الحقيقة بشأن التجارة

Nov 15, 2016 Dani Rodrik

كمبريدج ــ تُرى هل كان أهل الاقتصاد مسؤولين جزئيا عن الفوز المذهل الذي حققه دونالد ترامب في الانتخابات الرئاسية الأميركية؟ حتى لو لم يكن بوسعهم أن يمنعوا فوز ترامب، فإن تأثير خبراء الاقتصاد على المناقشة العامة كان ليصبح أعظم كثيرا لو تمسكوا بتعاليم مهنتهم، بدلا من الوقوف في صف المصفقين للعولمة.

عندما ذهب كتابي "هل تجاوزت العولمة الحدود؟" إلى المطبعة قبل ما يقرب من عقدين من الزمن، اقتربت من رجل اقتصاد معروف لأسأله إذا كان ليوافق على التوقيع على الغلاف الخلفي لكتابي بكلمة تأييد. وقد زعمت في الكتاب أن الإفراط في العولمة في غياب استجابة حكومية أكثر تجانسا من شأنه أن يُفضي إلى تعميق الانقسامات المجتمعية، وتفاقم المشاكل المرتبطة بالتوزيع، وتقويض المساومات الاجتماعية المحلية ــ وهي الحجج التي تحولت إلى بديهيات عامة منذ ذلك الحين.

الواقع أن رجل الاقتصاد المعروف رفض طلبي، قائلا إنه لا يختلف حقا مع أي جزء من التحليل، ولكنه خشي أن يوفر كتابي "الذخيرة للهمجيين". فسوف يستغل أنصار تدابير الحماية الحجج التي يسوقها الكتاب حول سلبيات العولمة لتوفير الغطاء لأجندتهم الأنانية الضيقة.

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0 Comments on this paragraph, 60 in all 60 Comments on this article

Chris Parry-Davies Jan 23, 2017

As an economist who has spent 35 years trying to explain that the Neo-Liberal market economics which is preached as gospel by most university 'economics' departments is not a theory to describe the world but a description of a theoretical world which only exists in the heads of economists and vested interests, I can't applaud this article enough. Sadly, the evidence suggests that our profession is not about to learn any lessons, let alone ready to go back to the drawing board and actually reconsider their in fact highly ideological thinking - despite, as the article says, having directly contributed to voters feeling they had no choice but to turn to Brexit, Trump and the Front Nationale to vent their frustrations.
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Shane Cameron Dec 15, 2016

