What to Expect When You're Free Trading

by Don Boudreaux on January 16, 2008

in Trade

The always-insightful Steve Landsburg has this excellent and timely op-ed in today’s New York Times.  Although access to the NYT‘s editorial page is now free, I paste Steve’s important op-ed below in its entirety.  Read, reflect, learn.

What to Expect When You’re Free Trading

By STEVEN E. LANDSBURG

 

Rochester

IN the days before Tuesday’s Republican presidential primary in
Michigan, Mitt Romney and John McCain battled over what the government
owes to workers who lose their jobs because of the foreign competition
unleashed by free trade. Their rhetoric differed — Mr. Romney said he
would “fight for every single job,” while Mr. McCain said some jobs
“are not coming back” — but their proposed policies were remarkably
similar: educate and retrain the workers for new jobs.

All economists know that when American jobs are outsourced,
Americans as a group are net winners. What we lose through lower wages
is more than offset by what we gain through lower prices. In other
words, the winners can more than afford to compensate the losers. Does
that mean they ought to? Does it create a moral mandate for the
taxpayer-subsidized retraining programs proposed by Mr. McCain and Mr.
Romney?

Um, no. Even if you’ve just lost your job, there’s something
fundamentally churlish about blaming the very phenomenon that’s
elevated you above the subsistence level since the day you were born.
If the world owes you compensation for enduring the downside of trade,
what do you owe the world for enjoying the upside?

I doubt there’s a human being on earth who hasn’t benefited from the
opportunity to trade freely with his neighbors. Imagine what your life
would be like if you had to grow your own food, make your own clothes
and rely on your grandmother’s home remedies for health care. Access to
a trained physician might reduce the demand for grandma’s home
remedies, but — especially at her age — she’s still got plenty of
reason to be thankful for having a doctor.

Some people suggest, however, that it makes sense to isolate the
moral effects of a single new trading opportunity or free trade
agreement. Surely we have fellow citizens who are hurt by those
agreements, at least in the limited sense that they’d be better off in
a world where trade flourishes, except in this one instance. What do we
owe those fellow citizens?

One way to think about that is to ask what your moral instincts tell
you in analogous situations. Suppose, after years of buying shampoo at
your local pharmacy, you discover you can order the same shampoo for
less money on the Web. Do you have an obligation to compensate your
pharmacist? If you move to a cheaper apartment, should you compensate
your landlord? When you eat at McDonald’s, should you compensate the
owners of the diner next door? Public policy should not be designed to
advance moral instincts that we all reject every day of our lives.

In what morally relevant way, then, might displaced workers differ
from displaced pharmacists or displaced landlords? You might argue that
pharmacists and landlords have always faced cutthroat competition and
therefore knew what they were getting into, while decades of tariffs
and quotas have led manufacturing workers to expect a modicum of
protection. That expectation led them to develop certain skills, and
now it’s unfair to pull the rug out from under them.

Once again, that argument does not mesh with our everyday instincts.
For many decades, schoolyard bullying has been a profitable occupation.
All across America, bullies have built up skills so they can take
advantage of that opportunity. If we toughen the rules to make bullying
unprofitable, must we compensate the bullies?

Bullying and protectionism have a lot in common. They both use force
(either directly or through the power of the law) to enrich someone
else at your involuntary expense. If you’re forced to pay $20 an hour
to an American for goods you could have bought from a Mexican for $5 an
hour, you’re being extorted. When a free trade agreement allows you to
buy from the Mexican after all, rejoice in your liberation — even if
Mr. McCain, Mr. Romney and the rest of the presidential candidates
don’t want you to.


Steven E.
Landsburg, a professor of economics at the University of Rochester, is
the author, most recently, of “More Sex is Safer Sex: The
Unconventional Wisdom of Economics.”

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Chris Meisenzahl January 16, 2008 at 8:02 am

Good stuff, and from a fellow Rochesterian! ;-)

Adam January 16, 2008 at 8:29 am

The only intelligent argument I've heard for government aid for people who lost their jobs due to free trade (at least, those who see it that way) is that it helps maintain public support for liberal trade policies. It's cynical and comes with the usual caveats about trusting the government to do it right, but in my opinion it's a reasonable point.

