Economics vs. fakeonomics

Published on Online Journal, by Ian Fletcher, Sept. 24, 2010.

We skeptics of free trade are used to being told, “You don’t understand economics.” In fact, one major reason I wrote the book Free Trade Doesn’t Work was simply to expose, once and for all, that there do exist extremely serious and intellectually reputable arguments, within the confines of accepted mainstream economics, which question free trade. And indeed they exist. 

But I’ve noticed something. We skeptics are often not really struggling against real eco-nomics at all. When I pick up a copy of the Wall Street Journal, or Forbes, or The New York Times, or turn on Fox TV or MSNBC, or read papers issued by the libertarian Cato Institute or the Peterson Institute for International Economics, I don’t even find economic arguments. I find a mischievous substitute for economics we can call “fakeonomics.”

What is fakeonomics? It sounds like economics to the uninitiated. It uses the same lan-guage, addresses the same issues, and fills the same logical hole in the national policy discourse. Most people can’t tell the difference. But fakeonomics is not the real thing.

How is fakeonomics fake? It tells a story that goes something like this:

  • Free markets are always right, always and everywhere.
  • Anyone who doesn’t believe this is stupid. Smart people not only understand that free markets are best, they like free markets, because free markets mean opportunities to get rich.
  • Or maybe they’re corrupt. The opposite of free markets is government. Government is always incompetent. It never does anything right. Ever.
  • Or maybe they’re evil. Anyone who doesn’t believe in perfectly free markets is a Marxist wannabe or a loser jealous of more-successful people.
  • Free trade is just free markets applied internationally.
  • Therefore, all smart, good, successful people must believe in free trade.

Unfortunately, fakeonomics is, at best, a crude parody of economics. It is often larded with a thick layer of moral hectoring, courtesy of a certain variety of the American Right which seems to think that economics is its exclusive property, a stick given it by God to beat liberals with. There is even a whole class of people, known as “libertarians,” who elevate fakeonomics to the level of an all-encompassing moral ideology. (Their fundamentalist sect is the old Ayn Rand cult, who call themselves “objectivists.”) … //

… What does all this mean? It means that there are really two targets, for those of us who would criticize free trade. There is economics per se, which tends to be pro-free-trade, but is actually surprisingly well aware of the counterarguments and becoming slowly but inexorably more skeptical. And there is fakeonomics, which is dogmatically pro-free-trade, proactively ignorant of the counter-arguments, and determined to stick its head in the sand. Shooting at the first target does almost nothing, unfortunately, to hit the latter, which is arguably more important, at least in the short run, for determining real-world policy outcomes. As a result, the first question one must ask, when querying some piece of economic reasoning offered as justification for policy is this: is it real?

Or is it fakeonomics? (full text).

Comments are closed.