On October 14, Daron Acemoglu, Simon Johnson, and James A. Robinson won the Nobel Prize for Economics. These economists’ influential work on how institutions shape economic development sought to answer the question: Why are some nations poor and others prosperous? Their studies have concluded that freer, open societies are more likely to prosper.
Given their recent work, it’s no surprise that these Nobel Laureates support free trade. On a recent Bloomberg podcast, Simon Johnson stated, “If you want to blow up the world trading system and really damage poorer Americans, slap a massive tariff on all the imports. A massive tariff wall? Terrible idea.”
In Why Nations Fail, Acemoglu and Robinson advocate for free trade as a means to promote economic growth. In their book they note, “Nations fail today because their extractive economic institutions do not create the incentives needed for people to save, invest, and innovate. Extractive political institutions support these economic institutions by cementing the power of those who benefit from the extraction.” This quotation highlights the importance of inclusive institutions and the detrimental effects of extractive institutions, which can seek protectionist policies like tariffs that hinder economic growth and innovation.
In 2018, we organized over 1,100 economists, including Acemoglu and 15 other Nobel laureates, to sign an open letter to President Donald Trump and Congress. The letter urged lawmakers to heed the advice of economists and economic educators on topics such as trade agreements, tariffs in response to trade imbalances, and the imposition of tariffs on products like washing machines, solar components, and even steel and aluminum used by U.S. manufacturers.
These issues are still relevant today, with some politicians and extractive institutions continuing to call for new import tariffs. NTU extends our heartfelt congratulations to these three remarkable economists. We know that free trade is a noble (Nobel) cause.