Jonah: An idiosyncrasy of contemporary American political debate is that concern with “competitiveness” is so often associated with the Democratic party, and is often used as a code word for industrial policy and a host of social engineering initiatives. I think it is a mistake for the right to concede this territory.
You link to a quote from Paul Krugman, supposedly discrediting the idea of national competitiveness:
International trade, unlike competition among businesses for a limited market, is not a zero-sum game in which one nation’s gain is another’s loss. It is [a] positive-sum game, which is why the word “competitiveness” can be dangerously misleading when applied to international trade.
But this doesn’t make a lot of sense to me. Sure, some product markets are somewhat limited, but competition between companies as a whole is not generally “zero-sum” either — hence, economic growth.
International trade can make both parties better off than they would be without the exchange. But there are still relative winners and losers. Some societies are populated by lots of people with high-wage jobs, nice houses, and good schools, and other societies are populated by lots of people hustling for tips from vacationers from the first kind of society. Over time, people who spend their working hours generating goods or services that they can sell for a big margin versus the costs of the required inputs will tend to live in the first kind of society. Nothing is forever in this world, but I want America to remain in that camp for a very long time.
In sum, we want the rest of the world to get richer, but we want to stay much richer than they get.