Sunday, October 30, 2011

Reading Analysis of 3 Paul Krugman Pieces

What did you find interesting or uninteresting about the piece? Was there something that seemed intuitive or counterintuitive? Explain.
Paul Krugman asserts that free trade is hotly debated as contentious topics surrounding religion. It's interesting that something as concrete as the belief in the benefits of trade and specialization could spark backlash comparable to declarations about evolution. This situation returns to the idea that it's more permissible to question social scientists as opposed to doubting "hard" scientists' findings. Perhaps it is due to the amount of incorrect economic information the public is forced to guzzle from frequent newscasts. In "Ricardo's Difficult Idea", Kruger writes, "Modern intellectuals are supposed to be daring innovators, not respecters of tradition." The daring quality of these thinkers often skews the economic reality.

One such incorrect depiction is that the strides made in first world countries hinder third world nations. In his second article concerning improvements on third world countries, Kruger states that "jobs with bad wages are better than no jobs at all". Not surprisingly, many people had a problem with his point of view, regardless of the amount of fact it contained. In the same article, Kruger informs the reader that aid from developed nations has done almost nothing for improvement in living standards in third world countries. This is a surprising realization for many. Most people cater to the belief that charity really does stop the hemorrhage when in actuality it simply slaps a band-aid on the entire situation. Wage and job improvements in the developing nations are positive unintended consequences of first-world enhancements.

Not everything in the first-world is perfect, as demonstrated by the final article entitled "A Raspberry for Free Trade". There are clearly double-standards about certain American policies. Kruger writes, "When the U.S. consumer is offered cheaper shirts from abroad, the United States loses the same number of shirt-making jobs regardless of whether the shirts were produced by workers making 30 cents an hour or $30 an hour." It really doesn't matter how underpaid, fairly paid, or overpaid the worker was when the American consumer is incentivized to buy the cheapest shirt he or she can find. I'm not saying that wage doesn't matter, but job loss is inevitable in almost all employment sectors.


Discussions Questions
Why are comparative advantage, and even trade in general regarded as controversial topics seemingly on the level of religious debates? Are there differences between the discussions on trade and the disputes on creationism vs. evolution?

Why is it that people believe so strongly in the zero-sum theorem? Is it truly that difficult to believe that the first world can become richer without further impoverishing the third world, but in fact raising the standards of living for the citizens of the latter? Explain.

How did globalization attain such a negative connotation?

Annotation
The purpose of the series of three Krugman articles was to further enforce ideas about the pros of free trade and globalization in the marketplace. He wrote about real-world examples concerning specialization and exchange, and established that standards of living improve on a global scale as international production increases. If production is increasing, then technology innovation is also increasing. This means that the number of jobs in a job sector with a fair amount of technological advancement is decreasing. The job churn, however, ensures that new jobs will always be created as old ones are eradicated.

1 comment:

  1. Great work! I love the first 2 discussion questions. If you come up with answers to those you'll be in line for the Nobel prize...

    We can, in light of these articles, debunk the all too common claim that a richer China and a growing China should be of concern to the US because they are going to "take all of the stuff" and there will be none left for us.

    We can also evaluate and understand the efficacy and correctness of such statements as "The US needs to free itself from its dependence on foreign oil"

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