Imagine a world without borders. Here, businesses are free to move people, products, and capital anywhere with minimal friction. Governmental interference has lessened and economic coordination improved.

Critics of globalization and free trade would have us believe the result would be a giant race to the bottom. They expect firms to seek out localities with the lowest wages and weakest environmental regulations. Does this actually occur?

The United States is just such a world. And over the last century, a lot of moving has gone on, for example, the migration of entire industries (e.g., textiles from New England to the Southeast). The result has not been the predicted nightmare. For example, while there is still disparity in regional incomes, over time these differences have declined and continue to do so.

The overwhelming consensus among economists is that the quickest way to boost living standards and improve environmental quality is to remove trade barriers.

In many “progressive” circles this is heresy. Here, globalization and free trade are metaphors for a world dominated by multinational corporations. They pollute the environment, exploit workers, and increase inequality, all in the name of profits.

Mexico is frequently used as an example. It’s true a growing Mexican economy has made controlling pollution more challenging. But economic progress, combined with a more competitive, open political system, has spurred the government to respond to demands for environmental protection.

One result is that Mexico City’s notoriously dirty air is improving. The government’s environmental regulations have significantly reduced the levels of lead, carbon dioxide, and sulfur dioxide. Today, Mexico City’s air is cleaner than that of Los Angeles 30 years ago. It’s vital to understand the connection between economic progress and the increased demand for environmental quality.

But why can’t Mexico City have even cleaner air, right now? Here’s a key to understanding. Cleaning the environment requires an enormous commitment of resources. Only when people can provide the basics for their families (e.g., food, shelter, and security) will they turn their attention to environmental quality. Russ Roberts of George Mason University explains:

“[Mexico] cannot afford the luxury of our standards … any more than America could have afforded them 100 years ago.… One way to see this is to think about bicycle helmets. Where are more bicycle helmets worn … Manhattan or Mexico City? … Don’t people in … Mexico know that it’s dangerous to ride a bike in traffic without a helmet? I suspect they do. It’s just too expensive. Poor people are better off foregoing the helmet, keeping their kids in school a little longer and doing the best they can to avoid being hit by a car.”

Affluent American college students show their concern by protesting the exploitation of “sweatshop” workers. Their angst will be reduced if they answer this question: Why do the world’s poorest continue to line up for these jobs? Contrary to popular belief, multinational corporations pay significantly higher wages than those paid by local firms. These jobs are among the most coveted in developing countries. The positive results are measurable and increase over time.

The World Bank notes that globalization is responsible for a “spectacular” decline in poverty in East and South Asia. In 1990, there were roughly 472 million people in the East Asia and Pacific region living on less than $1 a day. By 2001, there were 271 million living in such extreme poverty, and by 2015, at current projections, there will be only 19 million Asians living under those conditions.

This economic progress is responsible for declines in illiteracy, child labor rates, fertility rates, and for improving environmental quality.

Here’s a shocker. A 2001 paper from the National Bureau of Economic Research suggests the real cause of rising global inequality may be insufficient globalization. In the developing world, incomes in and among open, democratic societies tend to become more equalized. Incomes in countries more closed to trade and foreign investment lag.

Martin Wolf of The Financial Times wrote in his recent book, Why Globalization Works, “Never before have so many people -- or so large a proportion of the world’s population -- enjoyed such large rises in their standard of living.” Let’s not exclude the poor from this race to the top.