Voters aren’t buying what mainstream economists are selling
from David Ruccio
Mainstream economists, such as Harvard’s Gregory Mankiw, celebrate international trade (including outsourcing, which they argue is just another form of international trade) at every opportunity. But right now, voters—especially in the United States and the United Kingdom—aren’t buying what mainstream economists are selling. They are (as I’ve argued here, here, and here) ignoring the so-called experts.
That rejection clearly disturbs Mankiw, who just adds fuel to the fire by arguing that the more education people acquire the more they will eventually come around to his view. The implication, of course, is that being against free trade is a sign of ignorance.
We all know that Mankiw and his mainstream colleagues have spent an enormous amount of time and effort—in abstract modeling and lending their support to trade agreements, in the classroom, research, and the public arena—extolling the benefits of more international trade.
But it’s clear, not only from the Brexit vote and the rhetoric on both sides of the current U.S. presidential campaigns, but also from a survey earlier this year by Bloomberg, that many people remain opposed to free international trade: 65 percent favor restrictions on imported goods to protect American jobs, 44 percent think NAFTA has been bad for the U.S. economy, and 82 percent are willing to pay more for U.S.-made goods.
Clearly, mainstream economists’ campaign hasn’t worked. So, Mankiw turns to the research of two political scientists, Edward Mansfield and Diana Mutz (pdf and pdf) to find what he wants: anti-trade sentiments are positively correlated with isolationism, nationalism, and ethnocentrism and negatively with level of education. So, in his view,
there is reason for optimism. As society slowly becomes more educated from generation to generation, the general public’s attitudes toward globalization should move toward the experts’.
What I find interesting in Mansfield and Mutz’s research is actually something quite different: people’s attitudes toward international trade (including outsourcing) are not determined by narrow self-interest (such as their job skills or the industry within which they work) but, rather, by the “collective impact that trade policy has on the nation” (what they refer to as a “sociotropic influence,” because of the tendency to rely on collective-level information rather than personal experience).
That result is important because it suggests both mainstream economists and the general public, who may be and often are using very different representations of the economy, have an equally global view of the impact of international trade. Both groups are referring to and forming their judgements based on the nation as a whole. However, while mainstream economists tend to celebrate international trade based on the idea that the nation as a whole benefits (because of the efficient allocation of resources, cheaper imports, and so on), everyday economists may be emphasizing the fact that their nation is internally divided. Thus, in their view, many of their fellow citizens have been negatively affected by international trade and the only real beneficiaries are their employers. So, they continue to be critical of free trade and international trade agreements (such as NAFTA and the Trans-Pacific Partnership).
As I see it, more education won’t eliminate that critical view—as long as trade agreements are enacted within a profoundly unequal society and workers have no say in designing the policies that govern international trade.
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Real-World Economics Review Blog 
“more education won’t eliminate that critical view—as long as trade agreements are enacted within a profoundly unequal society and workers have no say in designing the policies that govern international trade.”
The point being made is at least two centuries old, ever since Friedrich List attacked classical economists for being spokesmen for the a London based economic imperium that mad-distribituted wealth by class and region. Why do we keep rehashing all this stuff. Economics is the enemy of the people.
Why do we keep rehashing all this stuff? For the same valuable reason that an elderly historian who has studied the German scholarship of a couple of centuries ago keeps reminding us of its relevance to our present-day situation. Every new generation forgets the past and if not taught about it is unlikely to discover it for itself, never mind learn from its crimes and mistakes. Of course, with so many of the present generation immersed in Facebook or football they are unlikely to take in what they are being taught, but that’s teaching for you. One can but hope and use the Chinese strategy: “drip, drip, drip, drip …”.
Robert is correct, sort of. Economics as presently constituted is the friend of a certain form of economy and the enemy of the others forms. It is not “representations” of the economy (implying there is a “real” economy beneath these representations) that are in conflict. It is different economies that are in conflict. Economists inhabit and protect one economy, attacking and denying the others. The economies inhabited and often defended by voters and others look and act differently than those preferred by economists. This may be in part a war of ideologies but it is also a war of very different ways of arranging and living our lives and interacting with one another and the planet. And no matter what the theories or methods may call for this is after all what economics is all about. If this is not the subject of economies then I suggest we dump the whole enterprise of an “economics science” and use our time and effort more wisely to search for better ways to provide for our resource needs justly and with as little waste as possible. Besides all that useless and confusing mathematics in current economics “science” makes everyone’s head spin.