I believe I can make the case that there has never been such a thing as free trade. It's really only subjective anyway. The world wants access to our markets. All the leverage we need and that should be the end of it. I am in utter disbelief that economist's still sell this yarn. Like I said, I don't believe Ricardo ever thought trade was or could be free. How could it be, that in the middle of the "free trade gilded age era" that a famous debate on the issue goes seemingly unnoticed. This debate was between two towering American intellectuals before congress in 1791. They were bitterly arguing about trade policies and how they would affect relations abroad, protection of our business's at home, and protecting the consumer as well. These men never even mentioned free trade. One of them wanted multiple tariffs (Hamilton) and the other simply wanted one tariff (Jefferson) and it was not to be at the port authority because of corruption possibilities. They briefly mention the concept of not engaging in mercantilism simply because we can't win that war! Jefferson would even go on to write Adams that he realized his error back then, but only later in his life did he come to say that the tariff was a true trade miracle... as long as the government didn't control it. I mean to me this is sensational. If it has obviously been so self evident that free trade has enriched our lives, why don't we see this wonder of globalism? Why when looking objectively at the forensic evidence it shows us a drastically different story. You don't even need the hard forensic evidence really. You could see the results using empirical, demonstrative, or documentary evidence. (Specifically NAFTA also the TPP) Academic economist's are like everything else that academia gives us these days. Like the kids they teach (social justice warriors) they feel that because they have a PhD that their irrational dogma can't be challenged. You know especially coming from the monetary or demand side group that these economist's would actually follow their own advice. It's a religion of empiricism and yet they refuse to see what is exactly staring them in the face. If it doesn't show up in their equations and graphs then OBVIOUSLY the aggregate data is wrong. So presented with evidence they go to the classic a playbook and blame the evil technology. If you listened to this you might think that we have a 1:1 robot to human ration on our earth these days. Technology undoubtedly hurt some folks, but to assume that technology did this is simply insane. It's akin to people saying things like we don't make things any more so who cares about the production process. I mean, I don't have to even go there right? It's almost as if we should build an entire society based on social media because apparently its forward thinking and the future. Those same companies are so forward thinking that they are working to censor us as we speak, we're all Russian shills, remember? Once again back to technology, it's been a real factor in the unemployment in places like the rest belt. However the root cause and where they rot began early on was the labor unions. The unions maybe have been the worse thing to ever happen economically to our country ever. That was the initial blow to our economy and this monstrous cacophony of calls for globalism will finish it off. At least we will have equality via central planning and social engineering, right? Our own government has overtaxed and hyper regulated businesses so erroneously that they willingly left our country and located across the world to make a profit. My god, I have the IMF 2016 global value-added chain in front of me. It is nearly mind numbing to see how many places our consumer goods/communication/ input factors are shipped off to only to finally be finished in Mexico and or China. Then this lovely process manages to get back into our country... at our prices and for us to buy. We know we must consume right? I mean my god, what did we do before 100 years ago. It's literally on billboards brainwashing us that we have to spend money on anything and everything to help the economy. You know, if you just started to trace your steps or maybe our country's steps...can you not honestly think to yourself, "wow, if I didn't know any better it would seem this is almost on purpose." I mean explain to me the reasoning behind creating an economic system that has the highest (almost) corporate tax rate, individual rates, state and local taxes, estate taxes, property tax (depending on business structure and size) ever increasing transfer axes (S.S. Medicare, Medicaid) that can nearly add up to 45-55%, like I said explain that to me. I can't forget to mention the 120,ooo page federal regulations codebook. i think with a smile, Mr. Obama was working towards 4,000 new regulations this year...impressive Mr. POTUS! Three separate studies have been done and the conservative guess is that all told, of the regulations still in force the cost on the economy nationwide was over 1 trillion dollars...annually. The hard data for all the rules only showed around 300 billion in cost, but the implementation, new construction, new hiring and then mostly firing, costly equipment, and finally the closing of business's due directly or indirectly to overburdensome regulations which lead to welfare, subsidies, food stamps, disability, unemployment insurance, and they all agree that the number is almost surely well above 1 trillion. The greatest economic engine to ever grace the planet and they want to kill it? Now its easy to dismiss my diatribe as an angry young economist venting a bit. That may be partly correct, but I am also an investment advisor and co principle at our RIA so I really don't have this kind of time to write something this long. Ask yourself this , why in the world, if they really thought the regulations, laws, bloated bureaucracy, and crazy high corporate tax actually worked and was helping the US citizens and the country, would they then allow business of every kind pick up shop and take the entire production process with them abroad and then sell their products back to us at our prices? How is everyone not asking this question? Or with the TPP can anyone explain to me how it is even conscionable to allow our rights as US citizens and in so doing the natural rights of all men, to be written out of history with a pen and contract? These corporatist sycophant's included a lovely last minute provision in which a world court essentially had global jurisdiction. This of course would mean that our individual rights as well as our country would be gone forever. This world court would be able to adjudicate or prosecute anywhere. It would or at least try to supersede US or any other national sovereignty. This is the free trade we are supposed to embrace. I would love to be proven wrong in regard to Ricardo and free trade. We are told and taught that free trade made the US into the power we are now. That it was prevalent not just here, but all over the world. Prima Facia you might get away with making that statement. However if we dig down to the available documents and verifiable history, it's simply not there. Not like we are taught it is. I think free trade would be great. The problem is that seemingly we are the only country in the world that actually practices (so were told) this doctrine or really even advocates it. So no, I am currently not into our free trade situation at the moment .
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Ece Yagman Nov 24, 2016

When we started covering Frankel & Romer's paper on trade yesterday (at Barcelona Graduate School of Economics), I asked the professor if it is still relevant to cover such dogmatic ideas on the wonders of free trade, especially given how dramatically the political landscape has shifted recently. Unfortunately his reply was quite uninspiring, "You are an economist now." While he was trying to be open minded about the recent thinking around the adversities of trade, the knee jerk reaction to such questions is still defensive of the discipline's orthodox teachings. I don't think being an economist is equivalent to being a free trade advocate, and as Rodrik argues, that kind of thinking is hurting the discipline more than it helps.
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Maurice Simpson Nov 21, 2016

You don't need an economist's opinion to conclude that there is no free lunch. Why are we debating whether there can be free trade, even if the latter only means unconstrained instead of free of charge?
The author is right in insisting that Trade which is not thought out to benefit both sides cannot last forever.
Unfortunately over the last 40 years free trade and globalization have come to obscure the reality that without policies for wealth generation improving prosperity for a nation remains an elusive goal.
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jagjeet sinha Nov 21, 2016

DEFECTIVE DIAGNOSIS - SPECIOUS SURGERY

When the 2008 Meltdown happened, the Lords of Finance were sleeping at the switch.
Nobel Laureates were able to explain - but failed to either predict or prevent.
The predicament continues.

Globalization has produced Mankind's Greatest Leaps forward - in blaming it for breakdown, Doctors diagnosis is defective.
Unless the causes of Brexit One is understood, the causes for Brexit Two will remain beyond comprehension.
Once the answers to WHY are understood, answers to WHAT HOW WHEN WHERE will be crystallized.

TRUMP TSUNAMI IS MAN-MADE.
Lords of Finance sleeping at the switch again.
Large sections within were marginalised - Democracy was their only salvation.
The parallels with India in 2014 remarkably similar - First Family patronage of 70 years created pockets of prosperity.
The Marginalized Majority in The Heartlands - like in Britain and in America - were galvanized for The Modi Mandate.

