This one's for Tom Johnson

We take requests here at TPS; as such, here are my thoughts on yesterday's WSJ piece against free trade:

The article focuses a lot (entirely?) on one side of the argument-- the costs to Americans. If the goal is to make "Americans" better, then you have to look at the costs and benefits to Americans and make a judgment. Americans losing jobs is a cost, but being able to produce goods and services cheaper is a benefit. It's an example of visible, condensed costs and very dispersed benefits-- and "300 million Americans paying $0.50 less for a t-shirt" isn't quite the newsworthy story that "5,000 Americans to lose their jobs" is.

It's not unlike the argument for the minimum wage. A family member plainly asked me over the weekend: Don't some people benefit from raising the minimum wage? Quite simply, the answer is probably yes. There are people that benefit from the minimum wage being increased. But that's not a reason to do it-- you need to look at both sides of the issue. If it's aimed at helping the working poor, are more of the working poor being hurt by the policy than helped on some margin? If it's aimed at income redistribution, are the working poor as a whole improving at the expense of the upper classes? It's a positive statement--not a normative one--on the means of formulating an actual argument and determining a policy's effect. Just because something has benefits is no reason to do it, and just because something has costs is no reason to refrain from doing it.

But back to the free trade issue-- it is also related to an issue first brought to my attention by Don Boudreaux in relation to international balance sheets and the irrelevance of trade deficits. Namely: Why look at the world in terms of countries? If we looked at the world in terms of a world economy, the idea of outsourcing immediately goes out the window. Instead, what we previously attributed to "outsourcing" is now the world becoming a richer place through a better allocation of productive resources. To adapt one of Boudreaux's analogies: If we divided the world into blondes, brunettes and redheads, would we have reason to fret if the blonde's jobs were being outsourced to the redheads?

"Retooling the American education system" is not the answer. Training Americans for jobs that are "likely" to remain in the United States is guesswork at best as to which jobs those will be-- not to mention the political processes involved in determining what those jobs would be. If "retooling" meant "eliminating the requirement of all American children to complete school through high school," I think that policy might have a bit more prospect for positive impact. After all, the U.S. could be completely eliminating a comparative advantage by requiring everyone to go to school through age 18...and if the goal is to get jobs within the U.S., then that would help achieve those ends.

"Retooling the tax code" involves all of the same guesswork and public choice issues as does the education issue.

"Free trade works" doesn't sell enough newspapers, I suppose.

Unleashing Capitalism

Russ Sobel, Josh Hall and I have recently edited a book concerning the institutional shortcomings of West Virginia, its role in our state's dismal economic performance, and what to do to make things better. It's called Unleashing Capitalism: Why Prosperity Stops at the West Virginia Border and How to Fix It. It is the first large-scale effort by the Public Policy Foundation of West Virginia, a group committed to "free enterprise, individual liberty, limited government and traditional American values." The book is entirely original research, with a number of contributions from current graduate students here at West Virginia University along with scholars outside of the state (William F. Shughart II, Edward J. Lopez, and Daniel S. Sutter, among others. The full list of authors is here.)

At its best, this book could lead not only to significant structural change in the Mountain State, but also provide a rubric by which other states could produce similar publications tailored to their particular circumstances.

To capitalism!

The Morgantown Heat!

I got pulled over yesterday on the way to school. Nothing major-- just a "friendly" 10-minute reminder that my front left headlight is out.

Fortunately, my roommate was with me at the time. While waiting for my license, registration and insurance to check out, I informed him of my theory that, ceteris paribus, drivers stand a much lesser chance of receiving a ticket when they have passengers in their car. The idea is that if it is one driver's word against one officer's word in a court of law, the State is likely to uphold the policeman's original claim. Should there be another passenger to vouch for the driver, the court now has two people claiming innocence. Knowing this, the officer doesn't waste his time writing a ticket and then having to go to court to potentially defend his actions. Again, ceteris paribus-- this isn't to say that no one ever gets tickets with other people in the car, nor that you can't get off with just a warning if you are by yourself. I just think you stand a better chance with some passengers in your car.

It's my personal experience that lead me to this idea-- I've got pulled over a handful of times over the years, and while the times that I've been pulled over are pretty evenly distributed between driving alone and driving with passengers, only once did I get a ticket while driving with a passenger (well-deserved, it should be noted), and only once did I not receive a ticket while driving by myself. A quick perusal of the Department of Economics here at WVU finds a roughly similar track record.

I'd love to see some data on this-- does anyone know what type of statistics police departments keep with regards to whom they pull over and the occupancy of the cars? Is any of this available?