The threat of globalization and the reality of de-unionization have combined to make the raise, for most Americans, a thing of the past. Between 2001 and 2004, median household income inched up by a meager 1.6 percent, even as productivity was expanding at a robust 11.7 percent. The broadly shared prosperity that characterized our economy in the three decades following World War II is now dead as a dodo.

Also dying, if not yet also kaput, is the comforting notion that a good education is the best defense against the ravages of globalization -- or, as Bill Clinton famously put it: What you earn is the result of what you learn. A study last year by economists J. Bradford Jensen of the Institute for International Economics and Lori Kletzer of the University of California at Santa Cruz demonstrates that it's the more highly skilled service-sector workers who are likely to have tradable jobs. And according to the Bureau of Labor Statistics, the proportion of jobs in the United States that require a college degree will rise by a measly one percentage point -- from 26.9 percent in 2002 to 27.9 percent in 2012 -- during this decade.

Since education as such won't save us, Blinder recommends a kind of particularized vocational ed. We will have to specialize more, he writes, "in the delivery of services where personal presence is either imperative or highly beneficial. Thus, the U.S. workforce of the future will likely have more divorce lawyers and fewer attorneys who write routine contracts." Now, there's a prospect to galvanize a nation.

[...]

To be sure, the furor over [N. Gregory] Mankiw's [February 2004] remark [that offshoring was normal and good for all concerned] was grotesquely out of proportion to the current importance of offshoring, which is still largely a prospective phenomenon. Although there are no reliable national data, fragmentary studies indicate that well under a million service-sector jobs in the United States have been lost to offshoring to date. (A million seems impressive, but in the gigantic and rapidly churning U.S. labor market, a million jobs is less than two weeks' worth of normal gross job losses.) However, constant improvements in technology and global communications virtually guarantee that the future will bring much more offshoring of "impersonal services" -- that is, services that can be delivered electronically over long distances with little or no degradation in quality.

That said, we should not view the coming wave of offshoring as an impending catastrophe. Nor should we try to stop it. The normal gains from trade mean that the world as a whole cannot lose from increases in productivity, and the United States and other industrial countries have not only weathered but also benefited from comparable changes in the past. But in order to do so again, the governments and societies of the developed world must face up to the massive, complex, and multifaceted challenges that offshoring will bring. National data systems, trade policies, educational systems, social welfare programs, and politics all must adapt to new realities. Unfortunately, none of this is happening now.