Trump, Trudeau, and Trade

Donald-Trump-Card

 

An expert poker player plays his hand with ease, gusto, and grace. A good negotiator, likewise, is keenly aware of the hand that he’s been dealt. Justin Trudeau, by this rubric, is a clown, as his recent G7 fiasco over U.S.-Canada trade demonstrates. The Canadian Prime Minister’s reckless behaviour, and that of his shrill harpy, