Trade, Jobs and Wages
In 1994, 2008 Nobel economics prize winner Paul Krugman and colleague Robert Lawrence said blaming foreign competition for U.S. economic ills is ineffective. The real problems lie at home
The data underlying our conclusions are neither subtle nor difficult to interpret. The evidence that international trade has had little net impact on the size of the manufacturing sector, in particular, is blatant. The prevalence of contrary views among opinion leaders who believe themselves well informed says something disturbing about the quality of economic discussion in this country.
It is important to get these things right. Improving American economic performance is an arduous task. It will be an impossible one if we start from the misconceived notion that our problem is essentially one of international competitiveness.
ABOUT THE AUTHOR(S)
In 1994, PAUL R. KRUGMAN and ROBERT Z. LAWRENCE taught economics at the Massachusetts Institute of Technology and at Harvard University, respectively. Krugman works primarily on international trade and finance; he is a leading proponent of the view that historical and political factors play at least as strong a role in trade as do underlying national economic characteristics. In 1991 he was awarded the John Bates Clark Medal by the American Economics Association. Lawrence’s investigations focus on international trade, with particular attention to its effects on the labor market. He is also a nonresident senior fellow at the Brookings Institution.