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Thursday, October 07, 2010

The Protectionist Instinct

Trying to stir things up a bit with a quick post between classes (Hayek is credited for the insight in a part I left out):

The Protectionist Instinct, by Paul H. Rubin, WSJ: As unemployment remains high and the election nears, many politicians are again campaigning against free trade and its cousin, outsourcing. Polls show voters are increasingly skeptical of the benefits of free trade. There is no area where the beliefs of ordinary citizens are more at odds with the views of professional economists. ...
There are two aspects of our evolved psychology that help explain beliefs about trade. First, humans tend towards zero-sum thinking. That is, we do not intuitively understand the possibilities of economic growth or the benefits of trade in achieving it.
Our ancestors lived in a static world with little intertribal trade and virtually no technological advance. That is the world our minds understand. This doesn't mean that we can't grasp the crucial concept that trade benefits both parties to a transaction—but it does mean that we must learn it.
Positive-sum thinking doesn't come naturally. By analogy, we learn to speak with no teaching, but we must be taught to read. Understanding the mutual benefits of exchange is like reading, not speech.
Second, we evolved in a hostile world. Our ancestors engaged in constant conflict with neighbors, much like present-day chimpanzees. We developed strong in-group and out-group instincts, and for many aspects of behavior we still have such feelings.
These feelings are benign when applied to something like rooting for local sports teams, but are more harmful when applied to international trade. They are most harmful when they generate actual warfare. Yet the metaphor of a "trade war" shows how close to the surface harmful instincts are.
These two sets of beliefs interact to explain our natural (mis)understanding of trade. We believe that the number of jobs is fixed (a result of zero-sum thinking) and that as a result of trade these jobs go to foreigners, whom in a deep sense we view as enemies. Both beliefs are incorrect, but both are natural. ...

    Posted by on Thursday, October 7, 2010 at 12:15 PM in Economics, International Trade | Permalink  Comments (68)


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