Samuelson on Globalization: A Comment
Andreas School of Business Working Paper
17 Pages Posted: 5 Oct 2004
Date Written: October 2004
Abstract
Paul Samuelson's recent article in the Journal of Economic Perspectives (2004) started drawing attention even before it was officially published (Fingleton, 2004). His conclusions go against the weight of 200 years of trade theory in concluding that international trade can, at times, result in deadweight losses, which might lead one to conclude that he is either wrong or that he has made a brilliant new discovery. He goes on to prove his point with a series of elaborate equations containing all the Greek letters, subscripts and square roots that economists have come to expect and love. His analysis and conclusions give ammunition to the anti-globalists, many of whom have relied mostly on emotional arguments or faulty logic to support their position in the past (Mander and Goldsmith, 1996). While Samuelson does not come right out and suggest that protectionist measures are called for to provide a safety net for the losers in a Schumpeterian regime (1984), he does leave open the possibility of government intervention to cushion the adverse effects to certain segments of the domestic economy that can result from free trade. This paper disputes Samuelson's conclusions.
Keywords: Samuelson, globalization, free trade, utilitarianism
JEL Classification: A12, A13, C1, C5, D6, F01, F13, F15, K11
Suggested Citation: Suggested Citation