He then censures the liberal left for abandoning the domestic struggle against inequality. His argument is historically incorrect. As a matter of fact, I am more likely than not to meet the same opponents carrying the same corporate water, opposing the social contract here and abroad. Finally, when Mandle sets up a straw man, he should make sure that he knocks it down. In this case, he swings at the effigy of protectionism by telling us that wages have nothing to do with unions or institutions but depend exclusively on productivity and growth, which he asserts is a result of increased trade.
Productivity obviously does set a constraint on wages.
But the range of possibilities in the distribution of the benefits of productivity between capital and labor are much greater than Mandle asserts. Thus, over the last quarter century of the globalizing of the American economy, productivity has risen about 25 percent, while the median compensation of the American worker has fallen. As for the effect of free trade on growth, it continues to be vastly overstated in the economists catechism. As I pointed out in myreview of Dani Rodrik s book on globalization in the Fall 1997 issue of this magazine, economists have not been able to ascribe more than a small portion of postwar economic growth to trade liberalization. Indeed, during the last two decades of accelerating U.S. exports, America s economic growth has slowed down.