Fighting Another War Over The Last War
So Dani Rodrik and Tyler Cowen have been replicating a debate that Dave and I had (sort of). Here's a rough sequence of events:
1. Rodrik argues that trade doesn't affect the price level.
2. Cowen argues that trade is usually good anyway.
3. Rodrik isn't so sure, and proposes a summary of the discussion. Rodrik suggests in another post that blanket free-traders are fighting the last war (sound familiar?).
4. Cowen asks Rodrik whether the politics of trade are fruitful and suggests that the last war is the one we should still be fighting.
5. Rodrik argues that things aren't so simple and suggests tinkering with political institutions to bring about the desired results.
Various other countries are heard from, including Greg Mankiw and Paul Krugman. This is one of the first times I've seen blogs actually perform a valuable role in bringing about thoughtful debate. As usual, though, I suspect that to resolve the debate you would actually need to know a lot about economics. Still, it's useful for people to be exposed to ideas all along the spectrum, or at least along the narrow spectrum of reputable American economics.
[UPDATE: here's DeLong, who links to an apparently exhaustive compilation by Mark Thoma.]
1. Rodrik argues that trade doesn't affect the price level.
2. Cowen argues that trade is usually good anyway.
3. Rodrik isn't so sure, and proposes a summary of the discussion. Rodrik suggests in another post that blanket free-traders are fighting the last war (sound familiar?).
4. Cowen asks Rodrik whether the politics of trade are fruitful and suggests that the last war is the one we should still be fighting.
5. Rodrik argues that things aren't so simple and suggests tinkering with political institutions to bring about the desired results.
Various other countries are heard from, including Greg Mankiw and Paul Krugman. This is one of the first times I've seen blogs actually perform a valuable role in bringing about thoughtful debate. As usual, though, I suspect that to resolve the debate you would actually need to know a lot about economics. Still, it's useful for people to be exposed to ideas all along the spectrum, or at least along the narrow spectrum of reputable American economics.
[UPDATE: here's DeLong, who links to an apparently exhaustive compilation by Mark Thoma.]
posted by James | 7:51 PM
2 Comments:
My impression (before reading the linked posts) is that free trade is one of the least won of the already-fought wars, in the sense that more, naive protectionism always seems to be on the horizon.
After reading the linked posts, Rodrik looks a lot like a jerk. Free trade doesn't lower the price level? Well, guh! Who cares? Mankiw's responses are all on target, reminding me again of why his textbook was so good. (PS the dood got his Ph.D. from MIT in two years, during the first of which he was also in Harvard Law.)
That Rodrik even raises the price level argument to begin with stinks to me. He's taking advantage of the imprecision of the popular understanding of the case for free trade (that it lowers prices); the actual economic meat of that argument is not that free trade causes deflation(!!) but that free trade increases real wages (Mankiw makes this point quite well).
The price level shtick is just this side of a strawman, and it's hard to believe it doesn't have the same deceptive intent on some level. In conclusion, what a jerk.
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