Marginal Wisdom

One of the best-known economics blogs is Marginal Revolution, written in part by George Mason University's Tyler Cowen. Many of Cowen's posts are dedicated to defending what's known in some circles as "free-market orthodoxy" - the idea that free trade and unregulated markets are always (or nearly always) the best thing for the economy. Cowen is certainly not alone in his beliefs; I'd estimate that 75% of economists agree with him. And he does a much better job of defending free markets, than, say, the ridiculous Jane Galt.

But, the more one reads his posts, the more one begins to suspect Cowen of serious intellectual dishonesty. Take this post, in which Cowen blasts the idea that offshoring to China and India threaten American jobs. Cowen writes:

I think that China is due for a crack-up and India will soon bump up against its horrible legal and educational systems...[T]he Chinese are not the major problem.

Notice the nature of his argument. Cowen says that trade with China is harmless, not because free trade is good, but because China's economy will soon collapse. He implies that this China's economic troubles will be a good thing for American workers - exactly the opposite of what a true free trader would say!

Or take this Cowen post about union-mob connections (hat tip to Matt Yglesias). Cowen writes that past union-mob ties "should not be forgotten the next time you hear talk of new legal privileges for unions."

But, as Yglesias wisely points out, the fact that mafias thrive in immigrant communities doesn't stop Cowen from being staunchly pro-immigration. What gives?

My answer: Cowen is playing a double game. My guess is that he doesn't really believe that strongly in the efficiency of free trade, or open borders, just as he doesn't really care that much about the mob. What Cowen care about is business, and what's good for businesses' bottom line. And the main factor in the bottom line of rich-country businesses is labor costs.

Trade with China allows American businesses to reduce labor costs; hence, Cowen is in favor of trade with China. Immigrants allow business to reduce labor costs; therefore, Cowen is pro-immigration. Unions raise labor costs; thus, Cowen is anti-union.

Tyler Cowen may not be a crusader for free trade; he certainly isn't a crusader against the mafia. What he does seem to be is a crusader against labor costs. And when pursuing this crusade, he will use any convenient argument that presents itself. In this capacity, he's acting not as an economist but as a sort of glorified management consultant/PR man.