My read of Cass is that he's fundamentally skeptical of the mathematization of economics. He thinks it's perfectly possible to do wise economic policy analysis which uses historical anecdotes and common sense as its main methods, and which never constructs explicit formal models of its assumptions. It's tempting--and I've seen economists succumb to this temptation--to attribute this to resentment or jealousy. Real analysis is hard, and it's natural to suspect that people who think you don't need to understand it to have an opinions on international trade are just suffering from sour grapes. Krugman leveled a version of this accusation back in the 90s, though his targets were on the left rather than the right.
While I think the Samuelsonian revolution represented real intellectual progress, I don't think this skeptical attitude is easy to dismiss. Engineers use their models to send rockets to the moon, so even if outsiders don't understand mechanics, they've got great independent reason to think the models are tracking reality pretty well, and that any idealizations they make involve ignoring stuff that doesn't make a big difference in practice.
When it comes to economics, it's much harder to find examples of finely tuned institutions that clearly work well, and are only able to serve their functions because they were built using esoteric economic knowledge. My sense is that spectrum auctions may be the best example here, but perhaps they're the exception that proves the rule. The standard model of particle physics makes predictions about the anomalous magnetic moment of the electron that have been experimentally confirmed out to 13 decimal places. By contrast, economists often disagree about the sign of their predictions (e.g., effects of a minimum wage hike on earnings of low-wage workers). Is this a fair "steelman" of Cass, by your lights?
This is all a great point and well put, but overall completely separate from the evaluation of tariffs. You don’t need real analysis to see the clear failings of such policies.
I think what he'll say is this. Of course there are simple models that illustrate inefficiency of tariffs. But the same goes for, eg, minimum wages vs wage subsidies. And in that case, plenty of economists will tell you the simple models leave out important details, like possibility of monopsony power. (Of course, others will say the econ 101 story is just as right there.) You could imagine fancier models where tariffs have good effects--think of the work of people like Dani Rodrik. Why aren't economists constantly reminding us that econ 101 leaves out detail and complexity when they talk about trade, though they do say that in other cases? He'll have a cynical, broadly political explanation of the difference.
I think most economists would concede that there are plausible non-zero tariffs which improve welfare (I recall a Krugman paper showing this). These are very difficult to implement and quite low, so there aren’t really examples of this actually happening. I really think the difference between the state of the two debates you mention (minimum wage & tariffs) mostly reflects the relative state of the evidence on either issue. Effects of minimum wages are less empirically clear. I concede you make his points far better than he does.
Excellent. I am just struggling to understand why Oren Cass is apparently taken so seriously (eg Lawrence Sullers finding time to debate him). The arguments made by Daniel Greco (see below) in my view deserve consideration (in the same vein I would add that the predictive power of economics beyond detecting broad pattern of cause and effect is inherently limited: see the complete lack of progress in economic forecasting compared to weather forecasting). But Oren Cass, for all his rhetorical skills, does not seem to grasp these arguments.
I think mainly because he has been embraced by the US liberal media (FT and NYTimes) as a “rational token conservative”. I’m sympathetic to their plight, as these days the right has gone so far towards irrational cult leader worship. The pickins are very slim. Sanewashing Trumps plainly idiotic policies produces vacuous fakes like Cass.
When you drop an object, it tends to fall. When you increase the supply of something, its price tends to fall. That doesn’t mean that all objects fall at the same rate or in the same way under different conditions, or that there aren’t things we can do to stop an object from falling. Similarly, it doesn’t mean that all rises in supply cause all prices to fall equally and uniformly, or that there aren’t things we can do to cause prices to fall more or less (which in turn has other consequences).
Your post brings to mind Frederic Bastiat’s Economic Sophisms, in particular “There Are No Absolute Principles”.
“This axiom, which is so much in fashion nowadays, not only countenances indolence, but ministers to ambition.
If the theory of prohibition comes to prevail, or if the doctrine of Free Trade comes to triumph, one brief enactment will constitute our whole economic code. In the first case, the law will proclaim that all exchanges with foreign countries are prohibited; in the second, that all exchanges with foreign countries are free; and many grand and distinguished personages will thereby lose their importance.
But if exchange does not possess a character that is peculiar to it; if it is not governed by any natural law; if, capriciously, it be sometimes useful and sometimes detrimental; if it does not find its motive force in the good it accomplishes, its limit in the good it ceases to accomplish; if its consequences cannot be estimated by those who effect exchanges—in a word, if there be no absolute principles, then we must proceed to weigh, balance, and regulate transactions, we must equalize the conditions of labor, and try to find out the average rate of profits—a colossal task, well deserving the large emoluments and powerful influence awarded to those who undertake it.”
Muy útil para contrastar con los "experimentos" que está haciendo el desastroso gobierno de Javier Milei en Argentina. Siguiendo el parangón usado por Brian: apelan solo a los principios de la aerodinámica, el empuje y la sustentación, pero no para trabajar con la ley de gravedad, sino para ocultar a dicha ley. Y tarde o temprano, la ley emergerá con fuerza.
