13 comments on “Timmy elsewhere

  1. What amazes me is this is quite a celebrated example of the dangers of trade wars, import tarriffs and the like. In fact it was used by Democrats as a stick to beat the Bush administration, charging it with economic illiteracy.

    So you do have to wonder what is going on and, yes, Steve’s uncharitable thoughts bear some examination. From the time of the Kenndey administration US Steel has been talismanic for Democrats.

  2. Ironman – Milton Friedman warned them about the consequences of protectionist policies 40-odd years ago.

    They no longer have the excuse their predecessors in the 60’s and 70’s did, of thinking it might work.

    It’s the cynical elevation of one special interest above the national interest based on political pull. I thought they couldn’t find a worse president than Bush 2, but I was wrong.

  3. ” So you do have to wonder what is going on” – politics, rather than economics.

    People feel grateful their livelihood has been “protected”. People who lose their job as a side effect don’t attribute the loss to protectionism – if anything they blame manufacturing not getting the same level of “protection” from those nasty imports. And of course, nobody at all is counting or feeling those new jobs which, as an unintended consequence of protectionism, never actually get created.

    Economists understand this stuff – one of the few things they mostly all agree on. Am sure most politicians get it, though not all. But for most voters it is the sort of counterintuitive result that shows how economics is worthless bunk. For them, of course protectionism and buying American saves U.S. jobs. Otherwise Chinese people would be getting richer and that means Americans getting poorer. It’s just “obvious” isn’t it? Regardless of whether it’s wrong. And just try rationally explaining live on TV to an angry unemployed voter whose 30 year skilled career has gone on your watch and who now can’t find a job and whose benefits are running out, why you didn’t “protect” his job.

  4. losing steel jobs is a political problem..
    loosing jobs in the workforce is a social problem…

  5. embutler – yes, great summary. It’s a classic example of the difference between dissipated and concentrated gains/losses. The more focussed the issue is on a narrower band of society, the greater the incentive for those affected parties to organise politically. They may therefore lobby more effectively than their opponents whose incentives are reversed by being on the flip-side of the issue, if the flip-side benefits are diffuse – even if the flip-side benefits are collectively larger.

    IIRC Greg Mankiw uses this theme to explain the continued prevalence of a range of poor economic policies, from protectionism (concentrated gains to the protected industry vs larger albeit dissipated losses to other industries) to agricultural subsidies (gains to farmer-lobbyists, losses to everyone else) to underprovision of certain public goods or the impracticality of using the Coase theorem to negotiate away “public nuisance” sort of externalities (those negatively affected by the externality being too dispersed to organise contractual negotiations, even if their collective loss massively outweighs the polluter’s gain).

    So, politics rather than economics, and a feature of all ages not just this one. Though admittedly politicians have been more bold in their defence of free trade in the past – Cobdenites for instance.

  6. “those negatively affected by the externality being too dispersed to organise contractual negotiations, even if their collective loss massively outweighs the polluter’s gain.”

    Be careful please, you’re almost providing a justification for Greenpeace’s existence. I would never forgive you for that.

  7. Greenpeace et al. don’t exist to engage in Coasean bargaining with polluters. They exist to either extort money from them – far beyond what the actual negative externality would justify – or to shut them down wholescale. In many cases they have government standing behind them, thwacking a crowbar into its palm and looking menacing (viz. the EPA shooting down the Pebble Mine project in Alaska).

    I wonder if the mercantilist fallacy isn’t (like a lot of things) an artefact of our psychology still being mired in the hunter-gatherer era of 50,000 years ago.

  8. “MyBurningEars wins. What a perfect essay on the collective psychology of the age.”

    No, heeeee-eeee-llllllll no.

    “And just try rationally explaining live on TV to an angry unemployed voter whose 30 year skilled career has gone on your watch and who now can’t find a job and whose benefits are running out, why you didn’t “protect” his job.”

    Great steaming heaps of cowpat. You don’t need to explain to him why his job’s gone, because he doesn’t give a shit. Why not? Because he’s already either re-employed or training for something else.

    Any politicians who can’t arrange that – and that’s one of the fundamental, bin-emptying-type jobs of government – might as well go and hang themselves from lamp-posts*, save us the moral harm of doing it for them.

    [*Originally I wrote ‘a lamp-post’. I don’t want to waste resources, but they probably need more than one if they’re going to do it at the same time.]

  9. Ironman>

    “Be careful please, you’re almost providing a justification for Greenpeace’s existence. ”

    There is ample justification for Greenpeace’s existence on those grounds. None at all for Greenpeace. QED, everyone involved in Greenpeace is scum of the earth, not friend of it.

  10. Great steaming heaps of cowpat. You don’t need to explain to him why his job’s gone, because he doesn’t give a shit. Why not? Because he’s already either re-employed or training for something else.

    Ignoring reality might be fun but it isn’t a sound basis for a political or economic philosophy. I remind you of MBE’s original statement:

    And just try rationally explaining live on TV to an angry unemployed voter

    It’s (now) Lord Tebbit’s “get on your bike” point – he’s right. But the mass of tribal humanity disagree with him. In fact, they don’t just disagree – they are viscerally opposed to the rationality* of the point he was making. It’s like trying to debate deep time with a biblical literalist – you are simply wasting your time.

    The key point is that there are many, many economic ignoramuses** out there. And each of them has the same vote as your or me. And they are easier prey for the political class. Hence, where is the political aim? At the ignorant and easily swayed. It’s a numbers game, not a morality one.

    And this concludes today’s lesson from the Second Book of the Professional Cynic.

    * My nearest family members, apart from those living in the same house, are 90 minutes travel away by modern car and motorway. The next nearest are 5+ hours away at the bottom of the M6. Modern professional families. Not all living in the same close or within walking distance – which was the rule for the vast majority not that long ago. Mrs S-E’s almost entire family live within 30 miles up and down the M1. And that’s only because her Dad moved (and took her and her Mum with him.)

    ** Can we just ignore the usual side-track about correct Latin versus correct English-of-Latin-nouns plurals? Please?

  11. Dave – ” Any politicians who can’t arrange that – and that’s one of the fundamental, bin-emptying-type jobs of government – might as well go and hang themselves from lamp- posts*, save us the moral harm of doing it for them.”

    Are you saying everyone from deindustrialising sectors of the economy ends up in new jobs or training? Or that they should? Or that the fact they don’t shows that government is incompetent? The obvious conclusion from your statement is that the unemployment rate should be near zero, but if that’s a fundamental function of government, it’s not one that western governments have strong records on.

    In recent decades there are lots of highly skilled 40 and 50 something chaps (and mostly twas chaps not chapettes) with experience in ship building, steel or coal mining, for whom finding a new job was a distinctly non-trivial task. Though of course I agree governments would do better to invest heavily in retraining than waste money in trade wars, there are always going to be losers.

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