Economics in isolation is grossly incomplete - without Social Political Philosophical sciences, Economics does not understand.
The prescriptions that are dished out seek explanations in Economics alone.
The Stock Index alone is never enough - Economics is also about Inclusiveness in Democracies.
Growth rates are meaningless to The Marginalized Majority unless it addresses the pounds in their pockets.
Economics must be realigned with Democracy - Monetary Myopia that governs Governors is in Meltdown.

Trumponomics will produce monumental metamorphosis, which will have its own excesses.
That will create different set of problems in a few years - perhaps leaving America in higher trauma than what Trump inherited.
Nobel Laureates are honoured by Society so that they can serve as Doctors whose Diagnosis produces Surgeries that succeed.
Surgeon General Trump can unleash trauma - unless suitably guided.
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george sos Nov 20, 2016

WEOW!Only the fact that Rodrik s been attacked in the comments makes him a serious read.
Who are you ,who dares to mess with the vultures?Who dares to challenge the greedy ones?
Who dares to speak of self care agendas of the bankers /investors and the "scientists" mercenaries of the vultures?
In my view,you re trying to open their eyes .But they seem to want to stay blind.And they will ,until the poor come knocking on their door....
Hang a couple ,then ask them again.Thats how you deal with greedy vultures.No other way exists.
sorry .they had their chances and blew them all away.Now is time to wait punishment.And it will come.no second guess it.And it will be horrible for human race.destruction and death only because some were far too greedy (for money or power).
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Tom Walker Nov 20, 2016

Economists can be counted on to parrot. Period.

And it is not just trade they squawk on about. Supposedly, employment and wages are magically also impervious to the effects of immigration, automation, overtime and postponement of pension eligibility. Anyone who thinks otherwise must believe there is a fixed amount of work to be done, a lump of labor!

According to the old-time orthodoxy supply creates its own demand and the economic system adjusts automatically. Keynes? Either they've never heard of him or they Bowdlerize his theory as having to do with sticky wages.

Quacks and fakers. What more can be said of a discipline that inexplicably reverts to discredited, archaic (and vulgar) "laws of political economy" because those old saws are easier to teach and more convenient for mathematical manipulation?
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Robert Goldschmidt Nov 20, 2016

Economists assume that our economy is being perturbed from a "normal" state. But we are witnessing a 45 year and still counting deterioration wages/GDP. Any model which fails to take this into account is fallicious.

Over this period we have seen the cost of computation drop by a factor of one trillion, enabling automation which destroys jobs ans represses wages, globalization has put U.S. workers in competition with subsistence pay in Mexico and Asia, climate change has lowered the purchasing power of workers through hurricanes, droughts, floods, sea level rise and ocean acidification, and finally worker purchasing power lowered and corporate tax loopholes have been created through the the corporatism of reformed monopolies and owning legislators.

If the U.S. economy fails because of the decline in wage-based purchasing power, we will take the rest of the world with us. This is why it would be prudent, just as with oxygen masks on a plane, to put trade barriers back up in order to rescue our economy. In addition we will need some combination of infrastructure spending, tax and redistribute, strengthening unions and a corporate excess profits tax of 100%.
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Janos Nagy Nov 20, 2016

Actually if Adam Smith or Ricardo could see today's society and economics with government deficit, debt and 40% of gdp is government spending both would cry how today's economists using them as kind of "they told us so " free trade is God.
But of course how easy to forget that domestic production has it's own tariff in the form of taxation and regulations .
Economically speaking when imports does not have the same dollar amount of tax components and that ultimately the consumers always will pay for it., than we can conclude that free trade is nothing else but based on subsidizing imported products to appear lot cheaper than if it would have the proper tax components in them.
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Delia Ruhe Nov 20, 2016

Insofar as “globalization” means perceiving reality exclusively through the prism of economics — which is an ideology and thus is more accurately described as “globalism” — economists must bear their share of responsibility for it. Globalism means the privatisation of everything, including governments, their agencies, and the courts that guarantee the rights of those who profit from globalism. Globalism’s primary fetish is a kind of international trade which exploits the idea that if you’re not at the table, you’re on the menu. Consequently, what is euphemistically called “harmonization” means the lowering of labour, consumer, and environmental regulations to the lowest common denominator, preferably down to those of the countries that have no such regulations at all. That creates a trade environment called “free,” and that freedom means the right of investors to freedom from anything that interferes with profits, present and future. And if anything should nevertheless interfere, those who are denied any role in the negotiation of those investors’ rights in the first place are obliged to pay the resulting fines — indeed, what other possible reason could there be for taxes, anyway?

Capitalism is astonishingly good at creating wealth but lousy at distributing it. That is why we need government, which takes care of the necessity of wealth distribution. But the ideology of globalism appears to regard such a role as an affront to investors’ rights. Therefore, the rights of those upon whose backs profits are made, those upon whose wages the “demand” side of the “supply and demand” of capitalism depends, and that which supplies the natural resources that go into the production of capitalism’s commodities is not visible through globalism’s exclusive economic prism. No wonder “supply-side economics” prevails. From globalism’s perspective, investors’ rights trump the rights of labour, consumers, and nonhuman nature, which are nothing but an excuse for Big Government. Therefore, globalism is with anti-tax advocate Grover Norquist, who insists that government should be reduced to a size small enough to drown in the bathtub.

