Africa Tries Free Trade

Or, more accurately, a customs union.

With all the proposals for hundreds of billions of dollars in new government spending and new taxes in the United States in recent days, there hasn’t been much good economic news.

Alexander C. R. Hammond, of the Institute of Economic Affairs (IEA) and of African Liberty, writes about it in “Africa Tries Free Trade,” Reason, April 2021. He writes:

On January 1, the long-awaited African Continental Free Trade Area (AfCFTA) came into effect. Aside from the economic benefits that the arrangement will bring to the continent, Africa’s newfound support for free trade and liberalization marks a clear rejection of the socialist ideology that has tormented African politics for decades.

In recent decades Africa has been the sick puppy of the six heavily populated continents. A glance at the Economic Freedom of the World map of economic freedom shows why. Over half of the 50+ African countries are in the least-economically-free quartile of the world’s 190+ countries. Not a single African country is in the top quartile. Hammond calls Nigeria, South Africa, and Egypt “regional economic powerhouses,” but of the three, only Nigeria is in the second-from-the-top quartile, South African is in the second-from-the-bottom quartile, and Egypt is in the bottom quartile.

One of the five measures of economic freedom is freedom to trade internationally. With AfCFTA, this will increase for many African countries.

This agreement is like NAFTA and its successor, USMCA: it’s a customs union. The idea is to have low or zero tariffs between and among members of the group, but a common tariff rate on imports from outside. Nevertheless it’s a big, if slow, step toward freer trade.

Hammond writes:

Within 5–10 years, the AfCFTA will ensure that 90 percent of tariffs on goods traded between member states will be abolished. Within 13 years, 97 percent of all tariffs will be removed. By 2035, the World Bank has predicted, this enormous liberalization effort will boost Africa’s gross domestic product by $450 billion, increase wages for both skilled and unskilled workers by 10 percent, and lift more than 30 million people out of extreme poverty, defined as living on less than $1.90 per day. According to the same estimates, by 2035, the AfCFTA will see more than 68 million people rise out of moderate poverty, defined as living on $1.90–$5.50 per day. The “countries with the highest initial poverty rates,” the World Bank says, will see the “biggest improvements.”

Given Africa’s flirtation with socialism and protectionism from the 1960s through at least the 1980s, this is a welcome development.

For more on Customs Unions, see Douglas A. Irwin, “International Trade Agreements,” in David R. Henderson, ed., The Concise Encyclopedia of Economics.

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Free trade and free labor markets

This caught my eye:

[Arindrajit] Dube responds that “one has to be honest about not knowing what would be the impact in every place.” But he points to 2019 research by Anna Godoey and Michael Reich of the University of California at Berkeley, who found that increases in state minimums didn’t hurt employment even in low-wage counties where the new floor equaled 82% of the prevailing median wage. And even if a high minimum wage does kill some jobs—as many studies, though not Dube’s, show it would—it can still be worthwhile if it raises incomes of low-wage families overall, he says. Some experts say that as with free trade, which helps more people than it hurts, any losers could be made whole with government assistance.

Yes, free trade is an excellent analogy for labor market policy, but not for the reasons cited by Peter Coy in this Bloomberg article.

Economists typically evaluate issues from both an equity and efficiency perspective.  Many economists favor policies that maximize efficiency (making the pie as large as possible), combined with some redistribution to compensate the losers.  Thus they favor free trade, combined with a program to help workers that lose their jobs due to import competition.

Oddly, Peter Coy seems to think this analogy points in the direction of boosting the minimum wage.  Exactly the opposite is true.  If we wanted to match the standard economic approach to international trade, we’d abolish the minimum wage and replace it with some sort of subsidy for low wage workers.  Even if that were politically impossible, you would definitely not want a $15 minimum wage.  A much superior policy would be a $10 minimum wage combined with a $5/hour wage subsidy, where the subsidy phases out at the rate of 50 cents/hour for each $1/hour pay raise, ending entirely when pay reaches $20/hour. (Teenagers could be excluded from the subsidy, if they are not living independently.)

I’m not saying this would be ideal (I’d prefer no legal minimum), but it would be much more in the spirit of the “free trade plus compensating the losers” analogy that Coy uses to justify a higher minimum wage. It would be aimed at making the pie as large as possible, while compensating the less fortunate.

