Alex Tabarrok on Trade and the Moral Community

Alex Tabarrok is a rootless cosmopolitan. I am proud of him, and proud to know him.

He writes:

Marginal Revolution: Trade and the Moral Community: =Much of the recent trade debate between Rodrik, Mankiw, Tyler and others (see Tyler's excellent post for links) is primarily not about positive economics but about the relevant moral community.... Peter wishes to trade with Jose.  The individualist says the relevant moral community is Peter and Jose and presumptively no one else.  Trade, the right of association, is a human right and on issues of rights the moral community is the individual.  When Jose offers Peter a better deal than Joe it's wrong - a moral outrage - for Joe to prevent Jose at gun point from trading with Peter.

The more common view expressed implicitly by Dani Rodrik, but by many others as well, is the nationalist view, the moral community is Peter and Joe.  Joe gets a vote on Peter's trades.  Peter should be allowed to trade only if both Peter and Joe benefit, otherwise too bad.  Jose counts for less....

I would argue... that economists are too quick to take the nation as the relevant moral community.  It is quite possible, for example, for Peter to benefit from trade but for Peter's city to be harmed, for Peter's state to benefit but for his region to be harmed, for his country to benefit but for his continent to be harmed.  Why should we cut the cake in one way, excluding some from the moral community, but not in another?  Indeed, geography is not the only way we can define the moral community.  Why not ask whether English speakers benefit from free trade or Christians or left handed people?  Each of these is just as valid as asking whether the collection of people called the nation benefit from free trade.

I understand individual rights and I understand counting everyone equally but I see less value in counting some in and some out based on arbitrary characteristics like which side of the border the actors fall on.

Comments

[CapitalistImperialistPig]

Too bad Alex doesn't understand Mr. Darwin.

As long as the human population continues to proliferate, we are doomed to compete with each other for survival. The effective moral community for Mr. Tabbarok is the worlwide community of rich people.

By forcing American workers into the most pitted possible competition with the foreign poor, the rich of here and there both benefit, while the rest get flushed down the evolutionary sewer.

Its not a very stable way to run a country, since it pits a nation against itself. Eventually the mass of the citizenry might realize that their real enemies are the rootless cosmopolitan rich.

[Joe Gideon]

Alex's argument is pretty common and mostly, I think, its purpose is to get people to shut up. It really boils down to, if you oppose free trade because you think it'll hurt your family and neighbours then you're no better than a Klansmen. Accusing those who are concerned about the effects of trade of being racist is a cheap intimidation tactic.

I have the feeling that the people who make Alex's argument don't really care about poor foreigners in their heart of hearts, as usually they're the same people who argue that it foreign aid is useless.

[Jon Fernquest]

In the context of Thai-US relations Big Pharma has become the proxy US state department and PR, law firms, and bogus NGOs, the proxy for this proxy.

The moral community being poor people who can't afford AIDS drugs and who would otherwise die, i.e. my neighbors.

This was the major issue during FTA negotiations (according to a CDC doctor friend of mine, and a dissident WHO official during the FTA negotiations as well) and now has is the driving force behind Thai-US relations.

http://www.readbangkokpost.com/business/
healthcare_industry/
intellectual_property_or_savin_3.php

[mq]

It boggles my mind that a seemingly intelligent social scientist could not understand exactly why a nation is a relevant moral community. The nation-state is the single most important social institution in modernity. How can someone who studies social institutions for a living not get why nation states are morally and socially relevant? The learned autism of economists is really remarkable sometimes.

[Trickster Paean]

What a lovely argument. Of course, it willfully ignores the fact that those arbitrary lines are drawn by Peter and Joe and Jose, and if they all wished for those lines to be gotten rid of, they could. But they don't, and they don't want to.

Peter and Joe are better off on their side of the line from Jose, even if Jose is worse off. And though Jose may be worse off, Jose may want that line there because he doesn't have much in common with Peter and Joe.

These may be "arbitrary" lines, but the fact is that these actors could get rid of these lines if they wanted to. Most often, they do not, and for whatever reason that failure is, good, bad, or ugly, to fail to see that may be the soul of being a "rootless cosmopolitan," but to me it seems more like that of a "willfully naive bourgeois."

[Bruce Webb]

"I understand individual rights and I understand counting everyone equally but I see less value in counting some in and some out based on arbitrary characteristics like which side of the border the actors fall on"

Taken to its logical conclusion this would mean Bin Laden didn't really attack me at all, just people who happened to take employment or visit the World Trade Center on September 11th. Because after all being in lower Manhatten or being in the Northwest all depends on arbitrary decisions about borders made a century or more before.

If Jose comes across the border with a tank Alex is going to expect me and Joe to band together and blow him away, all of a sudden that 'arbitrary characteristic' is going to become very real. The Alex's of this world expect the Joe's of this world to take up guns and defend their interests against the Joses and Ahmads but apparently feel no countervailing obligations. Well maybe that reveals a little more about Alex than he might feel comfortable with. Because when they start dragging Mr. 'Rootless Cosmopolitian' Tabbarok away it will do no good for him to call out to me and Joe. Our answer will be "Tell Jose".

[ajay]

Why not ask whether English speakers benefit from free trade or Christians or left handed people? Each of these is just as valid as asking whether the collection of people called the nation benefit from free trade.

Well, the entities that make policy about free trade are national governments, who are supposed to be concerned about the overall effect on their citizens, so that means that from a practical point of view trade policy should talk about nations, rather than religions or handedness. This seems fairly self-evident. From a policy point of view, the conclusion "this trade benefits Episcopalians at the expense of Hindus" is followed by the question "so what?"

As for the moral point: well, we live in a world of nation states, which are all about treating citizens differently from non-citizens. The question of the morality of a nation-based trade policy is really a sub-question of the issue of the morality of the nation state.

[Ponzi Q. Globalization]

Peter, Joe, and Jose trading with one another? What planet do Alex Tabarrok and Brad Delong live on? This is story of trade for children.

It would be nice if economists studied and talked about the real world instead of such nonsense.

Anyhoo, I don't see any international organizations doing much about lessening the negative fallout from trade. In fact, these non-democratic institutions are in the pockets of multinational corporations and international investment banks and work actively to weaken the bargaining position of labor. When you look at how they are set up and govenerned, it's not too surprising.

In our real world (you know, the one we all live in today and not the simplified models found in economics texts and in the ideologically narrowed minds of many econobloggers), the nation state is the only institution that can do something about the negative fallout. It is the institution that the masses of people can influence most.

[Ponzi Q. Globalization]

"The learned autism of economists is really remarkable sometimes."

Beautiful! I do wonder how the economics madrasahs succeed in turning smart kids with wide-ranging intellects into idiot savants. Beatings, water boarding, and sleep deprivation? Promises of carnal relations with David Ricardo in paradise? Telling them the esoteric econoknowledge they will be granted is the key to unlocking the doors to the ultimate understanding of the universe?

I'm sure that telling them the doctrine they will learn and are expected to promote will be used to bolster the positions of the wealthy doesn't work too well in creating ideologues.

[John Emerson]

"Well, the entities that make policy about free trade are national governments, who are supposed to be concerned about the overall effect on their citizens, so that means that from a practical point of view trade policy should talk about nations, rather than religions or handedness."

You really can't run a democratic government of a nation if you are neutral between citizens and non-citizens. Government and politics just don't work that way.

I'm very sorry that the Democrats tried this. It didn't hurt the Republicans as much because they're anti-democratic in principle (as shown by their many covert attempts to restriict franchise and reduce voting.)

[D-Slam]

"The learned autism of economists is really remarkable sometimes."

