Steven Pearlstein Too Easy on Dani Rodrik

Donald Boudreaux Cafe Hayek March 14, 2011

Cafe Hayek

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by Don Boudreaux on March 13, 2011

in Books,Man of System,Myths and Fallacies,Seen and Unseen,Trade

Here’s a letter to the Washington Post:

Steven Pearlstein is insufficiently critical of Dani Rodrik’s latest brief against free trade (“Review: Dani Rodrik's ‘The Globalization Paradox’,” March 13).

For example, while it might be true that countries most open to trade today also tend to be countries with the largest governments, this fact doesn’t prove Prof. Rodrik’s claim that free trade can be successful only if its consequences are managed by a large, activist state. Hong Kong remains today the most open country in the world, trade-wise, yet its government is also the world’s smallest. Singapore – the world’s second-most open country – also has one of the world’s smallest governments. Yet citizens of these countries are among the wealthiest people on the planet.

Or consider America before the New Deal. Although relatively high national tariffs were the norm during that period, America itself was a vast and vibrant free-trade zone. Textile-producing innovations in the Carolinas “disrupted” (to use Prof. Rodrik’s term for economic change) the economy of New England; meatpacking innovations in Illinois “disrupted” the economy of Texas; transportation innovations in Michigan “disrupted” economies everywhere. Yet there was no government, at any level back then, imposing – on all Americans freely trading with each other – “the same set of rules” that Prof. Rodrik fancies is necessary to make free trade both successful and accepted.

Sincerely, Donald J. Boudreaux

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{ 33 comments… read them below or add one }

1 jjoxman March 13, 2011 at 4:43 pm

Correlation isn’t causation. How many times do we have to go over this, people, really.

It’s entirely possible that vibrant trade is plundered for financing ever-larger government. If the tariffs are small enough, who will notice?

2 Methinks1776 March 13, 2011 at 4:54 pm

JJoxman,

When will you learn that correlation isn’t causation ONLY in the context of an argument for individual liberty and free markets?

3 jjoxman March 13, 2011 at 5:08 pm

Maybe by the time I hit 50. A good friend just told me that’s when he finally became completely disillusioned.

4 Methinks1776 March 13, 2011 at 6:22 pm

Disillusionment has really gotten a bad rap. Don’t be afraid. Come to the dark side.

5 vikingvista March 13, 2011 at 10:21 pm

Yes. Take the red pill.

6 Sam Grove March 13, 2011 at 11:20 pm

Giving up one’s illusions is a good thing. Popular illusions result in so much damage.

7 Richard Stands March 14, 2011 at 12:27 am

I find it restful.

8 Frenk33328 March 13, 2011 at 5:05 pm

It is perhaps possible that the correlation goes in the other direction. Maybe only countries with vibrant economies can afford to have large expensive governments.

9 muirgeo March 13, 2011 at 5:18 pm

2 city states and Pre- New Deal America are the counter proof???

You mean Pre- New Deal like during the Great Depression or the Gilded Age when poverty was estimated to be 30-50%?

When people are arguing a dead ideal and they hold onto it in spite of mountains of counterfactuals all I can think to do is to ask them to seriously consider what evidence WOULD prove to them that they are wrong. They invariably will not be able to come up with such evidence…. that is when you know they have a fundamental belief system opposed to an objective reason based position.

“Ideas are inherently conservative. They yield not to attack of other ideas but to the massive onslaught of circumstance with which they can not contend.”

J K Galbraith

10 vidyohs March 13, 2011 at 6:39 pm

So muirhuahua, when are you actually going to look at what you believe, weigh it against the thousands of years of evidence that socialism always fails, then recognize “the massive onslaught of circumstance with which they can not contend."

I wonder if you’ll ever understand that in the land of thought, you are but an amusement.

11 muirgeo March 13, 2011 at 8:53 pm

Well if after periods of deregulation and minimalist government everyone became employed and the economy continued to grow then I might be persuaded. If after the New Deal the GDP didn’t turn around and unemployment didn’t correct and we had worsening conditions rather than 50 years of prosperity then I might reconsider. If after Clinton raised taxes and the economy tanked then I might reconsider. If after Bush cut taxes, signed free trade agreements (Clinton too) deregulated the economy and Wall Street and there was NO SECOND GREAT DEPRESSION I Might be persuaded.

If pre-new deal history was not filled with massive levels of poverty, old people sent to poor farms and regular boom and bust cycles I might be persuaded. If the lukewarm progressive policies and the pitiful Obama stimulus had tanked the economy further rather then slightly improved it I might change my mind. If high marginal tax rates were NOT correlated with high GDP I might reconsider. If low marginal tax rates were NOT negatively correlated with poor economic growth I might think that vidyohs has a point.

If Ireland and Iceland and other countries that followed minimalist government oversight policies were NOT near default I might reconsider.

If the Danes and the Brits hadn’t list their empires after too long of periods of wealth consolidation I’d think you might have a point.

If the good governments of Canada and Denmark and Germany were crumbling instead of prospering I could be convinced.

If Libertopia’s were booming around the world and everyone was sharing in the prosperity and there weren’t 1.5 billion people living on 1 dollar a day and 1% of the people with 90% of the worlds worth THAN I WOULD SAY TO MYSELF VIDYOHS MIGHT BE RIGHT.

But none of that is the case… you guys ARE WRONG!

12 Methinks1776 March 13, 2011 at 9:52 pm

If you weren’t a TFM, people might GAF what the voices in your head are telling you.

Since YASAFI, you are merely the dancing monkey on this blog.

Dazzle us, monkey.

13 Andrew_M_Garland March 13, 2011 at 10:22 pm

To muirgeo,

You write “If after the New Deal, the GDP didn't turn around and unemployment didn't correct and we had worsening conditions rather than 50 years of prosperity then I might reconsider.”

So, you attribute 50 years of prosperity to the New Deal.

Is it possible that an intervening change in policy, after the New Deal, was responsible for much of that prosperity? If not possible, then what was the policy and mechanism that produced that prosperity? There should be a consistent record of that policy and its accomplishments. Why didn’t that prosperity continue? What policy change ended that 50 year accomplishment?

Possibly you believe a reintroduction of New Deal policies would promote another 50 years of prosperity. If so, what would that policy be, and what would the mechanism be that relates those policies to prosperity?

I seems that you have given these matters a good deal of thought. What are the details and references?