This is the headline on an excellent short piece in today's Emirates Business 24/7 by Dani Rodrik, Professor of Political Economy at Harvard's Kennedy School of Government. Rodrik's main point is that it is no longer possible for globalization boosters to dismiss their opponents as "violent anarchists, self-serving protectionists, trade unionists, and ignorant, if idealistic youth. . . . What makes news nowadays is the growing list of mainstream economists who are questioning globalisation's supposedly unmitigated virtues."
So we have Paul Samuelson, the author of the post-war era's landmark economics textbook, reminding his fellow economists that China's gains in globalisation may well come at the expense of the US; Paul Krugman, today's foremost international trade theorist, arguing that trade with low-income countries is no longer too small to have an effect on inequality; Alan Blinder, a former US Federal Reserve vice chairman, worrying that international outsourcing will cause unprecedented dislocations for the US labour force; Martin Wolf, the Financial Times columnist and one of the most articulate advocates of globalisation, writing of his disappointment with how financial globalization has turned out; and Larry Summers, the US Treasury chief and the Clinton administration's "Mr. Globalisation", musing about the dangers of a race to the bottom in national regulations and the need for international labour standards.
While these worries hardly amount to the full frontal attack mounted by the likes of Joseph Stiglitz, the Nobel-prize winning economist, they still constitute a remarkable turnaround in the intellectual climate.
Thanks to Brad DeLong's blog for linking to the Rodrik piece.
In what is becoming a pattern for Skeptic, he had an opportunity to recycle this post as a comment on a blog with a far larger following.
Even Alan Greenspan says foreign competition has driven down US wage levels.
Add McKinsey Global Institute to those who blame globalization for lower US labor incomes.
Phil Verleger says trade liberalization didn't work out the way he thought it would, in a letter commenting on Paul Krugman's How Did Economists Get It So Wrong piece in the NYT magazine a week earlier:
Paul Krugman’s essay is excellent, as far as it goes. However, it ends at the edge of the salt water. Krugman does not raise the subject of international trade. Yet for years salt-water and fresh-water economists have all written and preached of the benefits of free trade. Larry Summers, for example, has endorsed the view that trillions of dollars of benefits would accrue by opening international markets. I was part of the chorus for more than 10 years as a fellow at the Peterson Institute for International Economics.
Here, too, I believe economists got it wrong. The United States’ economic situation has been harmed, not helped, by the push for free trade. America’s skilled workers and middle class are undoubtedly much worse off thanks to the market-opening measures negotiated over the past three decades at the encouragement of almost all economists. The losses have occurred because the theoretical benefits projected by economists are blocked again and again by our trade partners.
Unfortunately, few economists are willing to offer the same detailed criticism of trade policies that Krugman has offered of macroeconomics.