Trade Winds.

• Author: Lindsey, Brink
• Position: Review

A Future Perfect: The Challenge and Hidden Promise of Globalization, by John Micklethwait and Adrian Wool-ridge, New York: Crown Publishers, 386 pages, $27.50

At last--a sensible book about globalization. International economic integration is a phenomenon drowned in hype: Cheerleaders talk breathlessly of a world without borders, while doomsayers rage against the supposed tyranny of uncontrolled market forces. John Micklethwait and Adrian Woolridge, two reporters for The Economist, have succeeded in cutting through both sides' bombast. In their engaging and clearheaded guide to the shrinking of the planet, they show that different parts of the globe are shrinking at very different rates and that the whole process has along, long way to go.

However fast they have grown, international markets remain the exception rather than the rule in contemporary economic life. Analysts at the renowned consulting firm McKinsey have estimated that only about 20 percent of world output is currently subject to global competitive pressures. Even when they are allowed to operate, the forces of global competition are much more attenuated than most of us think. In that connection, Micklethwait and Woolridge cite an eye-opening study of Canadian trade patterns. Canada and the United States boast the world's largest bilateral trading relationship. A common language and strong cultural ties link the two countries. Tariffs have been eliminated by a free trade agreement. And still, trade between Canadian provinces is 12 times greater than trade between provinces and American states, after correcting for differences in the trading units' size and distance. The bottom line: National borders still matter a great deal.

Despite all the loose talk about their imminent demise, the nation-states that defend those borders are still very much alive and kicking. The authors point to the experience of their native Great Britain, where from 1979 to 1997 Conservative governments strove to limit the size of the bloated public sector. In the end, all they managed was to budge government spending from 43 percent of gross domestic product down to 42 percent.

In the United States, Microsoft's travails reveal the fatuousness of the claim that governments are powerless in the face of footloose capital. "Companies are much less mobile than people believe," Micklethwait and Woolridge remind us. "One reason why the federal government can harass Microsoft is because it knows that the computer...