Our sister website Law & Liberty published an article by Oren Cass, a defender of protectionism (“Free Trade’s Original Myth,” January 3). It is an interesting piece although, I suggest, more from a rhetorical than a social-scientific or even simply logical viewpoint. Let me just discuss one irredeemable flaw.
Social anthropomorphism is a first symptom. Writing about the goods and services exchanged in international trade, Mr. Cass writes:
Once the products at issue are of different strategic value, any nation might rationally place its finger on the scale to gain comparative advantage in that which it prefers to produce.
How can a nation put its finger on anything? Who is the nation’s finger? Émile Faguet, the great classical-liberal essayist and French academician, mocked this sort of “zoological politics”: “You think you are a man,” he wrote; “in fact, you are a foot”—“Vous vous croyez un homme; vous êtes un pied” (Le Libéralisme, Paris, 1902/1903). Or perhaps by “nation,” Mr. Cass just means the government—politicians and bureaucrats.
Perhaps it is just a way of speaking. But what does the talk actually mean? General Motors and its owners prefer to produce cars while Microsoft and its owners prefer to produce software and cloud services. Mr. Cass prefers to produce articles and PR. So what does the social organism prefer to produce?
Ways of speaking often express or lead to ways of thinking. The anthropomorphic or organic conception of society has nearly always been associated with authoritarian politics. (I give examples in my article “The Impossibility of Populism,” The Independent Review, Summer 2021.)
But perhaps what Mr. Cass and protectionists are defending is not literally social anthropomorphism but simply collectivism, the bundles (or should I say the “fasces”?) of doctrines claiming that the collective is superior to the individual and that collective choices should take precedence over individual choices. Mr. Cass writes:
Dig to the bottom of the post-war case for free trade, and one finds not a closely reasoned and unassailable doctrine, but rather a condescending lecture about preferring the global to the national interest. Who was the “we” that had “agreed” to this?
Condescending? Since, for Mr. Cass, individuals are not practically or morally competent to make their own decisions (like, say, buying dolls from Chinese sellers), since individual liberty does not create an auto-regulated order, they need collective discipline and our author knows which collective, which “we,” they should be submitted to: not the world collective but the United States collective. One collective must rule and the “national interest” is the best collective interest. By the way, how does one calculate the collective interest in a numerous society of different individuals with different preferences and in different circumstances? At any rate, once some majority determines the goals, all individuals will have to obey, or else. Economists, we are told, “have a vital role to play in analyzing how best to accomplish the nation’s goals.”
Fortunately and quite coherently, a large number of economists have tended to stand more on the individual’s side. In the (classical) liberal and individualist perspective, individuals live in different, often overlapping, societies—the world, their countries, their villages, their online communities, their professions, etc.—because each thinks it is in his interest to do so. In a free society, characterized by individual liberty, each one pursues his own goals (his “ends” in the terms of Friedrich Hayek). Each one is free to pursue his own happiness.
That the collectivist ideology espoused by protectionists would lead to logical contradictions is not surprising. In defending the “national interest,” protectionists are strangely incoherent, as 19th-century economist James Mill and his more famous son John Stuart already pointed out. The protectionists want their country’s resources (“our national resources”) to produce goods for the consumption of foreigners, which is what exportation is; and they hate to see the resources of foreigners used to produce goods for their fellow citizens, the importing country’s residents, which is what importation means. To be coherent with their own collectivist logic, they should instead favor imports and fight exports.
In short, an essential element is missing from Mr. Cass’s arguments: the individual; protectionists only know collectives. The individual is missing both in a methodological sense and in a substantive moral and philosophical sense. Economists virtually always adhere to methodological individualism, the theory that one needs to start from the individuals to understand social groups, not the other way around. (One exception is Karl Marx, which explains why he did not use standard tools of economic analysis and why indeed his economic credentials are doubtful.) Consequently and naturally (although it is not logically necessary), most economists tend to espouse, or have tended to espouse, an individualist political philosophy, sympathetic to individual sovereignty. Like socialists (at least those in the Marxist tradition) and the old European right, Mr. Cass rejects individualism in both its meanings—methodological and ethical. This illuminates a phenomenon otherwise mysterious: the convergence between the anti-individualist right and the anti-individualist left.
