Ah, the education of young people: there is nothing quite so edifying! I love watching as the light of understand burst into their brains destroying the dark ignorance that they had previously mistook for wisdom. And that is especially true when the young person is brilliant, because their dark ignorance was especially elaborate. It is nice to watch it burn. That stuff is notoriously flammable.
Last Friday, Matt Yglesias wrote, Ooops! Foreign Trade Has Immiserated US Workers After All. As he explains, the standard economic argument for “creative destruction” is while some workers will lose their jobs, workers overall will get better jobs with increased access to cheap goods. So the world is flat and we should get out on the streets with Thomas Friedman to tell the world that it is a Good Thing.
Now look: I understand. Yglesias is being a bit ironic because (I assume) he always thought this idea was largely bullshit. But he is very much the kind of “free market” liberal who does believe this kind of nonsense. The problem is that Yglesias’ opinions are based on idealized policy. But we don’t get idealized policy in the real world. In fact, we generally get something like the opposite of idealized policy in the real world.
Yglesias’ insight is based upon a paper by Michael Elsby, Bart Hobijn, and Aysegul Sahin, The Decline of the US Labor Share (pdf). It is beyond my pay grade, but there are a number of reasons that make the economic system behave in ways that are suboptimal. Just on the simplest level, the world is not flat. All the good paying manufacturing jobs get shipped overseas because workers in America are put in direct competition with workers in Asia. But these workers don’t see reduced medical costs because doctors are protected from competition. So it isn’t even a question of workers versus business; it is question of rich versus poor. If a policy is good for the rich, the government enacts it; if it is bad for the rich, they don’t.
Of course, there are plenty of ways in which government policy puts business interests ahead of that of workers. The point is that intellectuals like Matt Yglesias gravitate by default toward idealized systems. It reminds me of a recent article where Dean Baker caught himself being against Elizabeth Warren’s idea of giving students the same loan rates that the Federal Reserve gives to banks. At first, Baker was against the idea because it has many problems. But then he realized, “Somehow sound economics are only important in discussions of policies that are intended to help the poor or middle class.”
That’s the problem. It is easy to assume the best when we are talking about policies that help the rich. The obviousness of the current situation is clear to Yglesias, “Now go to a rust belt town with this finding, and people are going to say: “That’s news?! What the heck is wrong with you economists?!?!” But when it came to seeing things this obvious way that wouldn’t help the interest of the rich, we had to have a major study. If there had been such an obvious explanation that helped business interests, it would have been accepted until a major study disproved it.
I don’t mean to make Matt Yglesias out to be a bad guy here. He isn’t a bad guy. But he is part of a press system that has defined the hip and cool position to be the one that tells unpleasant truth to the weak. There’s nothing hip or cool about that. Telling the powerful what they want to hear already has a job title, “Political hack.”