Thursday, October 4, 2012

Machine Wash Warm, Tumble Dry

Politicians' favorite Bobo doll for the past decade or so has been China. Before that, it was Japan. Every election season, America's woes are laid at the feet of the Oriental nation du jour. It's an embarrassing spectacle for onlookers familiar with the principles of economics, but whatever other failings they might have, politicians are pretty adept at gauging public opinion. This suggests to me that the median voter clings tightly to their anti-foreigner bias, which is a pity because I think all of us want to know what love is.

I'm curious to how much of this bias is tied to non-euvoluntary exchange sentiment. I think there's some paternalism over sweatshop labor, which we've covered here before, but these arguments seldom seem to form the crux of the arguments against China. It's usually "currency manipulation" (whatever that means in an era of widespread central banking) or "shipping jobs overseas". Mercantilist ledger-rattling demands a "level playing field" or some such nonsense (hint: when Congress doles out heavy subsidies to US industries, maybe elites should worry about taking the needle from their own eye first) and "fair trade", a term I suspect was written to make George Orwell do a spit take.

Anyway, the bluff and bluster against trade with China is a good challenge to some claims I've made before. I've written that euvoluntary exchange is, among other things, economically efficient and morally acceptable to the great bulk of folks (certainly, the median voter). International trade is quite obviously efficient, but if there is this moral opposition, can it be euvoluntary under my interpretation of EE? If it's not euvoluntary, which condition is violated?

This could just be my pride talking, but I have a hunch that the intuition is either in a conventional capacity to exchange feeling or, probably more accurately, an uncompensated externality argument. The conventional capacity to trade angle might be atavistic tribalism waving its banner in the form of parochial nationalism. More to the point, the "shipping jobs overseas" charge could plausibly be an externality argument. International trade includes some costs and some transfers on some Americans (ignore for the moment that automation in manufacturing has resulted in far more job destruction than international trade), and even if we assume no xenophobic sentiments among voters, these claims of job losses may be sufficient for voters unfamiliar with concepts like creative destruction and comparative advantage to support politicians who pledge to "get tough" with a nation that has the unabashed temerity to contain within it peaceful humans who wish to (taco) truck, barter and trade with peaceful humans who call the 54 states, districts and territories home.

The above paragraph feels a little weaselly to me. Students of economics (like me) would probably be a lot more likely to describe international trade as euvoluntary. Think of the Pepsi challenge: you're an economic nationalist in a store buying a TV with the  product information redacted. You like the TV and it's not stolen property or anything. There are plenty of other sets to choose from and nobody's holding a gun to your head. Only after you bring it home do you notice a little sticker saying "Made in China" and all of a sudden you feel cheated. Is this new bit of information the result of careful analysis of the costs, benefits and transfers of international trade or is it knee-jerking against an imagined foe, honed by years of exposure to sloppy economic arguments? I think I'd like to get into this question in more detail in a future post. For now, I'll just ask if there's a difference between the formation and the maintenance or moral intuitions about the role of, broadly, trade and more specifically, international trade. How did this bugbear heave itself from dust and how does it continue to shuffle its woolly feet around public discourse?

1 comment:

  1. That paragraph felt weasely because it was an argument about a pecuniary externality. Shipping jobs overseas is a transfer.


Do you have suggestions on where we could find more examples of this phenomenon?