ECONOMY - On Globalization

"Krugman's sensible response to globalization" from Prairie Weather

Paul Krugman worries about the results of "free trade" in one particular respect: what we need to do to protect American workers who suffer when we buy goods from countries with low wage workers.

...Am I arguing for protectionism? No. Those who think that globalization is always and everywhere a bad thing are wrong. On the contrary, keeping world markets relatively open is crucial to the hopes of billions of people.

Good. Because much protectionism is really about isolationism and that doesn't help anyone, least of all America, high wage and low wage alike.

But I am arguing for an end to the finger-wagging, the accusation either of not understanding economics or of kowtowing to special interests that tends to be the editorial response to politicians who express skepticism about the benefits of free-trade agreements.

It’s often claimed that limits on trade benefit only a small number of Americans, while hurting the vast majority. That’s still true of things like the import quota on sugar. But when it comes to manufactured goods, it’s at least arguable that the reverse is true. The highly educated workers who clearly benefit from growing trade with third-world economies are a minority, greatly outnumbered by those who probably lose.

As I said, I’m not a protectionist. For the sake of the world as a whole, I hope that we respond to the trouble with trade not by shutting trade down, but by doing things like strengthening the social safety net. But those who are worried about trade have a point, and deserve some respect.

"Social safety net" is anathema to those who enjoy having capitalism as a weapon. It's the hardline right which turns capitalism into a deadly weapon rather than something we can live with and love because it's under control. But we need a social safety net and it will have to include a much more flexible, well-designed, equal and expensive educational system, an educational system that is available to all Americans every day of their lives, no matter what age or condition.

Economic conditions are changing and "globalizing" so fast that no one educated in, say, the 1990's will have the skills necessary to continue making a healthy contribution to the economy for 50+ years. How we deal with that will determine whether or not we benefit from the expanding global economy.