The Pipes The Pipes Are Calling

After reading the blog exchange on trade, Dave comes to the conclusion that Dani Rodrik is a jerk. I had pretty much the opposite reaction, so let's dig deeper. [Perhaps I should disclose that Rodrik is a former colleague of a friend of a friend, though I've never met him and he has no idea who I am]

Dave writes (in comments):

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.

[me again]

So I guess I don't know what to make of the "strawman" argument. Classically, a strawman argument is one that falsely attributes an absurd position (a strawman) to the other side and then knocks it down. The question is whether refuting an argument actually made by the other side can ever constitute an abusive debate practice.

The answer isn't obvious. On the internet, you can find someone making just about any argument in complete seriousness. Selecting a particularly absurd idea and then demolishing it might be "just this side of a strawman."

Even if that kind of abuse is possible, I don't think that's what's going on here. Rodrik was responding to a point made by Daniel Drezner, a respected blogger and Tufts professor who used to teach at the University of Chicago. Daniel Drezner is taken quite seriously - his book U.S. Trade Policy: Free Versus Fair was published by the Council on Foreign Relations (he also wrote All Politics is Global: Explaining International Regulatory Regimes and Sanctions Paradox: Economic Statecraft and International Relations). We have a public intellectual who has written a book on trade policy making an argument about trade, and then we have Rodrik pointing out that the argument is false.

So I don't know what to make of this. My inclination is to give Rodrik a pass on the strawman charge. It's not his fault that someone as highly regarded as Drezner made an incorrect economic argument.

More importantly, Rodrik doesn't ignore the "real" argument for free trade. Dave writes, "the actual economic meat of that argument is not that free trade causes deflation(!!) but that free trade increases real wages." In fact, this is the point of Rodrik's post. Rodrik tackles the argument head on, noting that free trade does not always increase real wages. As Rodrik notes later, Mankiw studiously avoids making the claim that free trade always leads to increased real wages, because he knows it isn't true.

I'm not a huge fan of armchair psychology, but I think the difference between Dave's reaction and my reaction stems indirectly from our politics. I imagine both of us are supporters of free trade. However, my support for free trade is based not on its theoretical purity but on a very pragmatic concern. As Krugman writes, "The moral case for open markets is their importance to poor countries: America would do OK even in a highly protectionist world, but Bangladesh wouldn't." As I've noted before, I think some quotas are defensible.

I don't know what Dave's thoughts are, but I would speculate that he thinks one of the following:

1. The theoretical case for trade is actually quite strong.

2. The theoretical case for trade may be weak, but that's all the more reason not to air our dirty laundry in public. Trade is a good thing in the real world, and it doesn't really matter that you can come up with models in which it's not. This only gives ammunition to protectionists, who are either self-interested or deluded.

I'm sympathetic to #2, but it all comes down to context. Anyway, I suppose this post is already egregiously long, so I'll address the "Noble Lie" vs. "strategic simplification" debate later.