Globalization Now Eats The Hands That Fed It
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If it's a tsunami you're afraid of, what happened in the Indian Ocean last month is probably not what you should be worrying about. 

The tsunami Americans need to fear is the man-made wave of globalization that has helped gut the American work force by exporting its jobs overseas in part through the cute little trick known as "offshoring." We know the threat is big because last month even Business Week started paying attention to it.

In its Dec. 6 issue Business Week sported a sizeable article titled "Shaking up trade theory" by Adam Bernstein. The article is newsworthy because, for probably the first time ever, an establishment business magazine raised some serious questions about the free trade dogmas that underlie globalization and much of the economic theory and policy of the last several decades.

For a pillar of the business establishment like Business Week to do so is a bit like Scientific American raising questions about the law of gravity.

What worries a good many of the economists cited in the article is that the basic assumption of free trade theory—the doctrine of comparative advantage, as it's called—doesn't add up. Under the doctrine,

"most economists have concluded that countries gain more than they lose when they trade with each other and specialize in what they do best. Today, however, advances in telecommunications such as broadband and the Internet have led to a new type of trade that doesn't fit neatly into the theory. Now that brainpower can zip around the world at low cost, a global labor market for skilled workers seems to be emerging for the first time—and has the potential to upset traditional notions of national specialization."

The article cites no less an icon of the economic high priesthood than Nobel Prize winner Paul Samuelson, who recently raised his own questions about the benefits of free trade in the Journal of Economic Perspectives. Mr. Samuelson's questions had some negative answers.

As Business Week summarizes his argument:

"The fact that programming, engineering, and other high-skilled jobs are jumping to places such as China and India seems to conflict head-on with the 200-year-old doctrine of comparative advantage. With these countries now graduating more college students than the U.S. every year, economists are increasingly uncertain about just where the U.S. has an advantage anymore—or whether the standard framework for understanding globalization still applies in the face of so-called white-collar offshoring."

Not all economists agree, and the article offers a nutshell of the debate that's beginning to ripple through the academic and business communities. But what's news is that there's a debate at all.

For nearly two centuries the doctrine of comparative advantage, formulated by economic theorist David Ricardo in the early nineteenth century, has held much the same status as the Virgin Birth. Now even the high priests are starting to doubt.

One reason they're doubting is that while it's long been known that free trade scuttled blue-collar workers out of their jobs, nowadays it's starting to carve into white-collar workers. That means—eventually—the kind of people who write about trade policy—like Mr. Bernstein and his friends.

"Until now," Mr. Bernstein writes, "the pain of globalization has been borne by less than a quarter of the workforce, mostly lower-skilled workers, whose wage cuts outweighed the cheaper-priced goods globalization brings."

But someone else is sharing the pain—namely, the very class that thought free trade was such a hot bargain.

Mr. Bernstein cites a study from Forrester Research in Cambridge, Mass., as offering "the most detailed projections so far" of how bad the white collar hit might be.

The Forrester study sees "the pace of U.S. job flows abroad averaging 300,000 a year through 2015, probably a conservative estimate."

"Already, some 14 million white-collar jobs involve work that can be shipped electronically and thus in theory could be moved offshore," yet another study has found. "White-collar workers have a right to be scared," says Harvard University's labor economist Lawrence F. Katz.

So did blue collar workers, but nobody cared much about them.

It's hardly surprising that nobody paid much attention to the real costs of free trade and globalization until they started eating the very people who promoted them and gained from them. That sort of thing is common enough throughout history.

It remains to be seen if the wreckage of the white collar class—the business, political and intellectual elite of the country—turns out to be quite as devastating as some of the pessimists are predicting.

If it weren't for the problem that the wreck of those elites would probably wreck the country along with them, we just might all be better off if the devastation turned out to be real.


Sam Francis [email him] is a nationally syndicated columnist. A selection of his columns, America Extinguished: Mass Immigration And The Disintegration Of American Culture, is now available from Americans For Immigration Control. Click here for Sam Francis' website. Click here to order his monograph, Ethnopolitics: Immigration, Race, and the American Political Future.

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