Globaphobia

Globaphobia by Gary Burtless, Robert Z. Lawrence, and Robert E Litan, Robert J. Shapiro

Reviewed by: Andrew Ikpoh Seton Hall University

Globaphobia is a neologism introduced by the four authors to describe persistent fear of openness of the economy. Burtless et al. have written a very lucid and thought-provoking book, to show the errors in reasoning that support the strong resistance to increasing economic linkages between the U.S. economy and the rest of the world. They address the book mainly to a general audience of nonspecialists who require both theoretical and empirical facts to follow the debate about the impact of globalization on the American economy. However, the ease with which one can read some parts of the book depends on the type of economics training the person had. It is a good starting point for anyone who wants to quickly get up to speed on this side of the debate. Readers interested in delving deeper into the important theoretical issues about the debate should consult the references provided at the end of the book.

The authors organize the book into seven short chapters designed to refute popular misconceptions and misrepresentation of facts propagated by trade critics who oppose increasing globalization of the U.S. economy. The first chapter gives a concise summary of the main arguments on both sides. It exposes the fallacies in the arguments for protectionism. Trade critics attribute the following adverse economic conditions to the increasing globalization of the American economy in the past twenty-five years:

1. The stagnation of real wage growth since 1973.

2. The widening wage gap between skilled and unskilled workers.

3. The greater inequality of income distribution.

4. The increase in job insecurity due to downsizing or reengineering.

To support their claim, they point to the fact that three important measures of openness of the U.S. economy (i.e., the share of the value of imports of goods and services in the GDP; the cumulative U.S. direct investment abroad and the percentage of immigrants in U.S. population) have increased significantly since the early 1970s, when these adverse economic events began. The critics argue that the increased imports, the increased foreign investments by American companies and the increased immigration of mostly unskilled labor, have all contributed to the...