40. Albert O. Hirschman, National Power and the Structure of Foreign Trade (Berkeley: University of California Press, 1980), 72–73.
41. Proposals for the Expansion of World Trade and Employment, United States Department of State Publication 2411, November 1945. The document was written by interested parties from various government departments under the direction of Assistant Secretary of State William Clayton. It is only a slight exaggeration to consider Proposals the blueprint of modern globalization. It is remarkable that it is so little known and difficult to access. It can be found at http://www. efficientfrontier.com/files/proposals.pdf.
42. Ibid., 1.
43. Clair Wilcox, A Charter for World Trade (New York: Macmillan, 1949), 24. For the history of Proposals’ origins, see Wilcox, 21–24 and 38–40. It should be noted that during the past half-century the United States has gone from being the world’s greatest creditor nation to being its greatest debtor nation.
44. Rhodes, 46–77.
45. T. N. Srinivasan, Developing Countries and the Multilateral Trading System (Boulder, CO: Westview, 1998), 9–11; John H. Jackson, The World Trading System, 2nd ed. (Cambridge, MA: MIT Press, 1997), 36–38. Jackson’s book is considered by most scholars to be the “standard” English-language text on the legal and institutional foundation of the modern trade system.
46. Mancur Olson, The Logic of Collective Action (Cambridge, MA: Harvard University Press, 1965).
47. Bairoch, Economics and World History, 26.
48. Harley, “Ocean Freight Rates and Productivity, 1740–1913: The Primacy of Mechanical Invention Reaffirmed,” 861.
49. Marc Levinson, The Box (Princeton: Princeton University Press, 2006), 7–53; Mark Rosenstein, “The Rise of Containerization in the Port of Oakland,” New York Univerity master’s thesis, 2000, 23–31, http://www.apparent-wind.com/mbr/ maritime-writings/thesis.pdf, accessed on March 13, 2007. Both sources are entertaining and well written; Rosenstein’s thesis is the more balanced, readable, and inexpensive of the two.
50. Rogowski, 100–101; quote, 121. The protectionist Patrick Buchanan and William Clinton, a supporter of NAFTA, are exceptions.
51. T. N. Srinivasan, “Developing Countries in the World Trading System: From GATT, 1947, to the Third Ministerial Meeting of WTO, 1999,” World Economy 22, no. 8 (1999): 1052.
52. Jane Mayer and Jose de Cordoba, “Sweet Life: First Family of Sugar is Tough on Workers, Generous to Politicians,” The Wall Street Journal (July 29, 1991), A1.
53. Technically, these payments are “loans” from the Agriculture Department collateralized by the producers’ crops. The “borrowers” can choose at any time to repay the “loan” with sugar, wheat, cotton, corn, or rice valued at two to three times the market price. Which, of course, they always elect to do.
54. “Sugar Program: Supporting Sugar Prices Has Increased Users’ Costs While Benefiting Producers,” General Accounting Office GAO/RCED-00-126 (June 2000).
55. Timothy P. Carney, The Big Ripoff (New York: Wiley, 2006), 56–61.
56. Mary Anastasia O’Grady, “Americas: Clinton’s Sugar Daddy Games Now Threaten NAFTA’s Future,” The Wall Street Journal (December 20, 2002), A15.
57. A discussion of the history of the relevant GATT “agreements” in agriculture and textiles—the Short-Term Agreement on Cotton Textiles, the Long-Term Arrangement Regarding International Trade in Cotton Textiles, the Multi-Fiber Arrangement, and the Uruguay Round Agreement on Agriculture—is well beyond this book’s scope. For an excellent survey of this subject, see John H. Barton et al., The Evolution of the Trade Regime (Princeton: Princeton University Press, 2006), 92–108.
58. Scott Miller and Marc Champion, “At WTO Talks, Stances Are Hardening,” The Wall Street Journal (January 27, 2006), A7; Scott Kilman and Roger Thurow, “Politics and Economics, U.S. Farm-Subsidy Cuts a Long Shot as Doha Falters,” The Wall Street Journal (July 26, 2006), A10; Bernard K. Gordon, “Doha Aground,” The Wall Street Journal (July 26, 2006), A14.
59. United States Department of Agriculture, “Food Spending in Relation to Income,” Food Cost Review, 1950–97, http://www.ers.usda.gov/Publications/ AER780/, accessed March 23, 2007; Food Remains a Bargain for Oregon and U.S. Consumers,” Oregon Department of Agriculture, http://www.oregon.gov/ODA/news/ 060719spending.shtml, accessed March 23, 2007.
