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Boudreaux v. Rodrik
Boudreaux v. Rodrik is a knockout for GMU chair Don Boudreaux. I'm biased? Of course, but the call is made by Brad DeLong.
Posted by Alex Tabarrok on July 13, 2007 at 03:21 PM in Economics | Permalink
Comments
I have no idea how both you and Delong
arrived at such a verdict.
A 'knockout'? give me a break.
Posted by: Mark M. at Jul 13, 2007 4:10:50 PM
Read the comments in Delong's own blog, for heaven's sake. They all make better points than he does.
Posted by: fustercluck at Jul 13, 2007 4:32:17 PM
That if your diagnosis of the disease of country-level poverty is government failure--and that's what Rodrik's diagnosis is--then to call for the government to impose selective tariffs to target specific externality-heavy industries is unlikely to go well. The basic problem is that the country is ruled by an anti-developmental state. And, as I quoted Lant Pritchett, there are few things more hazardous than to call for an anti-developmental state to engage in state-led development.
Posted by: Brad DeLong at Jul 13, 2007 4:33:14 PM
I read the comments in Delong's own blog. DeLong makes more sense than his commenters in aggregate. Rodrik is attacking his own strawman instead of one-upping Boudreaux (which is probably not going to happen).
Posted by: caveat bettor at Jul 13, 2007 4:44:29 PM
Of course, DeLong is using an argument not made by Boudreaux, so maybe we shouldn't credit him with the KO.
Posted by: josh at Jul 13, 2007 6:51:53 PM
Responses to Brad:
(1) It's not clear that Dani's right on the "corruption and incompetence are THE causes of poverty" front.
(2) Even if he is, beware the libertarian vice: the quality of government isn't necessarily fixed. Dani's at least engaged in trying actively to improve it.
(3) Even if it were, you could still think that industrial policy might be a good idea for not-completely-useless governments, like, say China's.
(4) It's not necessarily all about developing country policy either: as Paul Collier argues in his recent book, deviations by rich countries from "free trade", which favour poor countries may be justified.
Posted by: conchis at Jul 13, 2007 7:50:33 PM
"Read the comments in Delong's own blog, for heaven's sake."
You are very easily impressed, apparently.
I'm serious. DeLong's blog is notable for the canyon-like gap in quality between the blogger and the commenters.
Posted by: Keith at Jul 13, 2007 9:13:40 PM
But seriously, Fuster? Which of De Long's luminaries are really grabbin' ya?
The one talking about what the local paper company did? The save the rustbelt guy who thinks his town in Ohio is the sum of the universe? The ones who don't get that foreign subsidies benefit us on net?
Posted by: Keith at Jul 13, 2007 9:20:09 PM
I had to stop reading the comments to deLong's blog after about a dozen posts. They simply made no sense and made me want to cry.
I'm very much in favor of free trade, but I can make a case for industrial policy in some countries.
Imagine a broker cold calling potential clients from a wealthy zip code. He gets one on the line and finds out he has all his savings invested in bank CD's of short duration, laddered.
The broker then has a choice. He can try to persuade his risk averse potential client to take his advice in buying and selling stocks, making him lots of comissions. He can try to persuade his risk averse potential client to put his money in a S&P 500 index fund. A third choice is to presuade his risk averse potential client to lengthen his maturities and to buy AAA corporate bonds and hold them to maturity, letting the broker pick the issues.
The second method is likely to be the most lucrative for the client and least lucrative for the broker. It also has the problem (broker's point of view) of not being likely to close the deal with a seriously risk averse client.
The first method may well be the second best choice for the client assuming the broker doesn't overtrade and is reasonably astute instead of plugging issues his company underwrites. It is surely the most lucrative for the broker. But it is even less likely he would get the potential client to sign up with the broker.
The third method is arguably the worst return for the client, with minimal, albeit regular, commissions for the broker. But it is most definitely the most likely to get accepted and make commissions more than $0.
Finally, and this is important, if the potential client hangs up, he (the non-client) would be worse off than under any of the three methods the broker might pitch at him.
