Trade and compensation

Steven Landsburg has some good points to make about why trade-induced changes in income distribution should not automatically call forth compensation for the losers.  We accept such losses (and offer no compensation) in too many other circumstances--for example, when technological progress leaves some people behind.

But he misses the important point that we do not blithely accept all such situations either. The kind of introspection Landsburg asks us to undertake also suggests that we judge the appropriateness of a change in income distribution by asking whether the mechanism that causes it is consistent with basic moral precepts and prevailing norms.  In other words, we use a procedural fairness test. If we discovered tomorrow that Bill Gates had obtained his billions by lying and cheating the companies he decimated (instead of by ingenuity and hard work), we would think far less--or even less--of Microsoft. 

Similarly, what is at issue in globalization debates is the procedural fairness of some types of outsourcing.  Trade is controversial because it involves exchanges of the type we routinely block at home (e.g., exchanges that involve unfair labor or environmentally harmful practices). This often makes trade look different from other instances of redistribution. I have written about this before.

Another key point not to lose sight of is this.  The question of how we should respond to a trade-induced change in income distribution is not one on which economists can offer any expertise.  This is a question about ethics, values, and norms, none of which is part of an economist's training. Landsburg's take on this is as good as mine--which is as good as that of any person on the street.  But once we accept that trade creates losers, at least we can begin to confront these questions explicitly.

Comments

[John V]

Ha. I just read the Op-ed via Cafe Hayek and then instantly get a reaction by coming here.

Interesting points. The part near the end about how an economist is no position to address the moral implications of the issue is interesting.

The idea that we need to judge such actions on ethics and norms is a strange one as is the idea about how we "fairly" go about doing this.

I don't think Hayek would agree with you, Dr.

This is an important topic. I hope Dr. Landsburg or even Dr. Boudreaux continue the discussion by commenting on your reaction.

[v]

Exactly. Some oustanding points there Rodrik; I agree completely. Thank you for voicing them.

[Lane]

Wise trade policy involves not only economic and normative but also political-economic considerations. Suppose a policy maker (or presidential candidate) agrees with Landsburg that informed ethical reasoning dictates no compensation to losers from trade. If many citizens don't share this view and therefore oppose trade in the absence of compensation, and if trade generates significant net benefits, then compensation is smart policy.

[John V]

The Economist has noticed the piece plus Rodrik's reaction:

See here.

http://www.economist.com/blogs/freeexchange/2008/01/trade_and_consequences.cfm

[Tim Worstall]

"But once we accept that trade creates losers, at least we can begin to confront these questions explicitly."

Perhaps. But we should also acknowledge that not trading also creates losers.

Imagine (as has actually happened recently) that trade in bra and panty sets between the EU and China is open. Imports to the EU come flooding in, threatening jobs of those textile workers in the EU. But also to the benefit of consumers of the bra and panty sets.
Protecting those textile workers (as was done) by quotas was a transfer of resources from consumers to those textile workers. An inefficient one too.
Now here we have the usual logic of compensation for trade changes turned on its head.
*Normally* we are told that we should compensate those who lose out from increased trade. Again, normally, in the form of a lump sum transfer from those who benefit to those who suffer.
Fine, when I see people arguing that the newly protected textile workers of the EU are to make a lump sum transfer to the consumers of bra and panty sets then I'll start listening to arguments that such transfers should happen in the reverse case, when we lower trade barriers.

[CalDem]

wow what a dishonest editorial by Landsburg (as usual). He decides to completely ignore that the real concern is the exacerbation of the large levels of inequality in the U.S. With declining marginal utility of income(wealth) a transfer that maximizes net monetary benefits may decrease total utility. Therefore his initial contention that there is net benefit is questionable and probably wrong.

I'm surprised Dani falls into this trap since he has written about it so eloquently before.

And its absolutely awful economics from Landsburg.

