Discussion: (0 comments)
There are no comments available.
View related content: International Economics
As unemployment remains high and the election nears, many politicians are again campaigning against free trade and its cousin, outsourcing. Polls show voters are increasingly skeptical of the benefits of free trade. There is no area where the beliefs of ordinary citizens are more at odds with the views of professional economists.
Why is that? Why do so many people have difficulty understanding the benefits of international trade, while clinging to counterproductive policies that reduce consumer welfare by limiting it? An answer can be found in the writings of the Nobel Prize-winning economist Friedrich Hayek and of evolutionary psychologists.
While Hayek is perhaps best known for his 1944 critique of government economic planning, “The Road to Serfdom,” he also was a pioneer in realizing that the evolutionary history of the human species was a factor for understanding current political and economic beliefs.In “The Fatal Conceit” (1988), Hayek wrote that “man’s instincts . . . were not made for the kinds of surroundings, and for the numbers, in which he now lives. They were adapted to life in the small roving bands or troops in which the human race and its immediate ancestors evolved during the few million years while the biological constitution of homo sapiens was being formed.” His insight anticipated the modern field of study called evolutionary psychology, which explains current belief systems as being based in part on our evolutionary history.
There are two aspects of our evolved psychology that help explain beliefs about trade. First, humans tend towards zero-sum thinking. That is, we do not intuitively understand the possibilities of economic growth or the benefits of trade in achieving it.
Our ancestors lived in a static world with little intertribal trade and virtually no technological advance. That is the world our minds understand. This doesn’t mean that we can’t grasp the crucial concept that trade benefits both parties to a transaction–but it does mean that we must learn it.
Positive-sum thinking doesn’t come naturally. By analogy, we learn to speak with no teaching, but we must be taught to read. Understanding the mutual benefits of exchange is like reading, not speech.
Second, we evolved in a hostile world. Our ancestors engaged in constant conflict with neighbors, much like present-day chimpanzees. We developed strong in-group and out-group instincts, and for many aspects of behavior we still have such feelings.
These feelings are benign when applied to something like rooting for local sports teams, but are more harmful when applied to international trade. They are most harmful when they generate actual warfare. Yet the metaphor of a “trade war” shows how close to the surface harmful instincts are.
These two sets of beliefs interact to explain our natural (mis)understanding of trade. We believe that the number of jobs is fixed (a result of zero-sum thinking) and that as a result of trade these jobs go to foreigners, whom in a deep sense we view as enemies. Both beliefs are incorrect, but both are natural. And in many cases politicians are only too eager to capitalize on these beliefs to be re-elected.
One of the great triumphs of modern economics is the reduction in tariffs and other barriers to the free international flow of goods. Enough voters have been convinced of the benefits of free trade that it has generally been a winning political position, and those running on protectionist platforms do not do well in contemporary America. It would be a disaster if the current economic malaise reversed this situation.
Paul H. Rubin is an adjunct scholar at AEI.
As polls show voters increasingly skeptical of the benefits of international trade, many politicians are campaigning against free trade and outsourcing.
There are no comments available.
1150 17th Street, N.W. Washington, D.C. 20036
© 2014 American Enterprise Institute for Public Policy Research