Caplan divides them into three categories: antimarket bias, antiforeign bias, make-work bias and pessimistic bias. Antimarket bias describes people feeling that trade and profit are zero-sum games, that one person’s gain is another person’s loss. They haven’t learned that free exchange is win-win and that in a free market, profit comes from cost-cutting innovation. Antiforeign bias, perhaps a vestige of primitive man, consists of distrusting “them” even though our prosperity increases according to how global the division of labor is. Foreigners don’t want to invade us; they want to sell us useful things [bold mine-DL]. Make-work bias is the belief that what makes us rich is jobs, rather than goods, and so anything that eliminates jobs is bad. If that were really true, we could prosper by outlawing all inventions created after 1920. Think of all the jobs that would create! Finally, pessimistic bias is the view that any economic problem is proof of general decline. Lots of people actually think we’re poorer than our grandparents were! ~John Stossel
It’s no secret that I don’t like Caplan’s arguments. I also find them wanting. Do “lots of people” actually believe that we are poorer than our grandparents, the folks who lived through the Depression? I would really need to see some evidence for that. Not that the self-serving claims of libertarians aren’t enough for me, mind you.
Profit can come from innovation, or it can come from other ways of cutting costs, such as reducing the price of labour by moving operations to places where labour is exceedingly cheap and of fairly comparable quality (or by importing cheap black market labour that does the same job for half the price or less). If you could cut costs through innovation and cheaper labour, profits would be even greater–that sounds like a win-win…except for the people who don’t reap any of the profits. The generalisation about foreigners is true, except in all those cases when it isn’t. Some foreigners may want to invade; some may want to infiltrate and attack. If you want to say that most do not want to do this, you might have a point, but the default assumption in favour of importing foreign labour and foreign products is no more rational when it is pursued relentlessly. What Caplan has categorised as irrational biases are simply different political leanings from his own; he knows that he is rational, so it must be that all these others are irrational. People do not assume that anything that eliminates jobs is undesirable. They assume that something that eliminates, for example, the manufacturing sector from their town is undesirable, particularly when that manufacturing provides most of the employment in the town. The libertarian answer: things change, people should move to another location. When people respond to this upheaval in a hostile way, it is declared irrationality and bias and the libertarian believes he has answered his critics. The optimistic bias of every free trader and market enthusiast is that every disruption, upheaval and economic transformation brings net benefits to all at ultimately minimal cost. That might even be true, but it won’t change the response of the voters harmed by the upheaval. The people who bear the brunt of those costs don’t care whether the costs are “minimal” in the grand scheme of things–they respond rationally to what is happening around them and are not inclined to measure their present misery against an uptick in national productivity.
I can see why Caplan’s agenda is attractive. It would be tempting for me to argue that no one who disagrees with me about policy questions should be allowed to vote. That would simplify matters considerably, and naturally I think that the resulting policies would be better, but somehow I think someone might suspect that this was a not-so-subtle power grab. If we were going to start setting up standards for voting, I would want to insist on voters who could also demonstrate foreign affairs and historical literacy, which would disqualify so many people that we would not need ballots, but could settle all important matters by a show of hands.