Idea for Tackling Inequality #27,653: Stop Subsidizing It

A trade policy that is intended to put U.S. manufacturing workers in direct competition with low-paid workers in countries like Mexico and China has the predicted and actual effect of lowering their wages. It also lowers the wages of non-college educated workers more generally, as displaced manufacturing workers crowd into other sectors of the economy.

By contrast, recent trade agreements have done little or nothing to put highly educated professionals like doctors and lawyers in competition with their counterparts in the developing world. The same argument for gains from trade that economists used to justify deals like NAFTA would apply to proposals to make it easier for foreign professionals to train to U.S. standards and work in the United States. The lower pay to doctors and lawyers would save us tens of billions a year on health care costs and legal fees.

But economists get really confused when they're asked about free trade in professional services. They apparently only studied policies that lower the wages of less-educated workers.