Chapter 14
1. Stolper and Samuelson, 73.
2. Norm Stamper, “A Good Cop Wasted,” excerpted in Seattle Weekly (June 1, 2005).
3. Quoted in Jean-Paul Rodrigue, “Straits, Passages, and Chokepoints: A Maritime Geostrategy of Petroleum Distribution,” Les Cahiers de Géographie du Québec 48, no. 135 (December 2004): 357.
4. “The Tanker War, 1984–1987,” from Iraq, Library of Congress Studies, accessed at http://lcweb2.loc.gov/cgi-bin/query/r?frd/cstdy:@field(DOCID+iq0105), March 26, 2007.
5. Yüksel Inan, “The Current Regime of the Turkish Straits,” Perceptions: Journal of International Affairs 6, no. 1 (March–May 2001), accessed at http:// www.sam.gov.tr/perceptions/Volume6/March-May2001/inan06.PDF.
6. See Rodrigue; see also Donna J. Nincic, “Sea Lane Security and U.S. Maritime Trade: Chokepoints as Scarce Resources,” in Sam J. Tangredi, ed., Globalization and Maritime Power (Washington, DC: National Defense University Press, 2002), 143–169.
7. Jessie C. Carman, “Economic and Strategic Implications of Ice-Free Arctic Seas,” in Globalization and Maritime Power 171–188.
8. Patrick J. Buchanan, The Great Betrayal (Boston: Little, Brown, 1998), 224.
9. Bairoch, Economics and World History, 47–55, 135–138.
10. Mark Bils, “Tariff Protection and Production in the Early U.S. Cotton Textile Industry,” The Journal of Economic History, 44, no. 4 (December 1984): 1041, 1045.
11. Kevin O’ Rourke, “Tariffs and Growth in the Late 19th Century,” The Economic Journal 110 (April 2000): 456–683; quote, 473. The papers by O’Rourke and Bils are representative of a much larger literature.
12. Kitson and Solomu, 102.
13. J. Bradford DeLong, “Trade Policy and America’s Standard of Living: An Historical Perspective,” working paper, 1995.
14. Edward F. Denison, Why Growth Rates Differ (Washington DC: Brookings Institution, 1967), 260–263.
15. Jeffrey D. Sachs and Andrew Warner, “Economic Reform and the Process of Global Integration,” Brookings Papers on Economic Activity 1995, no. 1 (1995): 41. The central difficulty in attempting to assess the impact of free trade on the economy is called the “endogeneity” problem. That is, since economic growth is itself such a powerful driver of trade, proving an effect in the opposite direction becomes highly problematic. As put by Douglas Irwin, the simplistic analyses of Bairoch and Buchanan “rest on the dubious assumption that one can judge a trade regime simply by examining the economic growth that occurs on its clock. A major problem with this approach is that the effects of trade policy on growth are probably swamped by other factors.” Douglas A. Irwin, “Tariffs and Growth in Late Nineteenth Century America,” working paper, June 2000. Economists have recently brought to bear cutting-edge statistical tools in this quest, most importantly “instrumental variables” such as geographic location to disentangle these effects. Such techniques have confirmed and extended the work of Sachs and Warner. For a sampling of this literature, see O’Rourke, 456; Alan M. Taylor, “On the Costs of Inward-Looking Development: Price Distortions, Growth, and Divergence in Latin America,” The Journal of Economic History 58, no. 1 (March 1998): 1–28; Nicholas Crafts, “Globalization and Growth in the Twentieth Century,” IMF Working Paper WP/00/44; Douglas A. Irwin and Marko Terviö, “Does Trade Raise Income? Evidence from the Twentieth Century,” Journal of International Economics 58 (2002): 1–18; Jeffrey A. Frankel and David Romer, “Does Trade Cause Growth?” The American Economic Review 89, no. 3 (June 1999): 379–399; Sebastian Edwards, “Openness, Productivity, and Growth: What Do We Really Know?” The Economic Journal 108, no. 447 (March 1998): 383–398.
17. Maddison, The World Economy, 363.
18. Denison, 262.
19. Those seeking a precise citation for this famous quotation will have difficulty. The sentiment permeates Bastiat’s writings about trade but is never so succinctly stated. This phrasing may be the work of Cordell Hull, who was fond of quoting Bastiat. See Hull, The Memoirs of Cordell Hull, I:363–365.
20. Steven Pinker, “A History of Violence,” New Republic (March 19, 2007); World Health Organization, http://www.who.int/whr/2004/annex/topic/en/annex_2_en.pdf, accessed March 28, 2007.