True_Liberal January 16, 2008 at 8:43 am

I can also make the parallel point that my home, bought 20 years ago, inflated 2x in market value in the first 18 years.

Post-ARM's, romping-then-delating market demand, it has come down in value 20% in two years.

Have I lost money? Only in the sense that my real estate taxes went up and stayed there. I did nothing to earn that inflated market value of two years ago, and yet I'm certainly richer than when I bought it.

tw January 16, 2008 at 8:43 am

Great piece on explaining free trade…and, by the way, loved him on "Barney Miller" too!

Martin Brock January 16, 2008 at 9:23 am

The argument for publicly financed education for adults when economic change makes their skills obsolete is the same argument for publicly financed education for children. Regardless of the merits of this argument, Landburg's moralizing is every bit as political as Romney's and McCain's. It's all so forceful! Isn't that dreadful? Like all property rights aren't forcible. Like market economies aren't a dizzyingly complex network of competing forces with statutory forces throughout.

I don't care at all about the nauseatingly simplistic moralizing. It's a diversion. How effective are the retraining programs? If they're ineffective, do some actual economic work and provide the evidence. Unlike the vague moralizing, this work might even be effective at changing the policies.

Want to rename the finance of training programs so Landsburg and his political partisans can feel better about it? Call it "credit". Extend this "credit" to corporations rather than the displaced workers. Allow the corporations to profit by their reorganization of resources or to declare bankruptcy if the new organization never becomes profitable. That's all perfectly fine with me. Just spare me the nausea.

Even extend this credit to some newly minted MBAs from Rochester, for what it's worth. Or extend it to a few academic economists if creditors buy their proposals … but don't hold your breath. They're too busy applying for their next government grant.

jorod January 16, 2008 at 9:36 am

Alan Greenspan says the employment problems are basically the result of a failed elementary and secondary school system. Workers lack the basic skills of reading and writing needed to acquire new job skills. Vouchers anyone?

Chris January 16, 2008 at 9:38 am

There is a difference between compensating a diner when it goes out of business and compensating (through retraining) an employee when he loses his job: I'm not concerned about being mugged at night by a diner, strung out on alcohol and drugs after going for months without a new job. There's the possibility I might be mugged by a bankrupt diner owner, but there are a lot fewer of those.

The big problem with retraining programs is that the government is really bad at picking what programs should be offered. A State might say "we really want to attract Biomed companies" and offer all sorts of Biomed training to displaced employees, luring them with the hope of future jobs. But, when the Biomed companies don't come to that state, not only do those people not have jobs, but it's now harder to get the jobs that do exist.

muirgeo January 16, 2008 at 9:40 am

"All economists know that when American jobs are outsourced, Americans as a group are net winners. What we lose through lower wages is more than offset by what we gain through lower prices. In other words, the winners can more than afford to compensate the losers. Does that mean they ought to? Does it create a moral mandate for the taxpayer-subsidized retraining programs proposed by Mr. McCain and Mr. Romney?"

First, the evidence is not clear that all Americans benefit equally from free trade. Lower prices don't help much if you haven't a job. Free trade is also a big factor in distribution of wealth upwards.

Second, the economy exist to support its citizens and the citizens DO NOT exist to support the economy. So sure the country should support its citizens by helping them retrain.

Quite simply if the so-called "winners" shouldn't have to help the "losers" why should we have any corporate laws or grant corporate charters? Why should we have a patent office? Why should are courts waste time and peoples money enforcing contracts?
The same reason we should have corporate charters, patent offices and courts is the same reason we should pay to retrain our citizens is it not? Why would some one support one and not the other?

Dr Boudreaux do you understand that the winners in our country are ultimately the winners because we fought a revolution over "cheaper tea" that we did not want to buy?

Eric Hanneken January 16, 2008 at 9:48 am

Martin Brock,

I don't see how one can dispense with moralizing when pondering whether the government should or should not transfer money from taxpayers to fired workers. Yes, if you assume it's unjust for some to benefit from a market change when others suffer, then it's important to know whether government-sponsored retraining works, but the point of Steven Landsburg's essay was to question that assumption.

jp January 16, 2008 at 9:51 am

Based on discussions with "average Americans" over the years, I'm inclined to agree with Adam, above. Simply getting people to understand that free trade is good is hard enough, even without also urging that the "losers" aren't entitled to compensation.

