Rational Action

I didn’t make it through the whole book, but here is my review of Jagdish Bhagwati’s In Defense of Globalization. (Yes. I wrote it for class. Did you honestly think I’d pick up a book, read it, and then review it all out of the goodness of my heart?) It lacks of bit of nuance, and I did have some problems with a few of Bhagwati’s arguments. He sure doesn’t write as well as PK does, but I’ll excuse him on that, because PK originally studied under him…

So here is the review:

In an online article written nearly ten years ago, Paul Krugman explains elegantly the problem faced by those economists who seek to defend globalization: while prominent policymakers appeal to the public by openly disdaining arcane mathematical theory, the “important ideas [of economics] are crystal clear if you can stand algebra, and very difficult to grasp if you can’t. International trade…happens to be a subject in which a page or two of algebra and diagrams is worth 10 volumes of mere words.â€? In Defense of Globalization, the latest book by Columbia economist Jagdish Bhagwati, seeks to provide a contemporary literary translation of globalization’s two pages of algebra. While his desire to appeal to the MTV generation is at times far too apparent, Bhagwati generally succeeds in utilizing a format dominated by globalization opponents to defend his position.

Bhagwati is at his most successful when taking on the anti-globalization response to welfare and social issues. He convinces because he makes clear at every juncture that those whom he criticizes share with him similar noble goals; along with the South Asian Coalition on Child Servitude (SACCS), Bhagwati would like to end child labor, and just as the NGO Women’s Choice wants to see women empowered, so too does Bhagwati. Since these organizations prescribe the antithesis of Bhagwati’s policies, the conversation becomes one not of ends but of means – In Defense of Globalization presents a vastly different procedure for achieving the same result sought by these NGO’s. Bhagwati’s arguments, founded on compelling uses of statistics and observations, stick because they show how often many anti-globalization groups impede the achievement of their own objectives.

While the posturing of anti-globalization groups has created a powerful image of the globalizer-as-neocolonist, Bhagwati’s Indian heritage and academic career present stubborn challenges to this stereotype. Rather than seeking to control underdeveloped nations from afar, one senses that Bhagwati would like nothing more than to see realized the betterment of the living standards of the world’s poor. As In Defense of Globalization shows, often the most ardent supporters of protectionism are CEO’s and well-connected businessmen; these powerful members of the anti-globalization movement have little interest in the poor but every desire to help themselves.

Bhagwati also scores points by showing how even supposedly disinterested anti-globalization groups may end up ignoring the unique cultures and societies of the people whom they intend to help. He shows, for example, how a sociologist concerned with the growing number of female migrant workers who must leave the care of their children to extended family members “seems to transfer to the migrant workers the values of her own culture� (77): used to the nuclear-family-centric West, she is unaware that families in underdeveloped nations tend to rely on aunts, uncles, and grandparents for child-rearing. Bhagwati’s experience allows him to reveal that the most imperialistic groups are often the greatest supporters of the anti-globalization movement.

If Defense of Globalization has any major failings, they come from its style, not its arguments or evidence. Often Bhagwati keeps the text engaging by making sure he uses contemporary examples, but at times these examples seem gratuitous, even cringeworthy. His odd observation about oral sex in the O.J. Simpson trial only makes the reader uncomfortable, and his endless recounting of supposedly well known jokes and sayings rarely conjures a chuckle. These side notes serve only to get in the way of Bhagwati’s excellent critiques.

Thankfully, with each page Bhagwati’s argument becomes more focused; as he moves from pop culture, surely only a pastime, to economics, his area of expertise, In Defense of Globalization becomes infinitely more enjoyable to read. In the end, the book’s failings are minor and its successes are substantial. For those who would like to convince a friend that globalization is a worthy cause, Bhagwati’s book just might do the trick – just make sure he makes it to capital markets and doesn’t get stuck on O.J.

In a largely anticipated move, Eidelblog responds to my response to his response to my response to his response. I’m not sure how much longer to bother with this argument; I have a few points of his I’ll respond to, then I’m going to give you all a special surprise paragraph. I’m also going to make a non-binding declaration to stop furthering this argument. The binding declaration will occur when or if either of us invokes Godwin’s Law.

So the first question, now that Mr. Eidelbus has provided me with a transcript of the debate, is over PK’s “rambling.” I’ve now looked at the comments in question. The first paragraph of Krugman’s answer has little to do with the point he ends up making — it is a response to Tanner’s point, and Krugman is only saying that redeeming Trust Fund bonds will necessitate tax increases if the rest of government runs a deficit financed by those bonds.

