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September 18, 2015

Comments

Opardor

Danny's answer is so odd. First, he claims he supports intranational trade since the conditions that would make it undesirable are unlikely in developing countries, where he "spends more of his time". Then he enumerates three conditions which he thinks holds in developing countries. First, labor mobility, which is not smooth in geographically or ethnographically fragmented countries. Second, he assumes that political representatives from affected regions represent the interests of the affected populations. Thirdly, he claims that "when I lose my company or job it is because another company worked harder, invested more or innovated better - not because it denied workers it's bargaining rights, despoiled the environment or received huge subsidies", which clearly sounds like a joke to anyone doing business in developing countries.

Steven Hales

"Another thing that happens is that there is an overarching state that will engage in transfer payments and other policies that aid the lagging region. The region will have political representatives in the national government who will push for the interests of those adversely affected."

Why wouldn't these same outcomes apply to foreign competition?

A further question, don't those transfer payments impede incentives to reinvest within the affected region or make it a more desirable place than it really is for the affected workers? Why isn't that malinvestment?

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In light of the empirical reality of most developing nation regulatory systems, this strikes me as bizarre,

"The boundaries of a nation are defined by shared sense of collective purpose, as embodied, in part, in that nation’s common laws and regulations and in its instruments of solidarity."

To take one example: In the Central African Republic, it takes an average of 46 days to prepare a container for export and 68 days to complete the procedures required to import a container. Does Prof. Rodrik believe that these procedures were the outcome of a deliberative democracy in which the "collective purpose" of the nation had been discovered? In Singapore the comparable figures are 6 days and 4 days.

I'm sure that Prof. Rodrik can cite legitimate examples of laws and regulations that do, in some sense, represent "a shared sense of collective purpose." That said, the great mass of red tape that is perpetuating global poverty is more likely a combination of protectionist legislation serving cronies and/or poorly thought out rules that serve no one's interest well, except the bureaucrats that thereby collect bribes and "gifts" to get things done.

If it was possible to get Prof. Rodrik to go through every legal and regulatory obstacle to economic freedom in developing nations, I suspect he could only justify a tiny fraction of those laws and regulations either on the grounds of economic efficiency or "collective purpose."

As a consequence of the empirical reality that most laws and regulations in developing nations are unjustifiable (whether with respect to free trade or internal regulation), the morally-motivated economist should emphasize the need to reduce irrational obstacles rather than emphasize those cherry-picked circumstances in which his vision of the world actually has some validity.

OH Anarcho-Capitalist

The answer provided is less economic than political. Yes, libertarian thought posits all government action beyond security and justice to be superfluous and destructive of liberty and property.

So, the arguments presented is not that there is any economic difference between intra- and international trade, rather political considerations distort markets and can artificially create win-lose propositions where none should exist.

So Prof Rodrik assumes political reality as set and unchangeable, therefore artificial political restrictions on voluntary, peaceful exchange are justifiable in the eyes of those imposing them.

Political fatalism masquerading as economic theory...

Khalil  Hegarty

This assumption can't be considered universal:

One thing that can happen within a nation – and not across nations – is that the workers in that region can migrate to other regions and therefore partake in the benefits of trade that accrue elsewhere. That is how, for example, Southern states in the United States adjusted to the industrial dominance of the North.

This isn't the case in countries such as Indonesia or China (and many other places) where domestic migration and human movement is controlled. Similarly, this:

Another thing that happens is that there is an overarching state that will engage in transfer payments and other policies that aid the lagging region.

This makes the assumption that the 'overarching state' will inevitably distribute wealth evenly, whereas the disparities between urban and rural revenue distribution can be stark, thinking specifically of Thailand (where it is used to prop up a middle-class voter base for Thai royalists) and, historically, Indonesia, where most of the 14,000 islands that aren't Java (including Sumatra, geographically the largest island) have for the most part been ignored and suffered economically as a result.

I think this all boils down to the assumptions in this statement:
The boundaries of a nation are defined by shared sense of collective purpose, as embodied, in part, in that nation’s common laws and regulations and in its instruments of solidarity.

This is true of a strong state, but the fact is the majority of the world's states are in fact weak. Governments are not accountable, they are absent rule of law, democracy is ineffective. They are not defined by a 'collective purpose'; they are merely defined by an arbitrary political boundary. In other words, Professor Rodrik views a nation state as politically homogeneous; whereas in many cases they are rife with division that can be equal to or worse than international political divisions.

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