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Comment by bko | Hacker News Reader

It is important to note that practically no economist believes that free trade is not a net positive for all countries. In a recent survey of economists, two questions were asked, of which 95% of those surveyed either strongly agreed or agreed, while the remaining 5% were uncertain (none disagreed).

Question A: Freer trade improves productive efficiency and offers consumers better choices, and in the long run these gains are much larger than any effects on employment.

Question B: On average, citizens of the U.S. have been better off with the North American Free Trade Agreement than they would have been if the trade rules for the U.S., Canada and Mexico prior to NAFTA had remained in place.

I find it ironic that publications such as the NYT which often (rightfully IMO) put a lot of weight on the scientific consensus on issues such as climate change, are much more reactionary when it comes to issues such as free trade, relying more an personal antidotes and political rhetoric.

[0] http://www.igmchicago.org/igm-economic-experts-panel/poll-re...

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Economists? Are those the same people that make assertions based on observations & models lacking legitimate control groups?

Beyond the fact that social sciences are generally not scientific and highly subject to groupthink, I don't think they're wrong in the sense that comparative advantages exist in the Ricardian/Smith sense. However, if they dont account for currency manipulation, tax loopholes, and labour safety standards, I think those same economists lose a lot of credibility clinging to this fantasy that free trade as we know it is actually free.

Currency manipulation: Devaluing your currency such that you can sell goods artificially cheap to your competitors. In other words, Americans not paying enough. Also known as quantitive easing when US does it.

Tax loopholes: tax code

In regards to labor safety standards, every country has a right to impose their own standards based on cultural norms. There is no universal set of standards that every country can agree upon. Would you really want to give up the autonomy with some universal code? As countries become wealthier, they value health and safety to a greater extent and the law changes accordingly.

At no point in my statement did I echo Trumpism or political rhetoric. I was speaking generally about things that are rarely included in the "free trade is great" line of thought.

You are absolutely correct that every country has the right to set their laws and operate as they see fit. However, their trading partners have the right to consider the implications of those policies on their own objectives.

I have no interest in changing anything. My opinion is that when someone says "economists nearly universally agree on X", I generally think the best course of action is to lift up one's feet to avoid stepping in bullshit.

EDIT: Changed a word.

> My argument is that when someone says "economists nearly universally agree on X", I generally think the best course of action is to lift up one's feet to avoid stepping in bullshit.

That's not much of an argument, in fact it's not one at all. You don't like or trust economists, ok, that's an opinion, but it's not an argument.

To your second point, Joe Biden's former economic adviser wrote an op-ed in the Times [0] to this effect; that free trade is hardly free.

"… various countries with whom we compete have historically managed their currencies to gain a price advantage (i.e., they keep their currency low to boost their exports to us and suppress ours to them), and this has long been a source of our persistently large trade deficits."

[0] http://www.nytimes.com/2016/03/14/opinion/the-era-of-free-tr...

And as (pre-political) Nobel Laureate and NY Times columnist Paul Krugman wrote:

> Even more fundamentally, we should be able to teach students that imports, not exports, are the purpose of trade. That is, what a country gains from trade is the ability to import things it wants. Exports are not an objective in and of themselves: the need to export is a burden that a country must bear because its import suppliers are crass enough to demand payment. [0]

[0] http://bernard.pitzer.edu/~lyamane/poptrade.html

Are those the same people that make assertions based on observations & models lacking legitimate control groups?

You seem to be discussing climate scientists, actually. I guess the NYT shouldn't take their consensus seriously either?

However, if they dont account for currency manipulation, tax loopholes, and labour safety standards, I think those same economists lose a lot of credibility clinging to this fantasy that free trade as we know it is actually free.

Yes they do. Currency manipulation is well understood - it's a country giving things away to other countries. I don't know what you mean by "tax loopholes".

Labor safety standards are also well understood by economists. Here's one article on the topic: http://www.econlib.org/library/Enc/JobSafety.html

Economists are also well aware that trade is far from free. For example, Bryan Caplan is a famous advocate of increasing free trade in labor (via open borders). There is a general economic consensus that occupational licensing, as practiced in the US, is exceedingly harmful:

https://www.whitehouse.gov/sites/default/files/docs/licensin...

https://www.aei.org/publication/the-terrible-economic-burden...

https://www.nber.org/chapters/c0601.pdf

> You seem to be discussing climate scientists, actually.