Randy January 16, 2008 at 9:54 am

Re; "…the economy exist to support its citizens and the citizens DO NOT exist to support the economy."

The second part is true, the first part is false. The "economy" is just the result of a multitude of individuals acting in what they believe to be their own best interests.

Floccina January 16, 2008 at 9:55 am

Chris wrote:
I'm not concerned about being mugged at night by a diner, strung out on alcohol and drugs after going for months without a new job.

Homicides fell in the 1930s and rose sharply in the mid 1960s. Highly paid profesional atheletes commit crime at a high rate. Their seems to be little conection between higher wages and crime.

Floccina January 16, 2008 at 10:04 am

Also if GM were run as a charty for its workers it would move all the jobs to the lowest wage countries

The Albatross January 16, 2008 at 10:09 am

Fortunately, the only data I have seen on government financed worker retraining lost to trade, etc, etc. are the following:
1. Government programs do exist to provide sed services.
2. A very small percentage of those displaced take advantage of them, and nearly all of the money–if I remember right about 90 percent goes unclaimed.

The reason appears to be that most displaced workers find new jobs rather quickly in much the same way that those who used to make horse whips and 8-track did before them.

Lee Kelly January 16, 2008 at 10:10 am

First, the evidence is not clear that all Americans benefit equally from free trade. Lower prices don't help much if you haven't a job.

Who said anything about all Americans benefitting "equally"? That, muirgeo, is called a strawman. It does, however, betray the standards which you hold the free market to, a standard which nobody has ever claimed it would satisfy.

Moreover, you're simply wrong on the second point. If prices are lower then people have more money to spend on other goods and services, thus creating more jobs. So yes, lower prices really do help even if you do not have a job, since they stimulate job creation.

Second, the economy exist to support its citizens and the citizens DO NOT exist to support the economy. So sure the country should support its citizens by helping them retrain.

No, muirgeo. The economy does not exist to support its citizens, and neither do the citezens exist to support the economy. You talk of "the economy" as though it is some authority-entity, provisioning and restricting access to goods and services at its whim. In fact you talk about the economy as though it is the government. Revealing, eh?

It reminds me of the "ask not what your country can do for you, but what you can do for your country" mindset. How about neither, ask your country to leave you in peace to pursue your own interests.

Andy January 16, 2008 at 10:12 am

I thought it was a great piece, I would only quibble with the sleight of hand that seems to equate a manufacturing worker with bullies. The worker may have no idea of what, if any, protectionist policies are allowing his job to survive.

Martin Brock January 16, 2008 at 10:24 am

Eric: "I don't see how one can dispense with moralizing when pondering whether the government should or should not transfer money from taxpayers to fired workers."

Landsburg obviously agrees with you, but he could track workers experiencing some retraining program and compare them to workers who don't. This actual economic science might be instructive.

Eric: "Yes, if you assume it's unjust for some to benefit from a market change when others suffer, then it's important to know whether government-sponsored retraining works, but the point of Steven Landsburg's essay was to question that assumption."

"Just" is a word essentially equivalent to "lawful". Laws are just because the justices say they are. Taxes are just. Retraining programs are just. I won't to know if they're any use to anyone. That's what economists are paid to find out.

Concentration camps are just too. They were at one time anyway. For the moment, in my neck of the woods, they're unjust again.

No, Landsburg hasn't a thing to say about whether retraining programs work. I've just reread the piece quoted, and it's not there. He does engage in meaningless collectivism like "Americans as a group are net winners". He does peddle gross overgeneralizations like "all economists know", as though all economists agree on where the sun sets. He deals in emotion laden, straw man arguments against "school yard bullies". The men who'll fine, jail or shoot me for violating his property rights aren't bullies, because … well … he doesn't say so, but the forcible proprieties he doesn't like are all about bullying, because he does say so. Apparently, the man fancies himself one of the justices. Why not? He's obviously a politician at heart.

John January 16, 2008 at 10:32 am

If it is wrong for a citizen to steal directly from another, it is equally wrong to steal by using government as a middleman.

