Is global growth a ‘public good’?

Arnold Kling responds”>http://www.inquit.com/cgi-bin/blosxom/blosxom.cgi/pwg/wto/whatUse.writeback”>responds to my claim:

I don’t see the pub­lic good argu­ment.  If the U.S. cuts its tar­iffs and sub­si­dies, then the biggest ben­e­fi­cia­ry is the U.S.  The prob­lem is not that we failed to incor­po­rate world wel­fare into our util­i­ty function–it’s that out gov­ern­ment caves into spe­cial inter­ests. ”


This may be a dis­tinc­tion with­out a dif­fer­ence. Say­ing that the gov­ern­ment ‘caves-in to spe­cial inter­ests’ is just anoth­er way of say­ing that it gives too lit­tle weight to the exter­nal­i­ties (for­eign or domes­tic). I don’t believe that this under­mines my ‘pub­lic good’ con­tention. I agree that the costs to the USA of its own pro­tec­tion in a glob­al­ized world are most­ly the loss of the gains from spe­cial­iza­tion etc. in its own econ­o­my. But the costs also include * the Unit­ed States’ share of loss of glob­al wel­fare from the glob­al-mar­ket-shrink­ing con­se­quences its own actions
* loss­es due to the ‘demon­stra­tion effect’ that the actions of the world’s most pow­er­ful econ­o­my have on the poli­cies of oth­ers.
Allow me to antic­i­pate a fur­ther con­cern here: what sort of force is need­ed to make neg­a­tive exter­nal­i­ties count in the polit­i­cal debate over trade or relat­ed pol­i­cy deci­sions? AK may be refer­ring to this con­cern when not­ing his dis­like of the idea that we should trump big gov­ern­ment with ‘big­ger gov­ern­ment’ (the WTO). The WTO is not ‘big­ger gov­ern­ment’ and doesn’t need to be. It’s only a con­tract among its mem­ber economies; it has no foren­sic or coo­er­cive pow­ers. The weight that it has in domes­tic debates is most­ly bor­rowed from the domes­tic oppo­si­tion to the plans of nar­row sec­tion­al inter­ests. As pol­i­cy mak­ers ever­where know, the most dif­fi­cult resource allo­ca­tion deci­sions are sur­pris­ing­ly fine­ly bal­anced. The prob­lem is that the side of the argu­ment that rep­re­sents the inter­ests of the major­i­ty is fre­quent­ly under-rep­re­sent­ed in the pol­i­cy debates. Pro­tec­tion impos­es huge costs on con­sumers as a group but only small costs on indi­vid­u­als, who have lit­tle indi­vid­ual incen­tive to object. The WTO has no pow­er to force gov­ern­ments to act appro­pri­ate­ly; cer­tain­ly not by appeal­ing to their ‘glob­al cit­i­zen­ship’. But its prin­ci­ples give some voice in domes­tic debates to the broad­er inter­ests in open mar­kets and pol­i­cy trans­paren­cy that deci­sion-mak­ers often know to be close to the under-rep­re­sent­ed inter­ests of con­sumers and e.g. importers. As Roosevelt’s Sec­re­tary of State Cordell Hull—one the treaty’s prin­ci­pal authors—knew, there’s noth­ing quite as help­ful to a politi­cian under assault from spe­cial inter­ests as being able to say: “Well, friends, I’d love to help you… but we have these over­rid­ing treaty oblig­a­tions.”

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