It doesn't take a degree in economics to see dangers in
globalization. An emerging China and India - with low wages, cheap
exports, and rising technological abilities - are causing layoffs
and depressing wages in the United States.
But when a renowned economist points to the same risks, more
people begin to listen.
Is it time to slow down the march toward free trade?
"It is going to become so big a problem that some slowing down is
going to be politically popular - and has some merits," says Paul A.
Samuelson, Nobel laureate and author of an economics textbook that
has educated millions of students over the decades.
He has stirred up a fuss by writing an article for the latest
Journal of Economic Perspectives that questions a basic assumption
of most economists - that the gains in the US from various types of
international commercial battles are big enough to more than
compensate for the losses.
This view, he writes, "is dead wrong about necessary surplus of
winnings over losings."
In other words, nations can sometimes lose from free trade.
That has not been America's experience so far. From World War II
to the early 1980s, increased trade with a revived Europe and the
Pacific Basin accounted for 30 percent of the rise in the average
American's standard of living, estimates Mr. Samuelson.
Economists see that as a result of the "law of comparative
advantage." Nations specialize in the output of certain goods and
services, and all trading partners benefit in the long run from the
But Samuelson doesn't expect the US to gain as much from trade,
outsourcing, investment, and other aspects of globalization in the
coming 30 years. Maybe it will improve living standards 10 or 15
percent, he says in a telephone interview, or maybe the US could
even lose out on a net basis. In the latter case, a minority of
Americans would gain, but more would suffer lower living standards.
"The general dogma that anything that expands globalization is
good for everyone isn't right," Samuelson says.
Certainly he would get agreement on this point from those
protesting globalization at meetings of the World Trade
Organization, the World Bank, and the International Monetary Fund.
Most economists, too, would agree with Samuelson that expanding
imports can cause layoffs and that offshoring can send service jobs
abroad. But they further argue that the lower prices for imported
goods and trimmed costs of services more than offset those job
"Characteristic Samuelson," charges Richard Cooper, a Harvard
University economist specializing in international economic issues.
"With impeccable logic he develops some interesting and
counterintuitive logical possibilities, but with no commitment to
whether or not they match reality."
Free trade is "not moving too fast for me," Professor Cooper