Socialism is founded on the taking of the property of some without their consent for the alleged benefit of others, and Americans are increasingly ignoring or even supporting socialism/stealing in one or more of its numerous forms.

True, most governmental taking of property without consent is legalized, but legality is not the same as morality. Legalization of theft simply nullifies the legalized penalties against theft.

As a note: our current Democracy where the collective determine how to spend the “booty” is very similar to lynch mob where the majority rules. Be careful those who are supporting MOB-rule, such a system no one remains the “in-group” forever.

Eric Hanneken January 16, 2008 at 10:41 am

"Just" is a word essentially equivalent to "lawful". Laws are just because the justices say they are.

That is a non-standard definition of "just," and it has nothing to do with my usage of the word. If your problem with Steven Landsburg's argument is that you think ethics is a bogus subject, you should just say so.

The Albatross January 16, 2008 at 10:46 am

"Retraining programs are just. I won't to know if they're any use to anyone. That's what economists are paid to find out."

Martin Brock

To answer your question generally no. however, I would consider them of some use if they were to shutup those trying to undermine my God-given right to trade with others. Unfortunately, they appear to have failed in this respect as well.

Lee Kelly January 16, 2008 at 11:04 am

Just spare me the nausea.

The moral principles exemplified in the piece seem perfectly reasonable to me, and reflect the kind of society I would like to live in i.e. [i]civil[/i] society, where people do not coerce others to do their bidding. A society which does not abide to these principles is inviting strife, which would quickly ruin any supposed economic benefits. The study of ethics and economics is tightly interwoven, so much as to be inseperable.

Of course, if you find that the "simplistic moralising" brings nausea then I hope you forever remain nauseated.

Martin Brock January 16, 2008 at 11:08 am

Eric: "That is a non-standard definition of "just," and it has nothing to do with my usage of the word. If your problem with Steven Landsburg's argument is that you think ethics is a bogus subject, you should just say so."

You've apparently never stood before a justice. You may use words however you like, like everyone else, of course, but if I want to know what forcible "justice" means, I'd better ask my lawyer rather than relying on you. Since Landsburg's argument is all about forcible justice, the statesmen's usage is relevant.

Ethics is a perfectly legitimate subject. It's not economics, but it's a legitimate subject. The problem with Landsburg's ethical argument is that its laced with hypocrisy, emotional rhetoric and poor logic. I'm a utilitarian myself. I prefer a well reasoned, utilitarian argument against retraining programs.

asflk; January 16, 2008 at 11:17 am

Brock, the article isn't about the efficacy of these programs. It's about the merits of the moral case for them. Why must he worry about the efficacy of such a program when he rejects the justification for their existence?

Martin Brock January 16, 2008 at 11:18 am

Lee: "The moral principles exemplified in the piece seem perfectly reasonable to me, …"

That's because he's preaching to a choir, and you're in the choir.

Lee: "… and reflect the kind of society I would like to live in i.e. [i]civil[/i] society, where people do not coerce others to do their bidding."

Right. You don't want your property rights enforced. That would be terribly uncivil. You don't want the interest on your Treasury notes or the rents on your real estate. That's all so forcible.

Lee: "A society which does not abide to these principles is inviting strife, which would quickly ruin any supposed economic benefits. The study of ethics and economics is tightly interwoven, so much as to be inseperable."

And your forcible proprieties are the economically ethical ones. Isn't that special? The other choir is always singing the praises of unethical, uncivil, unjust, ignoble, improper proprieties. I'm glad I have you to clear it all up for me.

Lee: "Of course, if you find that the "simplistic moralising" brings nausea then I hope you forever remain nauseated."

No doubt, you do. You want me forcibly incarcerated for defying your assertion of what's proper too, just like the other advocates of forcible propriety. It's the hypocrisy that nauseates me.

Martin Brock January 16, 2008 at 11:21 am

asflk: "Brock, the article isn't about the efficacy of these programs. It's about the merits of the moral case for them."

Gee. That thought never occured to me.

asflk: "Why must he worry about the efficacy of such a program when he rejects the justification for their existence?"

Because he pretends to be an economist, so it's his job.

