The Myth of the Responsive Politician?

The Economist's reliably bad Lexington column reviews Bryan Caplan:

The public's anti-foreign bias is equally pronounced. Most Americans think the economy is seriously damaged by companies sending jobs overseas. Few economists do. People understand that the local hardware store will sell them a better, cheaper hammer than they can make for themselves. Yet they are squeamish about trade with foreigners, and even more so about foreigners who enter their country to do jobs they spurn. Hence the reluctance of Democratic presidential candidates to defend free trade, even when they know it will make most voters better off, and the reluctance of their Republican counterparts to defend George Bush's liberal line on immigration.

It's worth noting, however, that absolutely all of the Democratic candidates are proposing policies that would result in very high levels of foreign trade. Dennis Kucinich has by far the most radical view on this matter and wants us to withdraw from multilateral trade pacts and "go back to bilateral trade conditioned on human rights, workers' rights, and the environment." Such a policy would, it seems, entail essentially unrestricted importation of goods from Europe, Canada, Australia, New Zealand, and Japan plus maybe a few other places.

And, needless to say, Dennis Kucinich isn't going to be president. The most trade-skeptical positions I've heard outlined suggest either that there should be no new trade deals until a larger welfare state is established, or else that no new trade deals should be signed unless they include rigorous labor and environmental standards. Perhaps this would lead to a situation in which President X presides over an administration that implements no new trade deals whatsoever. Even were that to happen, the US economy would still be substantially more open to foreign imports than it was 15 years ago before NAFTA or the Uruguay Round of GATT.

For that to be the case, either the public must not actually have an especially strong "anti-foreign" bias or else the political system is already highly insensitive to public opinion. Were Caplan's vision of a country at the mercies of irrational voters closer to the mark, surely we should expect a Kucinich boom as he's actually proposing a reduction in the volume of foreign trade.

Comments

Your argument is certainly strengthened by the completely unanimous support given to our free trade agreement with Australia by the Democratic party.

Posted by unf | June 15, 2007 2:02 PM

And, needless to say, Dennis Kucinich isn't going to be president.

Just as well. America could never handle a president who's six inches shorter than his wife.

Posted by Peter | June 15, 2007 2:03 PM

I would also add the complete lack of complaints from Democratic politicians about trade with Europe, Canada, and, in particular, Japan.

Posted by unf | June 15, 2007 2:12 PM

It's truly amazing to me how Matt Yglesias is opposed to the two most important welfare enhancing programs FOR THE POOR out there: open immigration and free trade.

What is it about the welfare state with its 50 year history of bloat and regressive incentive structures that gets him so excited?

Yes, though, Lexington is a reliably bad column.

Posted by Joe Strummer | June 15, 2007 2:18 PM

people don't vote based on one just one issue. well most don't. Talking about Kucinich, did anyone hear him talk about spreading world peace? He almost sounds like a Ms. Universe candidate. And he's running for President!

Posted by 2cynicalbyhalf | June 15, 2007 2:22 PM

free trade, even when they know it will make most voters better off

Hunh? How?

All arguments I've heard/read about how free trade is supposed to make most of us better off actually only show free trade makes people better off on average. If a few people are much better off while most people are a little worse off, on average, people are better off -- yet most people are not better off, nu?

Posted by DAS | June 15, 2007 2:23 PM

>> "from The Economist"
>> People understand that the local hardware
>> store will sell them a better, cheaper hammer
>> than they can make for themselves. Yet they are
>> squeamish about trade with foreigners, and
>> even more so about foreigners who enter their
>> country to do jobs they spurn.

When the 120-year-old industrial firm where I once worked carried its own janitorial staff, paid at $10-$12/hour + benefits and promotional opportunities, "real Americans" (both native born and green card holders) lined up for 3 miles (literally) to apply for those jobs. Note that $12/hour is really just barely enough to maintain a basic lower-class family existence; none of these people got to the middle class unless they were promoted. But they did a darn good job under sometimes unpleasant circumstances.

Then as part of its consultant-inspired death spiral the company fired all the in-house janitors and replaced them with outsourcers. The outsourced workers were billed at $20/hour, paid $5, and for some reason were all illegal aliens. Contrary to stereotype they generally did NOT do a good job. So much for "spurning".

Maybe there is a reason US Citizens are wary of their jobs being shipped overseas?

Cranky

Posted by Cranky Observer | June 15, 2007 2:35 PM

All arguments I've heard/read about how free trade is supposed to make most of us better off actually only show free trade makes people better off on average. If a few people are much better off while most people are a little worse off, on average, people are better off -- yet most people are not better off, nu?

My understanding of the results of free trade are that a few people (rich business elite types) are much better off, a larger number of people (workers in noncompetitive industries) are much worse off, and most people (consumers) are slightly better off.

Posted by John | June 15, 2007 2:47 PM

My anti-freeze flavored Chinese toothpaste I bought at the dollar store is sure getting my teeth whiter. But sometimes I feel a little dizzy.

Posted by the idler | June 15, 2007 3:01 PM

> My understanding of the results of free trade are
> that a few people (rich business elite types) are
> much better off, a larger number of people
> (workers in noncompetitive industries) are much
> worse off, and most people (consumers) are
> slightly better off.

That's what the economic models _predict_ will happen, yes. Empirical evidence doesn't seem to bear that out, although it is heavily clouded by the fact that the period of "slightly better off" as a result of heavy offshoring (1992-2002) also corresponds with the period of $15-$20/bbl oil and the resulting $1.00+/- gasoline. When gas hits $5/gal we shall see.

