The Economics Loophole That Leads Inexorably to Conservative Policy

Mark ThomaMark 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:

Economists, however, have ways around this. If a policy such as opening our borders to more international trade has both positive and negative effects, but the positive effects exceed the negative, then it would be possible to distribute the benefits in a way that makes everyone at least as well off as they were before the policy change.

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.

This entry was posted in Politics by Frank Moraes. Bookmark the permalink.

About Frank Moraes

Frank Moraes is a freelance writer and editor online and in print. He is educated as a scientist with a PhD in Atmospheric Physics. He has worked in climate science, remote sensing, throughout the computer industry, and as a college physics instructor. Find out more at About Frank Moraes.

16 thoughts on “The Economics Loophole That Leads Inexorably to Conservative Policy

  1. Out of sight out of mind also plays a huge part. They never see the actual damage their policies create so why should they care?

    • That’s certainly true of many people. There are former health-insurance execs and IMF types who specifically mention how seeing the damage firsthand that their organizations inflicted caused a crisis of conscience. And this is probably the case with most writers/academics who support the rich. It’s why they go to such great lengths “proving” how poor people are to blame for their own foolishness. Few want to feel like they are hurting others.

      There are some, though. Sadism exists to a degree in everyone. Given the worst possible upbringing and experiences, any of us could be Trump. And people like that are so bent they really enjoy harming others. It makes them feel good. I’m sure you’ve met a few. The utter shamelessness of their malice usually leaves you flabbergasted and incapable of fighting back (at least it does me.) So they walk away bolstered by another Big Win. Dopamine delivered! Then the cravings begin anew . . .

      • I agree. It is all about incentives. Are you going to encourage people to be good or bad? Sadly, we seem committed to incentivizing lots of bad.

      • I don’t think I buy that given X circumstances, you too could be as much as an evil ass as Trump. For one thing, some people are naturally passive. And Trump had four siblings-none of whom decided to go the splashy public route he did despite being raised the same way he was. Some of nature is involved, even with nurture mitigating nature.

        But you are correct when you pointed out that people will come up with justifications to avoid facing the fact that they are being a bad person. Much as one person (on Rawstory) once explained it-most people think they are good. And when you point out they are doing something bad like say making a racist statement, they are going to think “only bad people say racist things. I am not bad, therefore you are wrong.” Finally facing it makes things difficult but in the end I guess a better person even though the damage is done.

        • I work with disabled adults, have for 15 years. And I can tell you for a fact — I’ve abused them in moments of frustration. Everyone working in that job for that long has. (The people I’ve abused tend to be too forgiving and dismiss the abuse as me having a bad day.)

          Everybody’s capable of cruelty. All of us.

          In 15 years, I’ve never seen a worker with disabled people who didn’t abuse their power to take personal frustrations out on others who can’t fight back. We all do it. Some feel guilty about it. Some make it into a life mission; I dare you to challenge me on abuse, when I know you’ve been abusive. Refuse the challenge, and they become more abusive. Criminal mistreatment is how they cry for attention.

          • There is a fairly big difference between someone who has an off day (or week) and what Trump & co are doing.

            They are okay with a systematic reduction in assistance to the people you help and generally don’t think about the consequences. You have to think about the consequences and what is more, you actually feel guilty for doing it. You make vows to not do it (and then feel even worse when you do since duh, you are human and everyone has a bad day.)

              • Everyone has off days. It happens and it is why they forgave you. If you kept it up they would have buried you in the woods.

        • True. But it is probably the worst. As a field of study, it is biased before they even study anything. I’m sure the intellectual history of economics will look back on the last couple hundred years as hilariously biased.

          • And of course they think they are not being biased. Which is probably even more annoying.

            Now to see if this posts or if it does yet another database error.

            • Sorry about that! The server did have some problems around that time. I had hoped I was the only one that was effected. I think I had the problem about an hour before you. Usually when we have problems, it is much worse than that!

Leave a Reply

Your email address will not be published. Required fields are marked *