Sally Struthers January 16, 2008 at 11:25 am

Doesn't a de facto retraining programme exist to the extent that education loan interest and tuition are both tax deductible in the states. I would be all for moving education interest and tuition from a deduction to a tax credit with carryforward, but I don't think that's what is debated on the table currently. The questions are really who is doing the retraining and in what, and I'm not sure the government is in a good position to make that distinction for individual cases. However, a tax credit that results in the newly unemployed charting out a new course for themselves that requires a quid pro quo to get preferences from the government, that would at least be a more efficient allocation of resources than trying to pick winners.

mark seery January 16, 2008 at 11:27 am

This is about patriotism and nationhood. It is not much more complicated than that, IMO.

When politicians make such promises they are appealing to the sentiments of nationhood – we are in this together, we are one team.

Americans perfectly understand the benefits of free trade. They have no problems with free trade between CA and NY or MI and TX, and when jobs get relocated from one state to another you don't see politicians flooding the airwaves ringing (sp?) their hands about how terrible it is (or I suspect most of the TV commentators pushing for protectionism either).

If free trade is deemed ok by society between towns and between states, but not between countries, then the logical conclusion is that the issue is not free trade, the issue is nationhood and the dynamics of federal politics.

Austin January 16, 2008 at 11:28 am

To some above points:

1 – If I recall correctly, crime is not necessarily correlated with salaries beyond certain levels, but it is correlated strongly with a complete lack of one.

2 – The argument that the real purpose of job retraining is to prevent mass impoverishment and economic displacement (resulting in unrest, crime, and socialism) is probably valid, from where I see it.

3 – Frictional costs of changing jobs can be high; it is a non-trivial exercise to extricate a family of two parents and three children, none of them well-educated, from one area where a job market is contracting, and deliver them to another area where the job market is expanding, then find them a job based on their previous skills (or subsequently spend quite some time retraining them). This is a non-trivial issue that contributes to #2 above.

To me, the primary purpose of job retraining (assuming it is done in even a vaguely meaningful way) and subsequent employment is preventing civil unrest and preventing things like riots, crime, and socialism.

asflk; January 16, 2008 at 11:30 am

So economists aren't allowed to discuss morality? In my view that's a large part of what they do, since economics is de facto half science, half politics. I'm interested in the logical extensions of this. A criminologist writing an article about a type of crime he finds morally repugnant must describe the techniques and efficacy of said crime?

Reductio aside, one can write whatever one wants in an opinion piece. I might disagree with someone like Krugman's editorializing, but I don't reject his right to express his opinion on the morality of a technical subject just because he's an economist.

Martin Brock January 16, 2008 at 11:31 am

Andy: "The worker may have no idea of what, if any, protectionist policies are allowing his job to survive."

He doesn't know what, if any, protectionist policies cost his job either. Must we simply assume that these policies couldn't possibly exist? Suppose there's a statutory monopoly on whatever the worker produces, and suppose someone sells this monopoly to another collective of workers. That's trade. How free is it?

Randy January 16, 2008 at 11:38 am

1. The state is profit driven.
2. The state has an interest in free trade because that is where the most profitable opportunities are.
3. The state has an interest in training or retraining of workers for the same reason that any other profit driven organization does.
4. The state has an additional interest in training or retraining because, for whatever reason, it has taken an interest in maintaining the welfare of even those who are unproductive.

Martin Brock January 16, 2008 at 11:39 am

asflk: "So economists aren't allowed to discuss morality?"

Obviously, they are.

aslfk: "In my view that's a large part of what they do, since economics is de facto half science, half politics."

No disagreement here.

asflk: "I'm interested in the logical extensions of this. A criminologist writing an article about a type of crime he finds morally repugnant must describe the techniques and efficacy of said crime?"

I'm not sure what a "criminologist" does for a living, really. If he constructs incredibly ridiculous arguments like "crime is unethical because it involves force", while advocating the enforcement of laws against crime, he'll attract some ridicule.

aslfk: "Reductio aside, one can write whatever one wants in an opinion piece. I might disagree with someone like Krugman's editorializing, but I don't reject his right to express his opinion on the morality of a technical subject just because he's an economist."

You haven't reduced anything to absurdity here. I don't oppose law enforcement. I'm not going on about how terrible force is in the name of defending force.

His right to express himself is unassailable. His argument is nonsense. That's the point.

