“Oh, yes, I know, we have recently been told by no less than 365 academic economists that such a thing cannot be . . . Their confidence in the accuracy of their own predictions leaves me breathless. But having been brought up over the shop, I sometimes wonder whether they pay back their forecasts with their money.”
—Margaret Thatcher, 1979
As our $500-billion-per-year trade deficit, with its attendant job destruction and long-term damage to our industrial base, continues to spiral out of control, the public may be forgiven for wondering whether there might be problems with the free-trade theories that have gotten us into this mess. And this inescapably raises the question of whether American economists have been doing their jobs, since, as a recent study revealed, 97 percent of them support free trade.
Economics enjoys the highest prestige of any social science (when was the last time a president begged a sociologist for advice or the king of Sweden congratulated a demographer?), and the public believes economists to be trustworthy. We have seen before, however, that the experts can be wrong and, indeed, have a uniquely destructive arrogance when they are.
The public is unaware of the degree to which free trade is a theory full of holes but varnished with a façade of certainty for ulterior...