This paper argues that not a single proposition of the modern theory of free trade is upheld by the recent experience of the United States. Freer trade is supposed to raise GNP growth and productivity growth as well as the living standard. Until 1972, when the U.S. was practically a closed economy with a trade/GNP ratio averaging a low of 12 percent, GNP growth was 3.8 percent, productivity growth was 2 percent, and real wages had been rising for 150 years. Since 1972, the trade/GNP ratio has been rising steadily, U.S. GNP growth has been only 2.5 percent, productivity growth is below 1 percent, and real wages have been falling for over three-quarters of the labor force. Copyright 1994 by Blackwell Publishing Ltd.