I have a Master's in Economics (a terminal masters, not a PhD booby prize for flunking). A truer sentence than the above has never been written. It *is* autism, and it *is* learned. I lost interest in the subject when I realized my instructors were trying to teach me to be autistic.

[Curious]

What do you mean by "a PhD booby prize for flunking"?

[D-Slam]

I didn't word that very well...in most American graduate programs in economics (I'm told), there is no such thing as a "Master's program". There is only a PhD program which you enter directly from undergrad. If you flunk your comps or fail to finish your dissertation, they give you a "Master's degree" so that you don't leave empty handed. You may as well have a tattoo on your forehead which says "I'm too dumb to finish a PhD", ergo I called it a "booby prize". By contrast, in Canada, a "Master's Degree" is awarded in a "Masters program", which everyone must do before being admitted into a PhD program. If I want to say something critical of economics (and I often do because a revolution in the discipline is desperately needed), I want my credential in the subject to imply that I am (somewhat) qualified to do so, rather than implying that my comments are just sour grapes.

Anyway, to echo what others said, economic analysis for policy purposes rightly weights the benefits to citizens higher because the very act of policy analysis implies a policy making entity, a government, that Joe and Pete have decided to live under for the purposes of making their lives better. To comment on trade policy as Alex does without thinking this through is just jaw-droppingly misguided, but that's par for the course in academic economics.

[larry birnbaum]

"I understand individual rights and I understand counting everyone equally but I see less value in counting some in and some out based on arbitrary characteristics like which side of the border the actors fall on."

The fact that a border exists where it happens to exist may be somewhat arbitrary. Rather like the fact that whether we drive on the left or on the right is somewhat arbitrary. But that we all drive on one side, or the other, isn't arbitrary. By the same token I think it would be extraordinarly hard to argue that the existence of nation-states in general is an arbitrary fact at this time. One might just as well argue that the existence of corporations is arbitrary. Presumably, while there is no doubt some historical or even biological contingency involved in these modes of social organization, they exist in order to carry out certain functions.

In the case of nation-states and their governments for example, a good first order statement of those functions might be to "establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity..."

Moreover it is overwhelmingly likely that the particular set of functions expressed here is bundled as it is and handled by a single mode of social organization again for functional reasons.

Finally, and to get to the point, while there might not be a clear market value for these functions, it's ridiculous to argue that they have no value, and more specifically, that individual citizens like Peter derive no value from them. So Peter cannot, and should not, expect to derive the values stemming from his citizenship for free.

None of the above argument apply to a truly arbitrary association such as "left handers."

Parenthetically, I'm reminded of an argument made by the linguist/philosophers Jerry Katz and Jerry Fodor 40 odd years ago in which they listed the kinds of extrinsic contextual factors that a linguistic theory shouldn't take into account, the list being something like "memory limitations, the presence of food in the mouth, HOW LANGUAGE IS USED TO COMMUNICATE MEANING, ..."

So Tabarrok is either deeply confused or disingenuous here. Given the sort of intelligently managed "systematic desensitization" argument strategy embodied in a list like "English speakers, Christians, left-handers" I'd have to lean towards the latter.

[jerry]

This is your brain.

http://www.youtube.com/watch?v=yr5z2D2i2zs

This is your brain on tenure.

http://www.youtube.com/watch?v=0J16dyV4Du8

Any questions?

[PSP]

Emerson beat me to my main point.

But, I'll add that policy makers that elevate the interests of the citizens of a different polity over the interests of their own citizens tend to get fired. Rational self-interest and all that stuff that economists normally [?claim to?] base their analysis upon.

[Dean Baker]

I don't see the problem as preventing Peter from trading with Jose, but rather Alex insisting that Peter, Joe, and Jose see this as a problem of Peter wanting to trade with Jose.

You see Peter also wants to hire Jose to do brain surgery, but Alan won't let him, because Alan thinks that people who work hard and get advanced degrees in the United States should not have to compete on an equal footing with Jose.

Jose also wants to be able to get medicine, software, music, and books at their competitive market price, but the representatives of the motion picture industry and the pharmaceutical industry insist that Jose pays the prices demanded by the beneficiaries of patent and copyright monopolies.

So, the problem is not which moral community we look at, the problem is that Alex thinks that he gets to define the problem and that's the end of the story.

[Cbetley]

Did anyone else notice the contradiction between the content of this posting which we assume Prof DeLong assents to and the argument he makes about "Weimar Russia" in a previous item?

[Colin Danby]

Some distinctions might be helpful.

1. You can hold as an ethical position that the relevant moral community is the whole world without buying all the propositions of liberal trade theory, or adopting the kind of libertarianism that asserts that only the people making a trade are affected.

2. You can hold a view about what a powerful entity (such as a government) should do without subscribing to every enabling assumption that entity makes about the nature of the world. (Or subscribing to every foundational myth -- it's symptomatic that a couple of commenters give us a hand-waving social-contract theory.) These are logically separate things.

The world is, observably, full of transnational institutions. There are transnational families, transnational businesses, transnational religious institutions, and a range of formal supranational organizations. None of this is to deny the existence of nation-states. But if you're looking for autism, autism is taking a policy framework and deciding that because a given policy framework privileges the national government, that's how the world really works, and that's the necessary framework for our ethical thinking.

The argument that trade theory is too cosmopolitan goes back at least to Friedrich List. There is a complementary critique that 20th century economists have reified the national economy via the accounting presentation of balance-of-payments and macro aggregates.

One route to thinking about the actual world we live in is the literature on transmigration e.g.:

Basch, L., Glick Schiller, N., and Blanc-Szanton, C. (1994) ‘Introduction’ to Basch, Glick Schiller, and Blanc-Szanton (eds.) Nations Unbound: Transnational Perspectives, Postcolonial Predicaments, and Deterritorialized Nation-States, Langhorne, PA: Gordon and Breach.

[Rob]

Alex is really trying to make sure Jose is better off as long as Peter pays the price (and hey it just so happens Alex is made better off too! Funny that!) But ask Alex to pay more in taxes to help out Peter, well that is just asking too much!

[anne]

After reading the essay several times, I am not sure why I should run through the streets with a copy crying "read me." I find no sense of concern with the ways in which trade may effect individuals, so the essay is cold as ice to me. This is individualism where no individual counts, which is typical of the writer for whom real individuals never seem to count.

[Paul G. Brown]

Prof. DeLong has approvingly quoted Alex Tabarrok's writing about 'the way things ought to be'.

Many of you have responded by pointing out that what Alex Tabarrok is writing about is not 'the way things really are'. Further, many of you seem to be suggesting that 'the way things are is pretty shitty'.

What is odd is that many of you seem to think that this brings you into disagreement with Alex. It does not.

We can argue about the details--it's clear that Joe might get screwed in the short term though it isn't clear that telling Peter not to trade with Jose will be of any help to Peter or Joe in the medium term--and we all seem to agree that reducing the influence of { 'Big Pharma', 'the rich', 'beneficiaries of patent and copyright monopolies' } would be a good thing.

But the big picture point bears repeating. Protectionism doesn't work (except to win the next election) and the harm that comes from delaying domestic economic adjustment to the realities that arise from comparative advantage is greater than the short term harm (which ought to be looked squarely in the eye and addressed).

[Matt]

I get his point.

Now equalize things. Create a port tax for excess GHG emissions, create a port tax for "New World order" security services.

The problem we want to avoid is the idea that free trade is a charity service for the poor countries. Keep the books balanced on all services, then free trade away.

As far as favoring the rich, then complainers might want to think about sensible federal reforms of government, for it is government that systematically favors the rich.

