Tag: protectionism

Apr 04 2009

G-20 Faith in Free Trade Remains Unbroken

 

The absolutism of the key tenets of neo-liberalism: privatisation, deregulation, balanced budgets have all been rejected by all but the most dogmatic. Apart from one that is: the primacy of free trade.

So writes Noreena Hertz, economist and author, in her op-ed at Spiegel Online: “Is Protectionism Really All that Bad?”

Despite the nationalization of banks, calls for increased regulation, and massive trillion dollar deficits amassed, the status of free trade remains “basically sacrosanct”, she writes. “‘Free trade is good’ continues to be presented as a totemic truth, ring-fenced from debate or interrogation.”

An examination of the G-20 communiqué (pdf) from this week’s meeting seems to confirm Hertz’s assertion.

The G-20 leaders stated: “We believe that the only sure foundation for sustainable globalisation and rising prosperity for all is an open world economy based on market principles, effective regulation, and strong global institutions.”

Nov 24 2008

The U.S. Economy in Decline: What Stagflation Tells Us

(Cross-posted from Daily Kos)

Our economic situation has been all over the news. Banks are failing, credit is contracting, the auto industry is crying for a bailout. Clearly, the U.S. economy has gotten derailed, and we’re now faced with the unenviable task of getting it back on track. The trouble is, we don’t know which track is the right track.

Or do we?

Suppose there exists a valid interpretation of economic forces and outcomes, one that explains our current situation, yet one that no one will acknowledge, even to knock down.

About 12 years ago I picked up Cities and the Wealth of Nations: Principles of Economic Life by Jane Jacobs (better known as the author of The Death and Life of Great American Cities) at a used bookstore in upstate New York. Jacobs wrote this book in 1983, in response the emergence of stagflation. As an informed and educated layperson, she examined economic history with a critical eye and an urbanist’s heart, looking for the laws that explained what was going on — which the economic theories of the time did not.  

Jun 14 2008

On Trade

You’re talking history, right? I’m talking now. Because down here, it’s still “Who’s your old man?” ‘Til you got kids of your own and then it’s, “Who’s your son?” But after the horror movie I seen today… Robots! Piers full of robots! My kid’ll be lucky if he’s even punchin’ numbers five years from now. And while it don’t mean shit to me that I can’t take my steak knives to Dibiago and Sons, it breaks my fucking heart that there’s no future for the Sobotkas on the waterfront!

~Frank Sobotka, The Wire

One of my favorite concepts in economics is the Theory of the Second Best.  While it can be a bit technical, in summary, the theory is that if, for whatever reason, the required conditions for the optimal outcome are impossible to achieve, the second best outcome may require deviating from the conditions which were required to make the optimal outcome possible.  To use an analogy, most Democrats preferred ranking of the last three candidates for President was Obama, Clinton, McCain.  But one of the required steps to the optimal outcome of Obama’s election was his nomination, which made the second best outcome impossible.

The second-best problem is one which has particular resonance for me as a libertarian.  Many libertarians allied themselves for years with the Republican party, to try and establish the required conditions for a libertarian state.  However, the outcome of a libertarian state is further away than ever; responsibly, a libertarian must consider which of the desired conditions for our optimal outcome are negotiable in order for us to achieve our second-best outcome.  Of course, this is hardly only true for libertarians.