21. United States Census Bureau, “Historical Income Tables—People,” http: //www.census.gov/hhes/www/income/histinc/p05ar.html, accessed April 3, 2007.
22. Henry S. Farber, “What do we know about job loss in the United States? Evidence from the Displaced Workers Survey, 1984–2004,” working paper, 2006. See also Peter Gottschalk et al., “The Growth of Earnings Instability in the U.S. Labor Market,” Brookings Papers on Economic Activity 1994, no. 2 (1994): 217–272. For a general exposition of increasing inequality and job instability in the United States, see Jacob Hacker, The Great Risk Shift (New York: Oxford University Press, 2006). See also Jackie Calmes, “Despite Buoyant Economic Times, Americans Don’t Buy Free Trade,” The Wall Street Journal (December 10, 1998), A10. The key word here is “relatively”; the United States has relatively more skilled workers than the rest of the world, and has relatively fewer unskilled ones.
23. Susan Chun Zhu and Daniel Trefler, “Trade and inequality in developing countries: a general equilibrium analysis,” Journal of International Economics 65 (2005): 21–48.
24. Katheryn Gigler, personal communication. See also “Secrets, Lies, and Sweatshops,” Business Week (November 27, 2006).
25. Ashley S. Timmer and Jeffrey G. Williamson, “Immigration Policy Prior to the 1930s: Labor Markets, Policy Interactions, and Globalization Backlash,” Population and Development Review 21, no. 4 (December 1998): 739–771.
26. Human Development Report, 2006 (New York: United Nations, 2006), 335–338.
27. Alberto Alesina and Roberto Perotti, “Income Distribution, Political Instability, and Investment,” European Economic Review 40 (1996): 1203–1228.
28. Geoffrey Garrett, “Global Markets and National Politics: Collision Course or Virtuous Cycle?” International Organization 52, no. 4 (Autumn, 1998): 798.
29. See Michael Kremer, “The O-Ring Theory of Economic Development,” The Quarterly Journal of Economics 108, no. 3 (August 1993): 551–575.
30. See Adrian Wood and Cristóbal Ridao-Cano, “Skill, Trade, and International Inequality,” working paper; and Paul Krugman, “Growing World Trade: Causes and Consequences,” Brookings Papers on Economic Activity 1995, no. 1 (1995): 327– 377. For a superb summary of this controversial area, see Ethan B. Kapstein, “Review: Winners and Losers in the Global Economy,” International Organization 54, no. 2 (Spring 2000): 359–384. For a 100-step process with a 99 percent success rate at each step, the probability of overall success is 0.995100, or 61 percent. At a 95 percent success rate for each step, the overall success probability is 0.95100, or 0.6 percent.
31. Daniel Trefler, personal communication. See also Daniel Trefler, “The Long and Short of the Canada-U.S. Free Trade Agreement,” American Economic Review 94, no. 4 (September 2004): 888.
32. Westminster Review (April 1825), 400–401. The article is anonymous; Mill’s authorship is identified in Frank W. Fetter, “Economic Articles in the Westminster Review and Their Authors, 1824–1851, The Journal of Political Economy 70, no. 6 (December 1962): 584.
33. Jagdish Bhagwati, In Defense of Globalization (Oxford: Oxford University Press, 2004), 234.
34. Ibid.
35. Daniel Trefler, “Trade Liberalization and the Theory of Endogenous Protection:An Econometric Study of U.S. Import Policy,” Journal of Political Economy 101, no. 1 (February 1993): 157.
36. Dani Rodrik, Has Globalization Gone Too Far? (Washington, DC: Institute for International Economics, 1997), 5–7.
37. Ibid., 79.
38. Paul A. Samuelson, “Where Ricardo and Mill Rebut and Confirm Arguments of Mainstream Economists Supporting Globalization,” The Journal of Economic Perspectives, 18, no. 3 (Summer 2004): 137. For a delightful radio interview with Professor Samuelson on the topic, see http://www.onpointradio.org/shows/2004/09/20040927_b_main.asp. As might be expected, Samuelson’s article caused significant controversy among economists, not all of whom agree with the relevance and accuracy of his model. For the most cogent criticism, see Jagdish Bhagwati et al., “The Muddle over Outsourcing,” Economic Perspectives 18, no. 4 (Fall 2004): 93–114.
39. Samuelson, 142.
40. Rodrik, 54.
41. The Oxford Dictionary of Quotes, 3rd ed. (Oxford: Oxford University Press, 1979), 150.
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