A Squeal in the Dark
When I was growing up on the farm in Alberta, our family had a saying:
“If you throw something out into the dark and hear a squeal, it means you hit the pig.”
(OK, I didn’t really grow up on a farm in Alberta.Â But I visited one once.)
That’s how I feel about the Department of Foreign Affairs and International Trade’s over-the-top response to a recent study I wrote with Daniel Poon (smart young econ grad from Carleton’s Public Admin program) on the likely effects of a FTA with Korea.Â We definitely hit the pig.
The Department assigned top economists to “assess” our study.Â They deconstructed our report line by line, recalculated several of our formulas using alternate methodologies, and posted a 4000-word critique on their web site.Â Weâ€™re pleased with the attention (although less happy about the taxpayersâ€™ money it consumed).
The original CAW study is here:
The federal response is here:
The response covers familiar ground, some of which we have traversed earlier on this blog:
* Trade balances don’t matter, efficiency gains from reallocation of resources matter.
* Job losses don’t matter, and they aren’t permanent anyway.
* Don’t worry about a post-FTA flood of imports from Korea because it will only displace imports from other countries (this particular line of argument is both curious and dangerous — it implies the FTA is valuable for its TRADE-DIVERTING effects, which runs afoul both of welfare economics and of the WTO’s rules regarding the acceptability of regional trade preferences).
But the federal report is also full of self-righteous invocations of the findings of “traditional” economic theory.Â I am always glad for a debate, but can do without this nonsense about who is a “real” or “credible” or “genuine” economist, and who isn’t.Â That’s exactly the sort of neoclassical arrogance we formed the PEF to combat.
Dan and I are working up a detailed response, and a punchier one for more popular distribution.Â I’ll post both of them here as soon as they are ready.
Gotta go out to feed the pigs now.Â Later, Jim.