I thought what he said applied to both climate scientists and economists. :-)

> I guess the NYT shouldn't take their consensus seriously either?

Exactly.

I'm sure that 9 out of 10 priests believe in the existence of God as well, however the consensus does not strengthen the fundamental assertion.

You cannot say the same about climate change scientists. I hope this example has made the difference between economics and science clear.

I hope this example has made the difference between economics and science clear. It definitively has not. Rather than making confusing analogies, why not just state explicitly the difference?

Let's entertain your assumption that a near perfect consensus among economists isn't a reliable hint about the realities of the economy. Why should I trust you or some other group of people over the economists, especially when the economists' arguments for free trade match my understanding and intuition?

You shouldn't, but you should embrace skepticism and realize that is not science.

If you trust individuals making assertions based on unscientific methods because you value each individual's aptitude in the subject, fine. That is expert opinion.

If you trust an unscientific group consensus based on credentials that in actuality are worth far less than society values, then you're being naive.

I certainly wouldn't argue against skepticism, even of claims supported by what you consider to be science. My point is that there is no other group of people that I'm aware of who are doing reserach on the economy that you do consider to be scientific.

Personally, I trust practitioners of economics more than economists.

The arguments for free trade are based in logic and reason.

How could someone be better off with fewer choices as to where and from whom to trade with?

On an ethical standpoint, how could making goods more expensive for everyone in order to benefit a few justifiable?

True, logic and reason are the basis of these arguments. That is not the same as saying there is only one set of logic and reasoning from which an opinion could be derived.

> How could someone be better off with fewer choices as to where and from whom to trade with?

Well, if you're talking about comparative advantage due to something simple (like a mineral or natural resource without considering externalities from extraction), I'd agree.

If you're talking about labor costs at $20/hour vs $0.20/hour, then one could argue that without replacement jobs at $20/hour for those being replaced by cheaper foreign workers, then the only effect will be depression of domestic wages to retain competitiveness. Now, that might be nominal over the long run, but based on the US experience, it doesn't seem like social welfare has improved from more choice in trading partners. Our trading partners, however, are doing much better. Wage growth domestically has been stagnant in real terms.

> On an ethical standpoint, how could making goods more expensive for everyone in order to benefit a few justifiable?

If those costs account for the complete impact, then it would not be justifiable to make goods more expensive. If there are externalities and systematic impacts, then some might argue barriers to free trade are justifiable.

Keep in mind that I don't completely disagree with free trade. I personally despise unions (though, mostly just the public sector unions; trade unions are mostly OK with me, though I support right to work) and I think they share blame in some circumstances... But, my personal opinions do not prevent me from seeing drawbacks to the free trade at scale. The concept is very cultish and that is a clue right there that we should all be looking at it more critically.

I would ask you to consider why labor costs are $20/hour in some countries and $0.20/hour in others. Many jobs being done in the US could easily be outsourced to these lower cost countries, but are not. If the $0.20/hour was equally as productive as $20/hour, the $0.20/hour would be bid up. High price tag of American labor is not expensive because its American, its expensive because its very productive. The reasons its more productive is complicated, but it must be or in a competitive marketplace, the employer who is able to use the lower cost labor would have significantly lower costs than competitors.

Also, on a moral front, why should the accident of geography determine how you can make a living? Arbitrarily denying jobs to Mexicans living in America would be undoubtably immoral. But somehow denying Mexicans jobs in Mexico in favor of more expensive American workers is applauded by politicians. Why shouldn't Mexicans have an opportunity to compete with Americans?

Lots of other things to consider beyond the folksy idea of worker productivity (which I would argue doesn't scale uniformly across job type).

If we include the full cost of labor in that $20, then it is cheaper in locations unhindered by, say, insurance requirements. That is a very big difference between US and 3rd world (China, for example) labor markets.

Insurance is just one issue. Requirements for safe working conditions are another. There are factories in China where dioxin levels are several orders of magnitude above US EPA limits. I've only been near them and I sometimes wonder how much my cancer likelihood has increased.