[alex]

CalDem,

Good point. Funny how that diminishing marginal utility stuff, considered so fundamental elsewhere in economics, gets conveniently overlooked when talking about aggregates like GDP.

Landsburg also takes the smugly simple-minded approach of conflating foreign and domestic trade. Like the people who call the US an early example of a free trade zone, they overlook the fact that the document that established that free trade zone had a few side provisions, like the establishment of a representative federal government. The WTO is, to put it kindly, a far cry from that.

[happyjuggler0]

Tim Worstall is absolutely correct. When are farmers going to compensate me (and the poor) for making us worse off for buying artificially overpriced food? When are textile workers going to compensate us for making us worse off for all the artificially overpriced clothes I've bought, and the poor have bought, over the years?

Show me the money, and until you put up, then shut up and leave my wallet alone. Free trade is the only moral option. Everything else is theft.

[alex]

happyjuggler0: "When are farmers going to compensate me (and the poor) for making us worse off for buying artificially overpriced food?"

Just after I'm compensated for paying for other people's kids public school education, college subsidies, the subsidy to low wage earner's social security, federal research grants, Medicaid, and the increased prices I pay due to OSHA and EPA regulations and state granted monopolies of patents and copyrights.

Unless you're a full blown minarchist or anarchist, saying that free trade is the only moral option is ignoring a herd of elephants in the living room.

[save_the_rustbelt]

I'm getting really tired of tenured professors, who have an incredibly effective trade guild (quasi-union) protecting their jobs, crowing about how great it is for others to lose their jobs.

And if all of the economists are so hot on comparative advantage, why isn't the US economy producing lots of new high quality jobs? (note: creating jobs for sleazy lawyers and MBAs does not count).

[happyjuggler0]

alex,

First of all, I am indeed a minarchist.

Second, I fail to see what any of your list has to do with the rent seeking crap of protectionism, or why it means we ought to pay off the rent seekers when we end their scam.

Third, even though I don't see the connection, at least everything on your list is ostensibly to help either the masses or the needy, although if you think that urban government run K-12 schooling is help then I have a bridge to sell you. But surely you understand that paying off rent seekers (i.e. those hiding behind tariff and nontariff barriers) when their rent seeking comes to an end isn't about helping the needy, it is about paying the schoolyard bully to stop stealing from you. How is that moral?

[John V]

save_the_rust_belt,

America is producing lots of new high quality jobs...whether you count MBA's and lawyers or not...and you should.

You just don't hear about them or read about them or look for news on them...partly because you mainly read blogs that would rather complain and be cynical about everything and paint a dire picture about EVERYTHING.

Show me where what you say is true.

Don't worry, when a Dem is back in the WH in Jan. 2009, your blogs will change their perspective and start looking for good news again and Republican blogs will start complaining about everything again.

The libertarians will stay the same since they don't care who's in the WH as much the others do. :)

[Justin Rietz]

A couple of comments:

1. All economic decisions are moral decisions. I challenge anyone to provide an economic policy decision that does not have a moral component.

2. If a government is moving to a freer trade policy than currently exists, I do believe it needs to protect, in the short run, those who are hurt by the change - it was a mistake to have protectionist policies in the first place. The form of protection may be as simple as implementing the changes slowly enough so that those affected have time to adjust. In the long run, however, the protection needs to be phased out, otherwise it defeats the purpose of the policy change made in the first place. I would use Eastern Europe and Sach's "shock therapy" as an example of free market policies implemented too fast without adequate short run protections.

[Student]

CalDem and alex, I think you both are missing the point. Economists, as economists, have a lot to say about diminishing marginal utility in regards to an individual; Economists, as economists, have nothing to say about interpersonal comparisons of utility (this is what you both are doing). Further, Economists have nothing to say about whether a utilitarian ethical system (as CalDem seems to be calling for) or any other option should be the chosen one.

