Pop Internationalism, by Paul Krugman
MIT Press, 1996. 221 pages.

This book has 13 chapters, each a previously published essay or speech
(except chapter 7 which is a review Krugman wrote of Laura Tyson's "WHO'S
BASHING WHOM?" for the New York Review of Books. They rejected it.)

The other chapters were first published in a wide range of places: Foreign
Affairs, Harvard Business Review, American Economic Review, Peace Economics
Peace Science and Public Policy, The Wilson Quarterly, New Perspectives
Quarterly, Science, and Scientific American.

There is some redundancy and overlap between chapters because of this, but
I found the book to be interesting and worthwhile.  Krugman confirms many
points about international trade (and economics in general) that I have
made in many of my posts and web page items, so of course I enjoyed the
book  :-)

And I don't always agree with him: see my review of PEDDLING PROSPERITY (on
my web page).

Chapter titles include "Does Third World Growth Hurt First World
Prosperity?" ,"The Myth of Asia's Miracle" and "Technology's Revenge".

                    IS TRADE LIKE WAR??

The main theme is that we hear too much about the supposed similarity of
foreign trade with either war or sports or business. So much so that many
people have come to believe this analogy. But, as he stresses, there are
basic differences that render this comparison worse than useless.  

While sports is a "win/lose" situation, and war can be "win/lose" or
"lose/lose even more", trade is "win/win". The world is better off because
of trade and so are most people.  A corporation that does not keep up with
the competition may go out of business, but countries do not.

                   SOME USEFUL INSIGHTS

Here are some of his claims that I have also made in various posts, and are
to be found in various of my web page items.

The much discussed "loss of wages" in the US since the 1980's (or 70's or
60's or 50's depending on your source) is really a decrease in the rate of
INCREASE. If the "overcorrection" that the CPI makes for inflation is
considered, wages have continued to grow, just at an ever slower rate. See
my "Inflation & Federal Reserve Policy" or "Are THINGS getting Better or
Worse?" for examples.

Opponents of foreign trade talk about the "loss of jobs", while supporters
stress the "gain in jobs". Economic theory claims neither: the NUMBER of
jobs is not predicted to change because of foreign trade, but the KIND of
jobs will. Or to say it another way, both sides are correct. Many jobs will
be lost and an equal number gained. See my "Use of Statistics".

While international trade does have the effect of reducing the gap between
rich and poor WORLDWIDE, it also has the effect of widening that gap in the
USA. The poor and unskilled here are put into competition with the poor and
unskilled abroad: the rich and skilled here have a wider market for their
skills and talents.

While international trade is a GOOD THING, it is not really all that
important to the US economy. Only about 10 % of our total economy is
connected to trade. (But I think he understates the impact. Consider that
about half of the oil we burn is imported, but it would cause some major
readjustment of our economy if that were cut off- see "The Economics of
CO2" on the ENVIRONMENT section of my web page.)

A claim he makes that I have not is this: he says that the critics of
foreign trade have not gone "beyond" the basic economics text book
explanations of comparative advantage. They haven't even understood the
basics!  They are referred as Pop Internationalists.

             ON BEING INTERESTING

In his presentation of economic ideas, Krugman does sound a bit like he is
telling us to eat more vegetables and get more exercise. Of course he is
correct. As Bill Buckley said in response to a similar criticism, it IS
hard to come up with "interesting" and "novel" ideas and proposals if you
confine yourself to ETERNAL TRUTH.


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                           (_)
Jim Blair (jeblair@facstaff.wisc.edu) University of Wisconsin, Madison
(USA). For a good time, call   http://www.execpc.com/~jeblair/
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