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Dani Rodrik

@rodrikdani

22 Oct

@BrankoMilan

Re utility of classics in Economics, I’d like to take a position that I think is intermediate between @BrankoMilan and @florianederer. There's a sense in which Economics is like the natural sciences, with cumulative progress and you only need to read the latest articulation. +

So to understand comparative advantage, or efficiency of markets or a particular mode of oligopoly you do not need to read Ricardo, Smith, or Cournot. Contemporary textbooks are much better at explaining the theory, clarifying where it applies, and presenting relevant evidence. +

But there is also a sense in which Economics is not like the natural sciences. Economics advances not by simply refining existing models (vertically), but by expanding the range of models and enlarging the library of explanations (horizontally). +

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Dani Rodrik

@rodrikdani

10 Jul 20

A word about manufacturing, prompted by Biden’s “buy American” proposals. It is important to distinguish between production and employment. +

Manufacturing production exerts outsized influence on a nation’s innovative capacity and productivity. It is important to have sensible industrial policies that promote it. And it’s possible to reinvigorate manuf in the sense of preventing a decline in MVA/GDP. +

Employment is another matter. Labor content of manufacturing has been in decline for a very long time (flip side of rising productivity) and I think it’s virtually impossible to reverse employment-deindustrialization. No nation has managed to do it. +

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Dani Rodrik

@rodrikdani

13 Jun 20

There’s been much discussion in recent days about Economics’ race problem. Some of what has come out is quite disturbing. I have not said much, but I have listened and thought. Here are a few reflections I want to add. +

It doesn’t surprise me that the field, as a whole, reflects the ingrained attitudes and practices of the society of which it is part. But there are some features of the discipline that magnify and aggravate the problem. +

First, Economics is clubby. While good research does get recognized, the ability to produce it depends on networks. If you don’t start with the networks in place–a PhD from a top dept, a well-recognized advisor--you start with a significant handicap difficult to overcome.

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Dani Rodrik

@rodrikdani

3 Mar 20

Short thread on technology and skills: I am struck by how much we focus on education/training (to match the demands of innovation) and how little we think about redirecting innovation (to match the skills of the current and prospective labor force). +

Technological determinism runs deep. We tend to think we have little control over innovation and that society must somehow adjust to its consequences. Yet who innovates, who benefits from innovation, whom it replaces, and how it is deployed are all the result of choices we make +

We can innovate to replace labor with machine. Or we can innovate specifically with an eye towards increasing the tasks that ordinary workers can perform – by doing work that was previously performed by more skilled people, or by providing more specialized, customized services. +

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Dani Rodrik

@rodrikdani

1 Feb 20

I’m starting to think the idea that Trump captured the Republican Party has it exactly backward. It’s the party that’s captured Trump, making him pursue all its favorite policies (taxes, judges, deregulation), just with a modicum of space for Trumpian idiosyncrasy on trade.

Moreover, Trump has the great virtue from the standpoint of the R party that he can increase support for it among the less well off whites by playing the racism and nativism card. Otherwise, plutocratic policies would have dwindling electoral support.

@ezraklein

Which, by the way, is why I am unconvinced by @ezraklein’s argument (in his new book) downplaying material conditions (inequality and economic insecurity) as a strong factor behind “polarized identity.”

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Dani Rodrik

@rodrikdani

30 Aug 19

https://twitter.com/LarryMishel/status/1167482142210891779

There are good economic and political reasons why the compensation part of the liberalization-cum-compensation bargain was not fulfilled (and could not have been). See argument here drodrik.scholar.harvard.edu/files/dani-rod…. +

https://twitter.com/LarryMishel/status/1167482142210891779

But in brief: First, when trade barriers are very low reducing them does not generate enough resources to redistribute under reasonable assumptions about the deadweight loss of taxes and transfers. +

Second, political time inconsistency undercuts any promise to liberalize now and redistribute later, when trade agreements are costly to undo. (So redistribution happens only when it is baked into the social welfare system, as in Europe, not when it is an add-one as in the US). +

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