If, when Eidelbus says that “Krugman’s reply was as meandering as a sine curve along the x-axis, until he finally got to the crux of his argument,” he is only referring to this paragraph, then I apologize for my claims that he wasn’t paying attention. However, I suspect he is referring to more than just that short paragraph, in which case the “rambling” was actually part of Krugman’s larger point. Anyway, read Krugman’s response for yourself. While you’re reading, think about whether Krugman actually “wants Social Security to be thrown in with the rest of the federal budget”:

PAUL KRUGMAN: Okay. I actually have to have that Clinton quote. The crucial words were “by itself.� If you’ve got a system which is taxing workers to pay for retirement, and it’s supposed to be a self-contained system, and if the rest of the Federal government is run irresponsibly, then it’s going to have a problem redeeming those bonds. But it’s going to have a problem in a lot of other ways as well.

Again, let’s just come back to this. If you want to talk about Social Security having a surplus or a deficit or anything like that, then we’re talking about Social Security’s budget. Social Security is a program financed by a dedicated tax. And if it’s a program financed by a dedicated tax, then the trust fund is part of that because we’re giving the program credit for the years in which it’s running surpluses. Otherwise, it raises the real question, what are we paying for with this regressive tax?

If you want to say that doesn’t matter, because Social Security is just part of the Federal government, well, that’s another point of view, but in that case it’s just part of the Federal government. The year 2018 doesn’t mean anything, because if it’s just part of the Federal government then it’s just a payroll tax which is one of many taxes, and there’s just Social Security benefits which are just one of many government expenses, and there is no relationship between the two of them. (Page 18, bolding mine)

So does Krugman actually want to throw the Payroll Tax in with the rest of government? Or is he just making a point about the two differing ways of conceptualizing government, without pledging allegiance to either? With that in mind, read this excerpt of Krugman, speaking earlier in the debate:

There are a certain number of government programs—the Highway Trust Fund, the highways are paid for by specific, dedicated revenues. There are always two ways to think about that. One is you can think about it as a stand-alone project, in which case there is a problem or crisis, whatever you want to call it, if the dedicated tax is not bringing in enough to pay for the program. The other way to think of it is you can just think of it as part of the Federal budget as a whole, and say, look, it’s all part of the same thing. Both views have some meaning. (Page 3 of the transcript)

Krugman then goes on to discuss the intricacies of each approach. I hope this issue is settled, now: he did not make this point in order to say that the Payroll Tax should be mixed in with general revenue in a normative sense. Period.

Eidelbus dedicates most of the remainder of his post to a response to my arguments about the solvency of the Trust Fund. He continues with the line that any time the Social Security system requires an inflow of revenue in the future, it is insolvent, regardless of whether that inflow matches Social Security revenue transferred out of the system in the past. I thought this point would speak for itself. At the risk of repeating myself, though, I will repeat myself:

Eidelbus says that claiming Social Security is solvent in this case is “like saying my maxed-out Visa is no problem, because I’ll meet the payments with cash advances from my Discover.” This comparison is painfully inadequate. The Social Security system is not a maxed-out Visa — it took in real money from real people which was then invested in the rest of the government. The rest of the government then ran deficits, spending this saved Social Security income. It is now the duty of the rest of government to pay back these deficits, not the duty of Social Security. Since the General Fund lacks any plan for making these payments, we could say that government as a whole is insolvent (and not Social Security specifically.) Or we could say that Social Security is solvent until 2041, and the General Fund is not solvent now. Simple enough.

If you can sense my frustration with the Economics end of this argument, good for you. I don’t think I’ve said much new in this round. So hopefully I’m finished with the Economics now, because I really want to talk an even more exciting topic — myself!

After all, I’m apparently something of a mystery. Eidelbus tells me, “You’ve constantly misrepresented my arguments under the comfort of anonymity.” Maybe now it’s finally time to reveal my secret identity.

We’ll start with the domain name, “sacarny.com”. Surely this is part of my anonymous sheath! Unfortunately it’s not. My name is Adam Sacarny, and as one of nine living Sacarnies on the Earth, I felt it necessary to pick up my eponymous domain before one of my eight relatives took it for him or herself. My blog used to link to a personal info page, but when I installed a new Wordpress theme, that link went away (it was outdated anyway.) That said, I’m an Undergraduate sophomore at Columbia University. I have a sort of passion for Economics and a dislike for misrepresentation of good logic. The former reason explains why I attended the Social Security debate, and the latter why I’ve participated in this whole post-debate debate.

With that in mind, it’s been fun. I take a little too much enjoyment from competitive logic. In the future, I hope to spend less time responding, and more time coming up with something original to say. In the shorter term, e.g. right now, I also plan on doing some studying, although I am less excited about that…