READER COMMENTS
Jon Murphy
Jan 4 2024 at 10:29am
Maybe some people make that claim, but I teach trade from a strictly individualist perspective. Thus, it’s not about prefering global or national interest at all. It’s about preferring one’s own interests. For me, the fact that a nation, and indeed the globe, is made better off from trade is a nice bonus. But the case for free trade, as I teach it, is strictly individualistic.
Perhaps if Cass rejected collectivism, he’d understand that point.
Pierre Lemieux
Jan 4 2024 at 10:58am
Jon: Your students are lucky. They will learn something essential to understand the social world. I cannot help but think that if most students had learned about the individualist approach to society, universities and young people would not be in their current dire situation. Liberal individualism is a good antidote to bigotry and magic thinking.
Jose Pablo
Jan 5 2024 at 2:07pm
Sure, Jon’s students are very lucky, but in this regard so are Krugman’s:
Krugman defines “pop internationalists” as those who propagate the idea that competition among nations determines the economic fate of their citizens. According to Krugman, conventional wisdom perpetrates the fallacious analogy that nation-states engage in competition similar to corporations.
If the “technical consensus” is so widespread, why are the inconsistencies you point out so persistent (and so prevalent among the laymen)?
Jon Murphy
Jan 5 2024 at 2:15pm
There are lots of reasons, not the least of which is that economics is a technical field. There are many subtlties in the arguments that can get lost. So, poor arguments linger and can persist because of the fad bias (“I heard for X, Y, and Z that A is true, therefore A is true).
As far as inconsistencies being “prevalent,” as I’ve provided evidence for before, I think widespread misunderstanding about how trade works is likely overstated some. Many people still prefer free trade over managed trade. Consequently, that implies that there is no inconsistency between the “technical consensus” and the layman.
Which gets me to my second point. Economics is an empirical field. We (generally) report empirical information. Our models explain behavior as it is, not as it should be.* Consequently, even if people do not understand the technial details of trade, or individualism, etc., they act as if they do.
*Although some do not understand this point and confuse the two.
Jose Pablo
Jan 5 2024 at 3:47pm
they act as if they do.
Yes, but they vote as if they don’t.
Despite the fact that that (voting as if they don’t) reduces their ability to “act” and their economic welfare. And, very likely, because that (voting as if they don’t) increases their mental welfare.
Corollary: you can always count on voters choosing an interventionist government and on the “economics technical field” failing to explain this fact (the “special interest lobby” and “what is seen and not seen” ideas, I think, fail to fully explain this. Maybe it has more to do with a desperate effort by individual voters, to avoid the cognitive dissonance of assuming that “my government is powerless to steer the economy in the “right” direction”)
Jon Murphy
Jan 5 2024 at 4:28pm
Eh, that’s a hard claim to support. We don’t vote directly on issues.
Jose Pablo
Jan 5 2024 at 5:05pm
Well, members of Congress seem to believe that voters tend to vote for politicians that support anti-trade policies.
And members of Congress are the best experts we have on voters. So, if they believe so.
The empirical proof here:
https://www.hinrichfoundation.com/research/article/trade-distortion-and-protectionism/anti-free-trade-effect-of-elections/
[While looking for the support you were asking for, I came across this very interesting Mankiw’s article on the New York Times, trying to answer my initial question:
https://www.nytimes.com/2016/07/31/upshot/why-voters-dont-buy-it-when-economists-say-global-trade-is-good.html
It has some interesting findings by Edward Mansfield and Diana Mutz, although Mankiw’s conclusion seems a little bit optimistic:
In the long run, therefore, 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’.
I don’t know what “the long run” is for Mankiw, but taking into account that the article is more than 7 years old and the “disconnect” is not improving, he was very likely talking about “the very very long run”.
Pierre Lemieux
Jan 5 2024 at 9:37pm
José: This argument is not the best of your arguments:
Remember methodological individualism. The individual voter (at least the rational one) does not vote to elect anybody. He knows that he has never been decisive in any election. His vote does not change anything in his life, except indeed some mental states. He votes to express himself or as a form of entertainment (like he shouts and applauds at a sports game)–see Brennan and Lomasky, Democracy and Decision.
Jon Murphy
Jan 6 2024 at 12:08pm
I don’t know, man. I think voters are probably the best experts we have on voters. Interpreting the results of an election are difficult because any election is a vote on a bundle. We cannot determine the weight of a voter’s preference in a given bundle. Probably the best thing to do is to ask the voters.
