Monday, November 01, 2004

Economic Equality

Did you know that market liberalization can lead to more economic equality? That shows what anti-globalization activists know. According to Anthony de Jasay:

One elegant achievement of economic thought is the Factor Price Equalisation theorem proved by Paul Samuelson. It states that if trade in goods is free and transport costs are zero, the rewards of factors producing tradable goods will in equilibrium be equal everywhere. More realistic assumptions used by Ohlin and Heckscher yield the result that factor prices will at least tend to converge. The significance of the theorem is that people do not have to migrate from poor to rich countries to achieve higher incomes; free trade will do it for them even if they stay at home. The point of globalisation, then, is that both the rich and the poor countries gain, but the poor ones gain more, faster. Lovers of equality and worldwide "social justice" ought to welcome it, and not begrudge the transfer of less skilled jobs from the richer to the poorer countries.