You might reply, but isn't that what Landsburg is doing. Yes, he is, as a private citizen. Nevertheless, if your moral instinct is the same as his when presented with the scenarios posed in the article, then what you are expressing here is more frustration with a perhaps inconsistent set of personal moral beliefs and/or principles than a criticism of him.

I would like to commend Prof.Rodrik for his commentary though, but I must say that I don’t see where it helps the protectionist case. As happyjuggler has already made clear, the morally repugnant option here is protectionism. How non-coercive voluntary transactions could ever be compared to lying or cheating is beyond me.

You are probably thinking: you crazy loon, a voluntary agreement between A and B to pollute C’s property (person included) is harmful, so you too should be against free trade. And I would reply:
Suppose a group of people was kept in bondage for a long time and there was concern that when they were released, some of them would not know how to behave in a civil society and might do some very awful things when given the opportunity to be free. Does this in any way diminish the moral repugnance of slavery? Probably not. What it does mean, is that we better keep an eye on and punish those who do happen to commit (if any do) some terrible acts.

So where is the procedural unfairness of free trade?

[Joseph Becker]

I find two things ridiculous about this post. First advocating that it is moral or correct to compensate the "losers" of trade. Personally I find that concept absurd.

Case in point, when technology changes the requirements to produce something, say the advent of sewing machines relieving the requirement of hand sewing to produce cloth goods, the machine has a comparative advantage in the production of cloth goods. If looked at in the winner/looser mindset you will have the winner (the sewing machine technician) and the loser (the hand-sewer). If the prevailing social norms dictate some level of "fairness", measures would have to be taken to compensate the loser. To do so would introduce a loss of efficiency, most likely in the form of a dead weight loss. Thus eliminating (most) any benefit of the increase in efficiency brought on by the advance in technology. We tolerate the existence of the losers because the benefit to society of the technology is generally so great that it is practically impossible to rationally advocate the hand sewer over the sewing machine.

The existence of the comparative advantage that the machine has over the hand sewer is fundamentally the same as the comparative advantage a sweatshop in Indonesia has over the sweatshop in California (assuming of course there is a comparative advantage). The benefits of comparative advantages are basically so compelling that there is no reason to compensate the loser of change. Regardless of social norms no action should be taken to compensate the "losers".

To illustrate the perils of "fairness" look at the malaise and human suffering protectionism in Indian industry has had since the end of WWII. Compare this to their astonishing increase in living standards since the gradual liberalisation of business practices over the last 10 years. When you look at the benefits of economic freedom the "fairness" added by accommodation in fact does not exist.

Secondly on a Slightly more trivial point, Microsoft has been incredibly unethical in it's business practices over the years. Microsoft IS notorious for stealing ideas and whole business from rivals. Case in point, it regularly developed the proprietary technology presented to it from companies looking to sell their technology to or merge with Microsoft. In fact it is reasonable to associate some of explosive growth in Open source software as a result of disgust by programmers to their constant theft of ideas. If Microsoft could take the ideas it pleased and develop and profit off them, why not cut out Microsoft and develop software as a charitable hobby? There are better explanations of open source, but as an open-sourcer myself and a former Slashdot reader I would be inclined to say Microsoft disgust had a fairly real role to play in FOSS's growth.

[alex]

happyjuggler0: "I fail to see what any of your list has to do with the rent seeking crap of protectionism"

Patents and copyrights, which are on my list, are the ultimate in rent seeking. They're government granted monopolies that can raise prices many fold.

I am indeed a minarchist

Then say no more. My strictly pragmatic views of economics are so far from the assumption that market fundamentalism will automagically lead to optimal outcomes, or that such an approach is inherently morally superior, that I doubt we'll ever find any common ground.

[John V]

Alex,

You make a common mistake when going after "market fundamentalism".

The arguments of those who prefer freer markets and less obstruction of the flow of goods and services are not that the results are always optimal, they simply believe the results are almost always BETTER than otherwise.

There is a difference.

