Professor Paul Samuelson’s Economics: An Introductory Analysis has been the bestselling college economics textbook for more than fifty years. Many of his brightest students went on to important positions in business, finance and government policy-making. Some became influential economists themselves and spread the faith further. “I don’t care who writes a nation’s laws–or crafts its advanced treaties–if I can write its economics textbooks,” the author once boasted.

Now comes Professor Samuelson, age 89, to announce an important correction. Free trade, he explains, may not be win-win, after all. 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. His paper, published in the Summer issue of the Journal of Economic Perspectives, bears the lighthearted title, “Where Ricardo and Mill Rebut and Confirm Arguments of Mainstream Economists Supporting Globalization.”

Samuelson’s announced purpose is to correct the sloppy thinking of leading economists (including some of his former grad students). He scolds them for promoting “popular polemical untruth” to defend globalization against those Luddite antiglobalization protesters in the streets, who turn out to be not entirely wrong.

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 (think China) begins to acquire the technological capabilities to innovate and improve its productivity–in other words, become more like the advanced economy (that’s us). Act II, as he calls it, “deals some weighty blows against economists’ oversimple complacencies about globalization…. This invention abroad that gives China some of the comparative advantage that had belonged to the United States can induce for the United States permanent lost per capita real income.”

Alas, he points out, the US losses will not likely be shared equitably. “Some Americans (capitalists and skilled computer experts) may be being helped by what is decimating the real free-trade wage rates of the semi-skilled or of the blue-collar factory workers,” he observes. Thus, the country may experience growing income inequality. When the process “harms a really sizeable fraction of the future US population,” Samuelson suggests, the winners could be made to transfer some of their gains to the losers. Yet this remedy is most unlikely, he concedes, since the same leading economists (he cites Federal Reserve chairman Alan Greenspan) cheering for globalization also oppose any such equity measures as inefficient. “Marie Antoinette said, ‘Let them eat cake,'” Samuelson recalls. “But history records no transfer of sugar and flour for her peasant subjects.”

In some quarters, Samuelson is being celebrated for brave truth-telling, but the better question is: What took him so long? His elegant equations are, after all, merely confirming belatedly what is already visible. US hourly wages, discounted for inflation, have been stagnant for thirty years! The gross and growing inequalities he foresees in America have already occurred. China’s smart efforts to become a first-class economy of advanced production are visibly succeeding (aided by capital and technology transfers from US multinational corporations). And America’s lost manufacturing capacity is reflected in the staggering US trade deficits and the many billions China and Japan must keep lending us so we can keep buying their stuff. Not only the rich nations will suffer. Mexico, where US jobs in clothing and electronics were relocated, is now losing those jobs to China.

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. The Chinese evidently did, and borrowed some pointers, as the Japanese did before them. Dr. Samuelson’s learned observations have already been trumped by empirical reality–indeed mocked by the economic history of the past three decades. His attempt at drollery is intended, I suspect, to conceal a sense of error and regret, possibly guilt. His acolytes, he must know, are still running things according to what he taught them, oblivious to nondoctrinal facts and still dispensing failed wisdom to the masses. Not only economists but policy-makers and politicians, reporters and editors at major media–they all drank the Kool-Aid.

The mindless conformity of elite opinion was long ago observed in John Maynard Keynes’s famous dictum: “Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.”