You're Both Right, Suckaz, So Deal With It

Foseti has written further on his free trade conversation that left me in ambivalent paralysis, so I owe him a response.

To summarize what (I think) their conversation is about,

Aretae reasons from first principles, and using strong examples/reasoning, essentially that free trade (and related liberal economics) is Pareto-optimal, and wishes to emphasize the hidden costs that are obscured or ignored by conventionally-protectionist attempts to do good.

Foseti says that (if only due to human imperfection) what applies globally and in the abstract may not hold locally in some particular implementation, and wishes to emphasize that people may have values that aren’t always easily satisfied by, for lack of a better characterization, ‘GDP-maximization’.

Hmmm. Will I lose my blogging license if I just reiterate that I still think they both make good points, and am inclined to argue with neither one? Because frankly, I don’t even see the two as being necessarily in conflict.

To be sure, on the whole, I share Aretae’s views on free trade. Meanwhile one can easily understand why people, e.g. the displaced worker Foseti invokes, might not in certain situations, and would support e.g. tariffs. The free-trader would say ‘that’s a wrong/immoral and we could help that worker more cheaply anyway’ – which I believe is correct. The protectionist would say ‘however true that may be in the abstract, I live here and now and I doubt your thought-experiment solution would or could become reality’ – which is a fair point. Thus, free traders have correctness on their side, while protectionists are understandably unswayed. That about sums it up and not sure what there is to add.

If, like me, you would like to see freer trade and more liberalized economics, I guess one thing you can do is always try to make hidden costs more visible whenever/wherever possible, which can never hurt. Caplan’s whole point in his book is that the more people know about economics, the more they support free trade and so on. Protectionists of any reasonable intelligence need to acknowledge that they are focusing on the visible/near, and as such are almost inevitably doing a shoddy job of weighing hidden/diffuse costs. Meanwhile, among free-traders, the whole displaced-worker problem is usually waved off by mumbling something about ‘worker retraining’ or some similar, imagined alternative to tariffs, etc they cite as cheaper. This is obviously a chink in our armor; it strikes me as ‘correct’ only in a highly hypothetical sense; in reality I don’t even know what ‘worker retraining’ is supposed to mean, nor do I have any evidence that government-funded ‘worker retraining’ of any sort has really ever accomplished anything for anyone whatsoever, other than the people who got government jobs/funds out of implementing it. Similarly, it’s common to invoke ‘we could just send them a check for $X’, which again, however true, doesn’t seem to have actually ever happened, and if it did, it’s not obvious it would be done well. Basically it’s incumbent on people who cite theoretically-superior alternatives not to stop at the existence-proof but to proceed to the construction as well.

Back to the blog-debate, if we’re doling out points, Foseti does get a point on the technicality that Aretae’s statements are indeed often phrased (needlessly, I think) uber-strongly, such that one counterexample suffices to defeat them. (I took this as rhetorical flourish…) On the negative side of the ledger, Foseti started this conversation by reacting to Bryan Caplan, who (he claims) stated in his book that if everyone knew economics, literally no one would support tariffs. This seems like a slight straw-man to me, as I’ve read Caplan’s book and that’s not quite what I remember its point being. At most, I thought Caplan was dealing in generalities and ‘on averages’ and so on. I could be wrong, but it does illustrate that there are more- and less-charitable ways of interpreting the voices on all sides of this debate. I’m stubbornly insisting that in this situation, I think Foseti and Aretae are both right, dammit.