Martin Brock January 16, 2008 at 11:43 am

Randy: "1. The state is profit driven. …"

All true. Like I said, we can simply call it "credit" if the proprietarians feel better this way. That's fine with me. I don't want to hurt their feelings.

asflk; January 16, 2008 at 11:54 am

Ha, I know you're not rejecting his freedom of speech, just saying because he's an economist it's somehow improper to discuss a policy issue from a solely moral point of view. To the extent you address his argument (the bully analogy is undoubtedly poor) and not the legitimacy of an economist expressing his moral opinion, there's no disagreement and no reason to continue this nonsense.

muirgeo January 16, 2008 at 12:00 pm

In fact you talk about the economy as though it is the government. Revealing, eh?

It reminds me of the "ask not what your country can do for you, but what you can do for your country" mindset. How about neither, ask your country to leave you in peace to pursue your own interests.

Posted by: Lee Kelly

If you're gonna take that position it's required of you to answer all that was in my post….such as:

"Quite simply if the so-called "winners" shouldn't have to help the "losers" why should we have any corporate laws or grant corporate charters? Why should we have a patent office? Why should are courts waste time and peoples money enforcing contracts?

Do you support getting rid of corporate law? That's a creation of government is it not? Why have it?

See we aren't an economy. We are a country that governs how our economy runs. The rules we make DO matter how effiecient our economy is and how "fair" it is.

Lee Kelly January 16, 2008 at 12:04 pm

That's because he's preaching to a choir, and you're in the choir.

In other words, I find his argument reasonable because I happened to agree with it already. Facinating revelation, what is your next trick?

Right. You don't want your property rights enforced. That would be terribly uncivil. You don't want the interest on your Treasury notes or the rents on your real estate. That's all so forcible.

So any attempt to prevent coercion is itself coercive, and thus self-contradictory? I think you have missed the point somewhat, and sneakily redefined "coercion" in the process.

And your forcible proprieties are the economically ethical ones. Isn't that special? The other choir is always singing the praises of unethical, uncivil, unjust, ignoble, improper proprieties. I'm glad I have you to clear it all up for me.

You do realise that this is not actually a counterargument, don't you? It is quite possible that those laws which promote economic prosperity tend to also be those which are morally right. It is indeed special, but no coincidence.

No doubt, you do. You want me forcibly incarcerated for defying your assertion of what's proper too, just like the other advocates of forcible propriety. It's the hypocrisy that nauseates me.

I am reminded of muirgeo's question: should a minority be able to force liberty on a majority? or should one person be able to force liberty on another? The answer, of course, is yes. The alternative is to liberty is oppression, and to say otherwise is to say that nobody has the right to fight oppression.

I am not oppressing you by asking, and perhaps forcing, you to respect liberty. To not stop you, would be to consign myself to real oppression.

Randy January 16, 2008 at 12:20 pm

Muirgeo,

"We are a country that governs how our economy runs. The rules we make DO matter how effiecient our economy is and how "fair" it is."

The rules are incorporated in the decisions that individuals make. But it is the actual decisions that make up the economy, and the decisions are often a matter of working around the rules rather than in accordance with them. So you're right that the rules do effect the economy, but it is the actual decisions that define what fair is, and these may differ greatly from the intent of the rules.

Floccina January 16, 2008 at 12:21 pm

Austin wrote:

1 – If I recall correctly, crime is not necessarily correlated with salaries beyond certain levels, but it is correlated strongly with a complete lack of one.

2 – The argument that the real purpose of job retraining is to prevent mass impoverishment and economic displacement (resulting in unrest, crime, and socialism) is probably valid, from where I see it.

1. Few would argue that free trade reduces employment overall. Now the trauma of losing a job…

2. IMHO Middleclass income may fall but they do not become poor. The old saying, “I am not poor I just do not have money”. I do not worry about middleclass people they are capable of taking care of themselves. But even to me this argument seems valid at least to debate and think about.

Martin Brock January 16, 2008 at 12:42 pm

In other words, I find his argument reasonable because I happened to agree with it already. Facinating revelation, what is your next trick?

No trick. You've only repeated my point. If you think that "force is unfair so we should enforce fairness" is a reasonable argument, that's entirely up to you.