[Viscus]

D-Slam,

Do you think that someone ever decides to leave a Ph.D. program for any reason other than being too stupid?

If so, I think you should learn to show people who earn Masters degrees from Ph.D. programs more respect. Behind each one is a different story, and your stupid stereotypes don't really get at that.

Let me think of a small sample reasons that one might leave a graduate program.

(1). Asshole advisor
(2). You don't click with people in your department.
(3). You didn't realize how different grad school would be from undergrad.
(4). You got a great job offer.
(5). You desire a more balanced life. Now.
(6). Family reasons.
(7). You decide you don't want to be an academic.
(8). Etc...

I am not impressed with you insulting people who get a Masters degree from a Ph.D. program they don't complete. There is a story behind each person. Maybe, just maybe, a lot of these people are smarter than you. =)

(Full Disclosure -- I have never left a Ph.D. program. But I have friends who are damn smart who have.)

[Ponzi Q. Globalization]

"Protectionism doesn't work"

Of course, it works! It works for some, just like so-called free trade or any mix of the two. Now let's think about the winners and losers and the degrees. Oooo, it's soooo hard to model!!!

"the harm that comes from delaying domestic economic adjustment to the realities that arise from comparative advantage is greater than the short term harm (which ought to be looked squarely in the eye and addressed)."

And, if one wants to be a *moral* economist these days, one must make damn sure the addressing of the short-term harm never includes empowering certain classes of people (cough cough workers). Or should I say one must make damn sure that it *does* include the further empowering of other classes of people (cough cough those who control capital).

The 'losers' need not worry. Let history be their guide and she'll show them that the strong have always cared for the weak. And, anyway, if that's not the case, the meek will inherit the earth and all that, right? In the long-term.

One last point, everytime I hear the term comparative advantage, I get sick to my stomach. The nausea arises from the dizzying list of unstated assumptions and simplifications that are behind its usage.

[Paul G. Brown]

Ponzi -

Precisely which "unstated assumptions and simplifications" are you referring to?

[Paul G. Brown]

Oh - and by way of clarification - I think the short term harm of free trade is real, and demands state intervention.

I'm also very open to ideas like requiring the countries with whom we trade to put in place appropriate labor laws, environmental regulations, etc.

But you simply can't wave away realities such as industrial workers in the first world have for about 2 generations now benefited from technological and geopolitical circumstances which no longer hold.

[jerry]

Paul, when you say that "protectionism never works", and so presumably, free trade is best, it makes me wonder how you feel about laws that say we cannot import diamonds made using child labor.

When I hear people saying they like their free trade unadulterated, I wonder how they like their dog food, chicken, meat, and fish.

[nemo]

"As for the moral point: well, we live in a world of nation states, which are all about treating citizens differently from non-citizens."

"... the nationalist view, the moral community is Peter and Joe. Joe gets a vote on Peter's trades. Peter should be allowed to trade only if both Peter and Joe benefit, otherwise too bad. Jose counts for less...."

Of course the nationalist view is relevant. Look beyond trade. My nation-state compels me to pay taxes. Other nation-states do not compel me to do this, and my nation-state does not compel citizens of other nation-states to pay taxes here (unless they are earning income here).

In my own young adulthood 35 years ago my nation-state still had the power to compel me to serve in the armed services. Many other nation-states still compel their citizens to serve in the armed services, and my own nation-state could re-assume that power at any time.

You could argue whether my nation-state has the moral right to compel these things of me, but as a practical matter, it certainly acts as if it enjoys that right. My fellow citizens have a say in those matters (a rather small say, but a say) by how they vote.

You can argue as a practical matter whether it is a good idea for my nation-state to compel me to pay low taxes or high taxes, or to compel me to serve in the armed services, especially in a foolish and misguided war. You can argue as a practical matter whether it is a good idea for my nation-state to interfere in my ability to trade with foreigners.

But talking about whether my nation-state has a moral right to do such things? You may as well argue about the moral right of the sky to rain, or lions to eat zebras. Interfering with the lives and actions of its citizens (and foreigners within its boundaries) is what a nation-state does. The best you can hope for is to get the nation-state to interfere in the very limited areas where interference is beneficial, and lay off in the much vaster areas where interference is destructive.

[jerry]

I'm also very open to ideas like requiring the countries with whom we trade to put in place appropriate labor laws, environmental regulations, etc.

Ah, well you answered this while I was googling.

How is that free trade then? Claims to regulate trade based on environmental regulations and labor just smacks of protectionism to me.

Where will that end? With bans on child labor? Mandates concerning worker safety? Demands that food meet health standards?

Don't all of those barriers only serve to restrict trade and pollute the altar comparative advantage and free trade?

What is the difference between my stopping trade by imposing worker safety, labor, and environmental requirements on Jose's country and my stopping trade in order to make sure that a local Ponzi can remain in business making his award winning pasta?

[John Emerson]

"What is the difference between my stopping trade by imposing worker safety, labor, and environmental requirements on Jose's country and my stopping trade in order to make sure that a local Ponzi can remain in business making his award winning pasta?"

Is that a rhetorical question? Are you being ironic in some way?

[taylor]

Don't like Alex's thought experiment? Here's Krugman's take on why they work well . . .

THE ACCIDENTAL THEORIST

Imagine an economy that produces only two things: hot dogs and buns. Consumers in this economy insist that every hot dog come with a bun, and vice versa. And labor is the only input to production.

OK, timeout. Before we go any further, I need to ask what you think of an essay that begins this way. Does it sound silly to you? Were you about to turn the virtual page, figuring that this couldn't be about anything important?

One of the points of this column is to illustrate a paradox: You can't do serious economics unless you are willing to be playful. Economic theory is not a collection of dictums laid down by pompous authority figures. Mainly, it is a menagerie of thought experiments--parables, if you like--that are intended to capture the logic of economic processes in a simplified way. In the end, of course, ideas must be tested against the facts. But even to know what facts are relevant, you must play with those ideas in hypothetical settings. And I use the word "play" advisedly: Innovative thinkers, in economics and other disciplines, often have a pronounced whimsical streak.

http://www.pkarchive.org/theory/hotdog.html

[Paul G. Brown]

Jerry -

See my clarification. In practice, I think it's quite reasonable to 'special case' some things. And the price I'd require to enter Alex's ideal world is a (fairly) uniform set of regulations (largely to ensure that whatever comparative advantage exists is the result of some underlying reality - geography, climate, the trading partner's investment decisions).

Where these questions always get complex is at the margins. I concede your child labor example, but raise you the example of the US auto industry.

And there are lots of others .....

We might differ (I think) on high tech manufacturing. Environmental regulations in China are non existant but it's absurdly cheap to assemble computers and what-not there. In fact it's so cheap that any attempt at protectionism is doomed to fail. What can we do?

We might agree on the way that protectionism is shaping legislation on drug imports. Clearly this is the malevolent influence of 'Big Pharma', and it is a case where 'Big Pharma' is acting against the interests of consumers and worker.

There are tons of other situations: food, textiles, metal processing.

But Alex's point is instructive. Our community of interest (from a moral point of view) includes assembly line workers in China. Is their lot improved when we erect tarif barriers or charge a 'carbon tax' on imports from countries with poor greenhouse gas emission records?

[Ponzi Q. Globalization]

Here's are 10 points that occur to me off the top of my head. Forgive the rapid fire typing & disorganization (I'll assume it will show) but I must go soon.

1. Neglects power relations between people and groups of people. The models cannot take into account the feedback system between political power and wealth. To have any trade, you must have *some* rules. Trading rules influence wealth distributions. The rules are themselves influenced by wealth. How is this rule modification factored in?

