Left Flank

If nothing else, Paul Krugman has sparked some of the best (from the perspective of my IR comps next year) the most useful arguments on economic liberalization. Simon Lester points out other issues with Krugman's essay, and links to two other contributions to this debate. The Economist and Angry Bear seem to be talking to each other.

I agree with Stormy at Angry Bear about "...the lack of rules underpinning globalization.". However, I think those include more than just labor, although collective bargaining is important. The international dimension is something Yglesias, Cowen, et al have minimized. Yglesias is downright mercantilist. Lester also discusses the effect of second-best domestic policies, like tariffs and subsidies, on trade.

But, The Economist has the clearest exposition:

If a very small and very rich group of Americans are enjoying most of the benefits of trade, then we should determine how best to capture a portion of those gains for redistribution. Are increased income tax rates an appropriate means to that end, or are there more efficient ways to go about sharing the surplus? It's all well and good to propose a stronger safety net, but one must also discuss how to pay for it, and what effects a payment scheme may have on the incentives of investors and innovators in the economy.

Next, we must determine the best methods for downward redistribution, with a keen eye to incentive structures. Wage subsidies and unemployment insurance are attractive policy options, but the ultimate goal must be to increase the size of the skilled workforce relative to unskilled workers. As Mr Krugman states, "[H]ighly educated workers in the United States benefit from higher wages and expanded job opportunities because of trade." Investing in policies to enlarge the proportion of highly educated workers in America must become a high priority.

(...)

Where trade is troublesome, it's also important to understand that concerns about wage-effects miss the point entirely. If Chinese manufacturing is far more environmentally damaging than first-world production, then we ought to attempt to address those externalities, regardless of trade's impact on incomes. In fact, Chinese goods are cheap in large part because the costs of pollution and carbon (and unhealthy labour conditions) are not included in the shelf price. These problems are just as pressing as inequality concerns, and their solutions may have the effect of killing several birds with one stone.

Again, the reason we're having this debate has to do with translating economics into political policy, via the democratic process. So, I'll take full-bore clarity over disguised protectionism, from Krugman or Yglesias, anyday.