[alex]

Student: "I think you both are missing the point. ... Economists have nothing to say about whether a utilitarian ethical system ... or any other option should be the chosen one."

And yet that's precisely what Landsburg is doing.

Saying that economics is a science, and sciences don't make ethical or moral judgments, is fine. What's ridiculous is to ignore that economic scientists are actual human beings (some of them anyway) and, like other human beings they make ethical and moral prescriptions and judgments all the time.

Moreover, they often make ethical, moral and policy prescriptions using their economic credentials to bolster their credibility. That's what Landsdale did in the op-ed.

Worse, they (perhaps intentionally) confuse science and their personal ethics by saying things like "all economists know that when American jobs are outsourced, Americans as a group are net winners". That attempts to use the credibility of a science to bolster the unscientific claim that "Americans as a group are net winners". Hey, everybody wants to be a winner! Unfortunately, "winner" has no clear scientific definition. I guess (and it can't be anything more than a guess with such vague and biased language) that he means it increases the real mean per capita GNI. I don't think that that's necessarily the same as being "net winners", and to assume that it does, particularly without further discussion or elaboration, is nothing more than a propaganda technique.

"As happyjuggler has already made clear, the morally repugnant option here is protectionism."

happyjuggler0 made clear that he thinks paying more than he can get away with is immoral. I'm not convinced that having to pay slightly higher prices is even a venal sin.

"a voluntary agreement between A and B to pollute C’s property (person included) is harmful, so you too should be against free trade. And I would reply: Suppose a group of people was kept in bondage for a long time and there was concern that when they were released, some of them would not know how to behave in a civil society and might do some very awful things when given the opportunity to be free. Does this in any way diminish the moral repugnance of slavery?"

Now you're saying that trade agreements with environmental regulations are as bad as slavery? Methinks that metaphor is a bit over-the-top.

[alex]

John V: "The arguments of those who prefer freer markets and less obstruction of the flow of goods and services"

"Freer" and "less obstruction" than what? The essence of market fundamentalism is that "freer" and "less obstruction" are always better, no matter what the starting point, and that that consideration always overrides all others. It's just a brand of fanaticism.

"are not that the results are always optimal, they simply believe the results are almost always BETTER than otherwise."

Since market fundamentalists believe that since some is good, more is always better, then they believe that taking it to the extreme will yield the best possible outcome. For practical purposes, that is optimal.

[alex]

Joseph Becker: "If the prevailing social norms dictate some level of "fairness", measures would have to be taken to compensate the loser. To do so would introduce a loss of efficiency, most likely in the form of a dead weight loss. Thus eliminating (most) any benefit of the increase in efficiency brought on by the advance in technology."

How do you come to the conclusion that compensating the losers would eliminate "most any benefit"? If that's the case, then the benefit can't be very great, and you're basically playing a zero sum game.

"The existence of the comparative advantage that the machine has over the hand sewer is fundamentally the same as the comparative advantage a sweatshop in Indonesia has over the sweatshop in California"

No, it's fundamentally different. Indonesia doesn't have greater labor productivity, just much cheaper labor. By contrast, technological change increases labor productivity.

This is a difference that I suspect most people understand intuitively, which is why they're more upset by losers from trade than by losers from technology. They realize that if we returned to the level of technology we had in the early days of the US, then most of us would be dirt poor. Most of the economy would be devoted to just raising enough food, and there would be no electricity, running water, sewers, central heat, rapid transport, or modern medicine. By comparison returning to the same limited level of trade we had then would have a pretty modest effect.

"The benefits of comparative advantages are basically so compelling that there is no reason to compensate the loser of change."

That's nonsensical. If the advantages are so compelling, then the winners should be willing to compensate the losers, as the winners will still have a net gain.

"To illustrate the perils of "fairness" look at the malaise and human suffering protectionism in Indian industry has had since the end of WWII. Compare this to their astonishing increase in living standards since the gradual liberalisation of business practices over the last 10 years."

