Abstract

Defunct Economists

The article discusses the failures of free trade. Professor Paul Samuelson's "Economics: An Introductory Analysis" has been the bestselling college economics textbook for more than fifty years. Now comes Samuelson to announce an important correction. In certain circumstances, when a very poor but ambitious nation is trading with a wealthy advanced economy, free trade can turn into a very ugly loser for the wealthy country--inflicting permanent economic loss, stagnant wages, greater inequality and other hurtful consequences. The professor's reasoning is expressed in the abstract language of orthodox economics, but he does name the two countries he has in mind--the United States and China. Free trade, the professor elaborates, will deliver real gains to both rich and poor nations in the initial stages, but this can change dramatically as the poorer nation begins to acquire the technological capabilities to innovate and improve its productivity--in other words, become more like the advanced economy. The abstracted models worked out by economic scholars, most notably Samuelson, leave out the complexities of human existence--politics, society, culture, history, irrational greed. If one wants to understand China's energetic rise in the global system, read the economic history of the United States.