Paul Krugman Analysis

First, looking at Ricardo's Difficult Idea, highlights the arguments against Free Trade. While showing how completely untrue the majority of the arguments against Free Trade are we can see how many people are given false information about Free Trade and therefore without understanding the economic concept properly just outright reject it.

The main idea of comparative advantage is that trade between two nations normally raises the real incomes of both. It's interesting that a concept so simple can be misunderstood by so many people and challenged by 'new' economists.

Paul Krugman also looks into cheap labor and why he is in favor of it. He says, "More importantly, however, the growth of manufacturing and of the penumbra of other jobs that the new export sector creates has a ripple effect throughout the economy. The pressure on the land becomes less intense, so rural wages rise; the pool of unemployed urban dwellers always anxious for work shrinks, so factories start to compete with each other for works, and urban wages also begin to rise. Where the process has gone on long enough in South Korea or Taiwan, average wages start to approach what an American teenager can earn at McDonald's." Although in this article everything points to cheap labor being favorable, we can't condone women and children working for extremely low wages because it is for OUR benefit, this is something that we either need to re-think or change so that we can begin to see how this labor helps their economies and ours.

Finally, Krugman looks at the "berry outbreak", which after the fact Clinton asked for legislation to ban food imports from countries that do not follow adequate sanitary standards in agriculture. But doesn't this create a double standard? "Intellectual opponents of globalization gleefully noted a double standard: We're willing to seize shipments of foreign berries to protect yuppie consumers (the sort of people who eat raspberries out of season) from inadequate foreign sanitary standards, so why aren't we willing to protect U.S. workers from inadequate foreign labor standards? Isn't it the same thing?" Krugman goes on to show us that it's not the same.

Through these articles Krugman raises some very controversial issues in economics, that really shouldn't be controversial if you look at the facts. Yes, the wages may be very very low and unacceptable for our standards the facts show that cheap labor is improving Third World countries. There is more that needs to be understood and investigated before people make judgements and begin to oppose economic principles when they don't fully understand the outcomes.