Read "From Hindu Growth to Productivity Surge: The Mystery of the Indian Growth Transition " by Dani Rodrik and Arvind Subramanian.

http://ksghome.harvard.edu/~drodrik/IndiapaperdraftMarch2.pdf

Rodrik's tagline: "No, it had nothing to do with IT and outsourcing." And, contrary to popular myth, the surge in Indian growth rates preceded their dismantling of "protectionism" by over a decade. By contrast there is no evidence that their supposed commitment to free trade has done anything to increase the growth rate.

[wjd123]

"If the world owes you compensation for enduring the downside of trade, what do you owe the world for enjoying the upside?"--Landsburg

But Americans are willing to forgo the upside of trade when they run in to what Dani refers to as questions of "procedural fairness." As a society we find it morally unacceptable to deal in traded goods made by children or forced labor.

"Some people suggest, however, that it makes sense to isolate the moral effects of a single new trading opportunity or free trade agreement. Surely we have fellow citizens who are hurt by those agreements, at least in the limited sense that they’d be better off in a world where trade flourishes, except in this one instance. What do we owe those fellow citizens?"--Landsburg

If only it were that easy. For instance, our society accepts the right of labor to associate. NAFTA puts American workers in competition with Mexican workers who have no such right. As a society we don't complain about free trade with Canada or the EU on the grounds that it undermines labors right to associate because the workers of these trading partners also enjoy the right to associate. The right of workers to associate, a right they fought hard and long to get, isn't being undermined when we trade with Canada or the EU, however, that right is being undermined in practice when we trade freely with countries such as Mexico and China.

American labor has every reason to feel that free trade with countries that don't allow for the free association of labor is undermining their rights and Americans' economic morality. If we are comparing one countries economic morality to an others why shouldn't we make every effort to isolate the harm done to our economic morality by free trade agreements.

No, if society wants to preserve its economic morality and not have it undermined by the forces of globalism it should try to isolate itself from the moral effects of free trade. Or, find a way to protect its economic morality through international governments.

Our society sees the good in a balance of power between labor and capital. Do we want to allow the forces of globalism on our economic morality to pull us back toward values and ideals more fitting to the morality that underpinned the institution of slavery?

Landsburg with his referral to moral instincts along with the situations he presents--most of which have nothing to do with free trade--seems to think that morality is always a matter of individual choice. Obviously, it is not, If it were we wouldn't have laws with sanctions.

An historian wanting to understand the morality of a people wouldn't look to moral instincts but the laws that a people followed, their values, and their ideals. All of which can be studied objectively, and all of which are social. It's social morality that counts in matters of the procedural fairness of free trade agreements and not the psychological and biological.

The rules and regulations underpinning out political economy are social in nature. They have little to do with moral instinct. If they did every society would have the same morality, and they don't.

It is society that forces the mind to conform to its values not instinct. "Everyday instincts," if this concept means anything, aren't instincts at all. They are the dictates of society to conform to its laws, its values, and its ideals.

What compensation is adequate for the undermining of a workers right to associate? How much social instibility is acceptable when checks and balances no longer hold?

[pat toche]

I'm not sure of myself here, but my gut feeling is that the statement "Trade is controversial because it involves exchanges of the type we routinely block at home" is way off the mark, mere wishful thinking.

Trade is controversial because layhumans fail to understand that it is a mutually beneficial arrangement. Just as they fail to understand many things about economics. Just as they fail to understand that they cannot pay for the house they just bought, etc. Just as they suffer from money illusion again and again and again.

I would love to see evidence that more than 1 percent of Americans care about the sweat shops in China or Vietnam. They don't even care about their ghettos next door!

If layamericans understood that federal reserve injections will eventually feed into higher prices at their drugstores, reward incompetence, and operate redistributions of income of huge proportions, would they just sit back the way they do?

Trade is singled out because it involves transactions with foreigners of different creeds and colors. Period.

