Tuesday, March 11, 2003

Becker, Wright, and Bouton

Chicago GSB held an open mike night today with Gary Becker (Nobel Prize in Economics), Robert Wright (Nonzero), and Marshall Bouton (Chicago Council for foreign affairs). The topic: Globalization. Becker went through a list of statistics demonstrating that not only had globalization (gains from trade) increased the wealth of the poorest people on earth, but it had also increased health and reduced income inequality "by any standard". Bouton offered some public opinion statistics noting that most people thought globalization had improved their lives but also thought it threatened their job security. This was held up as a contradiction, but in fact it's exactly right: free trade improves peoples lives by lowering the price of goods and services (making people richer) but also makes jobs less stable as domestic industries keep restructuring in line with technological change abroad. And if this is true in the US, which has an essentially closed economy, it's probably even more true in countries where trade makes up more than 12% of GDP. An obvious solution to this? Pay off workers mired in industries being eroded by cheap labor abroad.

Wright was a disappointment. While I still look forward to reading his books, his two major contributions to the evening were 1) we should try to understand terrorists and 2) we need supra-national organizations to effectively disarm rogue nations that are trying to build nuclear, biological, or chemical weapons. I have no comment on the first point, and would like Wright to explain himself on the second given how the empirical evidence to date flatly contradicts his optimistic musings.


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