Another example is the Chinese “taikonaut” program. Countries do send up astronauts on other countries’ rockets. But for military (i.e., political) reasons, they may prefer DIY. Moreover, if you were in Beijing around the time of the first taikonaut shot (something like the Mercury missions 40+ years previously), it would be very obvious, as it was to me at the time, that military needs were not the regime’s sole political objective.

As for the generalizations about Japan’s experience, I am not an expert on Japanese history but I do live in Tokyo, and I can tell you that I would rather be living in Japan than in any other OECD country at this moment. Those who, like Paul Krugman, make glib references to the “lost decade” generally are speaking with reference to certain economic indicators, and not to the experience of Japanese people as lived.

(For those who don’t have a chance to talk with Japanese who lived through this period, a very rough proxy may be to note that male suicide rates in Japan had an historical peak in 1986, during the “bubble” period, then fell sharply after the Nikkei Index fell from its peak, and then hit a new peak in 1998, during an uptrend in Japan’s trade balance with the US, i.e., at the start of the “global boom” Krugman says saved Japan. They remained high during the “boom” years not shown on the linked graph. And female suicide statistics changed relatively little during the past 10-15 years.)

Moreover, there are some (such as Nomura Securities chief economist Richard Koo, a former economist for the NY Fed), who regard Japan’s 1990s stimulus package as on the whole quite successful. This package didn’t include tax cuts or “bad banks”, BTW. I’d say that given the current situation in Japan compared to what I hear about the US, Koo & al. are right. E.g., the rate of job cuts (per capita of population) here is well below what it is in the US, and peoples’ threshold of alarm about the cuts is far lower than in the relatively callous States. When a company announces a cut of even 600 (six hundred) people, it’s headline news here.

I’m also intrigued by the frequent reliance on appeals to expertise in the argumentation in this thread. Does that mean that, say, only experts in astrology are entitled to question its efficacy?

Krugman is a brilliant man and has made important contributions to economics. Barro’s point, however, is rather simple. You don’t consult an expert on African history regarding the history of an Asian country. You consult an expert on Asian history. The fact that they are both history experts does not mean their knowledge and expertise is so easily transferable from one place to the next.

Of course, this hardly precludes Krugman from having an informative opinion on Keynesian macroeconomics. Nevertheless, he hardly studied that area to same depth and breadth as his trade theory (or as others have done). As such, his opinion should be understood from that perspective (and not as the all-knowing-economics-God that many liberals make him out to be)

Your point about Iran seems a bit off the mark… Iranian satellites seem to not be a very good example of trade effects, if for nothing else because I’m sure Iran would love to just buy a satellite… if anyone were willing to sell them one. But if your point was along the lines that any country is capable of producing high tech products… well, yes, but the question is at what cost (particularly if they are not an oil state rattling it’s saber). I don’t doubt that if Bangladesh really wanted to drop everything and make its own automobiles that they probably could. But that is missing the point entirely.

My point in noting that Krugman had a Nobel was not to end the debate. Rather, it was an ancillary point that Krugman is an ardent free trade supporter. I noted this because he seems to be about the only economist Frank has much respect for, evidenced by his original citation of Krugman for his views on the stimulus bill.

Further, there is no need to cite to Nobels to end the debate, because the debate is closed regardless. There is no debate on a few fundamental propositions: trade is increasing and is likely to continue to do so, nations that set up trade barriers do so at their peril, and that increased trade is net positive for countries under practically any circumstances, even if we can still argue about the distributional effects. In particular the last point is important, as just a few decades ago many – and possibly most – economists believed that trade was net negative for “periphery” countries. As noted, many of the those same economists now acknowledge they were wrong, even as they continue to argue for a more egalitarian trade framework.

I would like to retract the statement I made in my earlier comment about Frank “arguing” that because economists disagree in stimulus effects that is evidence that they are wrong to agree on trade. After re-reading, I realize Frank made no such argument, but rather I confused myself with the going back and forth from stimulus to trade. So, sorry about that.

And is the definite article really sufficient when describing the “ultimate weakness[es]” of (mainstream) economics? How about its pretense of political neutrality? (Here the economists who voted for the same candidates I did are no different from those on the right.) How about its physically unrealistic view of the relationship between the environment and economic activity? Why is “a refusal to acknowledge the degree to which scarcity necessitates conflict between groups” more “ultimate” than a refusal to acknowledge, say, forms of relationships between people that are based neither on conflict nor utilitarian considerations?

On trade, suffice it for now to say that the benefits really depend on the usual journalism questions, such as who, what, when, where and how. Currently, e.g., Japan is getting hammered for being too dependent on exports, at least according to the talking heads on Bloomberg, CNN and elsewhere (who never mention that Japan’s export dependency ratio is around 15%, less than for any developed country other than US). Neat economic determinist arguments, such as the inevitable hegemony of “superior” foreign products, ignore that there are many other factors at work in how people behave. E.g., Iran just launched a home-made satellite, even though many other countries have a clear comparative advantage in all aspects of satellite technology. (BTW, even adopting a more politicized view as Frank suggests, is Iran’s main motivation for satellites, bombs, etc., worries about Lebensraum or some other form of scarcity here?) Countries are right to worry about the hollowing out of their own technological — and social — capabilities. Politics is only one reason; another is that viewing people as consumers is not an exhaustive description.

Of course, Dave is right to point out that free movement of labor — or, as Roberto Unger has puckishly proposed, the abolition of all national borders — is an available solution. As for Nobel Prizes in economics: they don’t end debates, they are part of the performance of the debate. Or are the views of, say, Debreu, Milton Friedman, Samuelson, Buchanan and Sen all mutually consistent?

