EconTech

I agree very deeply with Tyler’s remarks on the necessity of ethical training when doing policy economics. In fact, I wish that, just as there is a ‘Law and Economics’ school, that there would be a strong ‘Philosophy and Economics’ school. It is, of course, easy to get caught up in the epistemology of economics, and while interesting, I would hope this group of people would focus more on ethics and other questions that economists have much too little familiarity with. Indeed, the study of human rights from an economics perspective, and vice versa, could easily generate many interesting research programs.

That said, I do not remember having been impressed with either Dani’s or Tyler’s past ethical analyses. [Who cares that you aren't impressed? Well, fair enough. But, at the very least, me. ] Dani does bring good questions to the table about trade. But that is not enough, in my mind. This is not to disparage them, but it highlights the need for the above. Until such a program is established, I suspect economists with excellent ethical writing will remain an extreme rarity. Sen is, of course, one of those outliers. A good start might be to try to make explicit the many implicit normative decisions made in conducting an economic analysis. Even then, that is not easy.

What do you owe the world, and what does the world owe you?

Steven Landsburg writes:

Even if you’ve just lost your job, there’s something fundamentally churlish about blaming the very phenomenon that’s elevated you above the subsistence level since the day you were born. If the world owes you compensation for enduring the downside of trade, what do you owe the world for enjoying the upside?

Progressive taxation, some would say in response!

Tim Harford, however, nails it:

…people lose their jobs all the time for reasons that have nothing to do with foreign trade. I’d argue that they deserve some help. Why are jobs lost to foreign competition so privileged?

I am most interested in Dani Rodrik on the same, most of all when writes:

The question of how we should respond to a trade-induced change in income distribution is not one on which economists can offer any expertise. This is a question about ethics, values, and norms, none of which is part of an economist’s training. Landsburg’s take on this is as good as mine–which is as good as that of any person on the street.

Every now and then I feel a deep responsibility to rebut an argument. In my view anyone doing policy economics has an obligation to learn more about ethics — much more — than the guy in the street would know. Would someone doing experimental economics feel free of the obligation to learn some empirical psychology? Would someone doing trade feel free of the obligation to learn some trade law, some history, and some political science? No. What’s the difference? Economists like to separate the “positive” and “normative” aspects of what they do, but this distinction has not much impressed the moral philosophers who have looked at it nor has it impressed Amartya Sen. The very decision to use economic tools emphasizes some considerations and excludes others. The final policy analysis is not just pure prediction but rather it is also an implicit presentation and weighting of both different kinds of information and different values. So if you are doing policy economics, it is imperative that you think about ethics at a very deep level, and read widely in ethics. You are doing ethics whether you like it or not! Furthermore I don’t doubt that Dani already has a deeper understanding of ethics than the (often very crude) man in the street.

That said, I don’t agree with the ethics Dani does discuss, noting that he must have felt he had some good reason to put forward the concerns he did and not others. (As a rule of thumb I’ll note that those who profess the impassability of ethical terrain have just in fact traversed it.) I don’t worry much about the procedural fairness if a poor country trades at better prices by paying its labor less or by polluting. Low wages are precisely the wages we want to see bid up, and if there is a concern for the losers I would not call the issue a procedural one but rather one of outcomes. And pollution can be a moral crime but attacking trade is not usually a good way to go after it. Tax the pollution, not the trade.