[AAS]

Dani, you note that the reason that international trade is controvorsial is because "it involves exchanges of the type we routinely block at home (e.g., exchanges that involve unfair labor or environmentally harmful practices)."

A question or two question then. Isn't one solution to limit international trade to countries with broadly similar labour, environmental, copy right protection, etc. standards--say, between Europe, US and Japan? (Who needs the developing countries with their poor institutions and regulatory standards anyway.....)

I doubt however that autoworkers (and politicians) in Detroit would be more accepting if the jobs were lost to Japan and Germany rather than China and India.

[CL]

Are you saying ethics shouldn't be part of the training or are you lamenting the sad curricula of many schools?
In any case, how then do you justify your own government advisory activities if you don't have any training in ethics?

[Student]

alex, it is nice to see that you've taken the time to reply to my comment, however I'm sure that you achieve much in doing so. In my original post, I quite clearly said that Landsburg was making moral statements as a private citizen (not as an economist), because CalDem was criticizing Landburg as an economist along utilitarian lines and you were endorsing his post. In other words, I was defending his economics by pointing out that the judgement was being made from the position of a private citizen and not from that of an economist; Landburg would probably say the same if you asked him. In that same paragraph, I stated that if you had moral disagreements with him the way to go about it was to either say that your moral instincts differed from his in reaction to the scenarios or to criticize his examples. You did neither. Of course, if you agreed with him on the examples, the whole issue of inequality was a separate topic; for example, would a rich protectionism-benefiting farmer pay less in taxes than an equally rich, free-trade benefiting doctor from a “solving inequality” point of view? Probably not. If the issue is less inequality, people with similar incomes ought to be treated the same regardless of whether they are winners or loosers or neither of the above as a result of free trade. That is why permitting people to trade without “yeah, but”s and wanting less inequality are different issues.

In regards to the comments of happyjugler and my example, I didn't want to be repetitive or sound condescending by making the connections for other people, but since it has caused trouble, I will now. Happyjuggler's posts, more than being a complaint about "I have to pay more", are meant to highlight the fact that one is prohibited from trading with some other individuals; after all, that is why we have to pay more, so you should look at the cause rather than the effect. My example then restated this in a more vivid and obvious way (thus the powerful example of slavery), but the complaint was of course the same. However, the comparison is not between "trade agreements with environmental standards" and free trade. In fact, you quite clearly show this in that the beef is principally with whether one ought to compensate the loosers or not; you advocating for the former. The comparison then is between a policy that reduces people's freedom(protectionism), principally their freedom the trade, for a temporary gain of a sector of society and one which doesn't (free trade). The comparison is between a policy that says you have to compensate those who use the threat of coercion to interfere with your freedom and later makes you into a cow that has to be milked to feed the thugs when their ring of coercion no longer yields them the benefits that it once did and one which doesn’t.

One should try to keep things apart to avoid confusion. Environmental standards, child labor, compensation, and prohibition from trade are all related, but different. What environmental standards country X wants is a decision of country X, not ours (assuming that you believe country X’s government is legitimate and can make policy choices that a majority of its residents endorse directly or indirectly; this is an assumption I’m willing to make because I won’t encounter many libertarians here, and if I do, I don’t need to tell them why they should be for free trade). Whether parents think that children can better help out the family by working is their decision, not ours. Compensation to the “loosers” is plainly immoral just as it would be if the mafia asked the police to compensate them for shutting down their operations in a certain neighborhood. Protectionism, no matter how you try to dress it, is a very ugly thing.

[CalDem]

Landsburg's entire premise is that Americans are net winners from trade. He is relying on his economics credentials to say that. He has zero basis to assert the "net winners" argument. One you abandon the utilitarian framework you can't make the value judgement anymore about decisions that have losers.

