The comparative advantage model shows a story with the theme of "trade is good" and benefits both parties to the trade. This story doesn't fit with the public's view of trade or its fear of outsourcing. There are four reasons I suggest.

Gains from trade are often hidden.

One reason for the difference is that lay people don't recognize the gains of trade and don't notice the loss of jobs caused by the trade adjustments as countries shift production to take advantage of trade. The price of a shirt today is far less than it was a decade or two ago, in terms of the number of hours you have to work to buy it. Trade is one of the reasons for that. Not many people take it for granted. Much of our current lifestyle in the United States can be done by trade.

A second reason for the difference between the lay view of trade and the economists' view is that the lay public believes that if we allow free trade, eventually we will lose all U.S. This belief is related to comparative advantage. One country has a comparative advantage in one set of goods, the other country has a comparative advantage in another set.

The lay public does have a point. The model assumes that a country's imports and exports are the same.

U.S. imports and exports are not the same. The United States pays for the excess of imports over exports with IOUs. People in other countries finance the U.S. trade deficit by buying U.S. The other countries will stop financing the U.S. trade deficit once they decide that they don't want to.

The services that traders provide are included in trade. The gains the trader makes can account for the seeming differences in countries' comparative advantages.

One could make the model fit reality if one thought of the United States as having a comparative advantage in producing IOUs that other people will accept.

The international traders who brought the trade about benefited greatly from trade. Trade does not take place on its own--markets and trade require entrepreneurs, people who see the opportunity for a trade and do what is needed to make the trade possible. Real people are working to improve their position in the market. Many of the gains from trade go to the trader, not the countries that produce or consume good. The gains that traders get can be huge.

The students wear $200 sneakers. The sneak ers cost about $8 to make. The benefits of trade go to the trader, not the producer or consumer. Some of the difference is not profit. Someone has to convince you that you need those "with-it" sneakers, because the trader has other costs. Some of the benefits of the trade accrue to U.S. advertising firms, which can pay more to creative people who think up crazy ads.

The United States has a large advantage in facilitating trade, and many trade companies are U.S. based. Many of the goods and services that support trade from their home country are bought by these companies. Goods manufactured in China, India, and other Asian countries are creating demand for advertising, management, and distribution and are therefore creating jobs and income in the United States. That's one of the reasons for the increase in service jobs in the U.S. Lay people don't associate these jobs with trade.

Most economists see international trade differently because of distributional issues. The effects of trade on the distribution of income is something that most lay people are concerned about. Trade tends to benefit society as a whole, but the benefits are often highly unevenly distributed. Four reasons economists and lay people trade can hurt a lot in the short run. During the period of globalization, those producers whose goods are both tradable are when trade is opened among countries. Gains are often hidden.

The opportunity cost is relative.

Trade is more than manufactured benefit since they can get goods at lower international prices.

Many people in the United States have been affected by globalization. Distributional effects of trade.

The same was true for those with less skilled jobs. Blue-collar America has been hard hit by globalization. Immigrants who were willing to work at physically difficult jobs for lower wages than Americans were willing to work for have added to the problems facing these groups. The downward pressure on wages in those sectors is caused by this immigration.

People with intellectual property rights who suddenly had billions more people to whom to sell their products were on the high end of the income distribution. They were billionaires instead of being multimillionaires. Demand for the services of those in high-tech and managerial jobs increased greatly because their work could not be duplicated in low wage countries. Finance and high-level management were in these categories.

The share of manufacturing jobs in the US has fallen from 25 percent in the 1970s to 8 percent today.