Fakenomics -- The trouble with free trade.

[JDPriestly]

Ian Fletcher on Huffington Post writes (and I agree):


. . . . At bottom, fakeonomics is the ultimate free lunch story. Its seductive message is that we can consume all we want, right now, and never worry about the consequences. "Free" trade translates as "don't worry about" trade. The market forgives all sins.

Unfortunately for this happy fantasy, fakeonomics can only maintain this fantasy vision by systematically ignoring half of economic reality. It is, for one thing, almost exclusively focused on consumption, ignoring the production side of the economy. So it has plenty to say about how cheap imports provide consumers lower prices, but blithely airbrushes out of the picture the way imports deplete our industrial base. Of course, in the long run, nobody can afford imports, however cheap, without the ability to produce something to exchange for them. But that, of course, is the long run, and fakeonomics is about instant gratification and letting the chickens come home to roost in the next administration.

What does all this mean? It means that there are really two targets, for those of us who would criticize free trade. There is economics per se, which tends to be pro-free trade, but is actually surprisingly well aware of the counterarguments and becoming slowly but inexorably more skeptical. And there is fakeonomics, which is dogmatically pro-free trade, proactively ignorant of the counterarguments, and determined to stick its head in the sand. Shooting at the first target does almost nothing, unfortunately, to hit the latter, which is arguably more important, at least in the short run, for determining real-world policy outcomes. As a result, the first question one must ask when querying some piece of economic reasoning offered as justification for policy is this: is it real?

http://www.huffingtonpost.com/ian-fletcher/economics-vs-fakeonomics_b_720327.html