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Global Outlook: Spring 1999, New YorkAuthor(s): Sandeep PuriSource: Foreign Policy, No. 115 (Summer, 1999), pp. 130-132Published by: Washingtonpost.Newsweek Interactive, LLCStable URL: http://www.jstor.org/stable/1149501 .

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Global Newsstand

higher wages or greater opportunity. If firms relocate in order to cluster together but skilled labor does not migrate accordingly, labor shortages will drive up wages and mitigate the appeal of proximity. Eventually, high labor costs will prompt firms to relocate in search of cheaper manpower, until wages reach an equilibrium. Therefore, Puga concludes, further European integration may result in a leveling of wages across national borders; but firms will remain more dispersed than they are in the United States.

Economist Riccardo Faini, of the University of Brescia in Italy, comple- ments Puga's analysis by examining income disparities within the economies of the European Union (EU). Faini notes that although income gaps among EU economies have been declining, income differences within some Euro- pean countries-such as Italy-have stagnated or widened. Why?

Faini emphasizes institutional factors, particularly the role of organized labor. In seeking to set a common national wage-regardless of disparate skills or productivity-unions may hinder demand for labor in poorer regions, thus aggravating income differences. But even if unions cannot even out income disparities within countries, it is still likely that European inte- gration will cause average wages to converge across national borders. (Orga- nized labor-typically unable to coordinate wage demands from one country to the next-will not present an obstacle to this convergence) Like Puga, Faini stresses the significance of labor mobility: If skilled workers migrate in the face of stagnating incomes, unions may moderate their wage demands and thus exert a positive effect on employment, and therefore, on growth.

Work by Puga, Faini, and others in this volume suggests that even if the NEG remains in relative infancy, it already provides valuable insight into the outcomes of policies based on established, contemporary models. The NEG is not only pushing the boundaries of future economic study; it is helping to clarify the past and present as well.

-Carlos Lozada Economic Analyst

Federal Reserve Bank of Atlanta

Global Outlook Spring 1999, New York

The United States is experiencing record trade deficits as the global financial crisis limits the ability of American farmers and manufactur- ers to export overseas. Once again, the familiar coalition of labor unions, industrial lobbyists, and congressional critics of President

130 FOREIGN POLICY

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Global Newsstand

Bill Clinton's free-trade policies has emerged from the woodwork to clamor for protectionist legislation. Consequently, the question that Murray Weidenbaum asks in the inaugural issue of Global Outlook- an academic journal affiliated with the Zicklin School of Business at Baruch College in New York City-is particularly timely: Why should Americans be interested in international trade policy?

In his essay "The Stake of the Average Citizen in the World Econ- omy," Weidenbaum-an economist who served as a member of the Reagan administration's Economic Policy Advisory Board-argues that as the world's largest exporter, the United States has "a sub- stantial economic stake in freeing world commerce from unneces- sary restrictions." One measure of this stake is the value of U.S. exports: $791 billion in 1996. By contrast, Germany's exports were valued at $431 billion, Japan's were $318 billion, and the United Kingdom's were $269 billion.

Throughout his essay, Weidenbaum's mission is to defend the policy of unrestricted trade. He bases his view on the textbook argument that open trade promotes a more efficient economy, gen- erates higher living standards, lowers inflation, and "exerts pres- sures on producers to improve the quality of products they sell to consumers." In a section of the essay entitled "Does International Trade Hurt U.S. Workers?," Weidenbaum notes that the United States is enjoying the lowest unemployment rate in more than 25 years. Between 1980 and 1995, the U.S. economy created 27 mil- lion new jobs, compared with 8 million in Japan and a decline of almost 15 million jobs in Western Europe.

What gets lost in this enthusiasm, however, is the causal link between these feel-good statistics and free trade. Another consider- ation that is veiled by aggregate numbers is the question of who wins at whose expense. Free trade may produce macroeconomic benefits, but U.S. citizens who favor protectionist policies do so for reasons other than economic efficiency. One concern tends to be the preser- vation of manufacturing jobs or other types of work that allow com- munities to endure. Textbook theories are of little comfort to the estimated 380,000 people who lost their jobs at U.S. manufacturing plants last year because of slumping exports. Moreover, others argue that human rights should be a consideration when the United States chooses its trading partners. Economic efficiency may be desirable, but so are other values. How does one decide when one

SUMMER 1999 131

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Global Newsstand

value should prevail over another? An answer to this question would have allowed the reader to have had a more thorough per- spective on the title of this essay.

-Sandeep Puri Management Consultant

New York City

Journal of Cold War Studies Winterl999, Cambridge

The 1990s have proved a windfall for Cold War historians. Since 1992, Western scholars have had access to document archives throughout the former Soviet empire-a wealth of new information that has prompted analysts to rethink many of the events of the last 50 years. The Journal of Cold War Studies, launched this year, promises to be a leading forum for this path-breaking archival research. Build- ing on the important work of the Cold War International History Project and the National Security Archive-the two organizations that have done the most to collect and release previously classified documents-the journal fills a void for historians and political sci- entists studying the Cold War.

In an article that takes up nearly half of this inaugural issue, the journal's founder and editor, Mark Kramer, of Harvard University, reassesses the critical months following Joseph Stalin's death in March 1953. Kramer sheds new light on the succession struggle inside the Kremlin. Relying almost exclusively on documents mined from archives in the former Soviet Union, he describes serious con- cerns among Moscow's leadership about bubbling unrest in 1953 throughout the USSR's satellites.

Kramer explains that when Bulgaria, Czechoslovakia, and the German Democratic Republic faced labor unrest and a refugee cri- sis, there was broad consensus within the Kremlin for these states to modify and even abandon Stalinist policies. Stalin's drive for col- lectivization and industrialization had brought his European "allies" to their knees; his successors realized that without significant policy changes, many of these countries would implode. Kramer's new evi- dence shows how Soviet leaders appreciated that to preserve their dominance, they needed European stability-which meant a relax- ation of Stalinism. This period, as Kramer describes it, provides

132 FOREIGN POLICY

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