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China won the trade war

A year ago, Tyler Cowen claimed that President Trump won round one of the trade war with China:

I’m not entirely convinced we won even the first round of the trade war, although the claim might be true.  The stated goal of President Trump and his advisers was to reduce the US trade deficit with China.  A secondary goal may have been to slow the growth of China’s economy.  A third goal might have been to weaken the position of Xi Jinping, who has been moving China in a more repressive and nationalistic direction.

Today, we know that the US failed spectacularly on all three counts.  Indeed the last year has been an unmitigated disaster for Trump administration protectionists.  Today’s Bloomberg has an article arguing (correctly) that China ended up winning the trade war:

The trade deficit has risen to record levels in 2020:

 

 

The goal of slowing the rise of the Chinese economy has also failed.  The Chinese economy (in dollar terms) is now expected to overtake the US in 2028, five years earlier than estimated just a year ago.  (In PPP terms they overtook us years ago.)

And the prestige of Xi Jinping has risen dramatically relative to the prestige of President Trump, even before the recent fiasco on Capitol Hill.  In China there’s a widespread view that our botched handling of Covid-19 shows the superiority of an authoritarian system, at least on questions of public health.  (That’s not my view, as Taiwan did better than China.)  The prestige of America has never been lower.

Here’s what Tyler said a year ago:

A third set of possible benefits relates to the internal power dynamics in the Chinese Communist Party. For all the talk of his growing power, Chinese President Xi Jinping has not been having a good year. The situation in Hong Kong remains volatile, the election in Taiwan did not go the way the Chinese leadership had hoped, and now the trade war with America has ended, or perhaps more accurately paused, in ways that could limit China’s future expansion and international leverage. This trade deal takes Xi down a notch, not only because it imposes a lot of requirements on China, such as buying American goods, but because it shows China is susceptible to foreign threats. . . .

It is too soon to judge the current trade deal a success from an American point of view. Nevertheless, its potential benefits remain underappreciated, and there is a good chance they will pay off.

It’s no longer too soon to judge.  Perhaps without Covid-19 the outcome would have been more favorable to the US, but as of today the trade war looks like an own goal for the US.  The correct policy would have been to join the TPP back in 2017.  And increase high skilled immigration from China (including Hong Kong.) Let’s hope the Biden Administration learns the right lessons.

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Eric Hoffer on “Property Rights” in Jobs

I’ve written before about how “The Box,” that is, containerization, slashed the cost of international trade, thus leading to more of it. My guess is that that reduction in cost was the equivalent of dropping tariffs by at least 5 percentage points.

I quoted the famous statement by Paul Krugman that put it nicely:

The ability to ship things long distances fairly cheaply has been there since the steamship and the railroad. What was the big bottleneck was getting things on and off the ships. A large part of the cost of international trade was taking the cargo off the ship, sorting it out, and dealing with the pilferage that always took place along the way. So, the first big thing that changed was the introduction of the container. When we think about technology that changed the world, we think about glamorous things like the internet. But if you try to figure out what happened to world trade, there is really a strong case that it was the container, which could be hauled off a ship and put into a truck or a train and moved on.

The quote is from here.

Like Krugman, I’m a big fan of Marc Levinson’s The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger, Princeton University Press, 2006.

I happened to page through Levinson’s book the other day looking for something on the famous Harry Bridges, leader of the International Longshoremen’s and Warehouseman’s Union (ILWU). He was very important in the West Coast economy in the 1950s and 1960s, and especially the San Francisco Bay Area economy. Not that I was looking for this, but, as one wag put it when Bridges’s power was near its height, “In San Francisco, there are three bridges: the Golden Gate Bridge, the Oakland Bay Bridge, and Harry Bridges.”

In the process I found an interesting tidbit on Eric Hoffer, the author of The True Believer. (That’s a picture of him above.)

In 1960, employers on the West Coast were trying to clear the decks (pun intended) for mechanization and so they had a bright idea: compensate port workers with the amount of compensation scaled according to how long they had worked.

Levinson writes that in return for “near-total flexibility, the employers agreed to pay $5 million per year.” That was a lot of money in 1960 dollars. Longshoremen with 25 or more years of service would get $7,920, which was about 70 weeks’ base pay, upon retirement at age 65. They would also get the $100 per month ILWU pension. Workers aged 62 to 65 “would be paid $220 a month until age 65 if they retired early.” Others were guaranteed wages on 35 hours of work weekly even if their services weren’t needed. Levinson adds, “Anyone hired as a longshoreman after the agreement was signed would never be eligible for the guarantee because, as a union spokesman explained, ‘they will not have given un anything.’”