Thus a theoretically so-so idea turns out to be the best idea. A country's leader may well have an easier time persuading his countrymen, and the rich rentseekers in it, to go from a stupid tax and regulate the crap out of everything approach to a policy of wealth creation directed by a few "wise" (i.e. the technocrat head of state and rich rent seekers) men under the guise of industrial policy. They can use this dubious policy to keep labor unions at bay, direct credit to the rent seekers, and enforce high savings levels to fund this cheap credit, and sell it to the people under the theory that "it worked for Korea and Singapore".
The industrial policy is surely worse off than letting everyone direct their own capital to what they see as underexploited opportunities. But it is also surely much better than economic suicide. If the head of state is unwilling (no bribes!) to go for a Hong Kong or Estonia type of approach, and if the rich mandarins would also be unwilling to let that happen, and if selling it to the people is too hard (see, we are letting WalMart come in and destroy thousands of mom and pop shops for your own good), then industrial policy may well be the best public choice option.
The real thing that makes poor countries rich is actually simply trying to do so. In other words, to create high levels of GDP this year, which is shorthand for all the wealth created in that country that year, the best way to go about it is to try to create wealth. A virtually tautology, but one often missed by those who forget what GDP is. You need to actually try to create wealth in order to actually create it.
The countries that all left poverty and made it into prosperity all dumped wealth creation restrictions (taxes and regulations) to one degree or another and freed up (to one degree or another) potential weath creators to actually create new wealth.
Freer trade and freer market policies work better than industrial policy and trade restrictions, but they both work better than anti-wealth policies.
Posted by: happyjuggler0 at Jul 13, 2007 9:52:00 PM
The ones who recognize the huge difference between intrastate commerce and intranational commerce.
I take it you don't.
Posted by: fustercluck at Jul 13, 2007 10:02:07 PM
God you guys are so stupid. Didnt you all know that fustercluck is a noble prize winning biologist? The human beings who comprise one nation state have a different biological composition than the human beings in another nation state. That is why interstate commerce and intrastate commerce are completely different. Increases in specialization and the division of labor are only relevant for generating prosperity within a nations borders. There is no such thing as the global capital stock. There is ZERO global opportunity cost associated with keeping inefficient producers in business due to protectionism. God, some of you guys need to get hip with the new economics of fustercluck.
Posted by: John Pertz at Jul 13, 2007 10:42:50 PM
Read the comments in Delong's own blog, for heaven's sake. They all make better points than he does.
DeLong makes more sense than his commenters in aggregate
Brad's commentators in the aggregate are big fat minus. He's still very good so overall it comes out a medium plus, plus once in awhile someone decent actually comments. I always wince when I click on the 'comments' tag because I know I'm gonna regret it.
He's got a "economics-only" version that I already usually check. He needs a "without the comments" version too. I know, I know, I could just not click on'em. But Behavioral Economics and all, when it's there in front of me I can't resist too many times. I need something that will let me tie myself to the mast like Odysseus and the Syrens.
Posted by: notsneaky at Jul 14, 2007 12:15:46 AM
Didnt you all know that fustercluck is a noble prize winning biologist?
Who thinks energy is converted to matter in photosynthesis.
Posted by: TGGP at Jul 14, 2007 8:24:37 AM
I find the difference in quality between the blogger and the commentators to be interesting. Why is it that a person such as DeLong attracts droves of posters that more libertarian minded blogs concerned with economics seem to have been saved from (I add "concerned about economics", because you can surely find libertarian minded sites in general that are not of such high quality and intellectual honesty).
Posted by: Erik at Jul 14, 2007 10:29:36 AM
Such a utopian place the United States will be when this country finally adapts free trade.
Can't wait for those missile defense systems contracted out to a North Korean company to be installed. Or for port management rights to be contracted to a UAE-based firm.
I know, these are alarmist examples. We have nothing to worry about.
I have seen the light: there really is no difference at all between intrastate and intranational commerce whatsoever.
Posted by: fustercluck at Jul 14, 2007 12:17:24 PM
that should be interstate and international
Posted by: fustercluck at Jul 14, 2007 12:22:42 PM
"I find the difference in quality between the blogger and the commentators to be interesting. Why is it that a person such as DeLong attracts droves of posters that more libertarian minded blogs concerned with economics seem to have been saved from (I add "concerned about economics", because you can surely find libertarian minded sites in general that are not of such high quality and intellectual honesty)."
