Why Bryan Caplan's CEA Veto Wouldn't Work
By David Henderson
In which the author shows himself to be more Caplanesque than Caplan
I was reading through Bryan Caplan’s excellent lecture notes on “Constitutions” for his Public Choice course. (Parenthetically, I’m blown away by the clarity and wisdom of his notes, not just for this course, but for his other courses. When my students who express interest in going on in economics ask me what they can do next when they’re on ships or in Iraq or wherever, I tell them to read Bryan’s notes and answer the problems in the problem sets.)
I noted, though, his point II.F, in the section on alternatives to democracy and dictatorship. It’s the following:
How about giving the CEA veto power over trade restrictions?
This is actually a discussion I had with some fellow economists when we were all working at the CEA (Council of Economic Advisers) under Reagan. A bunch of us were moaning and groaning over lunch one day in the Old Executive Office Building’s cafeteria about various trade restrictions that the trade economists were fighting off. The two economists handling trade issues at the time were junior staff economists Ken Froot and Will Milberg. One of the senior economists–I think it was Steve Halpert–said, “It’s too bad the CEA doesn’t have veto power over protectionist measures.” A number of other economists nodded their heads in agreement on what we all, including Steve, recognized as a fantasy. But then I said, “No, that wouldn’t change anything.” “Why,” said the other economist. (Again I think it was Steve.) I answered, “Because if the CEA had veto power, we wouldn’t be in the CEA. General Motors would be pushing for their guys to have the jobs that our trade guys have. Ditto with U.S. Steel. We wouldn’t get these jobs.”
Now, I recognize that Bryan asked it as a question. So maybe that was his answer.