Max Sawicky's old blog, now manned by new faces, is apparently no longer specializing in passionately and unapologetically left-wing heterodox economics. Now they just spout random nonsense:
Econ bloggers have really missed the point about Landsburg’s free trade screed. The estimable Dani notwithstanding, the issue isn’t ultimately ethics or even procedural fairness. The problem is that doctrinaire economists understand less about trade than the average person with no academic training in the subject.
Ordinary people in many parts of the world, and not just in the US, worry about trade because they are afraid that jobs lost to imports will not be counterbalanced by jobs gained through exports. They worry that there will be fewer economic opportunities for them and their children. They worry that their wages or working conditions will be pushed downward through competition with even more vulnerable, desperate workers in other countries. They are right to worry about these things. Such miseries are not destined to happen, but they cannot be ruled out either.
Except in standard economic models which begin with the assumption that increases in imports automatically call forth equally valued increases in exports. If trade balances on the margin we live in the happy world of comparative advantage, and it is indeed true, as Landsburg says, that “when American jobs are outsourced, Americans as a group are net winners.” But the assumption that trade balances at the margin is simply a modeling convenience, something that enables Landsburg to regale his students with blackboards full of elegant diagrams and equations. It is not grounded in real experience, and especially not the experience of the US economy since the 1970s.
You have to be very well trained in economics and have high-level skills to make such a brain-dead assumption and not even know you’ve made it. Then you don’t have to give serious consideration to counterarguments because, hey, why pay any attention to the fallacies of economic illiterates and mathphobes?
Ordinary people in many parts of the world worry about getting fatal diseases because witches have cast an evil spell on them. That doesn't invalidate the germ theory of disease. Notably, doctors using the germ theory of disease have produced far more cures than doctors attempting to chase out the bad spirits with an energetic series of bloodlettings. And economies with (classically) liberal rules about trade both among the citizenry, and with citizens of other countries, tend to be much, much nicer places to live than the economies that charge you $1,500 for the privilege of importing a laptop.
But we needen't resort to complicated economic theories to illustrate that Peter Dorman is speaking twaddle. His post strongly implies--without daring to actually say something quite so stupid--that if we liberalize trade, we'll end up buying more than we export.
There are three possibilities for what will happen if we liberalize trade:
1) We will sell more stuff to foreigners than they sell to us. Since we can't use all those funny banknotes, we will essentially be giving them free stuff.
2) Over the long run, we will sell about as much stuff to foreigners as they sell to us.
3) Over the long run, foreigners will sell us more stuff than we sell to them. Since they can't use all those funny banknotes, they will essentially be giving us free stuff.
Situations numbers two and three are obviously preferable to the first--but the first is what mercantilists want. After all, then we've got more jobs than those nasty, nasty foreigners!
As I've pointed out elsewhere, worrying that "all the good jobs" will go to India is definitionally stupid. If that is really true, and all we make are stupid t-shirts that say "I'm spending my kid's inheritance", then we will have nothing worth selling to India, and they will stop trading with us.
Now, one could take him to be saying "ordinary people are worried that their particular job will go to India, and they themselves aren't well suited to do anything much else except flip burgers at Arbys". But that would hardly justify a rant against economists, since the problem of unequally distributed gains from trade is a bog-standard argument of conventional trade economics.
Update Yeah, I don't know what I was thinking either. Weirdness fixed.