Monday, 24 September 2007

The rules of trade

Stolen more or less wholesale from Naked Capitalism:

Dani Rodrik has [...] set forth the conditions that have to be in place for trade liberalization to enhance economic performance (short answer, a lot); in another [post], he reviewed the analyses that claimed that our current trading system produced large economic gains and found the logic to be badly flawed.

Rodrik in turn refers to Deconstructing the Argument for Free Trade, an excellent paper by Robert Driskill. In particular Driskill begins by asking what the metric is:

What does it mean for a change in economic circumstances to be "good for the nation as a whole"?

He then goes on to review various possible metrics, and discuss their advantages and disadvantages. Encouragingly, he ends not with a conclusion but a methodological recommendation:

Trade economists should [...] be forthright about the epistemological basis of their policy advocacy of free trade.

In other words, be clear about why you claim something is a good idea, not just that it is one.

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