Free trade is a heatedly debated issue in politics and the media. Those who oppose the idea of open trade between countries usually come up with the argument that comes down to something like this: ‘as a result of open borders, we lose jobs to those foreigners, and our factories are relocated elsewhere’. The suggested remedy is then that if borders are closed by upholding trade barriers, the jobs will come back, and the factories remain. Another often heard complaint is that so called regulatory competition will lead to a downward spiral: countries with the most flexible rules on product standards, labour regulations or environmental issues will attract most companies and be successful as a result of open trade.

As simple, safe and convenient as it sounds, such arguments are hardly convincing.