March 31, 2007
 
PARALLEL UNIVERSE: Free Trade Economist Blinder Takes Off His 'Blinders' and He's Beginning to See the Light
 
By David M. Kinchen
Editor, Huntington News Network
 
'Like 99% of economists since the days of Adam Smith, I am a free trader down to my toes.' Alan S. Blinder, writing in 2001.
 
Holy Lou Dobbs! Alan S. Blinder, one of the nation’s top economists and the adviser to John Kerry in his 2004 campaign, is beginning to have doubts about unrestricted free trade, offshoring and outsourcing of jobs, particularly to emerging superpowers like China and India.
 
The 61-year-old Blinder, who still teaches an introductory economics course at Princeton University, where he has been since 1971, last year aired his changed views in an article in Foreign Affairs magazine. Here’s a link to the piece in the March/April 2006 issue, headlined “Offshoring: The Next Industrial Revolution?” http://www.foreignaffairs.org/20060301faessay85209/alan-s-blinder/offshoring-the-next-industrial-revolution.html
 
The one paragraph summary at the front of the article states: “Economists who insist that ‘offshore outsourcing’ is just a routine extension of international trade are overlooking how major a transformation it will likely bring -- and how significant the consequences could be. The governments and societies of the developed world must start preparing, and fast.”
 
Commentator Dobbs and many others have long made that point, that it’s not only routine number crunching jobs that will end up in India or China—graphic designers, financial analysts -- even top-ranked economists (see below) may be faced with sudden unemployment.
 
Now comes Blinder on the front page of the Wall Street Journal for March 28, 2007, expressing many of the same views to reporters David Wessel and Bob Davis. Not only the front page, but above the fold – a prime location for any news story. Here’s a link to the story, which is worth reading because it diverges so sharply from the conservative editorial page point of view of the WSJ: http://online.wsj.com/public/article/SB117500805386350446-cRRynUb3zQgR2Yxn8wFOt96EOlE_20070404.html
 
Of course, like most newspapers, at the Wall Street Journal the reporters report the news and the editorial page and op-ed people present opinions and commentaries. This is something that non-journalists always seem to not keep in mind – the Chinese (pardon the expression) Wall between reporting and opinion.
 
My formal economics training is limited to an introductory Economics 101 course in college almost 50 years ago, but I’ve picked up some knowledge along the way from popular books like “Freakonomics” and “The World is Flat” – both of which I reviewed.
 
Wessel and Davis in their story tell how politicians heeded the advice of free-traders like Blinder and most of his comperes “and, with occasional dissents, steadily dismantled barriers to trade.” They note that today – beginning with the Foreign Affairs piece last year—“Blinder has changed his message -- helping lead a growing band of economists and policy makers who say the downsides of trade in today's economy are deeper than they once realized.”
 
Blinder, an adviser to Bill Clinton in his first term, was a big supporter of NAFTA and, according to Wessel and Davis, is still an “implacable opponent of tariffs and trade barriers.” They add that he is saying “loudly that a new industrial revolution -- communication technology that allows services to be delivered electronically from afar – will put as many as 40 million American jobs at risk of being shipped out of the country in the next decade or two.”
 
That’s more than double the total of workers employed in U.S. manufacturing today, the reporters and Blinder note. The job insecurity that Mr. Dobbs rails about nightly on his TV show is “only the tip of a very big iceberg,” Blinder says.
 
In a box accompanying the WSJ article, Blinder notes that 12,470 economists are 'highly offshorable.' Along with 180,910 financial analysts. And many other jobs that require a great deal of education, like mathematicians, film and video editors, interpreters, computer programmers (389,090!)and actuaries.
 
Blinder is the go-to guy for a number of Democratic hopefuls in next year’s presidential contest, including Barack Obama. The WSJ reporters note that Blinder, “because of his stature in his field, provided a degree of legitimacy to what many of us had come to feel anecdotally – that the anxiety over outsourcing and offshoring was a far larger phenomenon that traditional economic analysis was showing.” That’s a quote they obtained from Gene Sperling, an adviser Bill Clinton and now, to Hillary Rodham Clinton.
 
Wessel and Davis report that even Nobel laureate Paul Samuelson -- whose textbook I used back in the late 1950s in Econ 101 -- “damns economists' over-simple complacencies about globalization” and says rich-country workers “aren’t always winners from trade.”
 
That’s the point the Dobbs is making every night and that the guy I voted for the nation’s top job back in 1992 – H. Ross Perot – was saying 15 years ago.
 
This change by Blinder and Samuelson and other contrarian economists is what people like Ralph Gomory have been saying for a long time, according to Wessel and Davis. Gomery, the former chief scientist for IBM Corp. who now heads the Alfred P. Sloan Foundation, says 'that changing technology and the rise of China and India could make the U.S. an also-ran if it loses many of its important industries.'
 
Odd that he should say that since IBM not long ago sold its personal computer line -- including its well-regarded Think Book laptop models -- to Lenovo, a Chinese company!
 
Lou Dobbs and Ross Perot don't sound so far out of the mainstream, do they now?
 
So, click on the links and read both the WSJ story of a couple of days ago and the Foreign Affairs piece of last year. Both are accessible to the general reader – and both are worth reading.
 
Welcome, aboard, Mr. Blinder!