Michael Jordan disses the NBA

I was pretty shocked this morning to wake up and read that Paul Samuelson is no longer a free trader. For those who don't know, Paul Samuelson is a strong contender for the title of Greatest Economist Ever, the Michael Jordan of my field. He won a Nobel Prize, but that's just because the Economics Nobel is more like a lifetime achievement award; if it was based more on specific advances like the other Nobels, Samuelson might have won several.

So imagine my surprise when I read this:

Samuelson reads export and import statistics with the same attention ordinary mortals might pay to the weather report. He monitors the satellite images of the economy and attempts to differentiate between its tornadoes and hurricanes. And he has long predicted that we are about to face an economic tsunami -- a pressure wave that has formed underwater, gaining strength by the day. If we wait until a giant wave hits our beaches, it'll be too late. The force of this economic tsunami will destroy many things, he says, including what is left of American industry. What it will leave behind, in the best case, is what Samuelson calls "an American office economy."

Does he think that globalization is a zero-sum game, in which one party wins, and the other loses? No, he replied after he had finished his sushi. The world's wealth will continue to increase. But, he quickly added, unfortunately this won't apply to all groups within a society.

But won't the profits of globalization's winners offset the losses of its losers? No, he responded, not any longer. According to Samuelson, the consequences of globalization for the United States have been negative for some time now. Compared with Asia's rising economies, the country is now in a "win-lose" situation. Asia, says Samuelson, is gaining economic strength while America is losing its assets.

Free trade critic Hillary Clinton now bases her arguments on Samuelson's. His doubts are now hers.

It sounds like Samuelson is going back and forth a bit here. First he says trade isn't a "zero-sum game," then he calls it a "win-lose" situation. Maybe he's speaking generally with the first comment and referring to our current situation with the second. Or maybe he's just a 92-year-old man.

Anyway, I'm still a free trader...for now. But even as far back as Krugman's "new trade theory" in the 1990s, smart top-level economists have been finding ways that trade could actually hurt countries. My own trade professor, the brilliant Jing Zhang, has shown that open financial markets can often cause financial instability and sudden economic crises.

In any case, it looks lik the winds are blowing against free trade. And if free trade can't defend itself with actual proven results (as I believe it can 90% of the time), it deserves to be revisited. I just don't think we're there yet.