Saturday, May 24, 2008
New Yorker Article on Free Trade
Mankiw links to a New Yorker article on free trade, in which the author claims that although the poor, in some respects, lose the most from free trade (e.g., their jobs), they also gain the most from cheap overseas goods. I suppose he hasn't noticed the rising price of oil.
Why wouldn't it work?
Mankiw treats Congresswoman Waters' suggestion that the US might, in some situation, be required to nationalize oil companies as absurd. Thus, Mankiw erroneously assumes that nationalization of certain companies is inherently worse than privatization. In reality, there are pluses and minuses to each mode of ownership, and the best ownership structure depends on the context. Although not a perfect analogy, perhaps Mankiw should examine what happened after electric company deregulation in the US.
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