2. Neglects the role of bargaining between labor and owners (controllers) that occurs. The threat of offshoring can be used to bring wages down. How is this factored into win-win for the nation?

3. Assumptions of workers who can switch jobs on a dime. What a load! How is the fact that this is not true factored in?

4. Neglecting social costs of 'free trade' policies. How are social costs factored in? Broken families, fear of job loss, increases of wealth inequality, etc. These costs may feed back into future comparative advantages

5. Static nature of concept. All our lives are lived in a state of disequilibrium.

6. Is the infant industry theory really utterly invalid? See 7.

7. No mention of role of protectionism in so many (all?) rising economies. Would things really have been better if the US went 'free trade' from day 0?

8. No mention of the effect of freely flowing productive capital. This creates a single global labor pool in many fields. How is this a win-win for many American workers?

9. Not taking equality of human abilities into account. What happens when comparative advantage arises solely from differences in current living standards. See next.

10. No mention of comparative advantages based on the destruction of the environment or shitting over labor (human!) rights. Corps use proxies to do end runs around western level rules. Wonderful! How is this factored in? How do we not import lower levels?

For now, I leave it to others to come up with more if they want. Oh, & here's an interesting link...

http://www.exponentialimprovement.com/cms/fallacy.shtml

Some good points from a system perspective.

[MQ]

Taylor: whimsical models are fine, but Tabarrok was not constructing a whimsical model, he was laying down principles about what human realities should be taken into account in policy decisions.

Colin Danby: It is classic straw-man argumentation to see people claiming nation states are something with moral significance and say that this implies they are therefore the only thing with moral significance. No one here said that nation-states are the only important human loyalty, or even necessarily the most important one.

[MQ]

and P.S. I said in my earlier post that nation-states are the most important single institution in modernity (which I believe is empirically true) -- that does not mean that our most important ethical duties are owed to them. But they are still very significant morally in ways that the absurd caricature of cosmopolitanism given by Tabarrok utterly misses.

[D-Slam]

"Do you think that someone ever decides to leave a Ph.D. program for any reason other than being too stupid?"

Viscus... I apologize, I am not expressing myself carefully, which has led to misinterpretation. I can imagine 101 excellent reasons to leave a PhD program... and I have no trouble at all imagining that someone who does so might be a lot smarter than me (the ones who leave are probably smarter than the ones who stay IMHO). *I* don't look down on such people at all. However, I've been told by profs that others do, that a Master's degree is not considered a real credential in the US (unlike in Canada), more of a booby prize. I don't know if that's true, but that's what I've been told. So if I tell American readers I have a "Master's", I (perhaps unnecessarily) feel the urge to point out it is a terminal Master's, not a credential earned by dropping out of a PhD program.

[D-Slam]

"Do you think that someone ever decides to leave a Ph.D. program for any reason other than being too stupid?"

Viscus... I apologize, I am not expressing myself carefully, which has led to misinterpretation. I can imagine 101 excellent reasons to leave a PhD program... and I have no trouble at all imagining that someone who does so might be a lot smarter than me (the ones who leave are probably smarter than the ones who stay IMHO). *I* don't look down on such people at all. However, I've been told by profs that others do, that a Master's degree is not considered a real credential in the US (unlike in Canada), more of a booby prize. I don't know if that's true, but that's what I've been told. So if I tell American readers I have a "Master's", I (perhaps unnecessarily) feel the urge to point out it is a terminal Master's, not a credential earned by dropping out of a PhD program.

[dale]

"I understand individual rights and I understand counting everyone equally but I see less value in counting some in and some out based on arbitrary characteristics like which side of the border the actors fall on"

We often talk about individual rights or human rights as if they are transcendent, God-given, inate. But rights are only grounded in concrete political communities such as our Constitutional Republic.

Until we have an effective, world encompassing Constitutional Republic our individual democratic nation states are the only institutions by which we can grant each other rights and work to maintain and enforce those rights.

Now, perhaps certain trade policies and regimes might act as way stations towards a Universal Constitutional State and a universal grounding of human rights, eliminating arbitrary political divisions. If that is the intention of those advocating certain trade policies then let them state it plainly and proudly.

But it could also be the case that our current trade regimes, by weakening our current nation states and the currently existing "moral communities" (probably better to call them democratic-legal communites) may be undermining the only viable communities that protect our rights.

The struggle for recognition and inclusion- to see the inherent dignity of each and every person, is one of the ways we define this grand human project. It's good to be having this conversation. Capitalism and trade can play a part in this project. But real moral communities are just as likely to be frustrated by the limitations of capitalism as they are thankful for the benifits, and therefore mindful of the boundaries between what's good economics and what good moral behavior.

[Paul G. Brown]

Ponzi -

Err. That term, "comparative advantage"? I think you need to look it up. I don't think it means what you think it means.

You're raising a raft of (quite reasonable) onservations about the practical difficulties of international trade, but none of your points touches on the basic Ricardian insight of "comparative advantage".

Suppose we have a single nation state consisting of two islands. One island has a temperate climate. The other is sub-tropical. The former island is ideal for growing wheat. The later for winter holidays. This underlying geographic reality means the islands have "comparative advantage" for wheat production and vacation/tourism.

Everything you typed up is perfectly reasonable, and I agree with most of it. But none of these socio/political problems touches on the basic, simple observation that some countries are better at wheat than beaches (and vice versa) and the citizens of both countries therefore benefit by trading with one another.

And it is "comparative advantage" that explains, in the end, why "protectionist" policies do more harm than good over the long run.

Geography's not destiny, but you don't sun bathe in a blizzard, either.

[Colin Danby]

MQ: If you think a statement with the term "modernity" in it has status as an empirical proposition you'll have to tell us what the notoriously vague term "modernity" means.

You also appear to be confusing loyalty with morality, and empirical observations about people's loyalties with ethical choices about relevant communities. In any case I did not make the criticism of your position (whatever it is) that you apparently attribute to me when you protest about "classic straw-man argumentation."

Tabarrok's ethical argument still strikes me as smart, and it's interesting that a lot of folks above don't grasp that it's a *critique* of economics.

[jerry]

"What is the difference between my stopping trade by imposing worker safety, labor, and environmental requirements on Jose's country and my stopping trade in order to make sure that a local Ponzi can remain in business making his award winning pasta?"

Is that a rhetorical question? Are you being ironic in some way?

What I am mainly trying to say is that I don't see free trade anywhere. I don't think Brad really wants adulterated food sold to us. I don't think Brad really thinks we should support child labor.

So since I don't see free trade even amongst the hard core free traders, I am not sure what their complaint is with fair trade.

It seems to be more about degree and a label.

If taxes distort pricing information and incentives, doesn't a regulation against child labor do the same thing? If we accept taxes and regulations against child labor, why shouldn't we also accept other various fair trade proposals, including the right of a country (Italy say) to keep it's pasta pure?

[Robin]

It's done at the level of trade, but doesn't this just boil down to what, if anything, is objectionable about a Pareto-superior move?

[jerry]

Our community of interest (from a moral point of view) includes assembly line workers in China. Is their lot improved when we erect tarif barriers or charge a 'carbon tax' on imports from countries with poor greenhouse gas emission records?

Whose moral point of view?

Brad's?

Bush's? Rupert Murdoch's? Bill Gate's? Prince Alwaleed Bin Talal Alsaud's? Jim Walton's? Li Ka-shing? Silvio Berlusconi's?

I'm pretty far down on that list of movers and shakers. It's not clear to me how much of a moral obligation to help the Chinese Assembly worker I have compared to my helping my family, my neighbors, and my community, especially since I am struggling myself and my ability to affect the Chinese Assembly worker is very very limited.