At no point have I made a moral argument. I don't care about that argument. What I'm amused by is how the free trade argument can be morphed into a social justice claim for foreign economies... What would Adam Smith think of that?

This isn't free trade.

Consumers used to buy air conditioners made by Carrier in the US. Now the exact same air conditioner made in Mexico can be bought.

If the price went down the same amount as the labor savings, you'd have a case. But the fact that the move is being pushed by shareholders means a large amount of the savings will go into their pockets.

Of course, if the Mexican workers had to deal with all our EPA and work regulations, had the same cost of living and taxes, it could be considered free trade. But they don't. It's the same old story of free trade and currency arbitrage for capital, but not for labor.

>lacking legitimate control groups?

There are legitimate control groups for this particular issue. There are states that do not adopt some semblance of free trade. Like Venezuela, for instance.

Also, how do you know they didn't account for those things when forming their opinions?

No, I'm sorry but you are wrong. Calling Venezuela a control for free trade in the United States is absurd. The number of variables that differ is insurmountable, from colonial history to Marxism. There are no controls in the study of economics like there are in pure sciences. That is why economic analysis is so inherently flawed.

Upvote. I think it was here someone said something like 'economists are the modern day clergy - paid by the rich to promote ideas that benefit the wealthy'.

I'll quote Nassim N. Taleb here :

With [...] macroeconomic analysis working worse than astrology, microeconomic papers wrong 40% of the time, the appointment of Bernanke who was less than clueless of the risks[...], people are perfectly entitled to rely on their own ancestral instinct and listen to their grandmothers with a better track record than these policymaking goons.

from https://www.facebook.com/nntaleb/posts/10153658794008375

There is excellent evidence that many countries became prosperous because of protectionism: UK, USA, S. Korea... See for instance the book from Ha-Joon Chang, "Kicking Away the Ladder" (a digest can be found here: http://www.paecon.net/PAEtexts/Chang1.htm )

The use of averages conveniently masks the fact that most people lose while a few fat cats grab all the gains. When a group of 1000 people earns collectively 1 million, it's of tremendous importance if everyone gets $1000 or if one gets 999001 and all the others 1$ instead. "Free trade agreements" generally looks precisely like the latter.

Every American benefits from imports. Not just a few. The value of consumer choice could not be overstated.

Besides, free trade puts competitive pressure on American corporations. The "fat cats" would love protectionist markets so they don't have to compete with foreign companies. This has led to much higher levels of service and more choices to all Americans.

It's hollowed out the middle, not just the middle class, but the spectrum of products available to buy. You used to be able to buy decent quality, medium price products that were made in America. They might not be as high-quality as the very best, but they were a lot better than the foreign-made WalMart/Harbor Freight-grade trash.

Now we've still got the high-end products, but everything else is almost indistinguishable cheap trash. The corporations don't really care whether they make something in Ohio or Shandong or Hanoi, as long as the differentials for labor and shipping come out positive. The biggest corporations are effectively post-national anyway.

I disagree that today's products are "cheap trash". Consider the automobile, today's entry level Camry is faster, safer and more comfortable than a 1957 Ferrari Testa Rossa. Air conditioning is in over 100 million homes [0], a significant increase from even the 1980s. TVs, telephones and appliances are the same story. The only reason that there is a perception of cheap things is that low cost items didn't exist in the past and were limited to the well off.

[0] https://www.eia.gov/consumption/residential/reports/2009/air...

<today's entry level Camry is faster, safer and more comfortable than a 1957 Ferrari Testa Rossa.>

... and is also the "Most American-made Car" based on domestic parts contents.

https://www.yahoo.com/autos/toyota-camry-tops-ford-f-150-as-...

I think we are starting to see the effects of competitive pressure with more and more millennials (that don't live in SF, NYC or DC) opting not to marry, have children, and declining to purchase durable goods and homes.

They're not having children (the non immigrants, at least) in DC, NY, and SF. I'd say most millenials are still paying off loans in their late 20s and 30s. No way can they afford a home in one of these cities on top of that.