I think that most economists who looked at this agreement would approve of it as a way of compensating losers in a relatively efficient way. Eric Hoffer didn’t like it.

Levinson writes:

More than one-third of the ILWU’s members voted no. Some opponents, such as San Francisco’s famed longshoreman-philosopher Eric Hoffer, were outraged on ideological grounds. “This generation has no right to give away, or sell for money, conditions that were handed on to us by a previous generation,” Hoffer stormed.

In short, Hoffer saw the right to a job as an inalienable right.

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U.S. Tariffs Are Not “More Punishing to China”

The world would be a different place, more rational and convivial, if all politicians, journalists, and editors had some clear notions of supply and demand as well as of the history of economic thought—if, for example, they had read David Hume, Adam Smith, Jean-Baptiste Say, James Mill, and John Stuart Mill. As an illustration, consider a sentence in yesterday’s Wall Street Journal (“Trump’s Trade War Will Be Left for Biden to Win,” January 3, 2021—my emphasis):

[Mr. Biden] has already said he wouldn’t immediately lift the tariffs, which should prove more punishing to China than the U.S., as its economy generally depends more on exports.

It is not clear whether the explanation I have emphasized is the journalist’s paraphrase of Mr. Biden’s thinking or the journalist’s own opinion. It could well be both. My guess is that, as the sentence is written, it expresses the journalist’s belief. On the other hand, it is quite obvious that Mr. Biden is as ignorant of trade as Mr. Trump, although the ignorance of the former is not as militant as the ignorance of the latter.  But whoever’s thinking it represents, the clause ignores two centuries and a half of economic understanding, to which only some extreme left and some extreme right have been completely immune.

Increasing the tariffs “against China” would increase them against American consumers, who, as was again demonstrated by President Trump’s trade war, end up paying the tariffs in increased prices, which reimburse the tariffs paid by American importers. The only sense in which Chinese exporters pay is that higher tariffs and prices translate into a lower quantity demanded for their wares, assuming they cannot sell them elsewhere in world markets. Thus, increasing the tariffs on Chinese goods would prove more punishing to American consumers. (See my Econlog posts “The Poverty of Protectionism and the Impact of Tariffs,” June 17, 2019; and “Anecdotes and Data in the Trade War,” July 9, 2019.)

The last clause of the quote above, “as [China’s] economy depends more on exports” is also (at the very least) misleading. As such, exports do not increase domestic prosperity: they divert to the benefit of foreign consumers (Chinese consumers, in this case) domestic (American) resources that would otherwise be used to produce goods or services for domestic (American) consumers. American exports benefit Americans only in the sense that they allow them to produce more of what they have a comparative advantage in and thus import more goods which are produced relatively more cheaply in China or in other countries. The only benefit of exports for the domestic economy is that they allow more imports. Otherwise, exports would be just a gift from “the Americans” to “the Chinese.” (For an elaboration of this point, see my “Logic, Economics, and Protectionist Nationalists,” Regulation 43:3 (Fall 2020), pp. 9-11.)

 

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Time, Technology, and Textiles

A Review of The Fabric of Civilization: How Textiles Made the World, by Virginia Postrel, Basic Books, 2020

 

In 1998, Virginia Postrel closed her now classic book The Future and its Enemies with the observation that “We live in an enchanted world, a world suffused with intelligence, a world of our making. In such plenitude, too, lies an adventurous future.” Though I suppose some might see her books written since then–The Substance of Style and The Power of Glamouras somehow “artsy” and disconnected from the more traditional political and economic arguments of The Future and its Enemies, they seem to me to be deeper explorations into that enchanted world and the intelligence that suffuses it.

 

Postrel’s newest book, The Fabric of Civilization: How Textiles Made the World (out this month from Basic Books) applies this same sense of wonder and wealth to the subject of textiles. The book is an ideal example of the value added to a subject by Postrel’s wonder-filled approach. As an avid knitter and embroiderer, an occasional crocheter, quilter, and constructor of clothing, I know a good bit about textiles. Nearly everything that I hoped would be mentioned in the book was in there–a discussion about the sea snails that provide the blue dye for tallit fringes? An exploration of the coal-tar dyes that provided D.H. Lawrence with one of his best images for beauty coming from unexpected places? The complex sexual politics of women and spinning? They’re all in there. (I did hope for a discussion of green arsenic dye, but that is a story that has been widely covered in other discussions of tragedies of the Industrial Revolution.) 