In any case, the economic models don't seem to predict what will happen when ALL the productive jobs are moved from the US to China and India. For the moment they are being replaced with paper-trading jobs, but it is dawning on people in Hyderabad and Shanghai that paper can be traded just as easily there as in New York City.

Cranky

Posted by Cranky Observer | June 15, 2007 3:04 PM

a country at the mercies of irrational voters

Actually this is one thing I don't get about neo-classical economics. It assumes people are rational decision makers in economic matters but if they vote against what the masters of Econ 101 say is good economics, they must be irrational voters? But if these votes are economic decisions, doesn't that mean people aren't rational economic decision makers? In which case, what does that say about the very foundations of the economic policies the voters are rejecting? And maybe they aren't so irrational after all?

Seems like a strange loop to me ...

Posted by DAS | June 15, 2007 3:10 PM

The average tarrif is now 2.9%, so the economists won that won, but they are never, ever going to let us forget it...

Being lectured by a a comic book-writing Randian nerd like Bryan Caplan on "rationality" is like being lectured by Lindsey Lohan on prudence.

Posted by Steve Sailer | June 15, 2007 3:15 PM

no new trade deals should be signed unless they include rigorous labor and environmental standards.

It's worth noting that these requirements are often precieved (and in many cases I believe accurately) to be poison pill provisions meant to kill the deal on the other end by requiring terms that are politically impossible in the other country and are used as a way to kill deals without having to mount an intellectual defense of protectionism.

Posted by MattXIV | June 15, 2007 3:42 PM

Since the widespread availability of satellite pictures makes it easy to see the toxins drifting all the way from the PRC's manufacturing district to the West Coast of North America, I wonder if you might want to revise that belief?

Cranky

Posted by Cranky Observer | June 15, 2007 3:44 PM

Bryan Caplan's essay on the relationship of intelligence to economic beliefs lists four ways in people tend to have mistaken economic beliefs. Not surprisingly, one of those mistaken economic beliefs is not "the view that people always understand and act in their own interests correctly" -- even though this mistaken economic belief is extremely widespread, especially among libertarians.

Posted by matt steinglass | June 15, 2007 3:46 PM

The Economist's reliably bad Lexington column..

Thanks for saying that as it were, aloud. I am annoyed everytime I look at it. Pretty much all of The Economist's American political coverage is reliably bad, but the
Lexington column is especially so.

Posted by jonnybutter | June 15, 2007 3:58 PM

Being lectured by a a comic book-writing Randian nerd like Bryan Caplan on "rationality" is like being lectured by Lindsey Lohan on prudence. - Steve Sailer

coffee => computer monitor

And people previously doubted Sailer's sense of humor?

This is too funny ... and, I might add even if I'm biased to agree with this sentiment, right on the nose (or considering the comment, maybe some other body part ;) ) ...

Posted by DAS | June 15, 2007 4:03 PM

reliably bad Lexington

Preach it!

Posted by FMguru | June 15, 2007 4:05 PM

Third, they equate prosperity with employment rather than production: Mr Caplan calls this the “make-work bias”

I never thought I'd be quoting Reagan, but what's his saying about "if your neighbor's out of work, it's a recession; if you're out of work, it's a depression"? I just love how economists go on and on about "economic indicators", per capita GDP, etc. -- which, speaking as a glorified statistician, tell you a lot about things as statistics do in a sometimes under appreciated sense -- but then miss the whole point: prosperity is how people are doing economically. If people are under-employed or un-employed, it doesn't matter how good or bad some statistic is -- they are not prosperous.

It's one thing for an economist to say "based on statistic X, the economy don't look good" -- we (government grants, think tanks or what have you) pay them the big bucks to figure these sorts of things out -- but it's another for them to say "reality can do what Cheney told Patrick Leahy to do -- if my favorite metric says the economy is good, the economy is good no matter unto how many people the market has told what Cheney said unto Leahy". Those in the mental health field have a name for such a willful rejection of reality, "neurosis". And have name for those who are confused as to what's real -- their hallucination statistics or reality -- "psychosis".

So Caplan says that people exhibit a "make work bias"? I say people might actually be smart enough to know not to let the looneys run the assylumn.

Anyway, c.f. my earlier comments and matt steinglass' cogent remark -- if people are so irrational about making economic decisions (at the ballot box) what does this say about the very foundations of the economic theory Caplan's using to say people are irrational? Something is paradoxical here, eh?

Posted by DAS | June 15, 2007 4:15 PM

Just as well. America could never handle a president who's six inches shorter than his wife.

Posted by Peter
--
i swear if kucinich was elected, anti-american sentiment and terrorism would plummet. how could you look at that goofy guy and call him (or his america) the great satan? how could you do anything but laugh? that would be great.

Posted by dfg;'dg; | June 15, 2007 4:54 PM

I guess I'll never be President either, being an inch shorter than my wife and looking something like Satan: worst of both worlds.

Posted by CJColucci | June 15, 2007 5:17 PM

Three cheers for the Lexington hating. Who actually writes that waste of space? Do his/her editors understand just how bad it is? It's as if its being written by someone based in South Africa, and the only US media they can get a hold of is the Politico and Instadouche.

I used to hold the Economist as the sine qua non of any understanding of current events in the world, but their US coverage has become so extraordinarily abysmal over the past five or six years that I now call into question whether they get anything else right in places where I *can't* cross check them from my own knowledge (e.g., east Asia, Russia, etc.).

Posted by MB | June 15, 2007 9:56 PM