Cowen, Rodrik, and Harford on Trade and Ethics

More reaction to Landsberg's article on why we shouldn't compensate "losers" from trade.

First, Harford:

...people lose their jobs all the time for reasons that have nothing to do with foreign trade. I'd argue that they deserve some help. Why are jobs lost to foreign competition so privileged?

Bingo. I would further this by saying that we already have many protections in place for all displaced workers -- such as unemployment benefits, subsidized education, etc. -- that extends to those workers displaced by trade. Why should those who lose their jobs to trade, as opposed to any other source, get more than that? The most likely answer seems to be: political nationalism. But that seems to be an inappropriate response to the question.

Then Rodrik:

The question of how we should respond to a trade-induced change in income distribution is not one on which economists can offer any expertise. This is a question about ethics, values, and norms, none of which is part of an economist's training. Landsburg's take on this is as good as mine--which is as good as that of any person on the street.

Cowen reacts fairly strongly in the negative to this view:

Every now and then I feel a deep responsibility to rebut an argument. In my view anyone doing policy economics has an obligation to learn more about ethics -- much more -- than the guy in the street would know. Would someone doing experimental economics feel free of the obligation to learn some empirical psychology? Would someone doing trade feel free of the obligation to learn some trade law, some history, and some political science? No. What's the difference? Economists like to separate the "positive" and "normative" aspects of what they do, but this distinction has not much impressed the moral philosophers who have looked at it nor has it impressed Amartya Sen. The very decision to use economic tools emphasizes some considerations and excludes others. The final policy analysis is not just pure prediction but rather it is also an implicit presentation and weighting of both different kinds of information and different values. So if you are doing policy economics, it is imperative that you think about ethics at a very deep level, and read widely in ethics. You are doing ethics whether you like it or not! Furthermore I don't doubt that Dani already has a deeper understanding of ethics than the (often very crude) man in the street.

That said, I don't agree with the ethics Dani does discuss, noting that he must have felt he had some good reason to put forward the concerns he did and not others. (As a rule of thumb I'll note that those who profess the impassability of ethical terrain have just in fact traversed it.) I don't worry much about the procedural fairness if a poor country trades at better prices by paying its labor less or by polluting. Low wages are precisely the wages we want to see bid up, and if there is a concern for the losers I would not call the issue a procedural one but rather one of outcomes. And pollution can be a moral crime but attacking trade is not usually a good way to go after it. Tax the pollution, not the trade.

Right. I have had many arguments with professors on this topic. Many economists like to believe that their studies are value-free; that they are scientists, and not philosophers. To an extent that is true, but the assumptions underlying all economic study requires an ethical underpinning. Economists often talk about "best" and "second-best" policies, or "perfect-world" scenarios; but what are these if not ethical judgments? The entire study of economics, as we are taught on day one of Econ 101, is the study of how people and nations make choices given the inherent scarcity of resources. In other words, how we choose between different options. For policy-makers, especially on the macro level, this is truly an ethical concern.

The hottest economic topics these days -- bailouts for defaulting homeowners, tax cuts/redistribution, income inequality, international trade -- are all ethical topics first and foremost. Economists would rather not face this fact, because to do would require more work on their part. Justifying their models and assumptions in an ethical framework is no simple matter, so economists just assume those ethical concerns away. This is not right, it is not proper, and it is detrimental to the causes that economists seek to further, since those who share different ethical beliefs may simply reject the conclusions of economists on ethical grounds (esp. on trade, where environmental, cultural, and labor standards are given so much weight). Since economists generally refuse to argue on those terms, the argument is lost to them before it even begins.

This shouldn't happen. Economists should have much to say on the topic; it's just a shame that they generally refuse to join the argument.

Now Wait a Second...

Much has recently been made over James Watson's comments regarding racial disparities in I.Q. testing. William Saletan, at Slate.com, has borne the brunt of this criticism, and continues to even after issuing an apology for not doing journalistic due diligence. Brad DeLong tells us to read Robert Farley:

Robert Farley of Lawyers, Guns, and Money on William Saletan, who may at last have come to a dim form of self-knowledge:

Lawyers, Guns and Money: Apology Not Accepted, Bill: Saletan:

I missed something I could have picked up from a simple glance at Wikipedia.

For the past five years, J. Philippe Rushton has been president of the Pioneer Fund, an organization dedicated to "the scientific study of heredity and human differences." During this time, the fund has awarded at least $70,000 to the New Century Foundation. To get a flavor of what New Century stands for, check out its publications on crime ("Everyone knows that blacks are dangerous") and heresy ("Unless whites shake off the teachings of racial orthodoxy they will cease to be a distinct people"). New Century publishes a magazine called American Renaissance, which preaches segregation. Rushton routinely speaks at its conferences.

I was negligent in failing to research and report this. I'm sorry. I owe you better than that.

"Hack" doesn't really begin to cover it. Saletan sallied forth with the argument that the evidence for inherent intellectual inequality between races was so compelling that liberals who questioned the science were equivalent to creationists. Now we find that, in addition to not understanding most of the science he was trying to talk about, he didn't even bother to do basic research into the compelling work he was citing.

More Bill:

I wanted to discuss whether egalitarianism could survive if this scenario, raised last month by James Watson, turned out to be true. I thought it was important to lay out the scenario's plausibility. In doing so, I short-circuited the conversation. Most of the reaction to what I wrote has been over whether the genetic hypothesis is true, with me as an expert witness.

I don't want this role. I'm not an expert.