I've been thinking about the quality of Delong's posters. I don't think it has to do with libertarian vs. non-libertarian though. I see the problem as coming from Delong's "impeach Bush" posts. Whether or not you agree with Delong's views on Bush, I think Delong's style of Bush posts attracts a lot readers that have an instinctive dislike of Bush and other knee-jerk reactions on other Democratic issues. So, these same readers also seem to stick around and criticize Delong when disagrees with the standard Democratic issues.
I also like the idea of multiplicity of equilibria in comment quality. Consistently high comment quality prevents low quality posters from entering the fray (they get mocked, their arguments get picked apart). High comment quality also attracts other high high quality posters (for discussion, etc.)
Similarly, I see low quality posters attract other low quality posters (for simplistic analysis, stupid name calling, etc.). Low quality posters also drive out high quality posters (what's the point of posting on Delong's blog if 20 people respond to your post with inane commentary?).
So, if Delong's impeach posts are bringing low quality posters, then Delong's post quality could have shifted to a low quality equilibrium.
Posted by: D at Jul 14, 2007 1:04:01 PM
I think Delong's blog attracts way way to many people who have a highly simplistic democrat versus republican world view. Many of these people are often HIGHLY engaged politically and would actually spend time listening to a political debate, proudly display a political bumper sticker, and simplistically view the world's problems as being something that public policy can solve with better political interventions. I think many of the libertarian blogs are luckily much more economics based and so you get much much less discussion about partisan politics. I mean how often does Tyler post about certain political candidates or how often do we pit one politician against another in debate?
Posted by: John Pertz at Jul 14, 2007 6:34:14 PM
D: 20? SYMTS 200 !
Posted by: Russ Nelson at Jul 14, 2007 6:38:46 PM
fuster: they are indeed not the same, however free trade is good for one in the same manner that it is good for another.
Posted by: Russ Nelson at Jul 14, 2007 6:43:25 PM
Wow, those comments made my head hurt. There is definitely a large contingent for whom Earth is obviously not their first planet.
Posted by: asg at Jul 14, 2007 9:10:30 PM
I'm with Bill Polley, who calls it for Rodrik.
Posted by: Ken Houghton at Jul 14, 2007 9:42:12 PM
Russ, how is putting national defense contracts into the hands of our enemies (if you believe in that concept to begin with) because they are the lowest bidders good for our nation? What if the contractor is a state-owned Chinese company? Not exactly an enemy, but would you want the Chinese government to have a working knowledge of that kind of information? Is the argument that we'll be protectionist in that situation? Where does that protectionism begin and end, and isn't that what we have now only with less selectivity?
It just seems to me that the natural extension of the free trade agenda - which, according to some includes a prescription for open borders - leaves very little room for nation states.
It's a little too Star Trek for me.
I'm not in favor of large government, but I believe that the purpose of a central government is to look after the best interests of its people. I would be in favor of less protectionism (or at least a more fair and consistent safeguarding of certain industries), but completely open free trade damages a significant segment of the American population with no remedies. A lower cost of goods is great...when you're earning money of your own with which to buy them.
I get why the eggheads are in favor: they see themselves as the 1 percenters who would make out like bandits. More than likely, though, they'd be replaced with much smarter Asians. Plus I'm not sure how strong the international market would be for professional navel-gazers. This is a largely American phenomenon.
Posted by: fustercluck at Jul 14, 2007 11:27:38 PM
I think the reason that DeLong's site attracts such low quality commenters has much to do with the blogs that discuss and link to his entries. I find a lot of the worst commenters there are also frequent commenters at Political Animal, KOS, and Atrios. I wouldn't be surprised to find that most of his commenters discovered him through an explicitly partisan political weblog. I don't think that can be said for MarginalRevolution, for example.
Posted by: Yancey Ward at Jul 15, 2007 12:50:35 AM
fuster: The purpose of regional governments is to protect people's property rights (I note that everyone owns themselves). The purpose of a central government is to do ONLY the protection that regional governments cannot do. Everything else, including international trade, can be arranged through voluntary, non-coercive means.
Posted by: Russell Nelson at Jul 15, 2007 3:04:30 AM