If economists continue to celebrate such a dysfunctional economic system, they must assume some responsibility for the resulting chaos and discontent, which has made a President Trump possible.
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Ian Maitland Nov 20, 2016

Rodrik is entitled to his victory lap since his counter-cyclical focus on the distributional impacts of globalization on developed countries is now on everyone's lips.

But, having given the devil his due, let me offer some grumbles.

1. As usual, Rodrik devotes his column entirely to scolding economists for the rhetoric of globalization, but he offers little or nothing of substance.

2. Anyway, his charges about cheerleading by economists seems to be overdrawn. Take NAFTA for example. I distinctly recall that, at the time, economists generally agreed that the impact on the US economy would be negligible. Since Rodrik doesn't name names it's hard to evaluate his charge.

3. Hasn't Rodrik himself been a "yes, but" supporter of globalization all along? He has used his complaints about cheerleading for purposes of product differentiation, but much of his criticism has been cosmetic.

4. Rodrik rehashes the charge of social dumping. But not only does he fail to spell out any real implications of taking the concept seriously, but he appears to want to denigrate globalization's extraordinary -- unprecedented? -- accomplishments in raising well-being around the globe without having the guts to come out and say so directly.
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james hanbury Nov 20, 2016

You do not understand that politics rules economics.
It wouldn't have mattered no matter how many economists were more accurate about trade and its problems. It mattered that Hillary never realized the damage that her trade policies caused,
even if it strikes one as silly that older white men can't get high paying jobs.
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Mike Holly Nov 20, 2016

I agree to the extent that economists have failed to address the trade problems caused by weaker environmental laws in developing countries. The world especially needs to abolish or equalize environmental laws for air and water pollution that can move across borders. It has also favored them for important innovations like rare earth elements. But I think other criticisms about global trade are spurious, including currency manipulation, subsidies and even theft of intellectual property. The U.S. trade deficit of $530 billion ($2.76 trillion imports minus $2.23 trillion exports) is only about 3% of GDP and can be more favorably fixed by making the nation more competitive through de-monopolization, especially health care which adds $1500 per car.
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Robert Kolker Nov 20, 2016

you economists make one basic error. You -assume- that the participants in market dynamics are rational.

Perhaps you guys should read David Hume before jumping to such conclusions.
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Joel Dubow Nov 20, 2016

Good article by an academic who has the courage of his convictions in the court of coercive thought. My coronary to his question is how long did the purveyors of the mainstream narrative think their ministry of truth media and academia could fool almost all the people. As Lincoln said, you can't fool all the people all the time.

The evidence is overwhelming. Fifty years ago a single wage earner could support a family. Education was affordable to almost all. Ditto for medical care. The press was the most credible institution in the nation, closely followed by academia. Individual rights were paramount in society and freedom of expression was a principle held even in the face of personal advantage. That is what drove the civil, women's and gay rights movements. None of that is true today, yet the mainstream keeps telling us it is.

The problem is that the evidence has been piling up and hollowing out support for the institutions of public communication during the past decades. This lost trust won't be recovered quickly, especially as those controlling the channels of public communication insist on maintaining the status quo.
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William Pu Nov 20, 2016

Trade, globalization is never a problem. The problem is wealth distribution. So, don't change the subject, everyone.
Apple Inc. e.g., profits enormously from cheap and better labor in China and yet Apple pays as little tax as it can do so legally. So stop trading w/ China, at least in this one instance, some Chinese laborer lose their job, many Americans do not get to enjoy their favorite gadgets and the US government still do not get to collect more tax.
A better solution, which should be implemented in the first place when the big shots were designing global trades, is to devise a way for a more equitable way to distribute wealth generated via trading.
So don't stop eating just because your hiccuping.
- Janos Nagy Nov 20, 2016
  
  Actually workers in the usa would pay taxes and people would have more income to buy even more gadgets.
  The loser clearly the chines worker.
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george jonisch Nov 20, 2016

Well said and and necessary truth. Two points. ''All power corrupts.'' The power to print corrupts any government. This is something that our founders knew and we have forgotten. Corruption is always allergic tojustice, empathy and equal distribution.
Second point is more general.
How to improve on something that is as old as the Roman Empire, has always spectacularly succeeded and then spectacularly exploded over the course of thousand of years? WW1 put an end to the last global expansion of trade, commerce and population transfer. WW2 was the cake's icing. Now again. I believe the human hard wired need for tribal identity, affiliation and ''not us'' definition, is crucially relevant to the globalization discussions. To the extent that humans are seriously territorial and pack-like, the purely economic solutions will leave only partial and unreliable solutions. So what else needs to be addressed? To the extent that people between the coasts voted republican and middle England voted Brexit it is clear that it wasn't only the unemployed or even the under-employed. I believe it was those who not only felt ignored but also those who felt intruded and imposed upon in their lives and those of their children. Their values. One example; We ask soldiers (usually not from the coasts) to give their lives for ''our way of life" (our pack's substance) but then we unilaterally act so as to impose another another pack (whoever that may be or may have been in the past) into our territory. Wtf. An informed and integrated Social science needs to be part of any solution that wants to deal with changing the world back to functionality; before it is once again too late.
www.parentingandsocieties.com
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Per Kurowski Nov 20, 2016

