The ExIm Struggle: Another Thing to Blame the Boomers For?

Editor’s Note: This article previously appeared in a different format as part of The Atlantic’s Notes section, retired in 2021.
Walter Lippmann would have had thoughts on ExIm mess. (Wikipedia)

Here’s the background: No. 1 is “Idiocracy: It’s Not Just a Movie Any More,” an initial broadside against the Tea Party-ites who (fanatically and destructively, in my view) have managed to defund the Export-Import Bank. No. 2 is “When Is It Fair to Call a Policy Position Idiotic?,” a response from readers flustered by No. 1’s harsh tone.

Now several readers with a different angle—namely, that we’re seeing another front in the Boomers-against-the-world generational struggle. Let’s start with this one:

[The original] Ex-Im bank piece made perfect sense to me.  I’ve been in international trade the last 10 years or so.  You are completely correct regarding both mercantilist policies and the idiocy of some of the right-wing blather about them.

I wonder, is this more an overall generational issue than anything else?  Specifically, I think these policies may be an effort on the part of Baby Boomers to get theirs while the getting is still good, meaning while they are young enough to benefit from policies but old enough that the bill will effectively not come due during their lives.

As this point I'm legally obliged to note that I am one of these unloved Boomers. At least by this reader's logic I'm arguing against the interests of my actuarial class. The reader goes on:

I was born in 1980, putting me at the magic divide between Gen X and Millenials, but old enough to have a good view of the baby boomers.

I would suggest that what is really driving all of this is government policy that was fundamentally geared towards the good of the Baby Boom generation for the last several decades. My thought is that the right wing loves policies that are fundamentally supportive of the older, whiter generations, such as increased Medicaid spending or tax cuts.

Defunding the Ex-Im bank, ignoring climate change, not funding infrastructure, cutting spending on education, all seem to me like policies [whose long-term consequences won’t matter to the] Baby Boomers and therefore [aren’t worth doing if such investments would] take away from spending on things they do want.

I don’t think it was accidental that the United States supported higher education when the Baby Boomers were in school or enacted massive tax cuts when Baby Boomers were in their peak earning years. Nor do I think it is accidental that the estate tax is on the block again, now that the Baby Boomers parents are at the end of their lives. The only difference now is that the bill for past largesse is now due, and people are pissed about it.

I further suggest that similar dynamics have been seen in other countries. Specifically, Argentine under and after Peron (chickens in pots) comes to mind. I also think the current Chinese government has fundamentally the same challenge. It is hard for me to believe that all those girls in high heels with new smartphones are likely to accept that normal rates of growth are acceptable without fighting about it.

***

Now, from another reader, on the modern manifestation of the problem Walter Lippmann wrote about in his Public Opinion nearly a century ago. Namely, how the non-expert general public can be expected to develop views on issues so complex that any one of them would require full-time expert study (and even then might lead to disagreements). The reader says:

Had the same thought reading your second piece as I had after Pres. Obama announced the Iran deal: Americans have a tendency to weigh in on issues that they've read 5 paragraphs about like they know the whole problem and how to fix it. The Iran deal is such a complicated issue, one that I'm sure Obama had staff at the Pentagon and in other agencies going over full time for months before signing on to the final agreement. How can virtually any of us have an opinion on this, given how little we know?

It  makes me think about the book Can Gun Control Work?, the book that James Jacobs (of NYU Law School), spent years researching and writing. It outlines the major issues with gun control, such as the 2nd amendment, the problems with having open mental health records, the problems with the "assault rifle" label, and the vast number of guns already in private hands in the US.

But when it comes down to it, this matters to very few people. Most people would just prefer to say "Guns are bad" or "Gun ownership is my right".

Here’s the relevance to the current discussion. I took a “God save us from this insanity!” tone about the ExIm showdown precisely because this is an issue I think I know something about. Over the decades I have thought, learned, debated, and written about it to feel that I know the pros and cons. You may think my conclusions are wrong, but I’m not pulling them out of thin air.

Interestingly, the people upset about the idiocracy tone all said they didn’t consider themselves experts on the ExIm front. Thus my mistake — even in our new, breezy Notes section! — was in not fully showing my homework, on the thinking behind the idiocracy claim.

***

To round it out, a view from the academy. This is from an economics professor at a well-known liberal arts college, who deals with the theory/reality gulf in economics that I think underlies the ExIm discussion and much else.

I've been teaching at [the liberal arts college] since 1989.  One of the perennial habits I encounter among my students is the tendency to believe the economic theory is "true.” Frequently this belief is based on an ignorance of some important underlying assumptions in the theory.

IF you go back to the original Ricardian comparative advantage model we find the sneaky assumption that "people endeavor to employ their capital as close to home as possible."  In other words, if capital is immobile Ricardian trade theory finds trade is almost always beneficial.  When we relax the assumption of capital mobility maybe not so much.    

I try to explain to my students that economic theory is a map, not a religion. It does not describe reality perfectly, and  it's a good idea to have more than one type of map depending on the situation. When I'm on my boat on the river I want the navigation map, when driving to work, the traffic map.

Unfortunately, many of my fellow PhD economists also fall into the same trap of treating economic theory as a religion. Religious beliefs  can never be fallible or falsified, irrespective of evidence to the contrary.  

That’s all for now. Thanks for weighing in.