Economists f inally agree (about Trump)

My profession is famous for disputation. We economists supposedly never agree on anything. If you laid all the economists in the world end to end, George Bernard Shaw said, they still wouldn’t reach a conclusion. (A political scientist friend of mine says that if you laid all the economists in the world end to end, you should leave them there. Personally, I’m not surprised political science makes you bitter.)

Given economists’ reputation for disagreement, it’s a bit of shock to see complete unanimity in this week’s IGM survey of 43 leading American economists conducted by the University of Chicago’s Booth School of Business. Panel members answer a policy question roughly twice a month. The statement they had to agree or disagree with this week was “Imposing new U.S. tariffs on steel and aluminum will improve Americans’ welfare.” Forty of the 43 participated. Of the 40, not one responded “strongly agree” or “agree” or even “uncertain.” Twelve responded “Disagree.” Twentyeight responded “Strongly disagree.”

That’s the most single-minded I’ve ever seen them. They were also sure of their opinions. In an interesting wrinkle, respondents can indicate how confident they are in their answer on a scale of one to 10. Twenty-two said eight or higher.

This is not just your average survey of run-of-the-mill economists. The group includes five Nobel Prize winners, almost certainly several future Nobel Prize winners, and several winners of slightly less prestigious prizes. True, they’re all academics and they all teach at great U.S. schools like Harvard, Yale, Stanford, Princeton, Chicago, Berkeley, and so on. There’s not a lousy economist in the bunch. Nor, I suspect, are there many admirers of President Donald Trump in the group, although there are probably some Republicans, which isn’t the case in all university disciplines. My guess is most economists would agree this is a group of the most respected American-based academics in our profession. (Booth also has a separate panel of leading European economists.)

The panel can also provide brief explanations of their vote. Nobelist Oliver Hart of Harvard University said he opposed the tariffs because: “A robust result is that free trade increases national income. The cases where this is not true are rare and hard to spot.” Daren Acemoglu of the Massachusetts Institute of Technology (MIT) wrote: “It will help some Americans and hurt others. But the overall benefits are likely to be quite limited, and losses larger.”

Austan Goolsbee of the University of Chicago, who briefly chaired Barack Obama’s Council of Economic Advisers, simply chose to describe the effects of tariffs this way: “SMACK. SMACK. SMACK. SMACK.” And people say economists can’t communicate! Christopher Udry from Yale University wrote: “It will improve some Americans’ welfare and hurt many others. On balance it’s a very costly way to help those who gain.”

The only semi-positive comment came from David Autor of MIT (who nevertheless disagreed with the statement with a confidence level of six). He wrote: “Simple answer is no! Complex answer is that this could be a strategic gambit in a longer game that deters abuse of free trade agreements.”

That’s definitely possible. President Trump could simply be reminding everyone of the damage beggar-thy-neighbour policies can do. The havoc they wrought in the 1930s was the main driver behind 1947’s General Agreement on Tariffs and Trade (GATT), with its guiding principles of nondiscrimination and national treatment, i.e., that foreign sellers of goods should be subject to the same taxation and regulation as domestic sellers, nothing different. (There’s not the ringing endorsement of free markets in the GATT documents that many economists would have liked, but non-discrimination and national treatment provide a clear pathway to competition-generated prices, which is a main virtue of free markets.)

The 1930s are long gone, of course. No one now making policy lived through them. Trump himself was born in 1946. So maybe he really is just reminding everyone how badly things could go wrong if other countries keep subsidizing their steel and aluminum.

If the president were more obviously a student of history, if he made the case explicitly that he’s just trying to steer everyone back to economic first principles, if he himself were not so devoted to the mercantilist doctrine of “trade deficit bad, trade surplus good” — a basic error understood to be such even back when he took his economics at Wharton — then there might be reason to think Autor is right and Trump is acting strategically for the long-term good. But none of that sounds like the Trump we’ve come to know since he announced for his candidacy for the presidency in June 2015.

It’s true the 43 economists who make up the IMG Booth panel are an elite. It’s also true that elites are in ill repute these days. But when it comes to economic understanding, if I have to choose between the views of Trump and this elite, I’ll go with the latter.