Very interesting response. Why shouldn’t one have different kinds of economy co-inhabiting? In fact I’ve even thought that co-operative ones often exist inside competing firms.
But I accept that my response on education is double-edged. The free-traders DO school people in their garbage “drip, drip, drip, drip …”. My defence of David Ruccio was that Robert’s as well as David’s (and, I might add, my own constructive) type of opposition to it also needs to be continuous.
One doesn’t need “all that useless [?] and confusing mathematics” in practice, trying to predict the unpredictable when, as Bob Dylan once sang [and Ruccio quoted], “You don’t need a weather man/To know which way the wind blows.” But real scientists do need it to justify the use of simple formulae as rules of thumb for designers, and to explore the geometrical structures which give them something to look for and a basis for comparison, revealing how lessons learned in one field may be applied in another. I’m thinking of the “matching” of source and load impedences in communications theory – comparable to production and distribution costs in economics – which mathematically can easily be shown to be optimal when equal, but not why quite wide differences are tolerable in practice.
Collective folk memories,
One cannot overlook the collective folk memories of people when looking at politics. Two examples from French history to illustrate the point.
Once, when loading luggage in my boot in 1962, on leaving a hotel in Nimes, an old man with a clergy collar watching me, seeing that my car had a Swedish plate, starting talking to me, saying, “it was not far from here, on the city outskirts, that they took the people and shot them. I thought, “he must be talking about the Nazi atrocities during WWII, but as he continued, it dawned on me (I was studying for my PhD and knew my French history), that he was talking about the period after the revocation of the edit of Nantes, when Louis XIV suppressed the Huguenots. How’s that for deep folk memory?
The second collective folk memory has to do with the suppression of the Commune in 1871. After Napoleon III’s armies surrendered at Sedan, a revolution in Paris overthrew the regime on September 4th, 1870, to proclaim the 3rd Republic. France found itself in the absurd position of its armies being captured by invading Germans, with Paris under siege, until an armistice was signed with Germany (Bismarck) that provided for the election of a National Constituent Assembly, 8 February 1871, which assembled at Versailles to organize a new government. With the German occupiers looking on and cooperating (French soldiers were released by Bismarck and used by government in Versailles) this conservative government under Adolphe Thiers, ruthlessly encircled and suppressed the Leftist government in Paris and its supporters, lining up thousands and shooting them. It was an era of the red specter, which fed this white terror. When people asked the descendents of the communards why they voted communist in the 20th century, they did not cite Karl Marx’s Capital or the Communist Manefesto, they just replied, “we know who shot our grandfathers.”
Americans have a collective folk memory of the promise of America to make its people into a people of plenty, and they feel betrayed by the political establishment that is violating this promise. It’s simple, all this economics, if it does not deal with the impoverishment of the middle classes, is a betrayal of the people.
I think the public in the US, a sizeable subset at the least, Trump and Sanders supporters, intuitively if not in detailed rational consideration, understand that something has gone very wrong in the economy and trade deals are the touchstone for this feeling.
CNN, my shorthand for establishment domination of economic ideas, would not have to transform itself entirely to convene at least some panels of informed dissenters versus that establishment on this issue, but it will never happen. Why…in answering that, we come back to systems of belief, the Neoliberalism which can’t be named, and the fact that part of its forbidden policy zone is that which might have vigorous market interventions to actually help those displaced by the mal-effects of trade policy. Of course, believers in a fully participatory democracy know that the process on trade agreement development is itself a mockery of that word…
But these realizations of the harm that has been done by the sanctimonious invocations around “free trade” come very late, reminding me of the observation that “the Owl of Minerva takes flight at dusk.”
Apart from the comments on free trade I would like to say that many of my old workmates, that are able to think for themselves, argue that they see free trade as a smoke screen for the elite to further feather their nests.
They are also very aware that free trade has cost many of the their jobs. then talking to senior high school students my bitch is they are indoctrinated into believing only the supposed benefits without explaining any of the disadvantage’s such as job losses or reduced cost of living. Ted
Edward, free trade is the outside of the con. The inside is a list of winners and losers drawn up years before. American workers and middle class are in the losers column.