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Trade openness is generally measured by adding together the value of a country’s exports and imports, then dividing that sum by total gross domestic product (GDP). In other words, the higher a country’s volume of international trade, the higher its degree of trade openness. So the U.S. GDP in 2010 was roughly $15 trillion in 2010; exports and imports combined totaled just over $4 trillion, yielding a trade openness index figure of around 27 percent.
Why does free trade create more jobs? The European Economic Review study suggests that freer trade boosts overall productivity, enabling companies to hire more workers. Trade enhances competition, which weeds out inefficient firms and allows more productive ones to expand. As the average efficiency of firms in a country increases, they can earn more revenues by boosting production. And that leads to hiring additional workers.
Trade openness also improves the lives and livelihoods of women. A 2012 study by two German economists, Niklas Potrafke of the University of Munich and Heinrich Ursprung of Konstanz University, examined the relationship: “Observing the progress of globalization for almost one hundred developing countries at ten year intervals starting in 1970, we find that economic and social globalization exert a decidedly positive influence on the social institutions that reduce female subjugation and promote gender equality.”
A 2005 study in World Development by the London School of Economics economists Eric Neumayer and Indra De Soysa found that “countries that are more open towards trade and/or have a higher stock of foreign direct investment also have a lower incidence of child labor.” Openness to trade also correlates with higher school attendance rates. This finding suggests that legislation such as the recent bill proposed by Sen. Tom Harkin (D-Iowa) restricting imports made using child labor would actually backfire, forcing kids to work at less secure and less well-paying jobs in the informal sector.
Trade openness is additionally coupled with higher per capita incomes. In 2009, economists Vlad Manole of the Conference Board in New York and Mariana Spatareanu of Rutgers devised a trade restriction index to probe the degree of trade protection in the economies of 131 countries using data between 1990 and 2004. They found that “a 1 percent decrease in trade restrictiveness leads to an approximately 0.3 percent increase in income per capita.”
So why do people, especially politicians, believe that freer trade increases unemployment, hurts women and children, and reduces incomes? The 19th century French economist Frederic Bastiat explained this sort of disheartening policy myopia in his brilliant essay, “What is Seen and What is Not Seen.” People tend to focus on the seen consequences of a policy, such as competition from trade eliminating some jobs at relatively inefficient companies. And they miss the unseen benefits, such as the new jobs that result from increased average productivity.
The protectionist politics that follow from this misdiagnosis mean that a few seen workers get to keep their jobs while a much larger number of unseen jobs never get created in the first place. Meanwhile, the same laws make other Americans worse off by forcing them to spend more, because they are denied access to less expensive imports.
Local Biodiversity Is Increasing
Ascension Island is about as isolated as a piece of land can get, sitting in the Atlantic Ocean about midway between Africa and South America. When the British claimed authority over the uninhabited, barren hunk of stone in the early 19th century, it was frequently likened to a “cinder” or a “ruinous heap of rocks.” The new owners named Ascension’s central peak White Mountain, after the color of the bare rocks of which it was composed.
In 1846, botanist John Hooker from the Royal Botanical Gardens at Kew visited and decided to try transplanting a wide variety of plants onto the island. A century and a half later, the result has been an “accidental rainforest.” White Mountain, now renamed Green Mountain, is covered with an extensive cloud forest consisting of guava, banana, wild ginger, bamboo, the Chinese glory bower and Madagascan periwinkle, Norfolk Island pine, and eucalyptus from Australia. Because of the man-made micro-climate, what used to be a desert island now features several permanent streams.
Ascension Island undercuts the conventional ecological wisdom that tropical rainforests are supposed to take millions of years to form. And what happened on Ascension has been happening all around the world, as people have moved thousands of species from their native habitats to new locales, increasing species richness. Wherever human beings have gone in the past two centuries, we have increased local and regional biodiversity.
Yet “the popular view [is] that diversity is decreasing at local scales,” the Brown biologist Dov Sax and the University of California–Santa Barbara biologist Steven Gaines report in a 2003 article for Trends in Ecology and Evolution. Sax and his University of New Mexico colleague James Brown point out in a 2007 roundtable in Conservation that “North America presently has more terrestrial bird and mammal species than when the first Europeans arrived five centuries ago.”
While some introduced species do outcompete natives and contribute to their extinction, that phenomenon is relatively rare. On the whole, the actual number of species in any given area has tended to increase. For example, New Zealand’s 2,000 native plant species have been joined by 2,000 from elsewhere, doubling the plant biodiversity of its islands. Meanwhile, only three species of native plants have gone extinct. In California, an additional 1,000 new species of vascular plants have joined the 6,000 native species in the Golden State, while just 40 species have gone extinct. Similar increases in plant diversity can be seen around the globe.
The species that have become extinct and are most in danger of extinction are those that dwell in isolated habitats such as oceanic islands or freshwater streams. In a 2008 article for the Proceedings of the National Academy of Sciences, Sax and Gaines note that thousands of oceanic bird species went extinct as Polynesians spread across the Pacific bringing not only themselves but hungry rats. Nevertheless, they point out, the overall species richness of the plant life on Pacific islands has increased considerably, and bird species richness has remained about the same, since the number of extinctions has been balanced by a number of new species moving in.
Mammalian and freshwater species richness has dramatically increased on Pacific islands as well—it was much harder for animals like rats, pigs, deer, lizards, frogs, catfish, and trout to colonize islands on their own. In addition, while some freshwater species in continental streams and lakes have gone extinct, most now harbor more species than they did before. Hawaii is, for example, home to more than 2,500 new species of invertebrates.