Huh. So I guess that's why Bill devoted two columns to stressing how strong the science was and how reluctant to accept the truth liberals were, and one column to a few half-assed ruminations about the political implications. And I guess that's why he felt the need to write this missive to the liberal masses:

Evolution forced Christians to bend or break. They could insist on the Bible's literal truth and deny the facts, as Bryan did. Or they could seek a subtler account of creation and human dignity. Today, the dilemma is yours. You can try to reconcile evidence of racial differences with a more sophisticated understanding of equality and opportunity. Or you can fight the evidence and hope it doesn't break your faith.

I'm for reconciliation.

Yeah; I'm pretty strongly against reconciliation with someone who thought taunting liberals for not believing shoddy racist science was more important than doing basic journalistic research.

Seriously, what does somebody have to do to get fired from Slate?

But there is another possibility, and that possibility should be obvious. Rushton might be a vicious and horrible racist... and also correct about I.Q. I'm not a geneticist, cognitive scientist, sociologist, or in any other way qualified to comment on the truthfulness of Rushton's claims regarding the science. But he could be right. Just as many Christians accuse evolutionists of being virulently anti-God or anti-religion who were using evolutionary theory to further a more broadly general atheist agenda. And you know what? In some ways they are right. Many atheists do use evolution to further their own agendas, esp. among the current crop of atheists (e.g. Dennett, Hitchens, Dawkins), but that fact alone doesn't make their claims regarding the validity of evolutionary theory wrong.

I've read just enough on the subject to know that there is serious debate on the topic, mostly focusing on whether or not I.Q. testing is an appropriate measure for intellectual ability. But it wouldn't surprise me to learn that certain groups of people are genetically more predisposed to certain types of intellectual ability than others as a group, just as certain groups of people are genetically predisposed to certain types of physical or athletic ability than others as a group. This mustn't be a statement of value (and I don't intend it as such) since different genetic intellectual abilities may serve different purposes just as different genetic physical characteristics serve different purposes. Indeed, this is consistent with evolutionary theory.

But it isn't necessarily determinism -- Chinese people are, on average, shorter than Europeans, but that doesn't stop Yao Ming from being a great basketball player -- but if we can identify these differences it can help us understand how to generate an appropriate social policy which does the best service to the most number of people, while maintaining equal opportunities for all. If we ignore this evidence, then social equality will suffer since we may be trying to force people to adapt to roles for which they are not genetically built. It could be like trying to force square pegs into round holes, and that helps no one.

There is an awful lot of uncertainty surrounding the specifics of evolution, and even its underlying assumptions. The same is certainly true of group-based models of genetic cognitive ability. The truth is, we are merely starting to understand how the brain works, and what factors control what stages of development. But the discussion of the topic should be had on the merits, not through singling out individuals' despicable views for criticism without addressing the substance. Straw-man politics and ad hominems will get us nowhere.

Words of Wisdom from Joseph Schumpeter

From a Reason Magazine review of Thomas McCraw's Prophet of Innovation: Joseph Schumpeter and Creative Destruction:

“Capitalism stands its trial before judges who have the death sentence in their pockets,” wrote Schumpeter. “The only success a victorious defense can possibly produce is a change in the indictment.” Thus the major indictment of capitalism by the socialists of the 1850s was for immiserating the working people. When this proved scientifically wrong, the socialists of the 1890s indicted it for imperialism. When that too proved wrong, at any rate by the lights of the best economic scientists who troubled to look into the matter (among them Joseph Schumpeter), the socialists of the 1950s indicted it for alienation. When this accusation seemed less fresh, the socialists of the 1990s indicted it for environmental decay. Schumpeter wrote that “such refutation,” rationally proving the latest indictment wrong, “may tear the rational garb of attack [on capitalism and all its work] but can never reach the extra-rational driving power that always lurks behind it.”

Schumpeter, like Marx, believed that the collapse of capitalism was inevitable for sociological reasons. Schumpeter rued this perceived reality, Marx celebrated it. Were it not for Hayek and Friedman, they both might have been right (and they might still be). But the lesson here is to watch the shifting rhetoric of anti-capitalists. If they are unsuccessful with one attack, they will simply move to another one, hoping to overwhelm people with accusations until they start believing they are true.

They keep cycling back through the list -- immiseration of workers, imperialism, inequalities, environmental collapse -- as needed, neglecting history and scientific study in favor of rhetoric and ideology. Schumpeter recognized this early on, and his words still carry much weight today.

Russell Kirk: "Contemptuous Conservative"

Alan Wolfe reviews a new Russell Kirk anthology for TNR, and he doesn't like what he sees. The penultimate graf:

George W. Bush once called himself a compassionate conservative. Russell Kirk is a contemptuous conservative. Kirk is contemptuous of people, or at least those whose very existence prevents gentlemen aristocrats from sitting in front of the fire reading Aristotle while their slaves, or their wives, prepared their dinner. He is contemptuous of ideas, or of those ideas with which he disagrees, and prefers caricaturing them to arguing with them. He is contemptuous of the world in which he lived, always exaggerating the bad and having nary a word to say about the good. He is contemptuous of the truth, mangling his facts and distorting the history of the country he claims to love. His is not the conservatism of the country club; Kirk is no northeastern aristocrat determined to protect the exclusivity of his turf. His is the conservatism of George Babbitt, not Irving Babbitt: provincial, resentful, bigoted. If you collected all the grumblings in a small-town drugstore by men convinced that somehow the world had passed them by, and then added a few literary and historical references, you would have The Essential Russell Kirk.