 

And there is so much else I didn’t know. The radical nature of the first published weaving patterns. The sumptuary battle over–of all things–calico, which we moderns think of as a hopelessly out of date and “countrified” fabric.The complex interplay among weavers, dyers, and traders of different nations that resulted in kente cloth. Readers will pause throughout the book to examine the clothing they are wearing and the textiles that fill their home as Postrel points out what makes each of them remarkable.

 

And each of Postrel’s detailed explanations is fascinating. I was particularly entranced by her chapter on the gross and beautiful explorations of dying. The long history of revolting ingredients and smells that produce objects of great beauty sums up, for me, something central to the human condition–our endless hunger for the sublime, and our inability to achieve it without lowly tools and methods. But it also, in Postrel’s hands, becomes a reminder of that “world suffused with intelligence” that is so central to her understanding of how humans operate.

 

The best example I can give of this is her observation that: “Nowadays we call [indigo] that plant-derived coloring ‘natural’ to distinguish it from dyes formulated in chemical labs, including chemically identical synthetic indigo. But producing indigo takes far more artifice and effort than the word natural implies. Its source may grow in the wild, but turning leaves into dyestuffs for making blue cloth requires considerable technological prowess.” We have had that prowess for at least 6000 years, and in five concise and enormously readable pages, Postrel takes us through the development of that technology in ancient times, the later refinement of it into a portable technology that could be traded, and her own attempts to replicate the techniques for dying with indigo at home. Never once do we lose her sense that each step in the process of this technique is a leap for human intellect and a step into the future.

 

The political and economic are not absent in The Fabric of Civilization, either. Regular readers of Econlog and economic historians will find much to think about here, and textile historians will find new economic and political insights into their subject. 

 

Though Postrel is happy to tell readers all about the different looms used to weave different kinds of fabrics, she is equally detailed in her discussion of the reasons behind different rates of pay for different kinds of textile workers in different times and places. She also reminds us that the history of textiles is the history of trade–not just in the existence of the Silk Road, or in the birth of banking from the textile merchants of the early Renaissance, but also in the use of different textiles as money, the development of arithmetic and double-entry bookkeeping as offshoots of textile trading, and on and on. She reminds us, as well, that in contrast to the too-frequent reliance on a narrative that focuses on colonialist oppressors appropriating the culture and art of the colonies, that artistic trade went both ways. Artists and consumers on both sides of these exchanges influenced and were influenced by trading partners. That’s a more complicated, more interesting, and richer story than the one we think we know.

 

It would be easy for a book on textiles to focus exclusively on the pleasures of home crafting, small producers, and vintage, even antique, technologies. But Postrel, a dynamist since before she coined the term, is as fascinated by the engineer and the chemistry lab as she is by the dye pot and the loom. Her discussion of the Swisstex company’s work on “creating colorful textile with minimal side effects” is a fitting close to her chapter on dying. Their chemistry experiments and engineering innovations lead the way to a modern dye process that allows us to leave behind the stench and the dangerous by-products of ancient methods and early industrial improvements to them. You don’t get those, notes Postrel, “by thinking like a nature child. You get it by thinking like a Swiss engineer.” 

 

Her final chapter, “Innovation” explores the already existing improvements in textiles made by companies like Under Armour, and the technologies that soon might overturn everything we think we know about fabric. Smart fabric that charges your phone when you put it in your pocket? Fabric that only needs to be brushed clean, not washed? Clothes that make us cooler instead of warmer? Friends of the future may want to start the book here, and then travel backward to see how far we have come.

 

There are plenty of books about textiles for those of us who are interested in them. But there is only one by Virginia Postrel. You should read it.

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Is progressivism a scam?

Terms like “progressive” can be defined in a variety of ways. One common theme is that progressives are relatively optimistic that governments can solve economic problems.

We normally think of conservative Republicans as being on the other end of the spectrum, opposed to government meddling in the economy. President Trump is a bit unusual in that he is a Republican who is skeptical of the free market. He used a combination of subsidies, bullying and tariffs to try to bring back manufacturing jobs.

Overall, this approach was not successful. Some manufacturing jobs were created (in 2017-18) in companies supplying the booming fracking industry, but large subsidies given to firms like Foxconn were not effective, and the trade war negatively impacted manufacturing in 2019, even before Covid-19.

None of this was a surprise to a Chicago school economist like me. But what did progressives expect to come out of the Trump administration’s industrial policy”? After all, progressives believe that activist governments can solve problems.

