Mark Thoma wrote a very insightful article over at The Fiscal Times, The Lofty Promise and Humble Reality of International Trade. Most of the article is about something I’ve written about a lot around here. Trade agreements may be great overall. But at least in the United States, the benefits have gone almost exclusively to those at the top. The claim is always that these are the job creators, but given that they just keep accumulating money, it is clear that they aren’t creating jobs. They are able to game the system for their own benefit. And a big part of that has been the The Job Creator Myth itself.
But Thoma mentioned something that I didn’t know. Apparently, economists see themselves as above the opinion game. That is, they have no opinion about the trade-offs of a particular policy. So if a policy will make everyone better off, then the field says it is good. But if it makes a whole bunch of people better off but a few people worse off, it has no opinion. This came as a bit of a shock to me, given how much economists push all kinds of policies that absolutely do have losers — often very large numbers of losers.
There are even phrases for this — things like “creative destruction” — an indication that they know capitalism is set up to create losers, but it’s okay because “in the long run”
we are all dead everyone is better off. So how is it that economists are able to push policies that they know will cause harm? (I mean, other than by being the shameless hacks and lackeys for the rich!) Well, Thoma explained that:
That’s a hell of a loophole. By this, if a trade policy hurts millions of working Americans, that’s fine as long as it helps the rich by a greater amount. The fact that the gains could be distributed so that everyone is better off is all that matters. The fact that it literally never is doesn’t matter. That’s just details — nothing the economists need worry about! So they are able to push policies that could — in theory — be good for everyone, but are — in practice — only good for the rich. I’m finally starting to understand Greg Mankiw!
What I find fascinating about this is how much this is the way that libertarians think. For example, libertarians don’t believe in antitrust laws, because in theory a company with a monopoly could be open to another company coming in and winning market share. Of course in practice, that isn’t the way it works. But theory is all that libertarians care about. It’s bothersome that the economics profession uses the same kind of logic, which just so happens to give advantages to the power elite.
I find the whole thing upsetting, but it does explain why conservative economists can go around claiming that they they are just looking at the facts and yet be pushing for highly ideological policies. No wonder economics is such a screwed up discipline.