Winners from free trade should not compensate losers according to Steve Landsburg.
One way to think about that is to ask what your moral instincts tell you in analogous situations. Suppose, after years of buying shampoo at your local pharmacy, you discover you can order the same shampoo for less money on the Web. Do you have an obligation to compensate your pharmacist? If you move to a cheaper apartment, should you compensate your landlord? When you eat at McDonald’s, should you compensate the owners of the diner next door? Public policy should not be designed to advance moral instincts that we all reject every day of our lives.
I think that some of these analogies are misplaced. There may always be someone else who will buy from this pharmacy or rent from a landlord with higher prices. Free trade (and technological change) destroys jobs. They are gone.
However, Deepal Lal in Reviving the Invisible Hand would probably agree:
A prescription for winners to always compensate the losers in a competitive economy is one to preserve the status quo and to prevent the economic changes which lead to economic progress. It is the policy of the Luddite. (pg. 86)
He argues that losers from trade are not unlike those who lose their jobs due to creative destruction. For instance, should computer makers compensate typewriter manufacturers?
Here is Dani Rodrik's response. My take - with defenders like these, globalization and free trade doesn't need enemies.
I would argue for an expanded safety net for retraining and education but I would not limit it to just those who have lost jobs due to free trade or technological change. My arguments for this - none yet. However, Tyler Cowen as usual, elaborates on this better than I can.