This is the Cato Daily Podcast for Tuesday, February 2nd, 2016.

I'm Caleb Brown.

Some new research indicates that domestic labor markets aren't very flexible when faced with the rigors

imposed by free trade. Whether or not that's a problem caused by trade is another

matter entirely. So says Dan Eekinson, director of the Herbert A. Stiefel Center for Trade Policy Studies at the Cato Institute.

All of our trade people here at the Cato Institute like to say,

Trade is good.

Yes.

And because if it weren't good you wouldn't do it.

And but there's a paper here noted by Noah Smith by David Otter, David Dorn and Gordon Hanson,

the China Shock learning from labor market

adjustment to large changes in trade.

And the argument is that essentially American workers have not effectively adjusted to a great deal of the expansion of trade between China and the United States.

So what is the argument here and how do you think about it?

Yeah, I think this is pretty decent research.

These are reputable economists, but as is so often the case when a new academic paper hits the press, the results are being to a certain extent misused, misappropriated.

We see a lot of left-leaning journalists suggesting that this is an indictment of free trade and that free traders need to apologize for the errors of their ways.

This paper does nothing to indict the premises of free trade, which is that free trade is probably the most efficient way to

grow an economy and it enables us to specialize and enables us to enjoy economies of scale, which grows the pie.

Free trade theorists say there will be some beneficiaries and some losers,

but the benefits will vastly outweigh the costs.

And that is not under scrutiny here and that is not being called into question here.

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