> I find it ironic that publications such as the NYT which often (rightfully IMO) put a lot of weight on the scientific consensus on issues such as climate change, are much more reactionary when it comes to issues such as free trade, relying more an personal antidotes and political rhetoric.

I don't find it surprising at all, workers are real people out there. Economics is messy and when you're the one being marginalized you don't say "well at least on average the country is better off" when you can't feed your family. If climate change had as accurate a barometer as unemployment you would see radically different coverage.

Economics is messy, but the free trade and consumer choice are very basic tenant of economics which lie at the foundation of economics. This is not one of the messier, controversial aspects of econometric models.

I don't think this is accurate. Piketty throws a big wrench in any assumptions which rely on increases in the average being disseminated widely throughout the economy. Economists have mostly made this assumption before Piketty, and the field hasn't really caught up to accounting for this effect. Globalization seems to be one of the major drivers of capital's advantage vs. labor in capturing a disproportionate amount of growth of late.

So, wealth distribution is a controversial topic in economics right now that is highly relevant to the conclusions that can be drawn from econometric models that deal with global trade.

The equations say we're better off overall, but not what to do with the marginalized citizens. It's not surprising that they are both vocal and talked about in the NYT.

Imagine you get laid off and the rest of your former co-workers all got raises that together equal more than your former salary. Everyone is better off, but how does that help you feed your family?

Do you make the same argument for those displaced by technology? All those ad-execs replaced by ad-words. All those film developers replaced by digital cameras.

Surely society could make these machines illegal as well and make a few better off at the expense of many.

No, but those topics are also discussed widely in the NYT. For example, Rochester got absolutely whacked by Kodak's downfall:

http://www.nytimes.com/2015/03/22/business/at-kodak-clinging...

Whole industries being wiped out is a problem, doubly so when an industry is the majority of a region's GDP. It's not the end of the world, but it's certainly worthy of discussion.

Straw man argument. Technology increases have been around forever. The difference is now, capital gets to play wage arbitrage in places where labor can't roam to create an equilibrium. That is not free trade as defined.

Question A was about consumers and Question B was about "on average, citizens of the U.S."

Too bad this article, as it says right in the headline, is about workers and not consumers or the average U.S. citizen.

Nice try, though.

Therein lies the conundrum that we face: while the net is good for society, there will always be people who get burnt while rest of society benefits. You saw this at the advent of the automobile which left the horse and buggy industry in the dust and it is what we see now with "green" tech and fracking leaving oil and coal industries in the dust, not to mention the current hubbub of Uber/Airbnb vs Taxis/Hotels... Given a large enough N, there is bound to be a sizable subset[0] who will get hurt when society advances.

It's hard to argue about this though with people that is better because it comes off as economist being elitist and unconnected with the person you're in fact hurting. The best corollary I can imagine for me is if there was an influx of cheap PhD labor for doing science and putting me out of a job or forcing me to take >20K per year. But would it be better for science? Of course! But it would suck for me...

And I'm not sure of anything that could solve this problem. This is just the reality of the economics effects of any advancement.

[0] Small subset normalized to the total N, but a large subset compared to say, the number of fingers on one's hands.

Here's your [0].

https://research.stlouisfed.org/fred2/graph/?g=3Q3Y

I think this is a more representative graph[0]. I'm assuming that what you linked includes non-factory workers. [0] is specifically "Production and Nonsupervisory Employees" in Manufacturing. This is in no way weighted by the population at the time or the labor force at that time, but let's look at it this way. 8.5M around 2014 was about 5% of the total labor force in that year the US. I suppose 1 in 20 is a number of people if you're just looking at that one graph.

Here[1] is an informative graph (it'd be better if it were normalized to the total). Manufacturing is a major piece still, but the total is growing as manufacturing is somewhat changing little (overall absolute increase by [0] but might looks flat compared to growth in other fields, shrinking as a fraction of the total private industry workforce per [1]) with what looks like increases in other fields, specifically in the "education and health services" part on the bottom of the graph.

[0] https://research.stlouisfed.org/fred2/series/CES3000000006

[1] be it noted that this graphic claims to come from the same source as [0]

https://en.wikipedia.org/wiki/Economy_of_the_United_States#/...

