Thread by @jamuslim

Every year, I teach a course in international economics. In the first lecture of the course, I teach what is known as the Ricardian model: named after the 18th century economist, David Ricardo. (1/n)

The key insight then—as it is today—is that free trade between two countries allows each one to specialize according to what they can do relatively well. This is known as comparative advantage. (2/n)

In doing so, these economies can enjoy levels of consumption greater than if they chose instead to go it alone, and attempt to produce everything at home. This elegant, compelling argument underlies why economists generally favor free trade. (3/n)

But that is the first lecture. In the second lecture, I introduce the Heckscher-Ohlin model. This model elaborates on the basic Ricardian model, by allowing for two different inputs to production (labor vs capital), each with distinct interests. (4/n)

This deceptively simple tweak means that we are now in a position to ask ourselves whether there are gainers or losers when we open up to trade. Unsurprisingly, there are both. (5/n)

When we liberalize trade, the gainers will typically outweigh the losers, and so the nation, as a whole, will be better off. But there are undoubtedly those that will be harmed by a move toward freer trade. (6/n)

Importantly, this result is silent on whether the gainers need compensate the losers. Indeed, it is entirely possible that they do not, leaving certain sectors of the economy enjoying a disproportionate gain, while the others languish. (7/n)

That is why, in my view, the best strategy for addressing concerns about CECA or any of the free trade agreements we have signed as a nation is to, first, ensure that the benefits have outweighed the costs, not just in theory but in practice. (8/n)

If so, then the next step is to ensure that these benefits are widely shared. This would mean that the winners (directly or indirectly) compensate the losers, at least in part. Such action would build a national consensus in favor of free trade. (9/n)

For the #workersparty, we believe that the best mechanism for such compensation lies in strengthening our social safety net. This includes an end-to-end jobs support program: from redundancy insurance to reskilling to redeployment and reabsorption. (10/n)

We have always been a trading nation, from our days as a seaport called Temasek, to our role as a strategic crown colony, to our modern role as a global hub for goods, services, finance, and people. Our openness has always been a source of strength. (11/n)

It should continue to be. And it can be, as long as we strive to make it so. By keeping the playing ground fair for our workers. By uplifting those left behind. And by building a cohesive nation, united in common purpose. #makingyourvotecount (n/n)