Naked Economics: Undressing the Dismal Science pdfdrive com
particularly those among the more free-market “Chicago school,” are sometimes
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Naked Economics Undressing the Dismal Science ( PDFDrive )
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- Tyranny of the status quo
particularly those among the more free-market “Chicago school,” are sometimes perceived to be hostile toward government. It would be more accurate to describe them as skeptical. The broader the scope of government, the more room there is for special interests to carve out deals for themselves that have nothing to do with the legitimate functions of government described in Chapter 3 . Tyranny of the status quo. If small groups can get what they want out of the legislative process, they can also stop what they don’t want, or at least try. Joseph Schumpeter, who coined the term “creative destruction,” described capitalism as a process of incessantly destroying the old structure and creating a new one. That may be good for the world; it is bad for the firms and industries that make up the “old structure.” The individuals standing in capitalism’s path of progress—or destruction, from their standpoint—will use every tool they have to avoid it, including politics. And why shouldn’t they? The legislative process helps those who help themselves. Groups under siege from competition may seek trade protection, a government bailout, favorable tax considerations, limitations on a competing technology, or some other special treatment. With layoffs or bankruptcy looming, the plea to politicians for help can be quite compelling. So what’s the problem? The problem is that we don’t get the benefits of the new economic structure if politicians decide to protect the old one. Roger Ferguson, Jr., former vice chairman of the board of governors of the Federal Reserve, explains, “Policymakers who fail to appreciate the relationship between the relentless churning of the competitive environment and wealth creation will end up focusing their efforts on methods and skills that are in decline. In so doing, they establish policies that are aimed at protecting weak, outdated technologies, and in the end, they slow the economy’s march forward.” 7 Both politics and compassion suggest that we ought to offer a hand to those mowed over by competition. If some kind of wrenching change generates progress, then the pie must get bigger. And if the pie gets bigger, then at least some of it ought to be offered to the losers—be it in the form of transition aid, job retraining, or whatever else will help those who have been knocked over to get back on their feet. One of the features that made the North American Free Trade Agreement more palatable was a provision that offered compensation to workers whose job losses could be tied to expanded trade with Mexico. Similarly, many states are using money from the massive legal settlement with the tobacco industry to compensate tobacco farmers whose livelihoods are threatened by declining tobacco use. There is a crucial distinction, however, between using the political process to build a safety net for those harmed by creative destruction and using the political process to stop that creative destruction in the first place. Think about the telegraph and the Pony Express. It would have been one thing to help displaced Pony Express workers by retraining them as telegraph operators; it would have been quite another to help them by banning the telegraph. Sometimes the political process does the equivalent of the latter for reasons related to the mohair problem. The economic benefits of competition are huge but spread over a large group; the costs tend to be smaller but highly concentrated. As a result, the beneficiaries of creative destruction hardly notice; the losers chain themselves to their congressman’s office door seeking protection, as any of us might if our livelihood or community were at risk. Such is the case in the realm of international trade. Trade is good for consumers. We pay less for shoes, cars, electronics, food, and everything else that can be made better or more cheaply somewhere else in the world (or is made more cheaply in this country because of foreign competition). Our lives are made better in thousands of little ways that have a significant cumulative effect. Looking back on the Clinton presidency, former Treasury secretary Robert Rubin reflected, “The economic benefits of the tariff reductions we negotiated over the last eight years represent the largest tax cut in the history of the world.” 8 Remember all those economists who were so excited about trade with China because it makes “most Americans better off?” The Booth School asked the same panel of experts a follow-up question: Are some Americans made worse off? The economists’ answers to that question were equally lopsided: 96 percent said yes. Hence the politics of trade. Americans who lose their jobs don’t care much about the “overall benefits” of trade or “making the pie bigger.” They care about the pie that has been taken away from them. A Washington Post analysis after the 2016 election found that “counties facing stronger import competition from Mexico—and especially China—logged more votes for Trump compared with other Republican candidates in recent U.S. presidential elections.” 9 Cheaper shoes here, a better television there—still probably not enough to get the average person to fly somewhere and march in favor of the WTO. Meanwhile, those most directly affected by globalization have a more powerful motivation. In one memorable case, the AFL-CIO and other unions did send some thirty thousand members to Seattle in 1999 to protest against broadening the WTO. The flimsy pretext was that the union is concerned about wages and working conditions in the developing world. Nonsense. The AFL-CIO is worried about American jobs. More trade means cheaper goods for millions of American consumers and lost jobs and shuttered plants. That is something that will motivate workers to march in the streets, as it has been throughout history. The original Luddites were bands of English textile workers who destroyed textile- making machinery to protest the low wages and unemployment caused by mechanization. What if they had gotten their way? Consider that at the beginning of the fifteenth century, China was far more technologically advanced than the West. China had a superior knowledge of science, farming, engineering, even veterinary medicine. The Chinese were casting iron in 200 B.C., some fifteen hundred years before the Europeans. Yet the Industrial Revolution took place in Europe while Chinese civilization languished. Why? One historical interpretation posits that the Chinese elites valued stability more than progress. As a result, leaders blocked the kinds of wrenching societal changes that made the Industrial Revolution possible. In the fifteenth century, for example, China’s rulers banned long-sea-voyage trade ventures, choking off trade as well as the economic development, discovery, and social change that come with them. We have designed some institutions to help the greater good prevail over narrow (if eminently understandable) interests. For example, the president will often seek “fast-track authority” from Congress when the administration is negotiating international trade agreements. Congress must still ratify whatever agreement is reached, but only with an up or down vote. The normal process by which legislators can add amendments is waived. The logic is that legislators are not allowed to eviscerate the agreement by exempting assorted industries; a trade agreement that offers protection to a few special interests in every district is no trade agreement at all. The fast-track process forces politicians who talk the talk of free trade to walk the walk, too. The unfairly maligned World Trade Organization is really just an international version of the fast-track process. Negotiating to bring down trade barriers among many countries—each laden with domestic interest groups—is a monumental task. The WTO makes the process more politically manageable by defining the things that countries must do in order to join: open markets, eliminate subsidies, phase out tariffs, etc. That is the price of membership. Countries that are admitted gain access to the markets of all the existing members—a huge carrot that gives politicians an incentive to say no to the mohair farmers of the world. Download 1.74 Mb. Do'stlaringiz bilan baham: |
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