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Why don’t we treat free trade like global warming?
Loren Michael
Registered User regular
Registered User regular
Experts agree. Why don't we?
http://ordinary-gentlemen.com/blog/2011/02/27/why-dont-we-treat-free-trade-like-global-warming/
Maybe I'm strawmanning here, but my perception is that this guy is right. People don't tend to defer to expert opinion on trade. I understand the argument for lowering barriers to trade is somewhat counterintuitive, but is that a sufficient explanation for why people tend to reject the expert consensus on this issue? I don't think it is.
http://ordinary-gentlemen.com/blog/2011/02/27/why-dont-we-treat-free-trade-like-global-warming/
Belief in anthropogenic global warming is a sort of political signifier for American liberals – if you don’t think human activity is changing the Earth’s climate, they’re probably not going to take you very seriously. This is not because every leftist has independently verified the Intergovernmental Panel on Climate Change’s findings and concluded that people who disagree are blinkered or stupid. Instead, liberals quite sensibly think that when a critical mass of scientists arrive at a certain conclusion, we should take that conclusion as a given and proceed accordingly.
[...]
Why don’t we accord the same level of deference to economists? Shouldn’t the pro-free trade consensus within the field of economics be as bullet-proof as belief in global warming?
It’s not a partisan issue – in my opinion, the best introduction to the benefits of international trade was written by Paul Krugman. And the strength of the pro-free trade consensus in economics is at least as robust as the consensus view among climatologists. There are a few high profile dissenters, but those exist in every field, including climatology.
Maybe I'm strawmanning here, but my perception is that this guy is right. People don't tend to defer to expert opinion on trade. I understand the argument for lowering barriers to trade is somewhat counterintuitive, but is that a sufficient explanation for why people tend to reject the expert consensus on this issue? I don't think it is.
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But this doesn't explain why people more generally are skeptical of the economic consensus.
edit: Mind you, I don't have a problem with free trade. But macroeconomics is largely bullshit. You ask ten physicists to explain a phenomenon and the only real difference in their explanations will be the level of detail they decide to go into. You ask ten economists to explain a phenomenon and you'll get eleven or twelve completely contradictory answers.
...so the experts have no idea what they're talking about? Economic research is worthless? Economics might as well be theology, or a collection of aesthetic preferences? What do you mean?
EDIT: Re: Your edit:
Shouldn't the fact that almost all economists agree on free trade suggest that there might be something to that idea?
No, not really. If, say, almost all literary critics agreed that some author was good, I would still judge that author on my own preferences because literary criticism is not science.
Like I said, I'm all for free trade. But the last economist I trusted was Kahneman and frankly he's more of a behavioral psychologist.
So, again, the experts have no idea what they're talking about? Economic research is worthless? Economics might as well be theology, or a collection of aesthetic preferences?
I'm aware that this definition excludes most of the so-called "social sciences" and frankly, I'm okay with that.
I was taking a class on game theory at the same time. One of their first class wide games we did was this:
to win the game you had to accurately predict the number that was 2/3s of the class wide average and you could pick any whole number between 100-1.
Now, if you are rational AND you believe that everyone else is rational, the correct answer is, without question, one.
Because the highest number that could be picked is 100and 2/3s of that is 67, it is impossible for a number above 67 to win. Now you have a new set of numbers, 1-67. If everyone else is rational, then they also will choose a number between 1-67. Since 67 is the highest number of the new set, the highest possible number that could win would be 45. You could see how this continued to 1.
The people who chose 1 lost. Their assumption that people are rational doomed them. It's the same mistake made by my old professor.
It's hard to believe in the free market when every hypothetical for it seems to be based on a faulty assumption.
Now if you are rational, and beli
To sum up, "free trade" as it's currently constructed is a horrible, horrible idea for any developing country.
The idea that there's a supposed consensus amongst first world economists does fuck-all nothing to change that, since "free trade" is incredibly beneficial for first world nations.
Note that support for free trade is more common among the highly educated, compared to the wider population.
From Caplan (2001):
Compare, say:
GW and AGW is an issue where popular perception is strongly aligned along partisan lines; free trade is aligned along different lines.
I'm not sure that people like Paul Krugman and Greg Mankiw have a lot of similarities in their priorities.
Look, if the field of astrophysics had one "school" that held the belief that the sun orbited the earth and one "school" that held the belief that the earth orbited the sun, I would probably be skeptical of astrophysics.
The fact that you found an issue that the neoliberal Chicago-school type economists agree with the Keynesian economists on doesn't mean much; they agree on several things. They still disagree on major, fundamental issues that radically change their models of the rules of economics and so forth. Their predictions are generally non-falsifiable: for a given pheonomenon, an economist will find some way to make the facts conform to his model and his normative predictions will not change. This isn't science. Words have meanings, damn it.
