Economia

American Economic Association

Where Ricardo and Mill Rebut and Confirm Arguments of Mainstream Economists Supporting Globalization Author(s): Paul A. Samuelson Source: The Journal of Economic Perspectives, Vol. 18, No. 3 (Summer, 2004), pp. 135-146 Published by: American Economic Association Stable URL: http://www.jstor.org/stable/3216810 Accessed: 10/08/2009 09:34
Your use of the JSTORarchive indicates your acceptance of JSTOR's Terms and Conditions of Use, available at http://www.jstor.org/page/info/about/policies/terms.jsp. JSTOR's Terms and Conditions of Use provides, in part, that unless you have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and you may use content in the JSTOR archive only for your personal,non-commercial use. Please contact the publisher regarding any further use of this work. Publisher contact information may be obtained at http://www.jstor.org/action/showPublisher?publisherCode=aea. Each copy of any part of a JSTOR transmission must contain the same copyright notice that appears on the screen or printed page of such transmission. JSTOR is a not-for-profit organization founded in 1995 tobuild trusted digital archives for scholarship. We work with the scholarly community to preserve their work and the materials they rely upon, and to build a common research platform that promotes the discovery and use of these resources. For more information about JSTOR, please contact support@jstor.org.

American Economic Association is collaborating with JSTOR to digitize, preserve and extendaccess to The Journal of Economic Perspectives.

http://www.jstor.org

18, Journal of Economic Perspectives-Volume Number3-Summer 2004-Pages 135-146

Where Ricardo and Mill Rebut and Confirm Arguments of Mainstream Economists Supporting Globalization
Paul A. Samuelson

ost noneconomists are fearful when an emerging China or India, helped by their still low real wage rates, outsourcingand miracle export-led developments, cause layoffs from good American jobs. This is a hot issue now, and in the coming decade, it will not go away. Prominent and competent mainstream economists enter into the debate to educate and correct warm-hearted protestors who are against globalization. Here is a fair paraphrase of the argumentation that has been used recently by Alan Greenspan,JagdishBhagwati, Gregory Mankiw, Douglas Irwin and economistsJohn or Jane Doe spread widely throughout academia. Yes, good jobs may be lost here in the short run. But still total U.S. net laws of comparative national product must, by the economic advantage,be raisedin the long run (and in China, too). The gains of the winners from free trade, properly measured, work out to exceed the losses of the losers. Thisis not by mysterious fuzzy magic, but rather comes from a sharing of the trade-induced rise in total global vectors of the goods and services that people in a democracywant. Never forget to tally the real gains of consumers alongside admitted possible losses of some producers in this working out of what Schumpeter called "creative capitalist destruction." Correct economic law recognizes that someAmerican groups can be hurt by dynamic free trade. But correct economic law vindicates the word "creative"destruction by its proof [sic] that the gains of the American winners are big enough to more than compensate the losers.

s sM

and InstituteProfessor * Paul A. Samuelsonis Professor Economics Emeritus,Massachuof Massachusetts. settsInstituteof Technology, Cambridge,

136 Journal ofEconomic Perspectives

The last paragraph can be only an innuendo. For it is dead wrong about necessary surplus of winnings over losings-as I proved in my "Little Nobel Lecture of 1972" (1972b) and elsewhere in references here cited (see also Johnson and Stafford, 1993; Gomory and Baumol, 2000). The present paper provides explication of the popular polemical untruth. Here Ricardian equilibrium...