Getting it from the left

I was at the University of Massachusetts Amherst yesterday, giving their annual Philip Gamble Lecture.  The department of economics there is an unusual one. For one thing, they hand you a bag of cider donuts and a bunch of chocolate chip cookies before your talk--which should really be made standard practice in the lecture circuit. More substantively, the department is well known as the hangout of left-wing critics of economics and economic policy, so I had a different reaction to my talk than I am accustomed do.

Instead of getting questioned on whether I am downplaying the benefits of further trade and financial liberalization, I was quizzed on why I thought standard economics was at all a useful starting point for my policy agenda.  And instead of people being worried about how policy space would be abused by developing nations, I was asked whether international financial institutions and multinational enterprises would ever tolerate such a thing. I don't think my answers--yes, indeed standard economics does help you analyze the real world as it is, and no the real problem is that developing countries are giving away voluntarily the policy space that they should treasure--convinced anyone.

Which reminds me of what someone once said about my work, that it is perfectly calibrated to annoy both the adherents and opponents of the standard way of doing economics.  What a way to win friends and influence people...

Comments

[Chandan]

oh...they serve pizza and soda before any such lectures here in my college (at least in Econ and Math dept) as well...

[JMG3Y]

Annoying both sides of a debate but not being dismissed by either probably means you are pretty close to right.

[nathan]

JMG3Y said:
Annoying both sides of a debate but not being dismissed by either probably means you are pretty close to right.

I dunno, think of someone who took a moderate position on slavery. He would have pissed off hard-core abolitionists and plantation owners alike. And in that case I doubt any of us think the "right" position was in the middle. ;-)

I don't mean anything negative about Dr. Rodrik by this, I'm just saying the truth isn't always in the middle. And besides, political economy is hardly a one-dimensional space.

[nathan]

NB: I tried to put the quoted text above in italics tags, but typepad must have eaten the them.

[pat toche]

Don't flinch! Don't surrender! We read you!

[jerry]

Not at all meant to put Professor Rodrik in this box, it's actually a terribly illogical fallacy to think that pissing everyone off means that you're right, accurate, moderate, or neutral.

That's what journalists often say when placing their phony balance game that's really meant to excuse their own laziness.

And I've often found that when everyone is screaming at you that you're a jerk, well, you just might be jerk. (Please don't ask me how I know this.)

[Sean]

Seems like economics can never win politically. Because economics says that 'yes, you have to work for yourself, the government can't always help you' and 'no, not every single person wins all the time'.
It's political suicide to say such truths.

[corvad]

sean: if economics actually spoke, and made normative claims, it would also say that the availability of work (from subsistence to hedge fund ceo "work" is a macro-organized function, that the government can often help you better than "free markets" can, and that redistribution is desireable because not every single person wins all the time (winners and losers having a lot less to do with personal work ethic than sean seems to think).

[corvad]

sean: if economics actually spoke, and made normative claims, it would also say that the availability of work (from subsistence to hedge fund ceo "work" is a macro-organized function, that the government can often help you better than "free markets" can, and that redistribution is desireable because not every single person wins all the time (winners and losers having a lot less to do with personal work ethic than sean seems to think).

[wjd123]

"And instead of people being worried about how policy space would be abused by developing nations, I was asked whether international financial institutions and multinational enterprises would ever tolerate such a thing."--Dani Rodrik

I'm sorry, but I can't determine what "thing" referrers back to? Could someone help me out.

But, until then, let me say that I think the question about what international financial institutions and multinational enterprises will tolerate is right on target. Their intolerance can become very undemocratic. This is something Dani's approach, stressing the domestic, might inadvertently help to undervalue.

"This line of thinking [one-size-fits-all] has vast implications for the design of appropriate global economic arrangements. Hirschman would be aghast at the extent of intrusion into domestic policy-making that the World Trade Organisation or the International Monetary Fund engage in nowadays. As international bureaucracies with a penchant for “best practices” and common standards, these institutions are poorly suited to the task of seeking innovative, unique pathways suited to each country’s particular circumstances." Dani Rodrik, "A World too complex for one-size-fits-all models"

http://www.businessday.co.za/articles/topstories.aspx?ID=BD4A611613

I don't disagree with this when speaking on the "economic side" of a nations political economy, however, I think it might be taken as dismissive of the role internationalism can play in protecting the "political side."

It starts with the fact that international financial institutions and multinational enterprises aren't very democratic. Their values differ from the values of our political economy. If this wasn't so why would we have so many laws and regulations guiding their activity.

It would be comforting to think that business was as interested in social values as they are in their bottom line but that would be to deny the evidence: for example, Internet providers such as Google putting their interest over the democratic value of free speech by helping the Chinese government tract dissenters, or AT&T helping the Bush Administration tract domestic phone calls without a court warrant.