While talking about “flip sides!” The current almost globalized bank regulations, with their risk weight of 0% for the sovereign and 100% for We the People, have steadily subsidized the borrowing costs of governments, with those subsidies being paid by millions of SMEs and entrepreneurs around the world by means of lesser and more expensive bank credit… with so few economists concerned about this.

http://subprimeregulations.blogspot.com/2016/11/why-has-imf-kept-silence-on-what-was.html
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Douglas Leyendecker Nov 20, 2016

Exactly when did anything become "free"? For every action there is a reaction. There are always consequences, and when plowing new ground there are unknown consequences, that create unintended consequences.

One can't project something one has no previous experience with, so it's only after the fact that we can see the unknown/unintended consequences of "free" trade.

There has always been an ebb and flow to civilization’s march forward. Socioeconomic progress does not move up or down in a straight line. We may be just around the corner from a period of ebb (nationalism) that naturally happens after a period of flow (globalization).

No one is taking the word "cycle" out of the dictionary any time soon. Order occurs within the ecosystem of chaos.
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Wim Roffel Nov 20, 2016

The invention of "currency manipulation" is one of the tricks of the globalization zealots. There is no natural exchange rate where a currency will end without external interference as almost anything can influence an exchange rate.

The same applies "labor rights". These are cheap excuses invented is to give people a target for their anger - while protecting the real problem from criticism.

Real free trade accepts that different governments have different policies and it doesn't try to push other countries into cookie cutter prescriptions. But on the other hand it reserves for itself the freedom to do what is best for the country.

Almost every country understands the value of free trade. So we shouldn't fool ourselves to believe that we need enslavement contracts like TIPP to have it.
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Alan Kirman Nov 20, 2016

Over the 40 years of my career as an economist I have heard the same mantra repeated by those who should know better, "when the tide rises all the boats rise with it". At best all that we can show in highly simplified models with stringent assumptions is that if one opens up trade those who gain COULD compensate those who lose.

The real world is not like the models and we have never put in place these compensation mechanisms. The 50 year old steel worker whose job vanishes is a loser in the current situation and telling him otherwise will not convince him and will probably make him vote for Trump.
- vivek iyer Nov 21, 2016
  
  Alan Kirman is a hero of mine- I am shocked that there is a generation of bureaucrats and academicians who think they know General Equilibrium theory because it was part of their PhD program who have never heard of Kirman and who don't understand the first thing about what has actually happened in the field over the last four decades. I may also mention Chichilnisky's earlier work which could have helped public intellectuals from 'the global South' develop an independent way of thinking.
  This is a very welcome article by Rodrik.
  I hope Kirman will write for Project Syndicate or, in any case, that his work was more widely known and reflected upon.
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- William Pu Nov 20, 2016
  
  Trading/globalization is never the problem. Try isolation. The problem is wealth distribution. Economists need to devise a workable distribution model and politicians need to implement them.
  2016 election of Donald J. Trump is a cry for help, help from anyone but the establishment and Donald J. Trump is good enough, for now.
  And pundits are still doing their business as usual!.
  99% vs 1% - the 1% is not losing. But we'll see how far the 1% can go. This is a test of American democracy.
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John Doyle Nov 20, 2016

Roubini is part of the mainstream economics malaise. Mainstream economics does not concern itself with reality, just incestuous modelling and papers aimed at other economists. Reality passes them by. This really is a major problem for the world economy. They have a great deal of clout and have deluded politicians into major falsities that pass for economics. This incompetence is a huge handicap blocking real progress in society.
- Mike Holly Nov 21, 2016
  
  Yes. That's true. But I am concerned that Trump may use that to serve himself.
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- John Doyle Nov 20, 2016
  
  Yes. That's true. The banksters pull politician's' strings. They buy them and so politicians owe them. Trump is about the first one to have mostly paid his own way.
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- Mike Holly Nov 20, 2016
  
  Follow the money. Special interests support politicians in exchange for special privileges ie monopolies. Politicians hire economists to implement and support the needs of special interests with regulations favoring monopolies.
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M M Nov 20, 2016

Politicians, Academics, Economists, etc.... have been approaching the economic malaise of the last decade or so from the wrong end. In order to have Trade (and there nothing called “Free Trade”), one needs to have products and / or services. In order to have products and / or services, one needs to have people (for the eccentrics out there, AI was invented by people “HI” for the people). Therefore, instead of talking about Trade and how best to Trade, one (and especially governments and government representatives) are better start thinking on how best to create real “paid” jobs, in order to generate demand and therefore trade and growth....and not the other way round. The policies of the last decade or so have widened the gap between the various segments of society, the middle class is being eroded and the poor, under the banners of austerity and reforms, have been strangled and asphyxiated.
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Steve Hurst Nov 17, 2016

