A few years ago, the rich world’s worry about economic interaction with developing countries was that the poor could not profit from it. So unbalanced were the terms of exchange between the North’s mighty industries and the South’s weakling sweatshops that trade between the two could be nothing more than exploitation of the one by the other; far from helping the poor countries, global integration would actually deepen their poverty. This fear has now given way to a pessimism that is equal and opposite--namely, that trade with the developing world will impoverish today’s rich countries.
This new fear is more dangerous than-the old one. The earlier scare tacitly affirmed that the, industrial countries would suffer if they cut heir links with the third world. Starting from there, campaigning in the North to restrict trade with developing countries was going to be an uphill struggle. Those who oppose deeper economic integration now have a better platform. Vital interests oblige the rich countries to protect their industries from the new competition. Unlike its predecessor, this idea may sell.
The new fear, like the old one, expresses the conviction that growth in one part of the world must somehow come at the expense of another. This is a deeply rooted prejudice, and plainly wrong. Very nearly all of the world is more prosperous now than it was 30 years ago. Growth has been a story of mutual advance.
Lending useful support to this first error is a second--the idea that there is only so much work to go round. If new technologies make some jobs obsolete, or if an increase in the supply of cheap imports makes other jobs uneconomic ,the result must be a permanent rise in unemployment. Again, on a moment’s reflection, this is wrong.
At the core of both errors is blindness to the adaptive power of a market economy.