Pop Internationalism.

• Author: Ramos, Dante

Those of us who live just downwind from massive industrial installations get a little suspicious when we read about "competitiveness." We've heard ad nauseam that the United States is losing ground in the "global economy"--that imports are pricing American goods out of the market and that American capital is fleeing to take advantage of Third World slave wages. But experience provides little support for this story: If all the factories have gone to Mexico, they've somehow left the plasticky of manufacturing behind.

Anyway, argues Paul Krugman in Pop Internationalism, academic economics contradicts the conventional wisdom on this subject entirely. Krugman identifies "pop internationalism" as a set of commonly held beliefs about the role of international trade in the future of the U.S. economy. Pop internationalism holds, for example, that countries face off, just as companies do, in a zero-sum struggle for dominance in the world marketplace, whereas most academics believe trade generally benefits all countries that engage in it. Academics want to increase domestic labor productivity, because improved productivity allows the same number of Americans to buy more of the things they want. But pop internationalists would improve it primarily because it helps the country "compete."

The 13 essays that constitute this book don't jell into a thorough, systematic dissection of pop internationalism, but the overall theme is clear. In truth, imports and exports--the only goods affected by international trade--make up only an eighth of American output; a full two thirds consists of nontradable goods and services. Consequently, Krugman argues, the handwringing over whether America will "beat" developing countries on the world market is mostly hype--and dangerous hype at that.

The pop internationalists drawing Krugman's ire are a distinguished lot, including MIT's Lester Thurow, Labor Secretary Robert Reich, and Undersecretary of Commerce Jeffrey Garten. Their book titles tend to sound like Tom Clancy novels (Head to Head: The Coming Battle Among America, Japan and Europe). Insofar as the pop internationalists have influence, Krugman declares, their beliefs lead to destructive policies that actually cripple productivity growth.

Consider the question of whether the United States should preserve trade barriers against low-wage countries. Labor leaders opposed to NAFTA and GATT predicted a flood of goods out of, and a massive shift of capital into, developing...