ABSTRACT
This chapter addresses how the welfare gains and losses of free trade among nations have given rise to populism on the right and left of the political spectrum, depending on which socio-economic group within a nation is better off with free trade than without it. First, it puts forth basic elements of an evaluation framework that would help assess whether populism, as expressed by different socio-economic groups, is justified on cost-benefit grounds, i.e., welfare grounds. Second, it discusses the role of compensation mechanisms to redress inequalities of opportunity and incomes brought about by national free-trade policies. Third, it examines how free-trade policies affect the allocation of public and private resources. In this so-called post-truth era, it attempts to shed some light on the facts of the case for free trade, examining effects over time, the role of ideology, and the availability of accurate information. Finally, it concludes that populism has sprung out of significant losses by certain socio-economic groups incurred from free-trade policies that have not been adequately addressed or in a timely manner by sponsor governments or its academic proponents. An evaluation framework would allow the identification of central relevant facts and should help public policymakers recognize, argue for, and enact more appropriate measures to lessen the negative consequences of populism by addressing its causes.