Isn't my comparative advantage and the invisible hand all saying I should raise myself up and then use my profits to help the Assembly Worker out?

How will my eating adulterated food really help the Assembly worker?

And the other issue is one of rates and the fallacy of the excluded middle.

To hear the free traders say it, either we go whole hog to free trade OR we doom the Chinese Assembly worker forever. Are there no other alternatives to full speed ahead?

Doesn't full speed ahead usually end up with someone driving into a wall or off a cliff?

What if I give you a method to bring the Chinese Assembly Worker up to our standards over say a 100 year period, while never letting our standards slip for ourselves. Can you say that that is morally worse than a free trader's attempt to bring the Chinese Worker up to some indeterminate level that accepts our slipping in our standards ourselves?

I always hear about these moral issues. I usually hear about them from people with tenure that live in nice homes.

[jerry]

It's done at the level of trade, but doesn't this just boil down to what, if anything, is objectionable about a Pareto-superior move?

What are you measuring? How do you measure it? Why is that the right quantity to measure?

What are the costs of your move? What are the opportunity costs of your move? Who is paying the price? What is your justification for forcing those people to pay that price?

What else in society is compelled to move in Pareto-superior moves without regarding to other interests and factors?

[C. L. Ball]

I think some commentators are missing Tabarrock's point -- how one defines the moral community affects how one views the value of economic competition. Why worry over a 'race to the bottom' from Boise to Bangkok but not from Boise to Birmingham? I have yet to hear a call from US unions for a Constitutional amendment to impose inter-state tariffs.

Also, if the nation is the moral community then Joe might have to take a hit if Peter, Paul and Mary gain more by trading with Jose rather than Joe. Claims of trade harm are individual claims too.

[Ponzi Q. Globalization]

"That term, "comparative advantage"? I think you need to look it up. I don't think it means what you think it means."

Oh, please! So many of you economists think that CA is such a super difficult concept to understand. It's not.

That's not to say that I could have come up with it myself. Just that once it's explained, it can be understood by most people with a little bit of mathematical training.

"You're raising a raft of (quite reasonable) onservations about the practical difficulties of international trade, but none of your points touches on the basic Ricardian insight of "comparative advantage"."

Thank heavens we agree on the reasonableness of the observations. The Ricardian insight of "comparative advantage" is all fine and dandy. It just isn't adequate for making policy decisions in the real world.

"Suppose we have a single nation state consisting of two islands. One island has a temperate climate. The other is sub-tropical. The former island is ideal for growing wheat. The later for winter holidays. This underlying geographic reality means the islands have "comparative advantage" for wheat production and vacation/tourism."

Jesus, this is what I'm talking about! Oversimplifications. Of course, CA can be used to analyze this 'model'. Big deal.

Now explain how it helps in the real world with some of the issues I listed. If it's not adequate, then why is it used as THE MAIN REASON for promoting 'free-trade'?

"Everything you typed up is perfectly reasonable, and I agree with most of it. But none of these socio/political problems touches on the basic, simple observation that some countries are better at wheat than beaches (and vice versa) and the citizens of both countries therefore benefit by trading with one another."

My point is that all citizens of all countries do not benefit under the current trading regime.

"And it is "comparative advantage" that explains, in the end, why "protectionist" policies do more harm than good over the long run."

Do more harm than what? So-called free trade? Protectionism v free-trade is a false dichotomy.

"Geography's not destiny, but you don't sun bathe in a blizzard, either. "

Geography is losing importance with respect to the trade issue (note, I did not say all importance). Yet this is what economists think of when they discuss modern trade. Or at least this is how they try to push it down the throats of the American public.

[Paul G. Brown]

Ponzi -

So, you accept the basic reality of the Ricardian idea of "comparative advantage". But you don't like aspects of the current structure of international trade or the machinery used to create trade policy.

Well, welcome to a very big club!

Why is "comparative advantage" 'THE MAIN REASON' for promoting free-trade? Well - in my experience, it isn't. The Ricardian idea is a fairly narrow, technical formulation that explains why trade and specialization maximize the utility of partners in international trade. It shows up fairly often in these debates because it's a useful model that throws some light on some important questions - such as why every effort at sustained protectionism has failed. It's just a piece of economic machinery like a supply / demand graph.

I'm actually not at all that clear about quite what it is that you're so hostile to.

[kharris]

The tactic of offering a list of increasingly ridiculous examples to make an initial example seem ridiculous is neither new nor clever. In fact, there are groups of left-handed people. In an earlier time, they agitate for things like left-handed scissors and left-handed school desks. Nothing ridiculous about that. Left-handed people have no obvious common interest in trade policy, though. As Joe G says, this is mostly an effort to get people to shut up.

People group together according to their common interests. That is how social clubs and politics work. Tabarrok seems to want to argue against politics, no surprise, given his libertarian views, but the "left-handed, Christian, English speakers" business is pure silliness.

Rodrik arguing for national trade policy is not the same as Tabarrok arguing for left-handed trade policy because national trade policy is, in fact, the way we do things now, as does just about every nation in the world. One may object to this situation, or to some nation's policies, but to claim that "economists are too quick to take the nation as the relevant moral community" is to argue that economists should ignore reality. Alternatively, it is to argue that economists should prefer Tabarrok's views to the prevailing view in most countries in the world. I suspect that is what Tabarrok is actually arguing, but that amounts to his arguing that we should agree with him because he wants us to agree with him.

The reason we should cut the cake the way we do is because we have a Constitution that prohibits trade restrictions between US states but allows them at the national border. That's the system we have, which sort of makes people within our borders a, perhaps the, "relevant community". Tabarrok may want us to think this is an arbitrary choice of systems no different than a religion-based trading system, but it isn't. The border matters because the Constitution says it matters. If Tabarrok objects to the Constitution, let him say so plainly and stop hiding behind "relevant moral community" mumbo-jumbo.

And mumbo-jumbo seems to be what it is. As with any argument, defining the terms of debate can provide enormous advantage. Tabarrok slips "moral" into the discussion by claiming the debate to which he refers "is primarily not about positive economics but about the relevant moral community". Here's a little trick. Drop "moral" and read the sentence again. Still makes sense, right? "Moral" works for Tabarrok, so he slides it in, but there is no particular reason to accept the terms under which he wishes to hold the debate.

I object to this "moral" claim not because I am opposed to trade. I don't think my job will be sent off shore. I suspect I benefit from trade more than the average US resident. I am opposed to arguments that amount to figuring out how many angels can dance on the head of a pin. This "moral" argument strikes me as pretty shallow, not really moral at all. There will be another argument and another and another, each from a slightly different point of view, each of which will come to the same conclusion, piled one on top of the other. That's because the arguments are created to support the conclusion, rather than the conclusion growing out of the argument. That is what partisans do. Those who share the conclusion nod approvingly at the argument, without giving much thought to whether the argument has any real merit beyond supporting the favored position.

OK, now I get around to reading John E and ajay and larry b and Dean B. Yeah, what they said.

Paul GB,

The big picture isn't what Tabarrok is offering. He is starting with a conclusion – trade is good – and then concocting a pretty shallow argument in its favor. Support trade all you want, but please, please don't encourage the sort of thinking he offers in support of trade. This is awful stuff.

[Paul G. Brown]

Au contraire, kharris -

I applaud Alex's idea that nationality is a pretty crummy way to define 'moral community'. I applaud it as loudly as I can, given the grievous harm that the monstrous abstraction of 'nationalism' and 'national greatness' inflicted on citizens of the last century.

I hold that rejecting 'nationalism' as a basis for moral community is as important a lurch forward in human development as rejecting 'religion' as a basis for moral community was in 17th century Europe!