Politicians often misinterpret voters’ intentions. Case in point: Trump. Trump won in 2016. He interpreted this as approval for his policies. But there was a bigger issue in 2016: an open Supreme Court seat that could tip the balance of the court. There were many voters (myself included) who wanted Trump to win despite his policies so as to secure a Supreme Court pick. In 2020, a lot less was on the line. Trump lost, partly because many of the judicial voters were so turned off by the rest of the package, that we saw no reason to support him.
The same is true with protectionism. Most voters probably do not have strong preferences about it. So, it’s not a hot button issue. Protectionism can get passed because some voters strongly support it while a majority doesn’t care enough to stop it; concentrated benefits and dispersed costs. Thus, the paradox: most Americans want free trade (and happily engage in free trade) but protectionism lingers.
TMC
Jan 4 2024 at 11:02am
I’m in favor of free trade because I value choosing whom I do business with. My econ classes always taught the financial strengths though, which, while logical enough, do not seem to bear out.
In a 2003 report, the Congressional Budget Office wrote: “CBO estimates that the increased trade resulting from NAFTA has probably increased U.S. gross domestic product, but by a very small amount—probably a few billion dollars or less, or a few hundredths of a percent.”
I do also agree with some trade interference to add resiliency to supply chains.
Matthias
Jan 5 2024 at 10:15am
If you want resilient supply chains, you could start by repealing anti ‘price gouging’ laws.
So that people who have the foresight to prepare stock piles for a coming shortage or disruption can reap the full benefits of their wisdom. Thus encouraging more such wisdom.
There’s a few more exanples of regulations you can repeal to improve resilence, before any thought of adding restrictions would be justified.
Pierre Lemieux
Jan 5 2024 at 11:00am
Matthias: Good point! The “supply chain” is an excuse, as if the economy was a knot of steel chains or an assemblage of pipes. Is the supply chain to supply bread to Londoners “resilient”? (See “How Londoners Survive Without a Food Czar,” and “Dispelling Supply Chain Myths.”)
Jose Pablo
Jan 5 2024 at 2:14pm
before any thought of adding restrictions
This is, indeed, a key issue:
‘Adding restrictions” is what governments do by enacting new (restricting) legislation. But, how can “adding restrictions” improve the result of the works of individual supply chain managers?
Who is the brilliant mind that can come up with new regulation that can improve, at the same time, Apple’s supply chain, GM’s supply chain and Costco’s supply chain?
And, even worse, if such a genius exist, how on earth is he/she working for the government?
Richard Fulmer
Jan 4 2024 at 2:29pm
Authoritarian means – whether wielded by those on the left or the right – lead to authoritarian ends.
David Seltzer
Jan 4 2024 at 5:42pm
Pierre: “Social anthropomorphism is a first symptom.” Please see my comment on David Henderson’s post, Is Capitalism Soulless. I don’t see where Mr. Cass has offered evidence defending protectionism as superior to free trade between and among individual trading partners. Does Mr. Cass understand comparative advantage in voluntary exchange? Isn’t protectionism a threat to individual freedom? Hayek warns us time and again about this dangerous folly.
Anders
Jan 4 2024 at 6:34pm
To me the larger, more dangerous, misconception is not that a benevolent dictator finger on the scale cannot be useful (it of course can, and there are many examples you can collect into a compelling list as long as you ignore the denominator). It is that we have no good way of getting those fingers away from the bad scales that he will have to try out to find the right ones. If the best governed countries in the world cannot keep central bankers straying far away from something as simple as focussing on inflation or money supply where the guiding metrics are clear (by the standards of macroeconomists at least), then what hope is there for actions based on informed guesses with existing interests and political narratives to hew to?
Tariffs on China might make sense (not for me, but when even the Economist endorses it…). But when thse benefiting from the rents created, unions and entrepreneurs, will organise well, social harm is distributed widely and lost value unseen, the argument for free trade and capitalism frustratingly frumpy and abstract and even ostensibly callous compared to hyberbolic and by now unfounded narratives about outsourcing and poisoned baby formula and toys, and when the narrative (warranted, overhyped, or mythical) of a looming mortal rival worse than the Soviet union is promoted and endorsed across an otherwise unbridgeable political divide – what could possibly prompt the proverbial “us” to even look into what might make sense or not? Even raising the issue would be political suicide.
