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The economist, Paul Krugman, is at once, brilliant, and wrong. I have had a love hate relationship with him since 1997 when he published "Pop Internationalism." Then I found out that he was one of the experts Bill Clinton listened to when he decided against keeping his campaign promise to veto NAFTA. Ever since then he has defended globalization in spite of its obvious design as a tool to annihilate the middle class in America. According to Krugman the negatives have all been worth it.When pressed to the point of having to explain himself, he has trotted out David Ricardo's theory of comparative advantage and has droned the narrative of how even countries with no absolute advantage in any market product can benefit from free trade through comparative advantage. The story falls apart when you look closely at the variables that are being ignored and what is being put at risk when nations forego efforts to be as self-sufficient as possible in favor of narrow specialization in production of whatever product they have a comparative advantage in. It falls flat on its face when you compare Ricardo's prescription with what this nation is actually doing.
Ricardo's overly simple theory rests on the assumption that the goal of policy is to increase total consumption for a given constant amount of labor in a global economy where trade is freely permitted. This is accomplished by controlling what will be produced, exported, and imported based on the opportunity cost of production, with free trade among countries. It assumes that manufacturers are willing or can be coerced into producing what the analysis shows is optimum. It assumes that there is no loss of self-sufficiency, indeed, that self-sufficiency is not an issue. It assumes that all trading partners will always be willing trading partners that will dutifully produce, export, and import according to the optimum formula. It assumes that labor factors that once produced automobiles would be equally compensated and content if required to pick melons in the fields instead, and that car manufacturers would be happy to shut down their factories. (Of course they would if they can freely move them to another country where labor is cheaper.)
But reality intrudes on this idyllic dream. The governments of free nations don't dictate what their industries will consist of and produce. And any nation that is not basically self-sufficient is doomed.
From time to time over the years I have sent Professor Krugman requests to explain his dogged support for globalization as it has developed in practice. He never replies and continues to sell the status quo with the same old sales pitch. "Yes, there have been examples of hardships due to globalization, but the alternative is protectionism and, anyway, this is a temporary growing pain."-
Previously published by We! Magazine
