Wednesday, May 2, 2018

The Moral Economy of the American Crowd

I've had a number of posts observing that people are not very enthusiastic about free trade.  Why not?  One view is that it reflects fear--this New York Times article, summarizing research by Diana Mutz, mentions isolationism, nationalism (a belief that "the United States is culturally superior to other nations"), and ethnocentrism.  A recent article, also by Diana Mutz, has gotten a good deal of attention in the media. It offers a refinement of the earlier work:  opposition to free trade is about white men's fears of threats to their dominance in American society.  Basically, my view is that she provides some valuable information, but it doesn't support her interpretation.  However, rather than expanding on my criticism, I decided to suggest an alternative.  The alternative is that people see international trade as a form of competition, in which being in first place is important.

A 1990 NBC News/Wall Street Journal poll had the following question:

"Here are two situations that might occur.  Which would you prefer?

Situation A, in which the U. S. economy grows at a high rate, but the Japanese economy grows even faster, and over a period of several years, Japan becomes the world's leading economic power.

Situation B, in which the U. S. economy grows at a slower rate than in 'Situation A,' but faster than the Japanese economy, and the U. S. continues to be the world's leading economic power."

9% favored A, 86% favored B, and 5% weren't sure.  That is, 86% favored a lower standard of living for themselves just so that the United States could stay ahead of Japan.  Moreover, preference for Situation B was overwhelming among all kinds of people (84% among non-whites, 82% among people with graduate degrees, 82% among people who reported voting for Michael Dukakis in 1988).  That is, it wasn't just whites, or less-educated whites, that felt that way, it was people in general.

The point of my title is that suspicion of free trade isn't just a reflection of prejudice, but is part of the way that ordinary people think about economics.    In fact, it's pretty much the way that even sophisticated people thought about economics until well into the 20th century.

[Data from the Roper Center for Public Opinion Research]


  1. I think you've got a typo there:
    "preference for Situation A was overwhelming"
    Should read
    "preference for Situation _B_ was overwhelming"

    I dunno if this is all that irrational. Bragging rights has some value, and the object of the game of life is happiness, not green slips of paper. And faster growth rates can turn into bubbles real easily, as the Japanese found out ca. 1990.

  2. Thanks, that was a typo--I have corrected it.