Many of you have sent me this, and requested comment, thanks for the pointer. Read the essay, here are a few remarks for perspective:
1. The current results on trade, wages, and jobs do not support his basic claims. Those results are not definitive, and might be wrong, but so far they're better than anything Grove serves up. And his entire argument depends on the assertion that trade is a major factor hurting the U.S. job market.
2. Only he who first shows he understands comparative advantage has license to partially reject it.
3. There is so much talk about scale, scale, scale. The big exporting success these days is Germany, which has less "scale" than does the United States. What is the evidence that lack of scale is the problem, rather than a symptom, even assuming it is a generalizable symptom? I don't see it.
4. He doesn't once mention that we might get useful ideas from China and other countries, or that their prosperity is good for America.
5. I would like him to state how Asians enter into his social welfare function.
6. He calls for a tax on Chinese imports; at best, given the logic of his argument, this would imply a tax only on the increasing returns industries, not a general tax. He doesn't seem to realize this.
7. Is he assuming that the whole world works like his sector — semiconductors — does?
8. An innovation shortfall may well be a serious problem today, as every reader of Michael Mandel should know. But what are Grove's solutions? The government tries to pick winners, on a massive scale with public funds, and we start a big trade war against China? The evidence for these proposals is one citation to Robert Wade. Sorry, I'm not convinced. I heard that in the 1980s except China was Japan. We ignored that advice in the 80s and in the 90s the job market was fine. Grove is writing from a time warp in which these debates never happened or never were settled or never something — I don't know what.
9. And now for something completely different: Analects of Boettke.