Stiglitz on the P in IPE

Page 63: "In principle, the winners could compensate the losers; in practice, this almost never happens."

An important quote to keep in mind if you are trying to figure out why some scholars (economists and/or political scientists) seem to talk past one another on the politics and policy of international trade. We got at this a bit in class the other day: there is a big difference between arguments for what trade might do in terms of aggregate income and what it might do in terms of the distribution of income. Put in other terms familiar to some of you, it is akin to the difference between the two sides of the "efficiency-equity" tradeoff, with Wolf (most often) focused on the former, and Stiglitz (often, but not always) on the latter.  

Just to be clear: this difference in emphasis is not simply to concede one or the other side of this debate. In fact, historical evidence that we can discuss suggests that free trade might not always maximize aggregate income, and evidence might also suggest that free trade often does improve the distribution of income. So the distinction above between aggregate income and income distribution does not simply mean that free traders win on the former count and free trade skeptics win on the latter. But it is worth noting that they are often talking about slightly different outcomes.