My mind is ever toying with economic ideas and relationships. Great novelists and poets have reported occasional abandonment by their muse. The well … - Paul Samuelson

Instead of attenuating this paper’s theses, heterogeneity amplifies its importance. Contemplate a scenario where Schumpeter’s fruitful capitalist destruction harms a really sizeable fraction of the future U.S. population and, say, improves welfare of another group and does that so much as to justify a calculation that the winners could be made to transfer some of their gains and thereby leave no substantial U.S. group net losers from free trade. Should noneconomists accept this as cogent rebuttal if there is no evidence that compensating fiscal transfers have been made or will be made? Marie Antoinette said, “Let them eat cake.” But history records no transfer of sugar and flour to her peasant subjects. Even the sage Dr. Greenspan sometimes sounds Antoinette-ish. The economists’ literature of the 1930s—Hicks, Lerner, Kaldor, Scitovsky and others, to say nothing of earlier writings by J.S. Mill, Edgeworth, Pareto and Viner—perpetrates something of a shell game in ethical debates about the conflict between efficiency and greater inequality.
Policy aside and ethical judgments aside, mainstream trade economists have insufficiently noticed the drastic change in mean U.S. incomes and in inequalities among different U.S. classes. As in any other society, perhaps a third of Americans are not highly educated and not energetic enough to qualify for skilled professional jobs. If mass immigration into the United States of similar workers to them had been permitted to actually take place, mainstream economists could not avoid predicting a substantial drop in wages of this native group while the new immigrants were earning a substantial rise over what their old-country real wages had been.

Years ago, I wrote aphoristically: “Inside a classical economist, you discern a neoclassical economist trying to get in.” My archetypical tableaux flesh out this heuristic perception. And, in my considered opinion, these explications cast cogent doubts on that view popular in the 1950s and early 1960s that “going back to the classics” somehow offered a different and better alternative to the post-neoclassical mainstream paradigms.

Inside every classical economist is a modem economist trying to get out. In rereading the Wealth of Nation is, it seems to me that with a little midwifery sleight of hand, one can extract from Adam Smith a valuable model that vindicates him from criticisms of Ricardo and Marx and from the general supercilious discounting of Smith as an unoriginal theorist who is logically fuzzy and eclectically empty.