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Apostasy in trade economics land

Alan S. Blinder, Princeton economics professor (as well as former Fed dude, and former Clinton administration booster for NAFTA and WTO) has written a piece for Sunday's Washington Post about his awakening to the new dimensions of trade policy in the 21st century:

I'm a free trader down to my toes. Always have been. Yet lately, I'm being treated as a heretic by many of my fellow economists. Why? Because I have stuck my neck out and predicted that the offshoring of service jobs from rich countries such as the United States to poor countries such as India may pose major problems for tens of millions of American workers over the coming decades. In fact, I think offshoring may be the biggest political issue in economics for a generation.

When I say this, many of my fellow free-traders react with a mixture of disbelief, pity and hostility. Blinder, have you lost your mind? (Answer: I think not.) Have you forgotten about the basic economic gains from international trade? (Answer: No.) Are you advocating some form of protectionism? (Answer: No !) Aren't you giving aid and comfort to the enemies of free trade? (Answer: No, I'm trying to save free trade from itself.)

The reason for my alleged apostasy is that the nature of international trade is changing before our eyes. We used to think, roughly, that an item was tradable only if it could be put in a box and shipped. That's no longer true. Nowadays, a growing list of services can be zapped across international borders electronically. It's electrons that move, not boxes. We're all familiar with call centers, but electronic service delivery has already extended to computer programming, a variety of engineering services, accounting, security analysis and a lot else. And much more is on the way.

It's worth reading the whole piece, where Blinder goes into how technology has facilitated offshoring, and how the integration of new pools of labor from China and the former USSR have - in his view - changed conditions dramatically. (If you're interested in the dimensions of services trade and policy, you can check out the work we've been trying to call attention to for 15 years, over here.)

What is striking in these arguments, as Dean Baker has pointed out, is the concern for the most highly skilled workers, while over a decade ago, Blinder argued (and appears to still argue) that lower skill, lower wage workers should be subjected to race-to-the-bottom competition. And as for this particular wave of technological change, that's been going since the 1970s, and we've known about the fall of the USSR for, uhm, well, since Scorpion did this song way back when (back before we had NAFTA, WTO, etc.)

Better late than never, I guess. But from the way Blinder is getting pushed around in the profession, it looks like most economists have bought their ticket to destination: never.

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