I, too, am troubled by the income distribution effects of global trade. I think there is a valid critique there. But I am much more troubled by the disastrous effects that anti-trade development policies had on the third world in the 70′s and 80′s. The answer is not to seek to restrict the growth of free trade, which is only postponing the inevitable and increasing the social and economic cost of adaptation. Instead we should adopt policies that help make trade more equitable. One simple way to do so is to allow labor to flow as easily as capital, although that is, of course, antithetical to first world labor, the primary beneficiary of restricting both capital and labor flows.

Trade is good. Even the structuralists of the Economic Commission for Latin America, who provided the economic basis behind dependency theory, eventually recognized that import substitution industialization was a really, really bad idea, and realigned their development proposals into a neostructuralist, trade-oriented approach (See Sunkel, Osvaldo, Development from Within: Towards a Neostructuralist Approach for Latim America.)

The debate is over on trade (just ask Paul Krugman… he did, after all, receive a Nobel Prize for his work demonstrating the benefits of free trade). Your argument that the evidence that economists often disagree (for example, on the stimulus effects of government spending) is a basis for concluding that economists might then be wrong about something they are in agreement on (the benefits of free trade) is like saying that because physicists can’t agree on how old the universe is then they thus must have been wrong about gravity, too.

Keynes comment, in 2008, is less of an argument against trade and more of an argument against state sovereignty. There is an international trading system in place today that simply did not exist in 1933, and that clearly doesn’t lead to world wars.

1) I have also questioned aggregate measures of well-being. I applaud Sarkozy’s decision to ask Sen and others to refine them. But questions like yours suggest the validity of a broader rejection of the notion of measurement here.

2. Though I’ve derided some of its adherents as engaging in cute-o-nomics, I do feel that the “clean identification” school in economics is at least groping towards an experimentalist approach to understanding some very specific phenomena. It can often go wrong when it tries to make big claims, and when it makes small claims it may seem less relevant. But sacrificing relevance and scope for an increase in parsimony and accuracy is a common trade off in social science.

3) Ultimately, I agree with Barry Lynn’s suggestion that we need to see a return of “institutionalists” to the field (here: http://www.newamerica.net/publications/articles/2007/why_economists_cant_see_the_economy_5058)

Institutionalists “would study and model the power of large firms and trace the effects of these concentrations of power on such factors as pricing and employment. This approach implie[s] that markets are, at least indirectly, the products of law acting on or through the corporation and other institutions. It also implie[s] that the concentration of economic power, especially through a public institution like the corporation, transform[s] the affected marketplace into a largely if not entirely political realm.”

4) I think the ultimate weakness of economics here is an assumption that functionalism is the narrative or descriptive key to social relations, and a refusal to acknowledge the degree to which scarcity necessitates conflict between groups. A rising tide does not lift all boats. If we cut taxes on the richest people in St. Louis by 10% (as Senate Republicans are now proposing), we have little reason to believe their spending will redound to the benefit of the people in that article I quoted whose bus service was cut.

Political philosophy properly done can address distributional justice compassionately and rigorously. Mainstream economic thought on the issue is often muddled, as Matt Miller shows.

And finally, as for James’s comment: let’s stipulate that trade leads to gains of $6 and losses of $5. If that $6 primarily goes to elites and that $5 is primarily lost by middle class folks, there’s not much of an argument for trade. But even if the $6 goes to the desperately poor, I don’t see why in the long run we should support a process that may ultimately be tending toward reducing a de facto “global wage” to subsistence levels while eviscerating hard-won labor and environmental standards. David Grewal’s account of Keynes is illuminating here:

“Here there is an essay of Keynes from 1933 called “National Self-Sufficiency,” which is an excellent piece. . . What Keynes basically says here is, “Like all good Englishmen of the prewar generation”—prewar meaning World War I at that point—”I was brought up to believe in the principles of free trade and that anything against free trade could be nothing more than an actuarial mistake, an accounting error. It was almost immoral in the grossness of the inefficiencies it would introduce.”

He says later, “But I’ve come to see that because free trade, and especially free capital flow, entangles us in complicated ways with the destinies and decisions of other countries, free trade, actually, even if it’s economically advantageous, can be disadvantageous to the cause of international peace.”

“He says that it was through hard experience—hard experience—that England learned this lesson: Goods, he said, should be homespun as much as possible, and above all, finance should be national, because if you let your debts and your assets fall out of the hands of a single political community and separate them across different political communities, how do you reckon those accounts? There’s only one way. It’s either through complex international negotiation or it’s warfare. Whereas within a single country, you can use laws and you can do all the stuff that national sovereigns are good at doing.”

from

http://www.cceia.org/resources/transcripts/0093.html

In addition to economists’ tendency to weave back and forth across the blurry line between description and normativity (unless their feet are firmly planted on the latter side), there’s the question of whether the objects of study of a “scientific” economics have any stable reality. For example, macroeconomists speak glibly of GDP, corporate profits and revenues, “value added,” and so on, and present nice time series graphs of GDP, production, consumption and all the rest. Do they concern themselves with the politicised negotiations about FASB standards, tax regs, and other definitions that business people are spending all their lobbying dollars on? Definitions of the underlying quantities several layers below the aggregates used in macroeconomics are changing all the time, out of sight of the macroeconomists. Is it routine for historical graphs of GDP to describe the dynamic changes in defintions of the underlying data? Or for a multinational comparative time series graph to details the differences in national definitions of GDP? Even the economic definiton of a corporation — in the sense of which activities are deemed to be within the corporation and which without — is determined by negotiated convention.

When the raw data of economics are “socially constructed” and dynamic in time, what’s the appropriate object of study for a “scientific” economics, in your view? For some accounting scholars, such as advocates of “positive accounting theory,” reality is constituted by share prices. Would you be satisfied with having share prices constitute economic reality?