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Sunday, March 26, 2006


Is Lou Dobbs bad for America?:

Dobbsism, unintelligently designed for our times, By Benn Steil, Commentary, Financial Times

Even if the result is more profits for multinational corporations, do we truly believe that exporting those jobs will lead to a better life in this country, for our workers?...Or should we rely on public policy, regulation, tariffs, and quotas to protect our standard of living? Or should we share the blind faith of many in corporate America and Washington, in the power of a free market to resolve these questions? - Lou Dobbs, Exporting America, 2004

Faith is required in all views regarding the beginning of life, whether scientific, so-called, or whether religious...The fact is that evolution, Darwinism, is not a fully explained or completely rigorous and defined science that has testable results within it. - Lou Dobbs, CNN, May 12, 2005

As an economist, I feel a communal and curmudgeonly kinship with evolutionary biologists. We are ... in a seemingly endless ... struggle to persuade others that impersonal and unseen forces shape our world in predictable ways which, though far from obvious, are eminently demonstrable. The resistance we are up against I will call Dobbsism. Dobbsism is ... exemplified by crusading American television anchor Lou Dobbs... It is the consciousness behind belief in intelligent design, according to which biological life must have been designed by a creator, given its complexity. It is likewise behind the belief that a complex social construct like a “national economy” must be deliberately designed by enlightened policymakers, lest joblessness, poverty and mass bankruptcy result from the neglect.

To be clear, no biologist would claim that conscious design cannot improve on unguided evolution. Thousands of years of deliberate human genetic modification of animals and plants attest otherwise. Likewise, no economist would claim that economic outcomes cannot be improved by policy interventions. ... However, it is exceptionally well established that enormous and highly adaptive biological complexity can emerge, and has emerged, over periods of time that are well beyond what humans can intuitively grasp, through processes that are entirely unguided by a deliberate, thinking force. Evolution is indeed “just a theory”. Gravity is as well. But evolution is a theory strongly supported by the fossil record, comparative anatomy, the distribution of species, embryology and molecular biology.

Likewise, the foundation of the doctrine of free trade, that there is an inherent gain in production specialisation along the lines of comparative competence, is far from obvious but logically impeccable and empirically sound. Of this theory of comparative advantage, Nobel Prize winner Paul Samuelson wrote: “That it is logically true need not be argued before a mathematician; that it is not trivial is attested by the thousands of important and intelligent men who have never been able to grasp the doctrine for themselves or to believe it after it was explained to them.”

Why should we care? Well, Dobbsism ... can be dangerous. Take President George W. Bush’s imposition of tariffs on imported steel in 2002, on which Mr Dobbs commented enthusiastically that: “It appeared that the president had decided he had a far more important constituency to serve than the members of the World Trade Organisation, the European Union, and the so-called free traders: namely, working men and women in this country”. Powerful stuff. But is it true that Mr Bush faced down foreigners and free traders to the benefit of American workers?

It is a simple task to count the number of American steel workers at two different points in time, even if it is less straightforward to determine the portion of any decline that resulted from foreign competition (as opposed to, for example, new technology). Unfortunately for economists however, they must apply considerably more data and higher maths in order to estimate the effect of steel tariffs on American workers, the vast majority of whom do not work in the steel industry. Studies have found that the tariffs produced tens of thousands of job losses in steel-using industries.  Yet since statistical estimation techniques are not nearly as comforting as counting steel workers, Dobbsism would dismiss such an exercise as “just theory”...

But this leaves the hard question unanswered. Even if "no economist would claim that economic outcomes cannot be improved by policy interventions," there is considerable disagreement about how much policy intervention is optimal. How much "genetic alteration" should we do in an attempt to make the economy yield higher welfare returns?

    Posted by on Sunday, March 26, 2006 at 12:06 PM in Economics, International Trade, Policy, Regulation | Permalink  TrackBack (0)  Comments (19)


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