It is the physics of social science.
Conservatives embrace free trade, and are skeptical of AGW.
We could come up with complicated reasons for why this is the case, but I think it's more that AGW fits in well with the preferred liberal world view (corporations are bad for the environment and environmentalism is extremely important), while free trade fits in well with the preferred conservative view (the free market is awesome and solves all ills).
[Note that I am being somewhat simplistic and flippant in my characterizations, but the larger point stands.]
Basically, people tend to believe in things which reinforce their existing worldviews. I don't think it has much at all to do with the actual validity of either viewpoint, not only in these two cases, but in a large number of others, as well.
The New Keynesian school is now the dominant one in both academia and policymaking, actually... there is plenty of incentive to play up differences in the media, but there is a surprising level of agreement on key issues. Mankiw and Krugman both hail from the same school of thought, although a casual reading of their columns would suggest otherwise.
Surveys among economists during the 1970s generally supported the then casual perception of no consensus, but this has since changed; 1990s-era surveys began showing a gradual formation of broad agreement over macroeconomic policy, coincident with the ascendancy of New Keynesian views over both monetarism and Keynesian predecessors.
The RBC Chicago school is endlessly loud, of course, but they have trouble convincing fellow academics and policymakers.
No, that would be going too far.
But just because Economics isn't worthless doesn't mean it's a science. Economics is a soft science. Soft like butter. That's not a knock against it or anything, it's just a fact.
A consensus among researchers in a hard science, like physics or geology or something, simply carries more weight because it's a hard science.
The other point to make is the one HamHamJ, about priorities and such. Basically, what does "Free Trade is good" even mean?
The broad assertion over whether tariffs and other protective measures generally increase or decrease societal welfare (vaguely defined, as is usual for professional surveys).
But nobody advocates autarky any more, of course, which complicates the issue. Instead all we have are a massive pile of proposed marginal changes, in a system which is closer to managed trade than free trade, and so it is non-obvious whether a given change really makes trade "freer".
Rodrik:
Which is all true, and doesn't contradict the broader point that there is consensus on whether trade restrictions harm people (it does). But what counts as a policy that restricts trade more than it liberalizes trade?
1) Special Interest groups have an influence that proportionally outstrips their ratio(s) to all interests.
For example: Wall Street, which represents a significant portion of US wealth, creates no tangible product of value.
2) Because in general, understanding economics hasn't been boiled down sufficiently for the masses.
I am in no way implying that the masses are stupid, but we all have a limited amount of time and only so much can be devoted to any one topic. Global Warming can be boiled down to "The Earth is heating up" which is a simple concept to grasp (not necessarily understood). Man's need to feel important then leads to an easy jump for Anthropological Global Warming.
3) Because Free Trade cannot be used as a tool to control the masses.
Look at limitations placed on the energy industry due to fears of AGW. Every one of those limitations ultimately hits both you and I in the pocketbook.
4) Because Free Trade, at least in my understanding, would work best in a world where ALL countries engaged in Free Trade.
If you have a massive growing economy such as China manipulating Free Trade, then it can create an imabalance of economies ultimately leading to an imbalance of power. China regulates the exchange rate of the RNB to the dollar for good reasons.
I get the same feeling from climatology. Though I believe in it (as I do free trade).
Climatology takes some models and projects the future. Detractors are called fools. No experiments are actually possible...
Seems a lot like economics actually.
Fair enough; the blog post I got the OP from was primarily concerned with liberals. I tend to agree with your assessment, and I agree with ElJeffe: We tend to have worldviews, and then justify them.
That's because you don't understand climatology.
I have to extremely strongly disagree with this point. Physics is a hard science because all of the theories of physics can be evaluated using the Scientific Method and the "human factor" can be taken out. I hope you would agree that humans are not always predictable.
Soft sciences such as the Social Sciences are soft because you cannot remove the human factor. Any attempt to mitigate the human factor through use of assumptions such as "Humans are rational beings" ultimately fails when faced with reality. This is a big part of why the New Keynesians have risen to prominence, as the Keynesian theories were shown to be based on flawed assumptions and the theories of the New Keynesians more closely match reality.
Which is not to say they are perfect, they're just better in most cases.
1. Is economics a science?
2. "Free trade" does not encompass free movement of labor - and if it does, then there are a host of ultimately unworkable political problems.
So you strongly agree with me then?? I'm very confused by your post here.
@Shryke: Sorry I wasn't clear, I meant I disagree with your definition that Physics is a hard science because of scientific consensus. IMO, consensus has no place in science. This has been demonstrated historically (sun rotates around the earth, earth is flat, etc).
