Cass begins his historical account with a novel claim. “For more than a century after Ricardo introduced the concept of comparative advantage,” he maintains, “no one much cared.” This peculiar claim is belied by Charles F. Bastable’s The Theory of International Trade, one of the first trade-specific economic textbooks, which spelled out the mechanics of Ricardian trade theory in exacting detail in 1887. Cass would rather focus our attention though on Alfred Marshall’s classic Principles of Economics, published in 1890.
In his rendering, Marshall comes across as something of a skeptic of comparative advantage who allegedly “chastised the Ricardians” for their theories about trade. To argue his point he excerpts a passage wherein Marshall allegedly condemned comparative advantage for having “laid down laws with regard to profits and wages that did not really hold even for England in their own time.” Turning to Marshall’s original text, we quickly discover that Cass has either misread or misrepresented the economist’s words.
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While Cass presents himself as recovering this suppressed economic history from myth-making free-trade economists, his story is far from novel. It’s a hoary old tale with roots in the Anglophobic and nativist politics of the mid-nineteenth century. It fell outside of mainstream political discussion as US-British relations were transformed into a stable alliance by the two world wars, although it survived on the extreme periphery of American politics through its late twentieth-century cultivation by the Lyndon LaRouche movement. Only recently has the National Conservative movement attempted to revitalize the notion that free trade was a British invention of convenience, but they are building on a century and a half of similar claims.
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Indeed, this exact pattern of favor-trading and corruption led to the Morrill Tariff of 1861, which Cass celebrates for entrenching [Henry] Clay’s American System-style high tariff regime in the second half of the nineteenth century. His case for this corruption-laden law rests on an extended exercise in the post hoc ergo propter hoc fallacy. Since the United States attained industrial prosperity between the Civil War and 1929, Cass contends, the protectionist tariff regime simply must have been the cause.
Except this claim collapses under empirical scrutiny. As Douglas Irwin has shown, the claimed correlations between late nineteenth-century American industrialization and protectionism are both exaggerated and spurious. Economic growth in sectors that did not face heavy import-competition—think of transportation, communication, and utilities—generally outpaced the tariff-beneficiaries of industrial manufacturing. The United States also had the unique advantage of a large, geographically diverse internal commercial base in this period. Nor were tariffs the unambiguous benefit to industry that Cass claims. They raised the prices on imported capital goods like heavy machinery, which likely impaired many of the same industries that benefited from tariffs on their own goods.
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What we’re left with, unfortunately, is a historical account that is both incomplete and misinformed. Cass presents himself as a truth-teller, arguing against a suppressed tradition of American System protection that allegedly delivered America to economic greatness, only to find its legacy assailed and obscured by free trade dogmatists in the economics profession. In reality, his position has more in common with a nineteenth-century miasma theorist in a modern medical school, expressing bewilderment that those around him are unconvinced by antiquated theories attributing disease to bad odors drifting in through the air.
Samuel Gregg applauds Hayek’s call for humility. Two slices:
No one would have been surprised if Hayek had chosen to use his Nobel lecture to dwell on the immediate economic problems of the 1970s or engage in an “I-told-you-so” retrospective. Hayek, however, decided to expand upon the epistemological questions addressed in his 1945 article and other papers—most notably, his three-part “Scientism and the Study of Society” essay, published in Economica in 1942, 1943, and 1944. This is what makes Hayek’s Nobel Prize lecture, “The Pretense of Knowledge,” one of his most important intellectual contributions and why it repays careful reading 50 years after Hayek delivered it in Stockholm.
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Therein lay the normative and political significance of Hayek’s Nobel lecture. At its core was a plea for economists to avoid the hubris encouraged by scientism. This was not only about maintaining the discipline’s integrity as a social science. It was also a matter of being realistic about economics’ predicative powers: a realism which should discourage unrealistic expectations on the part of governments and citizens about what economics, economic policy, and economists can do.
Peter Earle explains that profits don’t cause inflation.
You wouldn’t learn it from Oxfam, but the global Gini coefficient measuring inequality has fallen from 92 to 88 since 2000. The top 1% saw their share of global income cut from 49% to 44.5%.
More important, the world’s poorest five billion have become significantly richer. The Oxfam report makes it seem as if things have gotten much worse for the poor since the pandemic. Oxfam makes this claim five times in its report, but never says by how much. It turns out that the poor’s share of global wealth—as measured by assets minus debts—declined by 0.2%, a figure so small that it is within the margin of error.
Something else you won’t find in the Oxfam report: Global poverty is now at its lowest level ever recorded—8.6%, down from 29% in 2000.
For depositors, overdraft fees can be an expensive alternative to even worse options, such as payday loans or having their electricity shut off (and paying a reconnection fee to turn it back on). And “the best of bad alternatives” can also be sort of true for bankers, who must find some way to defray the cost of providing what is basically an unsecured loan to people who are, as we’ve seen, often financially struggling and might be unable to repay the money. The fees also help pay for “free” checking (which costs banks quite a bit of money to provide).
In Trump’s view, remedies for police abuse, such as insisting that officers obey the Constitution or authorizing criminal charges and civil rights lawsuits when they don’t, are dangerous to public order. Just as presidents should not have to worry about criminal prosecution when they “CROSS THE LINE,” he thinks, police officers should not have to worry that they could face charges or litigation simply because they broke the law, and maybe a few heads, while doing their jobs.
Trump has promised to “restore law and order” by indemnifying police officers “against any and all liability.” Without such protection, he says, cops are “forced to let a lot of bad people do what they want to do.”
That claim is doubly mistaken. Thanks to “qualified immunity,” which allows federal civil rights claims against police officers only when their alleged misconduct violated “clearly established” law, suing cops is much harder than Trump implies. And even when victims of police abuse manage to overcome that barrier, officers already are routinely indemnified by their employers.
Aaron Brown is – to put it mildly – unimpressed with Matthew Desmond’s Poverty, by America. A slice:
Desmond misinterprets his own evidence and favors moral grandstanding over serious policy analysis. His stories actually point to the conclusion that the biggest cause of poverty is crime. If poor neighborhoods were safe, if middle-class people didn’t fear crime associated with housing projects, if poor people weren’t routinely cheated and abused, poverty would be reduced to a simple problem of lack of money and could be eliminated for far less cost than current social spending.
Desmond’s analysis never goes deeper than his facile assertion that “poverty persists because some wish and will it to.”