This Ezra Klein tweet caught my eye:

I’m sure that progressives would deny any responsibility for failures such as the Wisconsin Foxconn plant.  They might argue that Trump didn’t know how to do industrial policy.  That’s a fair point; Foxconn is not their fault.  But a similar fiasco occurred under the Obama administration.

Governments simply are not very good at creating economic growth.  Some of the more famous cases of industrial policy are not what many people assume.  The most successful parts of the Chinese economy are the private firms, not the big state-owned enterprises.  Some of the most successful Japanese firms got that way by ignoring the recommendation of government bureaucrats.  Germany has one of the world’s most successful manufacturing sectors, without relying heavily on subsidies and tariffs.  (They do have good technical training programs.)

When I first heard that the Trump administration planned to bring back jobs though a mix of subsidies, bullying and tariffs, I was immediately skeptical.  The fact that many progressives seemed nervous that he might succeed tells us a lot about the way they believe that economies work.  There was no need for them to be “nervous” that Trump would bring back manufacturing jobs with subsidies.

This also explains why I’m not a progressive.

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Imports as a “Drag on the Economy”

A Wall Street Journal story of last week, “The Verdict on Trump’s Economic Stewardship, Before Covid and After,” makes many good points. It also falls into some popular economic errors. Here is an obvious one:

Trade itself turned out to be a drag on the economy. U.S. export growth slowed starting in 2018 as Mr. Trump’s tariff battles ramped up. The U.S. trade deficit, reflecting an excess of imports over exports, grew to $577 billion in 2019 from $481 billion in 2016.

We are told that imports or a trade deficit necessarily constitute “a drag on the economy.” This elementary error stems from the misunderstanding of a national-accounting identity: GDP = C + I + G + X – M. This identity is often misunderstood as meaning that M (imports) constitutes a “drag” on GDP because it subtracts from GDP measured as the sum of personal consumption expenditures (C), gross private investment (I), government expenditures for goods and services (G), and exports (E).

I have blamed the Wall Street Journal and other journalists before for repeating this myth: see my Regulation article, “Are Imports a Drag on the Economy,” Fall 2015. Perhaps one can find a serious economic argument to the effect that imports reduce GDP—although I and most economists since David Hume, Adam Smith, James Mill, or Jean-Baptiste Say don’t think so. But if such a serious argument exists, it is not that the trade deficit (X-M) subtract from GDP in an automatic, accounting, arithmetical manner as some people imagine is shown by the accounting identity above.

The demonstration is simple. National statisticians (the Bureau of Economic Analysis in the United States), in one of their ways of measuring GDP (from the expenditure side), subtract M because it is already included in their measures for C, I, and G. Consumption expenditures, as measured in the national accounts (in the United States as elsewhere) already incorporate imported consumption goods; investment expenditures already incorporate imported capital goods; and government expenditures already incorporate imported goods and services (foreign consultants, for example). Why do statisticians subtract M? Because imports, by definition, are not part of GDP (gross domestic product) and must not be included in any measure of the latter. M cannot reduce the measure of GDP because it is not part of it.

For another statement of my argument, see my “A Glaring Misuse of GDP,” Regulation, Winter 2016-2017. In still another Regulation article (“Peter Navarro’s Conversion,” Fall 2018), I summarize and illustrate the argument:

Imports have to be removed because they are not part of GDP, which is gross domestic production. … Think about the guy on the scales who subtracts 1 lb. to factor in the weight of his shoes; his weight doesn’t change if instead he subtracts 2 pounds because on that day he is wearing heavier shoes. Likewise, American output doesn’t change because more imports are both added and subtracted.

An economist with the Federal Reserve Bank of St. Louis, Scott Wolla also pointed out this misleading error: I reported on, and linked to, Wolla’s article in another Econlog post: “The St. Louis Fed on Imports and GDP,” September 6, 2018.

Many former college students who took a macroeconomic class and glanced at the accounting identity GDP = C + I + G + X – M in a (perhaps not so good) macroeconomic textbook make the same error. The Wall Street Journal should not.

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Jagdish Bhagwati for Nobel Prize

Starting in 1996, I woke up early on an October morning and saw who won the Nobel Prize in economics. I had a deal with the Wall Street Journal that I would tell one of the editors within an hour so whether I knew enough about the winner(s) to write an op/ed that morning for the next day’s print edition.