America stands out as a country where framings like freedom and the virtuous, job creating, role model entrepreneur can actually be compelling. Here in Europe it would be heretical, even if few question the value of private ownership and competition in most areas if you avoid words like capitalism and profit and self reliance. In 1856 the London Times ran an opinion piece celebrating the entrepreneur as the hero of the age. 15 years later, the inevitable depression after decades of hype hit hard. Since then, the notion has lingered on life support at the Adam Smith institute and the murky realm of anarcho capitalist web sites and Ayn Rand acolytes.
So the problem is not that intervention may not be warranted, but that we have no system for even asking if it actually is once we started. Even in the haven of capitalism thatbis the US do I not see anyone apart from those driven by a general desire to stick it to the opposition with whatever may hurt them the most asking something as modest as if we really think we can master and excel in sonething as complex and specific as specialised chips, or whether throwing billions in subsidies to wind expecting them to replace fossil fuels at scale in a few decades (if only nefarious climate deniers and greedy oil companies were not so powerful) for four decades have born the fruit justifying that that, and only that option, is the basket for almost all our eggs? Or whether reviving jobs in coal mining rather than innovation to create better ones is the silver bullet to make America great again? Or how well rent control have worked to give less wealthy people affordable housing much better than making it easier to build more?
Please tell me my pessism is unjustified and why. I will feel much better. If you can mollify my concern that Trump and Biden may not be the best candidates the greatest country in the world could muster for the leader of the free world, I will throw a party and build a shrine to you.
Pierre Lemieux
Jan 4 2024 at 7:34pm
Anders: Please start building the shrine and I will tell you something when it is finished. OK, OK, I’ll say it now.
The problem is a bit worse than that of stopping a nirvana government enterprise after it is not nirvana anymore. Most government interventions that are beneficial to some are harmful to others–including of course protectionism, which subsidizes special interests and government courtiers. That is true even if the benefits are estimated to be higher than the costs; indeed, cost-benefit analysis is meant to approve the projects where the benefits to some are higher than the costs to others, not to find projects that have only benefits. If you have some background in economics and political philosophy, it is worth reading Anthony de Jasay about that (his book The State is where to start).
Anders
Jan 5 2024 at 10:46am
Thanks, though I was asking for optimism. It has all been downhill after I started reading the public choice stuff.
But Prophet Dani Rodrik solved both the knowledge and incentive problem, no? Knowledge can be mitigated by seeing vertical intervention as a process of discovery, learning, and self correction; incentive by a Trumpian wall shielding it from Congress who can only send over a paper airplane with a one sentence mandate once a year. And, why not, a bottomless pit in the middle of the building named after Mancur Olson with impaling stakes at the bottom named after Tullock. And yourself at the helm as the benevolent dictator.
What could possibly go wrong? I am being facetious to spice things up, of course, but it is an actual question…
Pierre Lemieux
Jan 5 2024 at 11:18am
Anders: Classical liberals of our time tend to be a pessimistic bunch. You might find a spark of optimism in James Buchanan’s Why I, Too, Am Not a Conservative, a small and non-technical book, which I reviewed in Regulation. As for a benevolent dictator, indeed, I can’t think of anybody else than me–and everybody shares my opinion, mutatis mutandis.
Jose Pablo
Jan 5 2024 at 2:57pm
In short, an essential element is missing from Mr. Cass’s arguments: the individual; protectionists only know collectives. The individual is missing both in a methodological sense and in a substantive moral and philosophical sense.
ok, but …
if methodological individualism has any value, it sure has to explain the prevalence of Cass’s type of arguments among voters and their persistence among educated people (is Mr Cass an economist?).
To say that so many individuals are just mistaken or fooled by a semantic trick is unsatisfactory.
Many individuals find comfort (=increase their utility) by thinking that “tipping the economic scales” is within the power of the governments they think they elect.
And it is easy to understand why. For the individuals, believing that the government they elect is almighty is way more comforting than believing that they depend just on themselves (and their voluntary/powerless collectives) to “modify” the world.
The hypothesis then would be that, for the individuals, believing (whether this is true or not is irrelevant in the argument), that their governments have powers they cannot possibly have, brings more individual utility that the additional economic welfare that could be achieved by a “fingerless ideal government”.