Except I never said this.
I said physics is a hard science and therefore a consensus in it carries more weight.
I did not say physics was a hard science because of scientific consensus beacuse ... well because that doesn't even make any sense.
Surely every field has a periphery where the data is ambiguous and people disagree or are uncertain. How and why should that count against the areas where there is consensus, where the data is clear enough to bring everyone together?
I assume you don't study economics. The anti-free-trade position is fundamentally a position that is either informed by research, or is informed by ignorance. Why not defer to the people who do the research on this issue? Is economic research worthless? Does it have a negative value? Are experts clueless, or actively wrong about the issues they study?
It's true, economics is a soft science. It is not generally possible to ethically conduct verification of its fundamental principles via repeatable laboratory experiment, rather than time-series regression; at best we hunt for natural experiments. The paucity of experimental data means that theory has to step up to fill gaps, at least while we look for ways to disconfirm proposed theoretical links.
Climate science has difficulty achieving repeatable laboratory experiments, too, though. This is not, and should not, be a strike against its status as a science; climate systems and economic systems just exist and the difficulty of conducting double-blinded tests in their respective systems are facts of reality. Any rigorous study of their behavior would invariably encounter the same difficulty.
The similarity is pretty much this: both have a pile of time-series data, some macroscopic mechanics argued loosely from more rigorous testable areas of knowledge, and lots of elaborate modelling (that is acknowledged to approximate reality rather than model it precisely). As such we don't look for, or expect, grand unified theories of global climate; rather we specify mechanisms which theory suggests may be significant and build a model capable of reproducing the observed time-series data.
My non-expert impression is that climate-science modeling tends to have a better handle on what they know they can or can't model accurately, though. It must be nice having so much damn data. The practice of measuring economic aggregates only goes back to the Great Depression.
Exactly.
After asking whether or not nuclear weapons should be legal in an ideal libertarian society, I once had a libertarian tell me, with a straight face no less, "Sure, why not? In that society there would be no point in using nukes."
Absolutely detached from reality, some of these people.
Consensus is valuable when it is based on actual facts as it can weed out experiments that are more than likely to be a complete waste of time.
Science is a bit different today than it was back when the Catholic church wielded immense power and a lot of scientists disingenously dismissed anything that didn't already fit with their preconceived worldview.
Except for the ID movement and creationism, obviously—but who wants to give them the time of day? Right? ...right?
Sigh...if you need me, I'll be over here in my corner tossing geology, mathematics, linguistics, astronomy, and biology textbooks out the window.
Climate science also has gobs more data and tons of it is repeated. One of the biggest issues afaik, from what I've seen with economics and you mention here, is that it's not like there's 50 Great Depressions so you can compare and contrast them for various differences and perfect your models and such.
The other thing you are missing here is that climate science has a very rigorous micro-level understanding of what's going. It's alot like physics in that respect. The issue is large scale things with lots of variables.
But again, just to repeat, just because Economics is a soft science doesn't mean it's bad or worthless. It's just a limitation imposed by the type of data it's crunching.
Not a rare attitude, but one which (in my experience) is often associated with a knowledge of economic theory and empirics acquired solely from reading newspaper columns. So, just in case:
So that's macro. You mentioned Kahnemen; you may be disappointed to learn that prospect theory has proven difficult to reliably confirm; laboratory participants tend to learn their way out of proposed behavior (i.e., with enough repetitions, participants cease to display the kinked preference curves that distinguish prospect theory from simpler neoclassical theories). Economics remains a study of aggregates, invoking natural experiments where possible.
It's possible that in the future we may have a set of fundamentals which people don't diverge from, but we certainly don't have it now, and advances in behavioral economics thus far suffers from the same broad problem that dangling $5 carrots in front of bored college students is not quite the same as most interesting economic activity.
Oh, yes, climate science has a ton of micro-level mechanisms - that are, individually, rigorously verified. Certainly. Rigorously studying air is usually much easier than rigorously studying individuals. But there are micro-level mechanisms which are less easy to reproduce than others - like clouds - and it is those which apparently account for much of the uncertainty that exists in current models.
For the purposes of the topic of anthropogenic global warming, this level of uncertainty is presumably not concerning, of course. But I think it would be misleading to claim that climate science has a physics-level certainty of its microscopic foundations.
1. What would a "yes" answer suggest? What would a "no" answer suggest?
2. I think any rigorous definition of free trade would necessarily include labor. I'm not sure what the difficulty of political obstacles implies though. The Senate in America, for example, makes a lot of things essentially unworkable. So...?