I think abandoning utililitarianism and interpersonal comparisons is a mistake. It leaves you only potential pareto as a creiteria. Potential pareto optimal is a bad criteria for policy decisions that ends up in these ridiculous arguments that people should voluntarily agree to contracts that make them worse off because it might be good for someone else.

It would be much better to state the assumptions about the marginal utility of income that would be required to make a trade agreement a net positive. That would be quite eye-opening.

[Armando]

Maurice Allais, Nobel Price for Economics, has proposed a roughly argument against free trade.
When free trade has origin from differences in technology - as in Ricardo -, the costs of adjustments outweigh the benefits.
Adjustments are certain and pervasive, the gains embedded in the more efficient technology would materialize in any case in the long run.
He point at UE: markets are big enough to pick the advantages of increasing returns to scale and there is also the push to improve techologies.
I'm not trained in economic but I found his argument very convincing.

[ranger_granger]

Reading some of the comments here, I've determined that Ayn Rand just won't die.

So, for anyone's future reference, I present...

How To Tell If The Pro-Free-Trade Shill You're Debating With Was The Same Geek Who Had A Hard-On For Ayn Rand Back In Junior High School (And May Still Have):

1) They insert the word "moral" in their arguments -- almost always. Then, they distort
its meaning in much the same way that the French Revolutionaries bizarrely distorted the meaning of
the word "virtue" before they chopped-off the heads of their enemies;

2) They fabricate wildly hypothetical market scenarios, and use them as the basis of their
arguments. These exercises in sophistry are invariably prefaced with variations of the
words, "Now imagine that (such-and-such)..."

3) They routinely, and rather shamelessly, commit the embarrasing logical fallacy of
"appealing to authority" while making their economic arguments. Hence, the
inevitable boast that "all/most economists believe free trade is good". The most
recent example of an economics PhD employing this most elementary and crude form of
argument: Steven E. Landsburg, PhD (University of Chicago) in yesterday's New York Times.
And I quote:

"All economists know that when American jobs are outsourced, Americans as a group are
net winners."

4) They repeatedly (and repeatedly... and repeatedly) refer to obscenely lopsided and unfair trade
arrangements (like that which takes place between the USA and China) as "free
trade".

5) They get blue-in-the-face, railing against "protectionism" when there's the merest whisper about reviewing trade agreements for the USA's side -- but put look innocently up at the sky and whistle when reminded that China closes its border to 90% of American exports.

[alex]

ranger_granger,

I was going to post yet another erudite comment when I saw your post and realized that your earthier approach often does a better job of cutting through the male bovine excrement. Well done!

P.S. It also reminded me of why I like to read Dani Rodrik, regardless of whether I agree with him - his insistence on using real cases rather than hypothetical scenarios.

[John V]

ranger_granger,

entertaining. But I've never read a sentence of Rand in my life.

Besides, you didn't really tackle at all anything that anyone who think of and label as "Randian" said.

You merely gave an uncharitable opinion of the people you disagree with. That's all.

And to you and Alex,

Based on an uncharitable reading of the things you've said along with my reading of Rodrik's latest book, you wouldn't really agree with him that much either beyond his thoughtful considerations and concerns which, to me, seem to pale in comparison with how much he agrees with those nasty people you are criticizing.

I could be wrong...but not by too much.

In my reading experience, economists seem to dwell publicly far more on the limited detailed matters of slight and complex difference with each other than on the vast amount of knowledge and sensibilities they share in common.

[alex]

John V: "to ... Alex, Based on an uncharitable reading of the things you've said along with my reading of Rodrik's latest book, you wouldn't really agree with him that much either beyond his thoughtful considerations and concerns which, to me, seem to pale in comparison with how much he agrees with those nasty people you are criticizing."

In fact there are many ways in which I disagree with Dani Rodrik. So? Reading only people that you agree with leads to a limited groupthink perspective, and is also pretty boring.

What I like about Dani is his insistence on using real world cases rather than hypothetical scenarios, his intellectual honesty, and his lack of concern for orthodoxy or encouraging the "barbarians" (whichever side they're on).

