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Below is a letter to The Economist; I thank Tim Schweizer for the heads-up:
Swati Dhingra is correct that Paul Samuelson argued that globalisation creates losers who, in Mr Samuelson’s opinion, should be compensated (“Trade creates losers. Here’s how to help them [2],” May 28). Alas, in this case Mr Samuelson, for all of his technical brilliance, reasoned poorly.
Consequences experienced by those who are said to be globalisation’s ‘losers’ are consequences not at all unique to globalisation; rather, they are consequences of economic competition and economic change. Particular jobs are destroyed (and created) whenever there is economic competition or change from whatever source – whenever new firms arise to compete against old ones; whenever producers improve their operational efficiencies; whenever new labour-saving innovations are introduced; whenever consumers’ tastes change; indeed, whenever there is any economic change at all. To single out the relatively few economic changes caused by, or transmitted by, commerce that crosses political borders is to give the impression that globalisation uniquely obliges producers to adjust to the demand of consumers. Yet this impression is utterly false.
Because globalisation is merely one among countless sources and transmitters of economic competition and change, the question instead ought to be if those who today suffer negative consequences of competition and of change should be compensated. When put in this correct light, globalisation is no longer wrongly demonized. More importantly, any actual policy of compensating today’s so-called ‘losers’ from competition and change – regardless of the origin of such competition and change – is more easily shown to pave a sure path to economic collapse.
Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030