Before the flood...

https://www.youtube.com/watch?v=k_-uGHWz_k0

The hydraulic modelling of economics from 1949, the Phillips Machine

Aside comment - I love the assumption that investment will occur because interest rates are low

I guess the point I am alluding to is that you cannot expect large unprecedented flows such as globalisation in a system without needing a mop and bucket and it doesn't surprise me that some think a bucket is beneath them
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Jose araujo Nov 16, 2016

"Nonetheless, economists can be counted on to parrot the wonders of comparative advantage and free trade whenever trade agreements come up"

Never understood this ortodox reverence to Ricardo... Its like Astro Physics sending the man to the moon based on Aristotles.
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Gary Stegen Nov 16, 2016

Large persistent trade imbalances are the biggest and most damaging flaw in the "free trade/globalizatyion" rules as currently practiced. If exporting countries were required to spend their export earnings (on average over time) their incentives and hence behavior would change. A tit for tat trade war would also make no sense if a country knows that by restricting imports it will eventually have to make an offsetting reduction in its exports.
Developing countries need to export to obtain funds to buy technology, equipment, etc. needed to build their economies. However, they do not need to run persistent current account surpluses. On the contrary, if they spend their export earnings they can build their economies faster than if they pile up the money from trade surpluses and loan it to developed countries. The best thing Trump could do on day one is to establish that balanced trade is the policy of the US and that this policy will be foundational for future trade agreements. This does not mean opposition to trade, which should be strongly supported and even expanded (under a balanced trade paradigm). Obviously this does not mean rigid balanced bilateral trade, and there would need to be some exceptions where there are good reasons for countries to run significant surpluses. But these exceptions should be very limited, for example: if a country has large external debt that needs to be paid; if a country has inadequate foreign exchange reserves it needs to build; or if a country's primary exports are nonrenewable resources that will eventually run out (e.g. oil or minerals).
- Jose araujo Nov 16, 2016
  
  Trade imbalances are the consequence of politics, not a bad or good thing in itself.
  
  In a flexible exchange rate world, trade imbalances would be automatically corrected, unless this imbalances are the consequence of clear expectations that the country is doing good, so there are people ready to invest in our country.
  
  Now balance of trade isn’t a model but an accounting expression, so in the end if you import more than you export is because there are rational people making those trades, and external creditors than believe the national importers.
  
  That is why being a free market advocate and being against deficits, it’s a paradox, since this deficits are a result of a multitude of individual, rational decisions compensated on the free markets.
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Brad Mueller Nov 16, 2016

Very good article. With some very valid points. But let me make a broad statement. Global trade is inevitable. Since the time of the Dutch traders in the far east we have ben trading globally.
But here is where it gets difficult. All trade is conducted for the benefit of the participants. The buyer and seller. When a third party get between a buyer and seller then chaos usually ensues. Governments shouldn't be making trade deals. At least not the minutia that effects whole industries.
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Emanuel Müller Nov 16, 2016

The western civilization seems to classify everything in the subjective categories of good vs bad. Now that the western electorates are split between localist aka globalism is bad, and globalist aka localism is bad, both sides apparetently unconsciously fill the logical incoherences of their all good vs all bad views with denial fillers and artificial blindspots. Hillary Clinton in one of her enlightening speeches declared that "We are good." which is sweet and constructive for world peace as, unless she is a white supremacist in disguise, all people being equal in value, everybody is good and deal done. One possible model is that the globalist and the localist are coming from the same cultural breed, the localist being more originalists/tribalists, in the sense that they are in a horizontal dynamic of hostility towards the to "other", while given the right circumstances, they can be transformed into globalists that are in a vertical dynamic of domination towards the "other". The second breed needs the cover of tolerance, human rights and multiculturalism to showcase a moral superiority allowing to export by force tolerance, human rights and multiculturalism e.g. Syria, while securing the availability of new low paid employees both in the countries liberated from their backward culture and the downward pressure on salaries at home. On the other hand, it is impressive how the US are shattering every glass ceiling imaginable in the white house, proving that it is still a land of opportunity for all, as with the election of Donald Trump it is the first time that a billionaire is shattering the glass ceiling (actually a glass floor from his point of view) to the access to the highest government employee position in the US.
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Muthoka Sila Nov 16, 2016

Dani almost seeks to turn this into a negotiation round-table. It is only then that affording place for "their side of the bargain" becomes at least of consideration in the discourse. Negotiations and settings of representative democracy, in my view, are, however, fairly unique to each other, and the consequences of mistaking this fact are tremendous. Well, perhaps not as tremendous as the incidence of giving up the whole of the pie, as encompassed in voting for "nullification" of trade!

