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Pritchett: At this stage we have more or less eliminated most of the barriers to goods. Quantitative restrictions are almost eliminated around the world. Relative to when I started working as a trade economist in the early 1980s, the world is completely liberalized. So the incremental gains from anything that could happen as a result of WTO [World Trade Organization] negotiations are just infinitesimal. If we did everything, all the remaining goods liberalization, the monetary gains would be between half and two-thirds of the gains from just allowing 3 percent more workers into the OECD. Given the current enormous wage differentials, a minor relaxation of people mobility easily swamps all remaining liberalization on the goods side. There are almost no tariffs left over, say, 20 to 25 percent, and yet wages for unskilled labor differ not by percents but by an order of magnitude—workers in some poor countries make 8 cents an hour, not 8 dollars an hour.
My main point is that we’re giving all this intellectual and political and analytical attention to mopping up that last little bit of trade liberalization. Which is a good thing; I’m all for it—but let’s get our eyes on the next big prize.
Reason: Why has it been so hard to refocus?
Pritchett: To some extent it’s the March of Dimes phenomenon. March of Dimes cured polio. They found a polio vaccine. Once the organization that was set up to find a polio vaccine found a polio vaccine, what did they do? They raised money to cure other diseases. You keep doing what you’re good at. So we have this enormous machinery around goods liberalization. It’s going to continue doing what it’s doing. And they dominate the agenda. So people who are concerned about poor people still have the issue completely framed by this obsolete machinery.
GATT [the General Agreement on Tariffs and Trade] frames the debate because GATT has been an enormous success. People concerned about cotton subsidies say, “Let’s make the Doha round of WTO negotiations more favorable to the poor.” But they’re still buying into the whole agenda framed by GATT and the WTO, which has the persistence of a successful organization. They found the polio vaccine; they just can’t quit.
Reason: You’re offering strategies for poverty alleviation, but the left seems largely hostile to this agenda.
Pritchett: The left is right to be deeply ambivalent about this. They’re wrong about where they end up. They’re legitimately concerned about the increase in inequality inside the Organization for Economic Cooperation and Development, and particularly the United States, which is an enormous social and economic issue. They worry that if we let in more workers it will be bad for those who are doing the worst in America. They fear that if poor people come to the United States, they might cause deeper inequality here.
Being against migration to the United States is wrong for two reasons. One, I don’t think it gets the scale of the poverty in the United States vs. poverty in the rest of the world right. Second, if you are really concerned about inequality in the United States, there are many things you can do that would be better than blocking other people from coming to our country. I don’t want to say that people who are concerned about inequality in the U.S. aren’t right to be concerned about inequality in the U.S. But I think taking that concern and using it to keep people from coming to the United States is victimizing the world’s true victims in favor of people who happen to live closer to you.
Reason: It seems strange to worry more about inequality within the arbitrary boundaries of a nation-state than about much larger global inequalities.
Pritchett: Exactly. I’ve never understood a view of the world in which the place in which a person was born becomes the key factor in whether you care about them.
Reason: Is there a legitimate concern about brain drain? About skimming the best and brightest from developing countries, leaving them worse off?
Pritchett: Again, I think there are some elements of legitimate concern about that, particularly since the political economy of immigration will lead rich countries to do more and more skimming rather than less and less. But that said, it’s the same path you take toward free trade. Rather than say you’re against free trade, let’s put the emphasis on fair trade. When it comes to brain drain, let’s get more unskilled migration rather than saying let’s stop all migration that could cause brain drain.
That’s the turn that the more sophisticated NGOs [nongovernmental organizations] have taken on trade, where they really have moved from a free trade to a fair trade agenda, which has its downside but is enormously positive relative to an anti-trade agenda. But they haven’t taken that same turn at all on the immigration issue. We say, look, let’s have migration that’s the best possible for everyone. Profitable, welfare-improving trade is usually driven by differences. And there’s nowhere the differences are larger than in the endowments of unskilled labor.
Reason: Why have attitudes about free markets in labor not evolved alongside attitudes about free markets in goods?
Pritchett: I would push back on the premise. The average citizen, if asked, is against free trade, particularly in Europe. The proportion of people against free trade is almost as high as the proportion of people against migration.