My Conversation with Douglas Irwin, podcast

Because Doug’s book is just out, we are rushing out the podcast, here is the audio, most of all about trade, trade history, and trade policy.  We covered how much of 19th century American growth was due to tariffs, trade policy toward China, the cultural argument against free trade, whether there is a national security argument for agricultural protectionism, TPP, how new trade agreements should be structured, the trade bureaucracy in D.C., whether free trade still brings peace, Smoot-Hawley, the American Revolution (we are spoiled brats), Dunkirk, why New Hampshire is so wealthy, Brexit, Alexander Hamilton, NAFTA, the global trade slowdown, premature deindustrialization, and the history of the Chicago School of Economics, among other topics.

Here you can buy Doug’s Clashing over Commerce: A History of U.S. Trade Policy.


Has anyone else noticed that Tyler never promotes the work of people of color?

Does anyone know why he insists on not being more inclusive?

He allows a certain fake Brazilian to post here a lot, despite his having nothing to say. Does that count?


Has it come to this in Trump’s America? Fake news, fake Brazilians...

I’m not sure what more annoying: this cheap trolling post (cf. below on “inclusive” guests/topics) or your goofy teddy bear symbol.

What are you talking about? He recently had the Indian woman Conductor of the NY subway system, Raj Chetty and other Indians as guest, and Kareem Abdul Jabbar.

Asians don't count as "persons of color" nor do Uncle Toms like Thomas Sowell in the warped ideology of twits like that.

Great discussion on the nuance of free trade vs laissez faire.

Would love a discussion about the economics/effects of organized crime and other intentional bad actors in market economies.

That was a good one!

Having lived in New Hampshire for 37 years, New Hampshire is in many ways what you would get from implementing many of Trump's "policies".

Immigration is limited largely to older high income people. Older to eliminate high income young people with kids that become public liabilities.

Young people self deport due to their not being rich, plus having few peers in the State even if rich. Sure, Boston is nearby, but commuting to Boston to date, etc, especially if working in greater Boston, and thus becoming rich, is absurd. Might as well self deport and live in greater Boston.

Many high school grads self deport because many out-of-state tuitions at state universities are lower than NH in-state tuition. Plus, the only affordable housing is probably with your parents. And cars are not given away for free in NH, but a reliable car is pretty much mandatory in NH if you are not a recluse.

Housing is expensive due to zoning which is designed to making assessed value very high for any residence that can house children. Schools are paid for with property taxes, but businesses refuse to be milk cows when across the border in Mass taxes are much lower. The zoning and building codes are a reaction to the housing boom in the 60s into the 80s for Mass residents escaping taxes, and expensive, for the time, housing costs. Houses were thrown up, sold, public ways turned over to the towns, which then had a lot of new voters demanding their kids get good schools like in Mass, that their roads be maintained well, regardless of the bad construction by the housing developers. The only way to pay for this was higher taxes on property, but the attraction of the new housing was it's low price, so the burden of a lot of the tax rate hikes fell on old NH natives. NH natives when I moved into the State in the 80s were friendly, but it was clear we were invaders costing them their lifestyle and money.

NH tax policy does generate exports, like consulting within the US and globally, capital assets that are exported internationally. But putting capital assets in NH? Not so much. They need working class workers to run them which NH makes scarce.

So, New Hampshire has the Trump policies of

Drive deportation of poor people
Restrict immigration to only rich older people
Make all real estate expensive to serve only rich older people
Make education about cutting costs and ideally making a profit, not educating people as an investment you don't own
Don't look at the long term impact of your policies

The issue of New Hampshire growing older and not having young workers for the businesses that must be in the State, e.g., building housing for the rich, serving the rich, etc are well studied and often debated, but given the solutions all require higher taxes or or new taxes, 99.99% of solutions are eliminated from consideration. Unless there is a Federal grant or funding from Obama. E.g., Trump was talking about trade training, like machine tool, six months ago, but that was funded by Obama so that these programs existed in 2017 to show off. Trump totalled about how great they were, but didn't talk of increasing the funding over what Obama had gotten authorized. NH has been working to treat addicts using the obamacare money for Medicaid that NH got under a Obama waiver for a temporary expansion just to get the 100% Federal payments. With the funding dropping to 90% soon, the NH GOP wants to eliminate the Medicaid funding, but not the treatment programs for addicts. The State constantly struggles with tanstaafl.

If your 95% white State with its high barriers to entry chafes your conscience, there are plenty of places to move.

Always more revealing to watch what people do versus what they say.

The section around 17:16 where he addresses China is interesting. It's clear here that Doug Irwin believes China has and is abusing the WTO rules in a mercantilist & protectionist fashion. I lean towards free trade, but I've been disenchanted with the number of people that have blithely ignored these types of abuse.

Good one indeed. Tyler's familiarity with the subject material helped tease out of fairly dry material a very engaging and informative podcast.

I'm a little baffled about the response to NAFTA at around 32:50.

Tyler points out that numerous research papers show negligible gains from NAFTA.

Irwin's response was that, NAFTA is to quote a trade representative that it is an "F'in Great Trade Agreement" because:

* US/Mexico trade barriers were already low, so there wasn't a big consumer surplus gain;

* Solidified the Mexican/US relationship (that seems to be a questionable premise)

* Measures to strengthen the Mexican economy (Tyler prefaced the comment by pointing out that there hasn't been convergence in the economies)

* On Net it's been very good for Mexico (the data I've seen supports this)

* Mexico now has a greater openness towards the world & the one party state has become a competitive democracy (I think it's a pretty incredible claim to say those are a direct result of NAFTA. What evidence exists that would indicate that Mexico would still be one party rule absent NAFTA?)

Hmmm, I don't see this response being very acceptable to all the laid of GE workers in Youngstown, Ohio. Yes, you don't have a job and the economic gains have been small, but hey, Mexico's a much better place!

That’s the beauty of steering clear of a numerical representation of the social implications of trade or economic activity. You can be bullish: “It’s an f’in great trade agreement” when it strikes your fancy; or minimalistic (around 21.51 min) about the million or so jobs that went to China, sure there were communities that were hurt, not that many in the aggregate, of insignificance as it was a one-off-shock.

No need to provide a measure for the benefit of Mexican openness to the world. It’s simply great. No means of evaluating the loss from opioid deaths and family decay in Middle America- so it’s just one of those unfortunate things

But Tyler pushes him throughout the interview to tie trade tariffs to public goods such as national defense- the Japanese and rice; culture- Korean and film production; physical infrastructure- tourism wear and tear in Iceland. Irwin relinquishes a tax payment to cover the last one (physical public goods are much easier to account for) but the others he pushes over to public policy. They deserve no accounting.

If social economics moved up to the big boy table, and was given numerical representation, then that would take all the fun out of the subjective analysis where one can be generously supportive of some social ‘externalities’ and quietly smothering of others.

Very nuanced interview. Thanks.

But it's interesting how the free trade argument is no longer strongly positivist - as in the effort is no longer to demonstrate that low tariffs boost growth, but rather to suggest that there is no great growth story that can be attributed to a protectionist high tariff regime.

In that sense, the Free traders have taken a step back and gone on the defensive since the emergence of the Trumpian discourse.

On top of the lack of positivism in the pro-trade arguments, Irwin's explicit denial that Smoot Hawley caused the Great Depression tell me that even the leading Free trade proponents in the Economics profession now believe that "the causal link between Free trade and economic growth" is overrated.

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