It seems to me Alex is making this point as plainly as he can.

[sleepdeprived]

What are the geographical comparative advantages China has in manufacturing over the United States?

The example given by Paul G. Brown is worthless and an attempt to shut down real discussion. People are not talking about sun & fun vacations - people are talking about the manufacture of goods and performance of services.

So what is the geographic advantage China offers?

Or was this another evasion to avoid talking about the real reason labor is cheap in some of these countries - little to no labor & environmental laws, little to no social safety net, little to no regulatory & inspection frameworks, government backed oligarchies?

Or how as soon as wages start to rise, business owners are ready to close up shop and re-open in some cheaper location? The comments in this blog have frequently referenced business closing up shop in India in order to move to SE asian or eastern european countries.

[Paul Reber]

There is a lot that is interesting here, but nothing really addresses the core point (which is one JBD makes regularly):

If a textile plant shuts in North Carolina (run by Joe) and a maquiladora opens in Mexico (run by Jose) that directly replaces Peter's demand for shirts, we cannot forget the benefit to the Mexican workers when we bemoan the loss of jobs in NC. I think this is pretty self-evident to reasonable people, but does require not being too obsessed with national borders.

The "fair trade" complaints here seem a bit angry with Alex without disagreeing with the core point really. The picture is certainly a cartoon and we should definitely consider additional practical consequences.

A key point is if the Mexican workers actually gain enough. Consider a different cartoon scenario where the off-shore workers are wholly owned slaves of evil capitalists. They might gain zero benefit from the additional work, while the evil overlords pocket the profits. That would break the scenario for sure and you would feel compelled to restrict the trade. Even border-blind free-traders abhor slave and child labor (reasonable ones, anyway).

More relevantly, we could ask the question of whether the Mexican maquiladora workers are actually gaining enough to compensate for the loss in NC. The aren't slaves, but the labor situation could be sufficiently oppressive that the benefits do not balance out well. I see some apparent assertions here that this must be true, but nobody is attempting to back that up with evidence. I doubt it's easy to judge and but it is completely critical to the question.

I don't think you have to ignore national boundaries completely either to make this an interesting question. Suppose losing 100 US jobs lead to job creation that led to avoiding 1000 cases of infant mortality in China. All reasonable people would say that's acceptible, right?

The point is just that if there is sufficient benefit to Jose, we have something like fair trade even though Jose lives in another country.

P.S. The contaminated food thing is a red herring. Before we had melamine tainted food from China, we had E. Coli tainted produce from California. All reasonable people want product safety and standards applied to all goods from any source. That kind of regulation doesn't seem to have much to do with national borders at all.

[Ponzi Q. Globalization]

"Well - in my experience, it isn't."

I dunno. Is comparative advantage not used as a primary justification for 'free trade' as practiced today? I've seen it used this way over and over and over again. I would think many people who read this and similar blogs also have.

"The Ricardian idea is a fairly narrow, technical formulation that explains why trade and specialization maximize the utility of partners in international trade."

It's narrower than you say here. The maximization is of the utility of the partners (in aggregate) in some simplified models. Left out are some of the things I mentioned previously. In short, the complexity of the real world.

"I'm actually not at all that clear about quite what it is that you're so hostile to."

The use of comparative advantage as the primary theoretical justification for the current trading regime.

[Ponzi Q. Globalization]

"Suppose losing 100 US jobs lead to job creation that led to avoiding 1000 cases of infant mortality in China"

American job loss for the benefit of the world's poor. Is this the way neoliberal free trade was sold to the American public?

Even as starkly as you put it here, it would not have passed if sold this way.

[Paul G. Brown]

sleepdeprived -

First, your claim that I have attempted 'to shut down real discussion' is pure bullshit and I ask that you retract it. The original example Ricardo used was wheat and wine, which is appropriate to an age where agricultural commodities dominated trade. In modern times, however, services (like vacations) make up such a large part of consumption spending (4-6% of GDP in the US). Hence I went with wheat and vacations. And I note you don't explain why the example is 'worthless'. Is it untrue? Is it misleading?

If you read my responses you will notice that I propose several things that might be the source of a comparative advantage. Geography was one of them. Another was the investment choices made within the other country.

You will also note that there is nothing to say that changing circumstances don't change the nature of a comparative advantage. China currently has a significant "comparative advantage" in manufacturing because technological advances have made it possible to use (exploit) relatively unskilled labor. India's "comparative advantage" in certain computer related industries is the result of significant government investment in education.

You're absolutely correct that these circumstances will change. But the principle of "comparative advantage" persists.

Look - you might not like what "comparative advantage" implies in the short term. I don't think anyone does. But that discomfort doesn't make the phenomenon any less real.

[jerry]

There seems to be a big difference between melamine and e.coli. And/or your definition of reasonable people differs from mine.

http://www.huffingtonpost.com/david-goldstein/melaminespiking-widespr_b_47221.html

" Melamine-Spiking "Widespread" In China; Human Food Broadly Contaminated (26 comments )

Who knows what kind of shit is adulterating our imported and domestic food supply? But whatever it is, it's about to hit the fan.

Months after dogs and cats started dropping dead of renal failure from melamine-tainted pet food, American consumers are beginning to learn how long and how wide this contaminant has also poisoned the human food supply.
Last week, as California officials revealed that at least 45 people are known to have eaten tainted pork, the USDA announced that it would pay farmers millions of dollars to destroy and dispose of thousands of hogs fed "salvaged" pet food.

But this is just the tip of the iceberg. Through the salvaging practice, melamine-tainted pet food has likely contaminated America's livestock for as long as it has been killing and sickening America's pets -- as far back as August of 2006, or even earlier. And while it may seem alarmist to suggest without absolute proof that Americans have been eating melamine-tainted pork, chicken and farm-raised fish for the better part of a year, the FDA and USDA seem to be preparing to brace Americans for the worst. In an unusual, Saturday afternoon joint press release, the regulators tasked with protecting the safety of our nation's food supply go to convoluted lengths to reassure the public that eating melamine-tainted pork is perfectly safe.

In a fit of reverse-homeopathy the press release steps us through the dilution process, tracing the path of melamine-tainted rice protein through the food system. The rice protein is a partial ingredient in pet food, we are told, which is itself only a partial ingredient in the feed given to hogs, who then "excrete" some of the melamine in their urine. And, "even if present in pork," they reassure us, "pork is only a small part of the average American diet."

How comforting. But the press release reaches its Orwellian best in its insistence that there is no evidence of any "human illness" due to melamine exposure:

"While the Centers for Disease Control and Prevention systems would have limited ability to detect subtle problems due to melamine and melamine-related compounds, no problems have been detected to date."

Translation: "We are unable to detect such problems, but don't worry, no such problems have been detected."

It is hard to read this as anything but a preemptive press release, a calculated effort to reassure the public that it is safe to eat trace quantities of melamine... just days before they inevitably reveal that Americans have in fact been consuming it unawares for months. Menu Foods, the company at the center of the controversy, has recalled product dating back to November 8, 2006. Manufacturing forty to fifty percent of America's wet pet food, the salvaged product from their massive operations must have surely contaminated livestock feed nationwide.

And it gets worse. Tomorrow the New York Times will report from China, detailing how nitrogen-rich melamine scrap, produced from coal, is routinely ground into powder and mixed into low-grade wheat, corn, soybean or other proteins to inflate the protein analysis of animal feed:

The melamine powder has been dubbed "fake protein" and is used to deceive those who raise animals into thinking they are buying feed that provides higher nutrition value.

"It just saves money," says a manager at an animal feed factory here. "Melamine scrap is added to animal feed to boost the protein level."