Negotiations follow the analogy of cooperative games where the participants stand to benefit from the outcome. Usual tact here involves getting ready to accommodate and internalise in the final decision the dissatisfaction of the other party, in order to at least gain something from the negotiations. It is not so in representative democracy. It follows the analogy of a zero-sum game. Once trade proponents gain in the election, the opponents lose definitely, of course just by not having their preference explicitly represented. This conundrum ever leads to extreme polarization among the philosophical laity. You don't want to listen to the other side, lest you amplify their sense and they deny you representation. It further leads to absolute muteness about the strengths of our opponents, and we actually rejoice when we know how their propositions could be strongly founded but they don't realise! Politics, in a real sense, is ever a zero-sum game; some lose, others gain. Every piece of effort is spent to ensure we win; and oftentimes one of the tools is to keep mum about what may fell our choices, including furthering the discipline of economics. It is a pity that we leave such gaps to be exploited by populists who understand pretty much little of the intricate fabric of politico-economic relations.
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Jerry F. Hough Nov 16, 2016

The economists have pushed Hayek to the absolute extreme in the realm of foreign economics where there is almost no government at all.

The anger that propels Trump and others is that immigration and outsourcing has had a disastrous impact on the distribution of income. The DOWt has gone up over 22 times since being 750 in 1982. Wages have been largely stagnant. The only surprise is that the revolution has been so long in coming. If this March 1917 revolution in Russia does nothing, November will be more intense.

The way to distribute income is to take a substantial part of the profits from global trade in corporate and capital taxes and use them to pay for a Canadian health system, a good pension plan, Ted Cruz's replacement of the Social Security tax with a VAT that hits the plus +$100,000 rich. And, as after 1849. democratization that has a left-wing party that is not totally controlled by Citigroup.
- Curtis Carpenter Nov 16, 2016
  
  Yes, the issue isn't "free trade" or "globalization," but how the economic returns of those policies are to be distributed. Do you think Rodrik and others can start a serious and productive conversation along those lines -- or are the problems of distributive justice really beyond the economist's brief?
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Luke Lea Nov 15, 2016

I, a poor blue collar worker, mad this point back when it mattered, and argued it was not going to be good for the reputation of economists in the long run: https://goo.gl/7st4y6

https://docs.google.com/document/d/1IyXhYO1w2SetH9bb0y9T8KwHuiVVfH2I9exL6lu1KzA/edit?usp=sharing
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Marc Laventurier Nov 15, 2016

As far as I'm concerned, this puts Dani over the top as the King of the PS economists.
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Rick Puglisi Nov 15, 2016

I love this article and what was said. I believe balanced trade is very important. When looking for causes I think it is useful to look at time. We have had technological advancement for a very long time. What is different now than previous technology? We all used to be farmers. Yet the income disparity has gotten worse when balanced trade was no longer enforced 30 years ago. That is a clear change with explanatory power.
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Duy Mai Nov 15, 2016

The problem is theveasy portion of trade (tariffs, quotas, etc.) has already been handled. The 21st century trade is not just about goods but also services, intellectual property, data, arbitration, etc. I understand and agree with Prof. Rodrik to some extent, but I think people should be happy that the TPP exists and is long as it is right now. Affected communities should not blame open free trade for their loss, but rather, the government for their failed edistribution.
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Karl Barber Nov 15, 2016

even though it is now clear that the distributional impact of, say, the North American Free Trade Agreement
---
It would be useful to add in the articles links to references on such controversial issues. Prof. Rodrik may assume that theyare are clear for all, but it is not the case
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Joseph Damond Nov 15, 2016

I agree but I don't agree. It's just not clear how much Professor Rodrik's version of reform globalization differs from the version we have. A strongly protectionist agenda certainly would change the existing order; not clear that what Rodrik has in mind would. It's also, by the way, not clear how much globalization itself is responsible for the fraying of social cohesion we have -- as opposed to say, the fact that the indebted rich economies are fast running out of resources to address the issue.
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Petey Bee Nov 15, 2016

I agree with the article, of course. My only nitpick is that Trump's victory is shocking. Although both the Democrats and Republicans took pains to nominate the candidate most offensive to the other side, the turnout for each, as a % of voting age population, was fairly normal. Almost exactly the same as the 2000 election, even. And despite the devastating feeling due to the nature of the person she lost against, Clinton's showing really wasn't that bad. She did, after all, squeak out a narrow plurality of the popular vote.

Moreover, the current Clinton outperformed her husband's turnout in 1992 and 1996 by quite a bit - President Clinton owed his victory to third party candidate Perot, who, ironically, was vehemently anti-NAFTA.