My read of Cass is that he's fundamentally skeptical of the mathematization of economics. He thinks it's perfectly possible to do wise economic policy analysis which uses historical anecdotes and common sense as its main methods, and which never constructs explicit formal models of its assumptions. It's tempting--and I've seen economists succumb to this temptation--to attribute this to resentment or jealousy. Real analysis is hard, and it's natural to suspect that people who think you don't need to understand it to have an opinions on international trade are just suffering from sour grapes. Krugman leveled a version of this accusation back in the 90s, though his targets were on the left rather than the right.
While I think the Samuelsonian revolution represented real intellectual progress, I don't think this skeptical attitude is easy to dismiss. Engineers use their models to send rockets to the moon, so even if outsiders don't understand mechanics, they've got great independent reason to think the models are tracking reality pretty well, and that any idealizations they make involve ignoring stuff that doesn't make a big difference in practice.
When it comes to economics, it's much harder to find examples of finely tuned institutions that clearly work well, and are only able to serve their functions because they were built using esoteric economic knowledge. My sense is that spectrum auctions may be the best example here, but perhaps they're the exception that proves the rule. The standard model of particle physics makes predictions about the anomalous magnetic moment of the electron that have been experimentally confirmed out to 13 decimal places. By contrast, economists often disagree about the sign of their predictions (e.g., effects of a minimum wage hike on earnings of low-wage workers). Is this a fair "steelman" of Cass, by your lights?
This is all a great point and well put, but overall completely separate from the evaluation of tariffs. You don’t need real analysis to see the clear failings of such policies.
I think what he'll say is this. Of course there are simple models that illustrate inefficiency of tariffs. But the same goes for, eg, minimum wages vs wage subsidies. And in that case, plenty of economists will tell you the simple models leave out important details, like possibility of monopsony power. (Of course, others will say the econ 101 story is just as right there.) You could imagine fancier models where tariffs have good effects--think of the work of people like Dani Rodrik. Why aren't economists constantly reminding us that econ 101 leaves out detail and complexity when they talk about trade, though they do say that in other cases? He'll have a cynical, broadly political explanation of the difference.
I think most economists would concede that there are plausible non-zero tariffs which improve welfare (I recall a Krugman paper showing this). These are very difficult to implement and quite low, so there aren’t really examples of this actually happening. I really think the difference between the state of the two debates you mention (minimum wage & tariffs) mostly reflects the relative state of the evidence on either issue. Effects of minimum wages are less empirically clear. I concede you make his points far better than he does.
Excellent. I am just struggling to understand why Oren Cass is apparently taken so seriously (eg Lawrence Sullers finding time to debate him). The arguments made by Daniel Greco (see below) in my view deserve consideration (in the same vein I would add that the predictive power of economics beyond detecting broad pattern of cause and effect is inherently limited: see the complete lack of progress in economic forecasting compared to weather forecasting). But Oren Cass, for all his rhetorical skills, does not seem to grasp these arguments.
I think mainly because he has been embraced by the US liberal media (FT and NYTimes) as a “rational token conservative”. I’m sympathetic to their plight, as these days the right has gone so far towards irrational cult leader worship. The pickins are very slim. Sanewashing Trumps plainly idiotic policies produces vacuous fakes like Cass.
When you drop an object, it tends to fall. When you increase the supply of something, its price tends to fall. That doesn’t mean that all objects fall at the same rate or in the same way under different conditions, or that there aren’t things we can do to stop an object from falling. Similarly, it doesn’t mean that all rises in supply cause all prices to fall equally and uniformly, or that there aren’t things we can do to cause prices to fall more or less (which in turn has other consequences).
Your post brings to mind Frederic Bastiat’s Economic Sophisms, in particular “There Are No Absolute Principles”.
“This axiom, which is so much in fashion nowadays, not only countenances indolence, but ministers to ambition.
If the theory of prohibition comes to prevail, or if the doctrine of Free Trade comes to triumph, one brief enactment will constitute our whole economic code. In the first case, the law will proclaim that all exchanges with foreign countries are prohibited; in the second, that all exchanges with foreign countries are free; and many grand and distinguished personages will thereby lose their importance.
But if exchange does not possess a character that is peculiar to it; if it is not governed by any natural law; if, capriciously, it be sometimes useful and sometimes detrimental; if it does not find its motive force in the good it accomplishes, its limit in the good it ceases to accomplish; if its consequences cannot be estimated by those who effect exchanges—in a word, if there be no absolute principles, then we must proceed to weigh, balance, and regulate transactions, we must equalize the conditions of labor, and try to find out the average rate of profits—a colossal task, well deserving the large emoluments and powerful influence awarded to those who undertake it.”
"derived from understand some unspecified law maybe?"
ESSENTIAL article. Required reading, I say.
Excelente.
Muy útil para contrastar con los "experimentos" que está haciendo el desastroso gobierno de Javier Milei en Argentina. Siguiendo el parangón usado por Brian: apelan solo a los principios de la aerodinámica, el empuje y la sustentación, pero no para trabajar con la ley de gravedad, sino para ocultar a dicha ley. Y tarde o temprano, la ley emergerá con fuerza.