John McCain

Close to the ground

/ jdc / 2 Comments

Hey, it’s John McCain time again! The Free Exchange blog has this (under the nifty headline ‘Tsk-onomics’), on the familiar topic of McCain’s support for the gas tax ‘holiday’. Congress doesn’t like it, economists don’t like it, so far so familiar.

Apparently McCain’s getting slammed for being rubbish at answering questions on this, and other, policies he’s advocating, but let’s leave that to the analysts. There’s a fun exchange quoted from a George Stephanopoulos chat with McCain:

STEPHANOPOULOS: Not a single economist in the country said it’d work.

MCCAIN: Yes. And there’s no economist in the country that knows very well the low-income American who drives the furthest, in the oldest automobile, that sometimes can’t even afford to go to work.

I think it’s neat that presidential candidates get chips by opposing economists, and I don’t mean that as an offended economist; I think it’s interesting. Anyway, is there any merit in that particular McCain quotation? Or, to paraphrase: is economics too far from the ground? Is it too esoteric to properly understand the actual, real implications of its preditions, its recommendations?

The classic case, I think, might be the globalization debate, the protectionism debate: typical economist’s position might be ‘trade good because it allows specialization based on comparative advantage, cheap stuff, more to go around etc’; the counter-argument could run ‘trade bad, erodes localism which we like, hurts those people whose livelihood depends on those things that their country will stop producing when trade makes it cheaper to get those things from other countries’.

Now, sure, the response to the latter is usually ‘yes, yes, we know some people lose out, compensate the losers’, but is that particularly constructive? Are we blind to the real, tangible content of the disagreement with the ‘economist’s answers’? Do we splutter and get indignant with John McCain because he had bad policies, or because we don’t really get the argument?

When we say ‘your gas tax holiday plan sucks, aha!’, we lose friends and alienate people; could we actually make economists a little cuddlier and meet McCain halfway? How can we deal with the problems he’s referring to, that people feel like they’re struggling to get by? We don’t deal with it by ridiculing, that’s for sure. There’s no need to compromise if you think a gas tax holiday isn’t right, so by all means make that case, but every time an economist is painted into a corner as an enemy of the prosperity of the common man, we must argue our way out double-quick, as a matter of principle and credibility.

Sensible economic policy is not just found in textbooks

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Standard caveat: I remain apolitical here. Hat tip to Economist’s View, whose discussion of Andrew Leonard’s Salon article on some current trade policy touches on a lot of interesting things.

Apparently there’s a “Trade Adjustment Assistance” program on the Senate radar. Now, this could be considered sensible economic policy, whether or not you agree with it.

“The Trade Adjustment Assistance program is designed to compensate manufacturing sector workers who are displaced by trade. It includes financial support for education and training, a health care credit, wage insurance and other goodies.”

It’s a well-worn argument that long-term benefits from trade with other countries might come with short-term costs for those workers who find employment in industries which produce goods most likely to be imported. Social justice might argue for support for such workers; help the worker, not the industry is not an original maxim. It can be applied equally to “dying” industries. If the typewriter industry is becoming obsolete, do you subsidize the typewriter producers or let them die and use your welfare state to support the people who are affected?

Maybe it’s too harsh to say that this is not a textbook argument, but one certainly can’t gloss over the negatives of any policy, no matter how positive the positives, and, recall, those pesky Principles of Economics said that Trade Can Make Everyone Better Off.

The Salon article refers to this, from The Atlantic, makes the forceful and obvious point (I will paraphrase) that a proper welfare state doesn’t ask why, just helps the needy while they need, and that this trade adjustment business is a band-aid, a facsimile of a real solution for the problems of the consequences of harsh and widespread unemployment in whole communities at a time.

Not to wade into the politics where I don’t belong, but I like this:

“Preaching the benefits of free trade without being willing to take care of the “losers” created by trade isn’t very bright in an election year when workers are feeling squeezed, and the opposition party controls Congress.”

Ignoring the electioneering stuff, the direct analog to an economics class or an economic policy debate would be to actually have a proper debate, an acknowledgment that everything isn’t always super-awesome. Similarly, the Economist’s View take:

“It seems to me that an administration that truly cared about the working class would be eager to find a way to help those who are hurt from trade, that they would make it a high priority and insist it get done, but there’s little indication – through actual action – that helping workers hurt from trade, or from economic conditions more generally, is a priority.”

This is perhaps one of the biggest economic policy questions: how big should your welfare state be? Design is one thing, but we have a fundamental philosophical question here, which is bigger than technicalities. Let’s brawl that one out, historically, globally, politically, morally, economically.

Except for poor old John McCain, who gets kicked again. Hard. I’m on record: I think he is an economist (for a suitable definition of economist). Not Economist’s View.

“I think a lot of people are missing the point about John McCain’s lack of knowledge about economics… Anyone who really cared about economic policy and its effect on households would have taken the time to become familiar with the basics. How will he know how best to help workers if he has no idea about the underlying economics? If he asked, there are very prominent economists who would be happy to spend an hour once or twice a week – kind of like a principles course – explaining how the economy operates. But he never bothered, never took the time, because he apparently doesn’t care enough to give up the time necessary to actually understand the polices he is voting on. I wouldn’t mind the ignorance so much if there was any indication at all that he had tried to over come it, any indication he thought it was important enough to learn about, but there isn’t.”

We’re going to give McCain the Principles of Economics course? I just got chills. Surely not the one we give the poor undergraduates? From me:

“A list of “principles” pregnant with loaded statements is not the right way to present our discipline.”

Let’s not indoctrinate John McCain too!