It is Obama who's performance stands out among democrats, not Clinton. If and when the D party becomes interested in winning, they already have a formula that gets lots of votes out (Obama, Sanders), in addition to the formula which does not (Clinton, Clinton). By letting the Clinton's get a lock on the party machinery, we all now pay the price. Perhaps economists provided a sort-of academic cover for this phenomenon, and it is reassuring that this is being discussed.
- Peter Schaeffer Nov 15, 2016
  
  No one knows who won the popular vote in the U.S. and no one ever will. Here is why. Illegal voters and illegal voters are now commonplace in the U.S. The U.S. has essentially zero mechanisms for detecting and removing illegal votes and voters. Obama went to pains to assure illegal voters that they faced no risks. For some actual data, see See "Do non-citizens vote in U.S. elections?" (http://www.sciencedirect.com/science/article/pii/S0261379414000973). Since we will never know the number of illegal voters in 2016, we will never know who really won the popular vote.
  This is one of the key reasons we have the electoral college.
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radek tanski Nov 15, 2016

I think technology has simply made globalization so easy as to make it inevitable. Less pleasantly its also made it more difficult to preserve national identity and purpose.

I think economists cannot be given too much blame. Just as corporations that stand in the way of the inevitable will flounder, so will the careers of those that refuse to facilitate it.

Visionaries should best start mitigating the worst effects of the new void once filled by national balkanisation.
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Sukhi Grewal Nov 15, 2016

This is on point, thank you.
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Robbie Jena Nov 15, 2016

Trump is not an Economist - is that the problem??
- Robbie Jena Nov 15, 2016
  
  Actually, Economists made a mess of Western Economies...but we can not say this in an economist article. Just silently suffer towards the Collapse of Western Society...
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Jamel Saadaoui Nov 15, 2016

I am particularly agree with this! Thanks for sharing.

J
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Leto Atreides Nov 15, 2016

Of course, to gain long term credibility with the public and purely for the sake of intellectual honesty, economists should tell things as they are. However, it is probably naive to think that it would have really made a difference because economics is a discipline with too much uncertainty, and economic policies are fundamentally political. Even when there is nearly unanimity among economists, politicians can still find some economists who will support their policies.
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Sally Snyder Nov 15, 2016

Here is an article that explains how President Obama is attempting to start a new global trade cold war:

http://viableopposition.blogspot.ca/2016/05/president-obama-united-states-and-trade.html

The haste to sign a key trade agreement is being driven by one factor; the pathological need for the United States to beat China at its own game.
- Curtis Carpenter Nov 15, 2016
  
  It's fine I think to oppose the TPP. But it's naive to ignore its strategic importance and what its pending failure will mean to U.S. interests in the Pacific. There is going to be a price to pay, sooner or later, however the balance is struck.
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Bob Aceti Nov 15, 2016

Trump wants to negotiate a better deal for Americans? Do you mean, 'heads I win, tails you lose?'. The U.S. is the strongest hand at the negotiating table and often leverages its key interests to the maximum marginal return in trade negotiations. I think x-American nations are starting to reconsider the lopsided approach to trade and, especially, communities that will be negatively impacted without compensation. The skills development conundrum may work for younger and better educated workers but those that had been near retirement and born within a generation of 'job for life' will be harder to place after their jobs had been traded offshore. I think the solution is that the nation's workers' affected negatively by global trade will need to have a sufficient settlement of retraining and retirements funds made available by those that benefit - corporations. Then we will see if all costs are covered in the consideration of fair trade. In the absence of a settlement to disaffected workers, global trade is a one-sided deal that - as we see - brings acrimony that political chameleons can easily exploit to Trump democratic electoral results. Not only does Trump exude a left-wing trade policy, he also brings a more dangerous environmental - Big Oil - policy and questionable rights initiatives by surrounding his cabinet with people that have exposed themselves as racist, bigoted temper and extreme right economic policies that will further result in degradation of democratic rights for most that are not wealthy and that do not have the financial resources to take advantage of Citizen's United decision of the SCOTUS.
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stephan Edwards Nov 15, 2016

At least someone acknowledges that Economist and expert have, to most, become the same as paid shill for the banks and corporations. I am impressed by the admission.
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Ariel Tejera Nov 15, 2016

Globalization ? It has certainly worked!
As military strategists say: Big Finance is now "free to roam" about in the world. And who is going to stop it, to reign on it ? The genie is now out of the bottle, for good. Trump/Brexit have a different, less obvious meaning, they are not meant to confront Globalization, on the contrary: they are meant to discharge the Anglosphere from the weight of giving Globalization its pretty face: no need to embellish it with moral values, anymore. That has become too costly, and benefits the Asians mainly.
- Ariel Tejera Nov 15, 2016
  
  In this sense, the role of Economists, as facilitators and cosmeticians of Globalization, is challenged, naturally (I am an Economist), as Mr. Rodrik describes.
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dan baur Nov 15, 2016

You're misrepresenting Trump - he just wants to negotiate better trade terms for the US. Nothing wrong with that.
- Lester Soss Nov 15, 2016
  
  I think you missed the point of this article. It's quite simple- it's not likely you can cure a patient if you are unfamiliar with what afflicts him. Trump has focused on trade, to the exclusion of all else, as the cause of the hardships in this country. It's not! And you will not change anything until you have an understanding of exactly what those causes are. Dr Rodrick is simply pointing out why economists failed to influence the debate-not that they didn't understand it.
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