A lapse in concentration

A dearth of competition among firms helps explain wage inequality and a host of other ills

IN “THE FUGITIVE”, a 1960s television drama, David Janssen plays Richard Kimble, a doctor wrongly convicted of murdering his wife who escapes on the way to his execution. He claims, but cannot prove, that he encountered a one-armed man minutes before he discovered his wife’s dead body. After his escape he drifts from town to town trying to find the ghostly figure and to elude the man obsessed with recapturing him.

The damage that globalisation has done to America’s economy is as obvious to some as Dr Kimble’s guilt was to his pursuers. Careful academic studies have linked competition by Chinese manufacturers to the growing propensity of prime-aged men to drop out of the labour force. A pillar of trade theory says that increased commerce with labour-rich countries will depress the pay of the low-skilled; and some reckonings of wage inequality in America pin part of the blame on trade and migration. GDP growth has been sluggish during the long hangover from the financial crisis. The globalisation of finance provided the kindling for America’s subprime crisis and spread its effects around the world. Globalisation is on the run. But might there be another brigand who bears responsibility for its alleged crimes?