If this hypothesis is correct, then, I am afraid, educating the individual is not a solution (as the persistence of socialist ideas despite the nefarious historical results, seem to show), since so many individuals are already “pursuing their happiness” by choosing “their” government showing their might over higher economic welfare.
And if this hypothesis is correct, then Cass’s way of thinking would be more prevalent among more prosperous societies (kind of “Maslow effect”). So the economic prosperity that liberalism brings can only lead to a higher prevalence of Cass’s way of thinking.
I am afraid.
Ron Bowning
Jan 6 2024 at 7:29am
I don’t understand the quoted statement from Mr.Cass regarding comparative advantage. Is he saying that a country’s political leaders will take profits earned by some of its citizens to subsidize a particular chosen industry to “gain comparative advantage” in the subsidized industry? I understand that sales of the subsidized products can increase but have they actually increased their comparative advantage in those products.
Pierre Lemieux
Jan 6 2024 at 11:34am
Ron: You raise a very good question, that is, how extensive or comprehensive should one’s definition of “comparative advantage” be? Does it include only physical advantage, or also “cultural” ones such as language or work ethic, or even the sunk-cost results of previous government interference? I have argued for a comprehensive, de facto concept à la Krugman:
The issue is discussed more extensively in my EconLog post “Taking Comparative Advantage Seriously,” November 17, 1017.
Pierre Lemieux
Jan 6 2024 at 1:59pm
A few commenters raised the issue of pessimism about the future. One reason to be optimistic is, indeed, the incredible lightness of collectivism (which is visible in Oren Cass’s opinions). Economically (both in the sense of economic analysis and of prosperity) and historically, collectivism only shows failures, depending on the time frame (Sparty lasted a few hundred years, China longer). If we can preserve books and free speech and if we pursue our pedagogical enterprise, there is a realistic hope that the collectivist ideologies will crash, just as an incarnation of them famously crashed around 1990. The recent show of intimidating bigotry on university campuses is, we may hope, the canary in the mine. Who knows, perhaps rightist collectivism will crash with Trump?
MarkW
Jan 8 2024 at 6:14am
Economically (both in the sense of economic analysis and of prosperity) and historically, collectivism only shows failures
Yes. This is the long-term undoing of collectivist schemes — ultimately, they don’t work. Whereas for liberal, individualist societies, complacency bred of success is what ultimately undermines them. The most recent collectivist failures recede from memory. New generations come of age that have no experience of collectivist failure and for whom the stories of such failures are ‘ancient history’ and therefore irrelevant. They’ve never known anything but wealth and success and so they feel entirely free to indulge in their apparently innate, hunter-gatherer tendencies toward zero-sum thinking and attraction to collectivist ‘share the wealth’ schemes. We seem to be in such a phase now, with most of the voting population having come of age post 1989.
Don Boudreaux
Jan 9 2024 at 7:37am
Please pardon me if the point I’m about has already been made here. (I don’t think it has, but I might have missed it.)
While I agree with Jon Murphy and Pierre that the ultimate economic justification for free trade is that it is a policy under which each individual is better able, than under protectionism, to pursue his or her goals. I agree also that any resulting benefit to humanity or to one’s fellow citizens is not necessary to justify free trade.
But as a matter of practice, when the case for free trade is made by informed people (including Jon and Pierre), the arguments invariably feature, almost exclusively, rebuttals of protectionists’ assertions that free trade inflicts net harm on fellow citizens.
Both the theoretical and practical cases for a policy of free trade have always emphasized the gains bestowed by free trade on the people of the home country. Read Adam Smith. Read Frédéric Bastiat. Read Henry George. Read William Graham Sumner. Read Gottfried Haberler, Milton Friedman, Leland Yeager, Jagdish Bhagwati, Arvind Panagariya, Russ Roberts, Dan Griswold, Scott Lincicome, and Doug Irwin. Read Pierre Lemieux. Read any remotely prominent proponent of free trade – or read even me – and you will find, front and center, arguments that demonstrate that free trade is a boon to the home country, whether that country be rich or poor, big or small, industrial or agricultural.
In the ‘condescending’ quotation above from Cass, he’s simply mistaken, and hugely so. He either is unfamiliar with a literature that he nevertheless insists on engaging with, or – if he is familiar with this literature – disingenuously portrays it falsely.
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