Saturday, July 29, 2006

Summers on Antidumping

Larry Summers is one the smartest economists I know. He has had an amazing career as Harvard professor, chief economist at the World Bank, and Secretary of Treasury. While he was Harvard President, he taught popular courses on globalization. Recently, he was asked about antidumping laws at a Brookings event, and he gave a shocking answer:

I am not an expert on many things, and I have the self-knowledge to know in particular that I am not an expert on countervailing duties and antidumping. I guess the only thing I would say is that I do think there is a tendency in the trade debate to underemphasize the longer-run and less immediately salient aspects of trade policies.

In particular, that goes to two sets of issues. Lots of people have worried that their job might be lost because a plant might move to China or to Mexico. Virtually no one except a few members of the American Economic Association has ever said, Isn't free trade great? I was able to buy twice as many toys for my kid at the holiday as I would have been able to if we had not had free trade. And I think the consumer benefits of trade tend very much to be underplayed in political discussion.

I also think we do need to take some stock of the fact that the United States is not currently enjoying an excess of goodwill in other parts of the world, and that the question of how we do or do not open our market is not irrelevant to the quality of our relations with many of these countries. And I think in some cases for really very small economic benefit, even measured in purely mercantilist terms, we sacrificed very substantial goodwill.

So I think it is appropriate for us to be looking carefully at those policies.

What is so shocking about this? I agree with Larry as far as he goes, but, shockingly, he does not go very far.

Larry is famous for being forthright about his views. He knows enough about our trade laws to know that they make little sense. So instead of feigning ignorance, why doesn't he call for repeal of the antidumping laws?

I wonder: Is Larry avoiding the third rail of trade policy because the leading Democratic presidential hopeful has been applauding the application of these inane laws?