The practice is widespread in China. For years animal feed sellers have been able to cheat buyers by blending the powder into feed with little regulatory supervision, according to interviews with melamine scrap traders and agricultural workers here.

[...] Many animal feed operators advertise on the Internet seeking to purchase melamine scrap. And melamine scrap producers and traders said in recent interviews that they often sell to animal feed makers.

"Many companies buy melamine scrap to make animal feed, such as fish feed," says Ji Denghui, general manager of the Fujian Sanming Dinghui Chemical Company. "I don't know if there's a regulation on it. Probably not. No law or regulation says 'don't do it,' so everyone's doing it. The laws in China are like that, aren't they? If there's no accident, there won't be any regulation."

"The practice is widespread in China," the Times reports, and has been going on "for years." And it is not just wheat, corn, rice and soybean proteins that should be suspect, but the animals who feed on it, including all imported Chinese pork, poultry, farm-raised fish, and their various by-products. Despite FDA and USDA efforts to allay concerns about consuming melamine-tainted meat, the health effects are unstudied, and the permissible level is zero. If China could impose a three-year (and counting) ban on the import of U.S. beef after a single incident of Mad Cow disease, then surely the U.S. would be justified in imposing a ban on Chinese vegetable protein and livestock products due to such a prevalent, industrywide contamination.

And if in the coming weeks this ban is finally imposed, the question we must ask government regulators is... why so late? Why did they wait until our children licked the last remaining drop of bacon fat off their fingers before alerting the public to the potential health risk, however low? It seems inconceivable that the regulators tasked with overseeing the safety and purity of our nation's food supply did not at least imagine the potential scope of this crisis back in early March when they first learned that Chinese wheat gluten was poisoning dogs and cats. Indeed, the very fact that they were so quick to focus in on melamine as the adulterating agent suggests they at least suspected what they were facing.

It may make for entertaining TV, but popular shows like CSI get forensic toxicology exactly backwards. You don't run a substance through a mass spectrometer and 30 seconds later get a complete readout of its chemical makeup. Rather, you painstakingly look for specific chemicals or groups of chemicals one at a time, until you find the offending toxin. Once you get beyond the basic "tox screen," forensics is as much art as science -- investigators use evidence and intuition to narrow the search to those compounds that are most likely to be the culprit.

And so it begs the question as to why -- in the face of an apparent wheat gluten contamination that reportedly killed nine out of twenty dogs and cats in Menu Foods' quarterly taste test -- would FDA scientists test for melamine, a chemical widely believed to be nontoxic?

Why? Because they thought they might find it.

Lacking adequate cooperation from FDA officials one is constantly forced to speculate, but given the circumstances it is reasonable to assume that the search for melamine was prompted by the "nitrogen spiking" theory, rather than the other way around. Based on their knowledge of the evidence, Chinese agricultural practices, the globalizing food industry, and perhaps prior history, the FDA hypothesized that unscrupulous Chinese manufacturers may have intentionally adulterated low quality wheat gluten in an effort to pass it off as a high-protein, high-value product. And nothing would do the job better than melamine.

According to one synthetic organic chemist, melamine is by far the perfect candidate. It is high in nitrogen (66-percent by weight), nonvolatile (ie, it doesn't explode,) and dirt cheap. It is also -- at least according to both the scientific literature and chemical supply catalogs -- widely considered to be nontoxic. For FDA officials, the mystery never seemed to be how melamine made its way into wheat, rice and corn protein, but rather, why it was suddenly killing dogs and cats.

The technical answer may center on the unexpected interaction between melamine, cyanuric acid, and other melamine by-products, but the practical answer may be much more pedestrian. Some samples of adulterated wheat gluten reportedly tested as high as 6.6-percent melamine by weight, an off the chart concentration that was likely the accidental result of some less than thorough mixing. Had this accident never occurred -- had cats, with their sensitive renal systems, not been the canary in the coal mine of melamine toxicity -- we might never have known that our children and our pets were being slowly poisoned by Chinese capitalism.

Well, despite the FDA's best efforts, now we know.
"

[Paul G. Brown]

Ponzi -

Actually, I would make the case a little more starkly.

Technological changes mean that the comparative advantage first world nations once enjoyed in industrial manufacturing have evaporated. Also, the comparative advantage we once enjoyed as a result of our embrace of capitalism has eroded as this socio/economic model has been embraced by the third world.

Increasingly, 'the poor' in the third world will get manufacturing jobs and 'we' in the first world will lose them.

You can complain about this all you want, but I think it's by now a fairly well established historical fact. (As an aside, these trends are explicable in terms of "comparative advantage".)

Our policy choices are to opt for more protectionist measures, or else to try to specialize in ways which work to our advantage. I'm for public investment, AND free(er) trade (subject to the kind of limits I talked about earlier).

[Ponzi Q. Globalization]

"Technological changes mean that the comparative advantage first world nations once enjoyed in industrial manufacturing have evaporated. Also, the comparative advantage we once enjoyed as a result of our embrace of capitalism has eroded as this socio/economic model has been embraced by the third world."

Agree on both points.

"Increasingly, 'the poor' in the third world will get manufacturing jobs and 'we' in the first world will lose them."

If the trading regime does not change, then I agree here also. But why stop at manufacturing?

"Our policy choices are to opt for more protectionist measures, or else to try to specialize in ways which work to our advantage. I'm for public investment, AND free(er) trade (subject to the kind of limits I talked about earlier). "

Please list what ways we can specialize. Be specific. And also remember that the majority of our nation did not go to graduate school.

An aside: Does anyone else ever get the idea that following the neoliberal globalizationized path can lead to a system that resembles feudalism?

[nemo]

"Melamine scrap is added to animal feed to boost the protein level."

It drives me crazy the way the press keeps stupidly repeating that the addition of melamine boosts protein levels. It does nothing of the sort.

Melamine is not a protein, and it is not an amino acid. It just contains a lot of nitrogen. Protein (and the amino acids making up protein) also contain quite a bit of nitrogen. Carbohydrates and fats, the other major ingredients in foods, contain no nitrogen at all.

What melamine does is fool a crude test for protein levels that only measures how much nitrogen is in the tested substance. Any additive containing a lot of nitrogen would do the trick.

The FDA, the USDA, and importers themselves need to be testing specifically for melamine and other contaminants added to fool the cruder tests, and rejecting any doctored shipments.

[JRossi]

"Borders don't matter. We must treat everyone equally, no matter where they live or who they are," Fine ideas--for someone with absolutely no knowledge of biology, psychology, epidemiology, history, sociology, common sense, etc, etc. The economics profession continues to lose credibility.

[Simon St.Laurent]

C L Ball writes:

"I have yet to hear a call from US unions for a Constitutional amendment to impose inter-state tariffs."

I haven't heard it from unions or any political official, but I've heard that sentiment from a number of people in upstate NY who are tired of watching the jobs head south to places where union-busting is more accepted and housing costs are lower.

However, some of those same people are mixing more laughter in with their tears, as they see the jobs that used to be here moving from the south to Mexico to China or elsewhere - the 'race to the bottom' isn't just about moving away from here.

Once again, upstate NY is twenty years ahead of the rest of the US. (I think the rest of the US would be wise to think about that, but it rarely happens.)

The 'rootless cosmopolitanism' of economics may seem attractive to economists wrapped up in their equations, but I suspect more and more that attitude and approach is looking like a disease rather than a cure.

A dose of cosmopolitanism is a good fix for communities that have turned too deeply inward, but too much cosmopolitanism obliterates the benefits of community as well as the costs.