BTW, where exactly did I call people I disagree with "nasty"?

[Student]

ranger_granger, I'm not sure if I was included in that honorable long titled group, but even if I was not, it is my understanding that discussions are best when kept at a purely intellectual level and not soaked in condescension and/or name calling.

In that respect:

1) It wasn't us "geeks" who inserted the word moral. The moral context of the issue was the very thing that was being discussed both in the post and the article. Shall I also remind you that libertarian "geeks" aren't the ones who use the word moral to justify a whole gamut of actions. Need I really list them all?

2) Neither argument 1, nor argument 2, in your post provide any meat to support your assertions. Where exactly have the "geeks" distorted the meaning of the word "moral"? How do you know that they distorted it? Is it from your own moral judgments? How do you arrive at these? Do you introspectively find and justify these with hypothetical ethical scenarios? If so, aren't you just as guilty as the geeks are of fabricating hypothetical scenarios to justify your judgments? Also, what is it that is wrong with using hypothetical ethical scenarios to justify one's arguments? Are our scenarios flawed in that they miss the "main issue" and if so, how so?

3) Should no importance be given to the fact that a super majority of PhD economists believe that free trade is good? If no, why not?

4) Could you explain to me what fair and unfair mean to you and how you arrived at the personal meaning of these terms? Ethical hypotheticals perhaps?

5) If getting the Chinese to sell us some things for a cheap price is a good thing, why must we deny this good just because they are not willing to go all the way in letting us sell X percent of our goods there? In other words, if someone gives you one gift, but could give you two, why would you say: nope, I won't accept your gift, because you could really give me two?

6) If “they”, the “geeks”, say that protectionism is bad and morally indefensible, why must they be repetitive and mention this for every national and international example that someone comes up with? Doesn’t the initial statement cover all these cases? In fact, if the “geeks” mention the US a lot when in these arguments, it is only because they are usually arguing against US citizens about US policy.

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Alex, good comments

"Moreover, they often make ethical, moral and policy prescriptions using their economic credentials to bolster their credibility. That's what Landsdale did in the op-ed."

And the ambiguity of the language they use seems to be the key to getting away with it. (Over-)simple sentences in layman's terms, ostensibly to communicate complex ideas to a non-economist audience, but with the effect of reducing the clarity of the argument.

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The rich and famous lives in greed while the poor and lowly are left in pity. In this presents economic situation people are forced to take alternative risky solutions to survive. This is part of the explanation why there is a widening crime and market activities such as prostitution and drug abuse. Why take alternative solutions to survive instead doing crime or selling ourselves becomes prostitute. Here’s a related article I’ve found about the experiences of many people how they sustain their life. http://personalmoneystore.com/moneyblog/

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Life was made so much easier by the use of new technology. Take away this technology and there will be absolute chaos. When we think of innovation of technology, the first thing that usually comes to our mind are the "high-tech" industries -- IT, biotech, etc. As a result many business industries came out and it created many jobs. Technology has a growing impact on the economic futures of American companies, workers, and families. Increasing integration with the world economy makes the U.S. and other economies more productive. For most Americans, this has translated into absolute increases in living standards and real disposable incomes. But some of those innovations are turning out to be not so good, just like innovative industries in the United States in financial service. With this advancement also came out issues like identity theft. This crime is much more prevalent these days because of personal information stored in computers. Crooks have easier access to our personal information because some online companies that we transact with have loose security measures and can be easily hacked. If you want to read more articles and news about this, check out this website. http://personalmoneystore.com/moneyblog/

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Wise trade policy involves not only economic and normative but also political-economic considerations. Suppose a policy maker (or presidential candidate) agrees with Landsburg that informed ethical reasoning dictates no compensation to losers from trade. If many citizens don't share this view and therefore oppose trade in the absence of compensation, and if trade generates significant net benefits, then compensation is smart policy.

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