Fortunately, I’ve been able to do so for every year since then, except 1998 (when I didn’t know enough), 1999 and 2000 (when I was teaching a course in Prague), 2002 (when I was traveling in the U.K.) , 2007 (when I didn’t know enough), and 2010 (when I didn’t know enough.) Here’s the list of past winners.

The web has made my job easier.

One economist in an email discussion yesterday joked that I must have some pre-written pieces because I have a sense of who will win. Unfortunately, no. I haven’t yet predicted correctly. I haven’t even been in the ball park. I gave up producing about a decade ago.

I did tell the people in the email discussion that I used to go the library the weekend before and check out books by 3 or 4 economists who I thought were contenders, but I quit after a few years because I never got it right.

Which brings me to Jagdish Bhagwati.

I used to check out 3 or 4 books by Bhagwati, starting in the early 2000s and going to late in that decade. I’ve always thought he was deserving. I still do. He did some of the most careful and important work on international trade and protectionism. In my graduate course on trade at UCLA, we studied his book 1969 book Trade, Tariffs, and Growth carefully. He was a master at showing why every argument for tariffs but one was a second-best argument: there was always a more direct, less distortionary way of achieving a goal other than tariffs.

What was the one first-best argument for tariffs? If I recall correctly, it was that a tariff can help a country exploit its monopsony power against exporters. I pointed out on this blog over a year ago, that, believe it or not, that seems to be what President Trump did with some of his tariffs.

Back to Bhagwati. Another strong admirer of Bhagwati was the late Paul Samuelson. Here’s an excerpt from Samuelson’s admiring note on Bhagwati:

However, in closing I turn away from any vanities of career accomplishments to substance. In the struggle to improve the lot of mankind, whether located in advanced economies or in societies climbing the ladder out of poverty, Jagdish Bhagwati has been a tireless partisan of that globalization which elevates global total-factor – productivities both of richest America and poorest regions of Asia and Africa.

Bhagwati, by the way, wrote “Protectionism,” in The Concise Encyclopedia of Economics.

This is NOT a prediction that Bhagwati will win. I think the Nobel Committee is too into fashion. However, it sometimes uses the prize to make a statement about policy. Given how much of a beating free trade and globalization have taken in the political realm in the last few years, this would be a good time to make such a statement.

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Casey Mulligan’s Excellent Adventure

A sharply dressed bearded man stood up near the door of the White House meeting room and bellowed, “HHS, you need to hear the OMB loud and clear: your AKS RIA is DOA!” and exited the meeting. As several others filed out of the room behind him, I leaned toward CEA’s General Counsel Joel Zinberg and whispered, “That must be a world record for number of acronyms in one sentence. What the hell does it mean?” Joel chuckled and said, “I have no idea, except that we’re going to enjoy working with that guy.”

“That guy” was Joel Grogan, a high-level Trump appointee in the Office of Management and Budget (OMB). The quote is from You’re Hired: Untold Successes and Failures of a Populist President, by University of Chicago economist Casey B. Mulligan. It’s about his time as the chief economist at President Trump’s Council of Economic Advisers (CEA) for the 2018–19 academic year. Oh, and Mulligan did enjoy working with Grogan. I’ll tell why later.

I’ve respected Mulligan’s work for about a decade. He’s a first-rate economist who, by relentlessly applying economic thinking to policy issues, reaches important conclusions.

But I was not a fan of his too-academic writing style. In a 2013 review, I wrote that his 2012 book, The Redistribution Recession: How Labor Market Distortions Contracted the Economy, “could have been one of the most important books of 2012.” Even I, a PhD economist, found it hard slogging. I don’t know what writing pill Mulligan took, but his latest book is profound, important, entertaining, economically solid, and easy to read. It will be one of the most important books of 2020.

 

The above is from David R. Henderson, “Economic Savvy in the White House,” Defining Ideas, October 8, 2020.

Another excerpt:

Mulligan himself realized that he needed to “think like a Democratic Congress” to help Trump deal with hostile Democrats in Congress. Here’s how Mulligan characterizes the mindset of the twenty-first-century Democratic Congress: “that big government is likely to achieve big progress, that incentives are of second-order importance, that the title of a bill need not reflect its contents, and that profits are glorified theft by private business from workers and consumers.” Mulligan also regularly read economist Paul Krugman’s tweets. Why? They “proved helpful for predicting mistakes that would be made by the president’s opponents.”

Read the whole thing.

HT to John Cochrane.

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