In an op-ed for the New York Times, Paul Krugman calls the Trans-Pacific Partnership (TPP) “No big deal”. This column looks at Krugman’s main arguments against the TPP. First, Krugman suggests spending political capital on domestic initiatives, and not on the TPP. Second, he argues that the pay-off from TPP will be trivial since tariffs are already low. The column points to a larger message in Krugman’s op-ed, namely that the era of globalization and policy-driven liberalisation is over.
In a “man bites dog” column for the New York Times (February 27th), Paul Krugman, a self-proclaimed free trader, declared that the Trans-Pacific Partnership is “No Big Deal”. With free traders like this, who needs protectionists?
Equally disturbing as his headline, were the dubious justifications offered by Princeton’s Nobel Laureate.
Kevin Hjortshøj O’Rourke, Ronald Findlay10 March 2008
Globalisation is fundamentally political, not technological. This is the lesson from a new book tracing 1000 years of international trade history. Here the authors use lessons from the past to identify challenges for globalisation in the 21st century.
To many seasoned observers of the world economy, today’s globalisation is a largely technological phenomenon.1 Once learned, new technologies are typically not forgotten, which is why globalisation can seem an irresistible force, destined to bind us ever more tightly together for the foreseeable future. History, however, suggests that globalisation is as much a political as a technological phenomenon, which can thus be easily reversed, and has been so in the past.
Big governments and globalisation are complementary
Anna Maria Mayda , Kevin Hjortshøj O’Rourke12 November 2007
The creed: Trade creates winners and losers, but the winners win more than the losers lose, so governments should boost public support for trade by creating ex ante mechanisms that share the pains and gains. Here is some evidence that it actually works.
While economists have preached the virtues of free trade for over two centuries, the majority of their fellow citizens remain stubbornly protectionist. When over 60,000 people in 47 countries were asked in 1995-1997 whether they favoured free trade or stricter limits on imports, approximately 60% of them chose the latter option.1 As China and India rise to economic prominence over the coming decades, it is predictable that such opinions will become even more prevalent in Europe and the United States than they are now.
In recent years, the skill premium in the US manufacturing sector is declining and the skill intensity increasing. The authors of CEPR DP6042 argue that this pattern can be linked to globalization and the rise in offshoring.
The received wisdom about the relative wages of skilled workers in the US is that the wage gap is growing as the skill intensity within industries is increasing, and these changes in wage and employment structure are often attributed to skill-based technical changes rather than to globalization and trade. Since the early 1990s, however, the pattern has been different.
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