Free trade and automation will improve our lives – if we let them

Morgan Schondelmeier

May 17, 2019

With a Tory party leadership contest well underway, political discourse will undoubtedly continue to focus on painting a picture of the future we could have with leader X or Y. It’s something we’ve been experiencing for years now in the context of Brexit – saying we need to look forward to rosy uplands of the future. But with the leadership in the mix, Tory frontrunners will be putting forward their policies to create an ideal future for everyone. This is especially true when it comes to international trade and the future of the labour market.

History is on the side of free trade and free markets. We’ve seen free trade lift billions out of poverty – we know it works. However, one thing that the rising socialist lobby has been very good at is rewriting history. They are very good at ignoring their own failures while also ignoring the successes of free markets and free trade – which is why neoliberals need to reclaim our history and embrace our track record when making policy proclamations for the future.

Across history, in the face of any disruptive change, two things happen: the vested interests buckle down and the scaremongers start predicting the end of whatever system, industry, or profession.

Mercantilists thought that wealth was fixed and if you wanted more of it, you had to take it from someone else. By the time Adam Smith, the namesake of my employer, came around, the vested interests – in the case of mercantilism, the rulers of Europe – were willing to go to great lengths to protect their industries and their colonial interests. Kings granted greater monopoly power to individuals, higher taxes were levied, and colonies were established.

Upon seeing the academic shift towards free trade, the scaremongers fomented the fall of the great powers of Europe. They thought the western world’s leaders would no longer be able to exercise international political control and that floods of international goods would crash the domestic economy.

But in the end, the arrival of free-market ideas and the dawn of free trade resulted in the growth of the whole world’s economic pie and has helped every country that has embraced its principles become better off. If you look at graphs outlining the growth of the world economy over the last 2000 years, the line was horizontal, floating just above zero until around the late 1800s when markets, free trade, and industrialisation took over. And we all know what’s happened since then.

If we look at one of the largest changes in the 21st century – the automation of the labour market – we see a similar phenomenon. The scaremongers have already started, saying that automation will cause the loss of millions of jobs and the end of major industries. And the vested interests are buckling down, with unions – like in the rail industry – pulling out all the stops to protect jobs (at incredibly high costs, might I add).

When you look at the evidence, automation has led to job losses and will lead to more, but those jobs are being replaced by those that are better in spades. The World Economic Forum came out with a report in 2018 which predicted that robots will displace 75 million jobs globally by 2022 but also create 133 million new ones. Even by the most modest estimates, job losses will largely be offset by gains in new industries.

We need to understand that disruption in the short term will work out in the long term, just as we saw with the advent of free trade. But in order to capitalise on the potential for growth, we can’t be swayed by the scaremongers or vested interests.

Politicians need to reframe the conversation to talk about the potential for skills growth and the potential for value added across sectors – including the public sector.

They need to focus on creating an efficient system of social safety nets that helps people displaced by automation get back into work through reeducation and job placement assistance. They need to fight against the vested interests that only take into account the wellbeing of the few. They need to make the case that change isn’t bad and fighting progress will only result in worse outcomes.

In the context of creating policies for the future, all of those hopeful Tory leadership candidates who are currently scrapping over column inches in Britain’s national papers need to stand by the incredible track record of free markets and free trade and work to create a policy environment that can continue to capitalise on progress.


Written by Morgan Schondelmeier

Morgan Schondelmeier is Head of Development at the Adam Smith Institute.


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