So any attempt to prevent coercion is itself coercive, and thus self-contradictory?

No. That's not my nonsense. I have no problem with coercion. I favor some coercive measures and oppose others.

I think you have missed the point somewhat, and sneakily redefined "coercion" in the process.

No. I define "coercion" as the forcible imposition of one man's will on another. How do you define it? I may not force my way into your house and help myself to your television, because you may forcibly prevent me, and I think that's fine. In this scenario, my force is unjust, and yours is just, and I accept this "justice". I don't therefore accept anything and everything labeled "just", "right", "proper" or "noble". I certainly don't call any force "not force", because I respect Orwell.

You do realise that this is not actually a counterargument, don't you?

It was intended as sarcasm. If you don't like sarcasm, that's your prerogative.

It is quite possible that those laws which promote economic prosperity tend to also be those which are morally right. It is indeed special, but no coincidence.

I like laws promoting economic prosperity. I don't see a word in Landsburg's piece suggesting that retraining programs don't promote economic prosperity. That's exactly how I'd like him to argue.

I am reminded of muirgeo's question: should a minority be able to force liberty on a majority? or should one person be able to force liberty on another? The answer, of course, is yes.

This answer obviously begs the question: what's "liberty"? Clearly, the word cannot denote the absence of force in this context.

The alternative is to liberty is oppression, and to say otherwise is to say that nobody has the right to fight oppression.

Right. I'm against oppression too, and I love babies and my mom's apple pie.

Thanks for the blockquote.

The Albatross January 16, 2008 at 1:00 pm

Ok, let's skirt issues of justice and morality (although I believe that economics is simply and extension of moral science–see Adam Smith). Say, despite constituional authorization, training programs are authorized. Does the government have the "right" knowledge to pick the right training? The Germans had some experience with this after re-unification where the government built factories and trained workers to build giant zepplins (not kidding–sadly). So what if government pick a "clear" winner like IT, then the questions comes as to what IT workers will be trained in–will the future be basic, HTML, Java, web browsers? What about government avoiding a clear "loser" like steel or coal? These industries have seen a resurgence of late, whould the government have guessed right here? Again probably not, and this is before we get into the various public choice issues–how will firms influence what training is available? Etc., etc., etc. So why we delight in NPR stories about laid-off Erma learning to use the new-fangled computer thing, the overall effectiveness of government worker training problems is seriously in doubt–in both theory and practice.

John V January 16, 2008 at 1:12 pm

See Dani Rodrik reaction here.

and the Economist's reaction to both Landsburg and Rodrik here.

Martin Brock January 16, 2008 at 1:14 pm

Ha, I know you're not rejecting his freedom of speech, just saying because he's an economist it's somehow improper to discuss a policy issue from a solely moral point of view.

No, I'm saying that his "moral" argument is ridiculous. He's saying that we mustn't have retraining programs because they involve "force", but he's all for markets and trade, as I am. Markets imply property. Property implies force. His argument against retraining programs based on their use of force is non-unique. The same argument applies as well to other decrees he does support.

A not so ridiculous argument would be "central authorities are not competent to retrain someone losing his job to international trade." Then he could propose an alternative linked to competitive markets, as I did. We continually extend credit to finance expected future value.

Let's hope we don't run out of expected future value in this country, and let's hope we don't sell too much statutory monopoly over future value to producers in other countries. The people with cash from these sales might decide to buy everything from other countries. That might be a problem.

Now, I did suggest a specific alternative to centralized retraining programs myself, but this suggestion thus far hasn't attracted a reply, unless I missed it.

foxmarks January 16, 2008 at 1:19 pm

The argument for publicly financed education for adults when economic change makes their skills obsolete is the same argument for publicly financed education for children.

Unfounded. Elementary education teaches general knowledge and skills to be used as foundation for future specialized job training. There is no sustainable argument for state funding of job training.

It's a diversion. How effective are the retraining programs?

The two sentences should be reversed. The effectiveness of training is a diversion, or red herring, to the original post.

If job training is worthwhile (proven effective by economic and financial analysis) why must it be funded by the state? Does anyone need Uncle Sam to pick up $20 bills off the sidewalk for him? Why do I need Uncle Sam to take $20 from my neighbor to give to me when there is money lying there on the sidewalk?

