Pejman, allow me to quote from that telling link so that we can make sure it's seen. From a letter to the NYT by Cafe Hayek's Don Boudreaux:
Paul Krugman again insists that trade with low-wage countries - especially China - threatens to depress wages in America ("Dealing With the Dragon, January 4). So I again refer Mr. Krugman (the shrill pundit) to Dr. Krugman (the skilled scholar of trade).
In his excellent 1996 essay "Ricardo's Difficult Idea," Dr. Krugman pointed out that wages are determined by worker productivity. Therefore, low wages reflect low productivity. This fact, once grasped, reveals that low-wage countries have no general competitive advantage over high-wage countries. Dr. Krugman continued: "Someone like [James] Goldsmith [a protectionist] looks at Vietnam and asks, 'what would happen if people who work for such low wages manage to achieve Western productivity?' The economist's answer is, 'if they achieve Western productivity, they will be paid Western wages' - as has in fact happened in Japan."
Substitute "Mr. Krugman" for "Goldsmith," and "China" for "Vietnam," and Dr. Krugman's learning should calm Mr. Krugman's fears.
Sincerely,
Donald J. Boudreaux
Now that's some good stuff.