Washington Post columnist Sebastian Mallaby rivals Thomas Friedman as a cheerleader for the U.S. trade agenda. He made yet another appeal on Monday, using arguments that he shoud know are fallacious. One of these ranks high on my list of all-time favorites for fallacious arguments. He makes the case that growth is the key for reducing poverty (this is true) and then argues that trade is essential for increasing growth: "And growth, in turn, is highly correlated with trade openness. One World Bank study showed that poor countries whose trade grew as a share of the economy recorded gains in income of 5 percent per year in the 1990s; by contrast, poor countries whose trade did not expand had no income gains whatever." The problem with this one is simple. Every country uses trade as a mechanism to promote growth. Some are successful, some are not. The ones that are more successful in increasing trade are also more successful in growing. In other words, increased trade is an outcome variable, not a policy variable. Research that has focused on the relevant policy variables (e.g. reductions in tariffs and quotas) has found much more ambiguous results. Mallaby also notes the efforts of anti-poverty groups to target farm subsidies as a way to help the world's poor. While there are good reasons for cutting these subsidies (many subsidies are corporate welfare for large farms and bad on environmental grounds), the evidence actually shows a very mixed impact on the world's poor. Some of the poorest countries will actually be hurt if subsidies for agriculture are cut. (They are net consumers of agricultural products, they are hurt when prices rise.) The Post seems to have endless space for diatribes that support U.S. trade policy. It would be nice if the Berlin Wall on this issue could be opened and they would occasionally print something critical of U.S. trade policy.
-- Dean Baker
