefits. Yet even using money as the primary measure, politicians—even the democratically elected ones—don’t spend too much time trying to spread the gains of trade around.
Identifying the winners and losers would be a first step, but even that is done in only a half-hearted manner. People who lose their jobs aren’t the only ones who lose, and people who can buy cheap imports aren’t the only winners.
Perhaps just brainstorming the effects of trade on people’s happiness would be a useful exercise.
If trade means that you have an opportunity to start a new business exporting silk scarves, realizing a lifelong entrepreneurial dream, you may be happier. If trade means that you can choose from a wider variety of fresh fruit in the grocery store, you could be getting happier, too. If trade means that a new factory opens a block away from you, congesting roads and generating pollution, you might be less happy—even if the people who take jobs there are happier. Getting the hang of it?
Now, it may seem like the people most in touch with the idea of trade and happiness are the ones protesting against the World Trade Organization at its ongoing meetings around the globe.
They have a visceral reaction to trade, and they let it be known. But often, they claim to be advocates for other people’s happiness, despite having done as little research into its causes as the politicians have.
And why would the protesters be out there shouting in the first place, unless doing so made them happier, too?IHT