How free trade helps the UK's poorest

Much has been made of a trend of low income voters, the so-called "left behind", turning their backs on free trade, and instead supporting anti-trade politicians like Trump and Le Pen. 

One solution, typically advocated by the left (but also by those with more centrist tendencies) is to simply redistribute some of the gains of trade to those who've lost out (i.e. workers in Port Talbot). But the problem is that the gains of trade already go to those least well-off. 

A paper in the most recent Quarterly Journal of Economics by Fajgelbaum and Khandelwal shows why. The least-well off typically spend a much greater share of their income in traded sectors than rich folk. Think cheaper imported food in ASDA and cheaper imported clothes in Primark. The rich on the other hand, will typically spend more on services that are much more difficult to trade internationally. 

So what is causing the backlash against free trade? Everyone's favourite textbook writer Greg Mankiw has a piece in the New York Times arguing that it's not economic self-interest but culture that's driving opposition to globalisation.

Referring to a study by Mansfield and Mutz, he writes:

For an economist, one natural hypothesis to entertain is that people’s attitudes toward globalization are based on their self-interest. That is because textbook economic theory says that openness to international trade increases a nation’s overall prosperity, but it also says that some people gain and others lose. Even if the gains exceed the losses over all, those who get the short end of the stick may still object.

Yet Mr. Mansfield and Ms. Mutz reject this theory of voter attitude. If people were just looking out for themselves, their view of globalization would be determined by the industry in which they worked. Those in industries with a high concentration of exports should be favorable to an open economy, while those in industries that have to compete with imports should be opposed. In actuality, however, people’s attitudes about free trade and offshore outsourcing are unrelated to the characteristics of the industry in which they are employed.

Mankiw lists three belief that Mansfield and Mutz suggest are more predictive of opposition to free trade; isolationism, nationalism and ethnocentrism. It's not increased redistribution, but addressing these cultural concerns that'll ultimately matter, if sense is to prevail on free trade.