More of the Same

Economist Greg Mankiw is warning against what he believes are the dangers of protectionism. In his opinion, the outsourcing of jobs to China is less important than the ability for Americans to buy cheap goods, even if those goods contain toxins (see article here).

What I do not understand, though, is why it is for Greg Mankiw to decide that Americans would rather buy cheaper goods than have higher wages. Here is the trade-off in Mankiw's words:

Critics of China say it is keeping the yuan undervalued to gain an advantage in the international marketplace. A cheaper yuan makes Chinese goods less expensive in the United States and American goods more expensive in China. As a result, American producers find it harder to compete with Chinese imports in the United States and to sell their own exports in China.

There is, however, another side to the story. The loss to American producers comes with a gain to the many millions of American consumers who prefer to pay less for the goods they buy.

I find it disconcerting when social scientists are not careful about their terminology or theory. Replace all of the above quotes the word "producer" with "worker," and the real story should be much clearer. In reality, it is the workers who are finding it more difficult to compete; particularly when labor laws, environmental standard, and product quality controls do not effectively exist in places like China.

The world is not as simple as Mankiw would seem to like. Why should we assume that the benefit of cheap goods would necessarily outweigh the benefits of higher wages? Who is Mankiw to decide for American workers that they wouldn't pay more for better working conditions?

Mankiw doesn't like the concept of "fair trade," because to him "fairness" is too "amorphous." Yet, what he fails to acknowledge is that, for him, all trade is fair by definition. He already has an implicit theory of fairness, but he isn't aware of that in his own thinking, or he doesn't want to make those assumptions clear to others.

Questions for fairness can't be elided that simply, however. Questions of fairness will be made regardless, so why not talk about what is fair? In reality, Mankiw is making an argument about fairness, but he wants to avoid the use of the word fair. Avoiding analysis of moral concepts because they are "amorphous" seems a tad intellectually timid in my view. Why not tell us what you really think, Mankiw?