Somehow I missed the news that Duane Chapman died last summer — he was only 66 years old. Duane taught environmental economics at Cornell and did pioneering work on several fronts. It was from him that I first learned, back in the mid-1980s, about the importance of the environment-trade nexus; he was years ahead of that curve. He produced a powerful critique of a different sort of curve, Environmental Kuznets, showing that it is an artifact of looking at production rather than consumption footprints. His textbook, Environmental Economics: Theory, Application and Policy, failed to find its audience, but it was sprinkled with analytical gems found nowhere else. While his style could sometimes be a bit gruff, he was never less than warm and supportive to me. I’m grateful I had the opportunity to get to know him.
Archive for March 16th, 2008
Duane Chapman
Sunday, March 16th, 2008Mankiw vs the Muggles
Sunday, March 16th, 2008For those of you living on another planet, Muggles are the pathetic characters in the Harry Potter stories who have no magical powers. They are oblivious to the action going on around them. Mankiw, in his latest NYT column, contrasts Muggles to economists, who have magic to burn. The economists, it seems, understand the glories of free trade, while the uninformed Muggle-masses think that globalization is draining their wallet. This is reflected in politics, he says, where honest Republicans like McCain (to whom this column attempts a reposition) do battle with protectionist Democrats – who, with luck, are merely pandering.
I wish Mankiw all the best in his courtship of McCain, but the guy really doesn’t get it about trade. This is not a matter of free trade versus protectionism. OK, that archaic duality comes up periodically in a small way (like the recent spat over the Pentagon’s spurning of Boeing tankers), but it is not the main issue. There are two big facts that menace the US economy like twin Voldemorts, the long-term erosion of wages for most of the population and the buildup of massive current account deficits. These are almost surely related, though not in any simple way. Intensifying competition among the world’s workers has been great for investors, bad for wages, and poison for the US international position.
The question is not whether there should be trade or not, but under what rules it should take place. NAFTA was not a one-page flyer announcing free trade in North America. Renegotiating it to promote more equity and sustainability is not flat-earth economics. But above all, thinking that a trade deficit of 5+% of GDP, year after year, is rendered benign by the writings Smith, Ricardo, or for that matter Samuelson is to live in a world of magic, not reality. The Muggles are right.