Alan Blinder to Greg Mankiw: Don’t Call Me an Apostate

Patricia Cohen writes:

For many economists, questioning free-market orthodoxy is akin to expressing a belief in intelligent design at a Darwin convention: Those who doubt the naturally beneficial workings of the market are considered either deluded or crazy … “There is much too much ideology,” said Alan S. Blinder … Economics, he added, is “often a triumph of theory over fact.” Mr. Blinder helped kindle the discussion by publicly warning in speeches and articles this year that as many as 30 million to 40 million Americans could lose their jobs to lower-paid workers abroad. Just by raising doubts about the unmitigated benefits of free trade, he made headlines and had colleagues rubbing their eyes in astonishment … “What I’ve learned is anyone who says anything even obliquely that sounds hostile to free trade is treated as an apostate,” Mr. Blinder said.

Dr. Blinder recently published his concerns over offshoring in Foreign Affairs:

In February 2004, when N. Gregory Mankiw, a Harvard professor then serving as chairman of the White House Council of Economic Advisers, caused a national uproar with a “textbook” statement about trade, economists rushed to his defense. Mankiw was commenting on the phenomenon that has been clumsily dubbed “offshoring” (or “offshore outsourcing”) – the migration of jobs, but not the people who perform them, from rich countries to poor ones. Offshoring, Mankiw said, is only “the latest manifestation of the gains from trade that economists have talked about at least since Adam Smith … Although there are no reliable national data, fragmentary studies indicate that well under a million service-sector jobs in the United States have been lost to offshoring to date … That said, we should not view the coming wave of offshoring as an impending catastrophe. Nor should we try to stop it. The normal gains from trade mean that the world as a whole cannot lose from increases in productivity, and the United States and other industrial countries have not only weathered but also benefited from comparable changes in the past. But in order to do so again, the governments and societies of the developed world must face up to the massive, complex, and multifaceted challenges that offshoring will bring. National data systems, trade policies, educational systems, social welfare programs, and politics all must adapt to new realities. Unfortunately, none of this is happening now.

While this seems fair enough, Greg Mankiw launches four objections:

1. Alan’s views are a challenge to the economic mainstream.

2. Alan did not present his new views in a refereed academic publication but instead in Foreign Affairs, a publication aimed at the broad policy community, and then in the Washington Post.

3. Alan’s new views are conveniently consistent with the political party with which Alan is affiliated.

4. Alan’s arguments are not persuasive.

It is as if I wrote an article saying that the broad-based income tax cuts raise tax revenue and then published it in the Club for Growth Newsletter with a summary on the editorial page of the Wall Street Journal. My fellow economists would look upon me as an apostate, and they would be right.

I’ll let others be the judge on #4, which is a fair area to debate. But is Greg saying that a member of my party who is also an economist is not allowed to raise distributional issues? Fine – then the converse should hold – every Republican economist must start by discussing the distributional issues of trade policy. And while one has to concede that Foreign Affairs is not the Journal of Political Economy, to compare it to a dishonest rag like the Club for Growth Newsletter is really insulting. But let me stop and just turn the phone over the Alan Blinder (his comment at Greg’s place):

I never blog, and may never again. But this one is over the top, Greg. “Anonymous” who posted at 2:28 has it exactly right:

1. Out of the mainstream? Both my friend and former student and I teach introductory economics to some pretty smart students. With me, the first lesson on international trade is that (and why) there are gains from trade. (I love Ricardo!) The second is that trade always creates both winners and losers, though the nation as a whole gains. Don’t Harvard students hear the second?

2. This is silly. As Greg knows well, refereed journals don’t publish “think pieces” such as mine in Foreign Affairs. And yes, I was tryng to reach non-economists. They are, after all, 99.999% of the human race. (I believe Greg also writes occasionally for nonprofessional audiences–though not in Econometrica.)

3. Consistent with my party’s views? That’s not what many in my party think.

4. Not persuasive? Well, persuasiveness is in the mind of the beholder. I clearly haven’t persuaded Greg. But, then again, I never persuaded Milton Friedman to stop watching M2.