[PaulGBrown]

Ponzi -

you ask a superb question. One of the great questions confronting the next generation of folk coming of age in the first world.

My answer? Haven't a friggen clue.

JRoss -

Hey asshole!

Replace "border" with "race" in your comment. Stuff that. Replace "border" with anything. Religon. Gender. Hair color. Class. IQ.

We 'East African Plains Apes' all breathe one atmosphere. We share one planet, and a tiny, shallow gene pool. The barriers people like you erect to classify and divide humanity have over and over again been exposed as the launching pad of utterly evil outcomes.

It doesn't take a verse-chorus-verse of Kum-Bah-Yah to see that your personal outcomes are bound up with Peter's, and Joe's, and Jose's, and Lee's. It's not a case of "Fine ideas". It's a case of fact.

[Matt McIrvin]

All right, here's another toy model, slightly more complex: suppose what Peter actually wants to is trade with Paul, who can give Peter a better deal because he owns Jose as a slave, fed on water and crumbs and beaten six times a day, and can get his labor nearly for free. Is Joe, who wants to work for fair wages, still supposed to hold his tongue?

[comment]

I'm a rootless cosmopolitan too, and proud of it.
At the same time I worry lest my kind to be brought low in stature by the ill-considered activities of a sub-set of the species.
. . .
('national interest' extrapolated becomes international in nature, or can be extended in arbitrary directions to other set designations. The operant point is contained in that designation 'moral community', and the benefits gained by altruistic common cooperation in such. There is the general phenomenon of the con-artist, in Americana folklore would go from town to town ripping off the marks and generally screwing things up. These days we have the policy mechanisms being manipulated by the very short term -I hesitate to call them 'interests', since that implies some kind of enlightened rational deliberation- *desires* of a set of the uber-corporate community which has gotten itself mired in some horribly maladapted memetic habits. . . What do we call them? The plutocracy, or the capital-manipulators,. Do they have rational (self) interests? At this point ought we not push pause on the economic discourse and launch full bore into psycho-social analytics? I'm wondering for starters, where *they* (whoever it is we are for the moment considering) are looking beyond the next quarter returns, are they looking 30 odd years off? Really? Or just paying lip service to the idea? . . .
I get the impression that what is running policy is not lucid or intelligent, and it seems to be running behind massive cubic tonnage of obfuscation. And it doesn't seem to have any coherent image of a viable or desirable future in mind (isn't this what policy is all about, is to effect the future?), if so I can't find it... I just see idiots running corps. like they were running a brain tumor (more more more!) (And I am nominally organized enterprise, which means I am actually pro-corporate, in principle if not in accord with the actual present mess}
. . .Drunk and coked up indeed, or if not maybe just craven, sycophantic and mediocre.

Not necessarily my kind of rootless cosmopolitans.

Sorry for the rambling post; it's late and I need to write a paper.

More:

On the optimistic side, looking forward. This thread and others like it bode well for the future:
...more sophisticated virtual community structures will emerge...
...policy is being affected in some sense by common understanding that is improved in places like this...
... broader and more intricate interface and organizational structure for these things.
The sophistication, coherence, and effectiveness of the discourse in general should improve, and the state of the art in the social sciences (the 'bar') should elevate to a point where we can make sense of and deal with complex problems, with of course, complex solutions, requiring complex cooperative communication and behavior on the part of high quality communities composed of high quality individuals. {late night style of writing}
Potential to both revolutionize academia and spread some of the beneficial characteristics of academic culture to the polis at large. Making for a population of truly educated, interested, and engaged citizens.
After a century which saw our species' collective intellectual potential pummeled into slime by the television and 20th century marketing culture, this would be very nice.

[CapitalistImperialistPig]

Tabbarok is not making a Ricardian argument - he is making an argument against nations treating their citizens differently from non-citizens. While he is also being obtuse about why they do, or should, it is likely true that economic efficiency would in theory be greater in the absence of "corporations" such as nations (or ordinary corporations.)

It is quite likely also true that if frogs had fur, the world might be made safe for chinchillas.

[ogmb]

Everytime I read Tabarrok I'm reminded of the anecdote about the prof who at the beginning of the first PhD class declared that economics is about finding separating hyperplanes in the n-dimensional vector space.

[bigTom]

The dangers of the melamine contaimination are being greatly exaggerated. The dilution in going up the food change is very large -so we need not worry about eating the few hogs and chickens that ate the melamine. Yes small amounts do get through, but numerically the risk is small, and in case you don't realize everything we can eat/drink/breathe is poisonous is sufficient quantities.

This doesn't mean that the whole episode has reavealed some serious problems with the testing of food components. Clearly we got to get this situation resolved, we were lucky, the recent event of EtheleneGlycol (anti-freeze) being exported to Panama has resulted in several hundred human fatalities. So clearly the amount and kinds of testing for imported materials must be improved. That is not a reason to restrict trade (unless the trading partner refuses to take neccesary steps), but the additional testing will increase the price of these goods.

[jerry]

I think the Chinese need a good talking to by Alex and Brad. Clearly they have a provincial attitude regarding borders and the morality of their own actions and they don't understand that we are all in this together.

[Bruce Webb]

"I don't think you have to ignore national boundaries completely either to make this an interesting question. Suppose losing 100 US jobs lead to job creation that led to avoiding 1000 cases of infant mortality in China. "

Well lets turn that around. Suppose losing 1000 meatpacking jobs in the United States due to opening the US market to Argentian beef caused a handful of ranchers and packing plant owners there to gain huge profits, while forcing Argentians to substitute cheaper Brazilian Beef thus causing increased clearing of the rain forest and creating 1000 cases of infant mortaility in Brazil.

Rodrik used a bi-polar model of the effects of combining the Argentinian and United States into one market for meat. He concluded that meat prices would increase. And given his assumptions and the limits on his model he was right and cast some doubt on the "everyone wins" argument for Free Trade.

But by changing a couple of assumptions about capacity, substitution, and sensitivity of demand to marginal price all kinds of other outcomes become possible, and adverse consequences can pop up in third countries all together. Chaos and the Butterfly, you just can't control everything in your model.

From an outside perspective it seems the economics has erected a large theoretical superstructure with some relatively rigorous math but some blindness about how many real world variables had to be fixed in place along the way. And how many psychological assumptions.

[Alex Tolley]

There's a "moral community"? I get very uncomfortable with the idea that morality is to be invoked for trade. It becomes too easy to shift from "this is operationally beneficial for the parties in the current circumstances" to "we should do this because it is morally right". Organized religions use just these sorts of arguments to maintain social order and the distributional status quo. Giving up short term advantages for future benefits sounds awfully like "your reward will be in heaven" to me. As a practical matter, Peter and Jose cannot trade in any goods, some will be regulated or off limits, so the moral argument for free association seems a bit strained.
BTW, if you want to add interested parties, what about the unborn?

[sleepdeprived]

So Paul G. Brown is angry someone noticed he
justifies his comments on industrial comparative advantage (PGB 10:30ish) with worthless analogies about sun bathing and blizzards, and absolute statements about how any protections are always bad for those protected. And then today explains that metaphor on industrial comparative advantages by noting many people talk vacations.

Huh? Why? Don't ask, you'll make him angry!

Maybe some inane simplified models like the ones in the excepted article will help...

Bob, who owns a straw farm, will find it easier to build strawmen! And thanks to generous government subsidized and new free trade agreements, he can ship them under cost to other countries and put Jose's farm out of business despite Jose's cheaper labor and production costs.

Also something about the tourism industry and snow-locked people going sun tanning explains why we should offshore/ outsource jobs to China & Mexico.

Doesn't make sense? It doesn't have to if you are a free trade evangelical!