It seems that when push comes to shove democratic values can become secondary to a corporations bottom line. And in times of national stress it's easy for society to lose track of the importance of these values especially when there is an Administration in place that is willing to call war, peace, or a loss of rights, freedom. Combine the agenda of international corporations with politicians who appear to be in their pay, and we are in need of greater protection from the capture of our values by those with undemocratic agendas and their enablers.

There is the problem, "Are democratic values being devalued by people with different agendas? Is globalism with its lack of international laws ane regulations governing trade helping to undermine democratic values. I think it is.

We need another line of defense against the powerful forces of international corporations with their own agenda and politicians who are their willing and well paid enablers.

When values are included as a part of trade deals, as they are in the EU, there is an extra line of defense against the power and agendas of financial institutions and multinational enterprises from capturing and redefining those values by marching to a different agenda.

International trade agreements with international laws and regulations centered around democratic values are just such a way of helping to keep the world safe for democracy. That is not a one-size-fits-all internationalism, but one where international organizations, such as the EU, can use the carrot of trade to encourage other nations to adopt those values while strengthening their own democratic values against the forces of internationalism that would undermine them.

[Qingdao]

I call it the turd (turk?) in the punchbowl syndrome; takes some getting used to but invariably signals you are saying something original as opposed to 95% of "discourse" out there which repeats warmed over stuff someone else has said.

[Gallagher]

As Rodney Dangerfield would say, you are getting "no respect" from either side.

If we want to elevate this discussion however, perhaps both the left and you are missing some nuance on why developing countries are "trading away" development.

Rodrik says the developing countries are VOLUNTARILY trading away and the folks at UMASS say they are being forced to by MNCs.

Both are right. On the one hand MNCs lobby the US government which can exhibit immense pressure on a developing country in a negotiation. Perhaps Hirschman's greatest work on this is NATIONAL POWER AND THE STRUCTURE OF FOREIGN TRADE which shows that when a big country enters an agreement with a small country the negotiation is all about access to the big country so major conditions on the small country by the big country become the ticket to market access--a function of market power.

In the 21st century those conditions are the harmonization of standards as if the US trading partner had a GDP of $60,000 per capita.

But its not all MNCs lobbying the US and like governments.

One, often developing country governments are in cahouts with the "winners" and could care less about S-S losers and shut the losers out of the politics.

What's more, there is a reverse collective action problem going on in a temporal way: the winners are concentrated (MNCs and export firms that will gain immediately from the deal) with the losers dispersed in present and not yet existing in a future sense. Most policies for policy space are to gain a dynamic comparative advantage. Thus the firms that policy space will benefit are in infancy or not even in existence yet and thus have no voice in the process. They bear the costs but aren't hear to vote.

[Paul Mason]

At the termly talks given by guests of the Dennis Robertson Society, attended by Economics students of Trinity College, Cambridge, liberal quantities of port were served during the talk, paid for by the good Dennis's bequest.

Naturally this produced lively discussion of the guest's thesis.

If you want to be remembered and haven't produced a new eternal verity, I can thoroughly recommend this alternative!

[paine]

"yes, indeed standard economics does help you analyze the real world as it is, and no the real problem is that developing countries are giving away voluntarily the policy space that they should treasure--convinced anyone.'

i agree
of course with u
on "the science"

models are models

show any of us
better ones
and we'll all perk up

the real politics of the science
class politics anyway ....
what are you working
on for and towards
what is your class location in the conflicted areas
where the science
has no class
win wins

but two ...
the emerger "states "actions
are they done
"voluntarily "
or
vichy... arily ????

the virtual earth wide reich ???

"international financial institutions "
and
their private bosses
the " multinational enterprises "

[paine]

fortunately

the private bosses often "disagree among themselves "
enough for wiggle room
there are some
both pole
(north and south)
wins
out there

[paine]

btw i doubt
dani
is

"missing some nuance "
here

and needs no lecture on
relative power

[Matías]

Jerry is correct, being criticized by left and right does not equate with being right. Also, if one's work annoys the adherents of the standard way of doing economics, you do NOT tend to be accepted in the Ivy League and publish in the QJE. Just a reminder, Amherst became heterodox because people that truly annoyed neoclassical economists (like Sam Bowles) did not get tenure at Harvard!

[R.Piwowarski]

Hmmm....

"Which reminds me of what someone once said about my work, that it is perfectly calibrated to annoy both the adherents and opponents of the standard way of doing economics."

That's we are doing here, I guess: http://economicsinternational.blogspot.com/

Remy Piwowarski
Economics International, Exec. Director

[david]

Paine, you are generous to a fault.

[david]

Paine, you are generous to a fault.

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It's political suicide to say such truths.

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