We have more employed people than ever, yet we have regressed in terms of %of population between ages 25-54 participating in the workforce. We have lost 4,000,000 manufacturing jobs in 15 years, despite wages languishing (in real dollars) and productivity increasing.

We have gained jobs in health -- this is to be expected with the aging boomer population.

We have gained jobs in transportation/logistics -- this is to be expected given all the stuff made in Chinese factories we buy from Amazon. Very soon these jobs will be automated, trucks will drive themselves and warehouses will stock themselves.

Worshippers at the altar of Free Market Economics (A Real Science) can wave around normalized, adjusted graphs all they want but if society doesn't figure out what to do with the people we graduate from high schools and colleges or layoff to pad quarterly earnings, we are going to have some serious issues on our hands in the next decade -- if not sooner.

Only because we have more people, period, than ever. We are actually closer to our lowest-ever percentage employed than our highest ever[0] since 1950.

And our workforce participation rate (i.e. where you don't ignore longstanding unemployed to dishonestly suppress reported unemployment stats) is still well below even the worst of Bush 43's tenure[1].

[0] http://www.tradingeconomics.com/united-states/employed-perso...

[1] http://www.tradingeconomics.com/united-states/labor-force-pa...

But economists aren't scientists. Most are employed to support government ideologies. And these IGM economists are handpicked by some committee.

For example, they're supposedly "geographically diverse". That means: Berkeley, Chicago, Harvard, MIT, Princeton, Stanford, Yale.

Where's Dean Baker, one of the few who predicted the housing bubble crash & impact of 2007-2008? Stiglitz? Pettifor? Varoufakis? Piketty? Do they not have sufficiently "impeccable qualifications" even by bureaucratic credentialist standards?

Pseudoscience and lying with statistics is the Economist Way. Consensus by a bunch of handpicked suit-wearing economists is nothing like the scientific consensus on global warming. "Globalization" and "free trade" are doublespeak; you have to prefix them with "corporate", like corporate globalization.

I don't understand your argument. This is an instance of the vast majority of scientists disagreeing with the policies of the vast majority of national governments.

If an engineer or physicist says they believe something about their field (not at the cutting edge) I tend to believe that they are right but economists, however smart and honest they might be, don't have the luxury of performing experiments so many of their pronouncements are either mere opinions or are arguments from first principles unsullied by attempts at verification.

I'm confused by your argument - you're right that most economists would agree that free trade provides holistic benefits, but most would also note that it imposes costs - and that the benefits are often widely dispersed, but the costs can be very concentrated. Is it wrong to write an article talking about the costs?

Its fine to mention the cost to those small groups affected negatively. But just be clear that those groups are really special interests and having a policy to cater to those special interests at the, albeit small, cost to many leads to a lot of problems.

Economists would also almost unanimously agree that trade creates winners and losers, within a given country. TANSTAAFL

Often trade deals are sold with "some people will lose, more people will win, we can take some of the gains from the winners to compensate the losers and everyone wins!" The second half of that statement doesn't happen, largely because it's difficult to come up with effective programs that share the gains of the winners with the losers.

On the whole I'm a free trade supporter. It's unsurprising, however, that the losers will get pissed off and start flocking to demagogues like Trump. That risk is concerning enough that I've decreased my support of free trade, for reasons of maintaining a healthy civic culture.

I sort of agree, but "free trade" and "anthropogenic climate change" are very different kinds of things.

Climate change is not a policy whereas free trade is.

A better analogy would be between "free trade" and "carbon taxes" or "free trade" and "renewable subsidies."

Polling "experts" on policy issues is a different beast than polling them on scienfitific issues.

That's because economics is a social study, not a science.

>It is important to note that practically no economist believes that free trade is not a net positive for all countries.

Yes, on average it's a net positive. Of course, if you average +20 for capital with -15 for labor, you get +5, a "net positive" for "society overall", with the slight unexamined problem that capital and labor increasingly don't overlap.

Economists have always said that some state action would be necessary to compensate the sections of the working class harmed by competition with cheaper overseas labor. The state, being run by ideologues trying to strengthen capital over labor, never took any of the corrective actions recommended by trade economists.

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