What We Talk about When We Talk About Free Trade
I am continuing to avoid talking about SSM at the Supreme Court despite Brother Likko’s invitation because I don’t think I can add anything his wonderful post. I will probably get to it this week. Instead I will talk about free trade!
Kevin Drum is currently battling cancer and has largely turned over his blog to a bunch of guest bloggers. Matt Yglesias wrote a curious post about what economists are missing about the Pacific Trade Deal.
The Trans Pacific Partnership seems to be Obama’s NAFTA but about Asia and Oceania instead of being about Mexico and Canada. The Labour Union wing of the Democratic Party hates it. The DLC and Corporate friendly wing of the Democratic Party loves it. The two sides predictably are not communicating well with each other.
Matt Y starts his essay off with his typical “I really loved Econ 101” spiel about free trade is awesome and how all economists love free trade and think it is a “cool idea”. This includes a link to Krugman from 1995 because Krugman is the current liberal darling of the anti-austerity and we care about income and wealth inequality crowd.
However, Matt Y is able to admit that 21st century trade deals might do well for nations, rich stockholders, and rich landowners while screwing over the average citizen of a country or the average worker. He notes that Smith concentrated on the Wealth of Nations but not the Wealth of People.
He ends the piece arguing that there are a lot of barriers to free trade that are not considered barriers for free trade. His examples are the Jones Act, Japanese safety regulations for the auto industry, and various measures meant to protect American and European agriculture like American concerns about cheese bacteria and European concerns about Beef with Hormones.
I am not sure what Matt Y’s conclusion wants us to think at the end of his essay. Does he think that we should ditch the Trans Pacific Partnership and just concentrate on the invisible barriers to trade which are done for reasons of culture, health, and safety? Does he think that the Trans Pacific Partnership is a good idea and we should also gut the trade barriers done under other names as well?
We have danced around this problem before on OT. There seems to be a belief (at least here) that talking about regulation and deregulation is dumb and counterproductive. We should talk about smart regulation. I agree with this idea. The problem is that we lack a vocabulary and we lack trust to talk about whether regulation is smart or not. I suspect that if we even agreed to talk about smart regulation, the division lines would be the same. Matt Y clearly seems to be on the side that most regulations are bogus. He also has little or no sympathy for the idea of cultural heritage, health or safety regulations.
I consider this a very Caveat Emptor kind of attitude and I am not sure why Cavaeat Emptor should be the lay of the land. I’d rather pay more and be assured of quality and provenance instead of paying less and being required to take a gamble on both qualities. This is why we require bar licensing. You can at least be sure that your lawyer took a comprehensive exam and in many states, attended an ABA-accredited law school. This means that they should at least recognize when they don’t know an answer and know how to look up the answer or consult with another lawyer who might know the answer. I don’t think any liberal would deny that there are no trade-offs with regulations. We would argue that the trade-offs are overstated or the social benefits outweigh the economic costs.
So, how do we talk about smart regulations and whether the benefits of a regulation outweigh the losses or costs? This seems to be rather subjective. My general stance is that people need to be viewed as workers and employees just as much as they are viewed as consumers if not more. This means that you need to work on laws and regulations about what happens at the workplace including the availability of jobs and whether those jobs are done on conditions that are as physically and psychologically safe as possible. Some jobs are going to be inherently more dangerous than others and there is no guarantee for a kind boss. We shouldn’t just concede that work is going to be an unpleasant hellhole for the majority though. Consumer side stuff needs to focus on more than price and also on whether a product is good or not. Is it prone to break down? Is it bad for the environment? Is it unsafe and dangerous? etc.
Yet these concerns seem to get constantly waved away as just taking away jobs and opportunities and often by those who already control the most.