Dogmatism Masquerading As Science

So far, the presidential campaign has not gone as the experts had predicted. One of the reasons for this is that many Americans are anxious about the economy, an anxiety that those ensconced in the recession-free DC bubble have a hard time understanding. And one of the reasons for this economic anxiety is the damage that continues to be wrought outside of that bubble by the trade policies advocated by almost all of those insulated from reality in that bubble. But this week saw more evidence that ordinary Americans have been right about the damage caused by free trade and that the experts have been wrong, in the form of a remarkable article by economist Noah Smith for Bloomberg View entitled “Free Trade With China Wasn’t Such A Great Idea for the U. S.”

Smith cites a recent paper by labor economists David Autor, David Dorn, and Gordon Hanson entitled “The China Shock: Learning from Labor Market Adjustments to Large Changes in Trade.” What these economists found was that “Adjustment in local labor markets is remarkably slow, with wages and labor-force participation rates remaining depressed and unemployment rates remaining elevated for at least a full decade after the China trade shock commences. Exposed workers experience greater job churning and reduced lifetime income. At the national level, employment has fallen in U. S. industries more exposed to import competition . . . but offsetting employment gains in other industries have yet to materialize.” In other words, American workers and industries have been hurt by trade from China, those workers and industries have not recovered, and there are no increases in employment elsewhere in the economy to take in those workers displaced by trade with China. This is not what the experts told us was going to happen, but it did. The ability to buy cheap trinkets from China is a poor substitute for the good jobs that have been lost and the many communities that have been devastated by closed factories.

Smith also says that his fellow economists bear a share of blame for this dismal situation. Economists cheerleading for free trade helped overcome political opposition to opening up the US market to Chinese goods, and many economists can still be relied upon to cheerlead for free trade even after the damage caused by trade with China has become clear enough to be seen even in the ivory tower. One of the reasons for this, according to Smith, is that “Economists are . . . stubbornly unwilling to question their benchmark theories, even when the evidence presents a challenge to those theories.” In other words, much of the economics presented to the public is dogmatism masquerading as science. Smith’s article offers some hope that this is beginning to change, even as many of the experts who pushed for free trade with China are now pushing for the Trans Pacific Partnership.

Tom Piatak

Tom Piatak

Thomas Piatak is a contributing editor to Chronicles: A Magazine of American Culture. He writes from Cleveland, Ohio.

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One thing we must guard against is knee jerk conclusions that certain things dont work because they dont work right away. Ten years seems a long time but if you're talking about economies adjusting to major change, that's not a long time. Another is that if a small piece (manufacturing in some industries or regions) of a bigger thing (free trade) doesn't work, we assume the whole thing (free trade or capitalism itself) doesnt work. Bollocks. Free trade and capitalism are wildly, completely, successful. The problem is with disruptions. Friedman says governments should pay to retrain displaced workers. Definitely. And if a society needs certain types of work (factory, manual, manufacturing) so as not to cut whole swaths of people from good jobs, then fine, we subsidize. But that is a trade off that will hurt other sectors and people. If it's worth it, we should choose it with eyes open, and not make stupid and grand pronouncements like "Free trade doesnt work."