Martin Brock January 16, 2008 at 1:23 pm

The people with cash from these sales might decide to buy everything from other countries. That might be a problem.

Anticipating the critique, I should have written "buy too much from other countries". Obviously, corporatists living in the U.S. can't buy everything from other countries, but they can sell too much statutory monopoly to other countries.

Martin Brock January 16, 2008 at 1:36 pm

Unfounded. Elementary education teaches general knowledge and skills to be used as foundation for future specialized job training. There is no sustainable argument for state funding of job training.

"Specialized job training" is another way of saying "marketable skill". Elementary education can be a waste of time too, but reading and writing are marketable skills, but they aren't most valuable, because most of us possess them. The finger painting I learned in elementary school is not so valuable.

If I'm 30 and can't read for some reason, teaching me to read, if it's possible, could increase my expected value in the immediate future far more than teaching a six year old. If I can read more generally, teaching me to read Javascript specifically might increase my expected value, especially if I already know how to read C++ and have employed this knowledge for years. I can also teach myself these skills and often do, but I also learn from coworkers and through continuing formal education.

"There is no sustainable argument" implies that you know every conceivable argument, and you clearly don't. Hyperbole is not sound rhetoric. It might be persuasive to lots of people, but it's not persuasive to me.

Martin Brock January 16, 2008 at 1:49 pm

The two sentences should be reversed. The effectiveness of training is a diversion, or red herring, to the original post.

The original post makes the point that the author doesn't like retraining programs, because they offend his personal preference for some forces over others. I grant his personal preference and don't pretend to disprove it, so there is no red herring. I don't care that he doesn't like retraining programs, and I do care whether they're effective or not.

If job training is worthwhile (proven effective by economic and financial analysis) why must it be funded by the state?

Like I said, we can call the payments "credit" instead. Since we have a central bank, "not funded by the state" remains a tricky notion. Since statutory authorities write bankruptcy laws and hear bankruptcy cases, the notion is doubly tricky. It's triply and quadruply tricky too, but I won't belabor the point.

Does anyone need Uncle Sam to pick up $20 bills off the sidewalk for him? Why do I need Uncle Sam to take $20 from my neighbor to give to me when there is money lying there on the sidewalk?

Uncle Sam manufactures all of your $20 bills. Have you ever read one of them?

The Albatross January 16, 2008 at 2:01 pm

Ok, so say we replace the government planned re-training with some sort of credit. The planning elements will probably still remain, as the government will likely restrict use of the credit. Say I get laid off from the steel mill, can I use the credit at the seminary or clown college (not that equate the two)? These occupations add value to society, but somehow I can think that Uncle Sam will see his way to restricting the credit to what he sees fit. So what if we just give displaced workers more money? Well, they already get unemployment so who say which workers are obviously displaced and get the extra money? And if they do get the cash what will they spend it on—more education, training—maybe, but maybe not? Lastly, a credit is a subsidy that will, of course, make more training available, but are displaced workers really better off getting training or getting another job and starting to work their way up again? (the data suggest that the latter is the preferred method). Furthermore, if displaced workers do apply the credit to more training, this will put up the price of training. Since they have the credit, displaced workers will more easily afford the higher priced training. However, those entering the workforce might not now be able to afford the training. The high-school dropout, recent graduate, or single-mother may now not be able to afford training. Society’s scarce resources will be too tied up trying to teach old dogs new tricks, rather than being used more effectively on the pups.

John Pertz January 16, 2008 at 2:07 pm

So let me get this straight. The pro-government crowd wants the same institution that does a lousy job of providing secondary education to young Americans to take up the responsibility of retraining the tiny minority of laborers in this country whose jobs are destroyed by trade? If we are so concerned about job destruction caused by free trade why not apply the same compassion to the much larger group of American citizens whose jobs are wrecked by new technology?

Randy January 16, 2008 at 2:14 pm

I'm thinking it would often be cheaper to just buy people bus tickets. Mooove! Move to where the jobs are!

The Albatross January 16, 2008 at 2:30 pm

Randy,

Funny you mention that becasue a bus maker near me recently had to shut its plant because it can not find enough workers. It would appear that the local aircraft manufacturers (an export industry) are gobbling up all the workers.

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