There was a post at Mark Thoma’s site this morning, wondering why the growing wage premium to skills/education hasn’t resulted in more workers investing more in their educations. The growth in the premium was calculated at about 1% per year or 20% over 16 years. Really, sometimes economists just don’t have a clue.

Unless the geek is Tanta at Calculated Risk, whose dazzling geekiness inspires lust in every heterosexual male.

Thanks for doing the heavy lifting on Buiter.

There is no such thing as free trade. We have a series of bilateral and multilateral agreements, forged by people, with each treaty designed to advance some goal or purpose. And in the aggregate, we have the global system of trade that we have now. The fact that this system heavily biases protections for capital, property, and corporate actions over human, labor, and environmental standards (which Mr. Buiter dismisses as rubbish protectionism) is a product of the goals set by the people who designed these treaties. And to call the end-result “free trade” is merely a nice marketing maneuver.

While Mr. Buiter trashes efforts by labor to enforce universal labor rights, he doesn’t similarly trash corporations’ efforts to enforce universal patent and copyright restrictions. If the goal of free trade is to raise living standards for all, which set of rights is more closely aligned with that goal than labor and human rights? Surely not the “right” to buy copy-protected DVDs… And if forcing countries like China and India to meet first world labor standards places too much burden on them, then why allow pharmaceutical companies to place onerous patent restrictions on their lifesaving drugs as well? Surely people dying because they can’t afford patent-protected medicines is as much a tragedy as people losing jobs because of higher minimum wages. Yet one practice is labelled “free trade” and one is labelled “protectionist.”

Secondly, Mr. Buiter talks about the diffusion of engineering and management expertise as another natural flow that can’t be altered. The fact is that much of the engineering, scientific, and management expertise that was accumulated in the West was through decades of public spending in R&D, education, and the such. The public that funded such efforts has every right to expect that the fruits of those endeavors come primarily to themselves and not to others who didn’t pay for their development. The fact that the American govt. is willing to give away America’s publicly funded and developed advantages / technology in trade negotiations in exchange for a few more dollars of corporate profit is a testament to how craven our government is, not a testament to some idealized notion of free trade.

But I don’t worry too much about Mr. Buiter. He’ll soon see “free trade” in a new light. After all, there are plenty of Indians with expertise in economics who can write in perfect Queen’s English, while charging much less than Mr. Buiter’s salary. And similarly, India’s Institutes of Technologies and Institutes of Management are already considered world class, and have much lower tuition rates than Mr. Buiter’s LSE.

I suspect that when Mr. Buiter witnesses the destruction of his domestic industry and the loss of his own job due to foreign competition in journalism and education, his perspective on free trade might change a little…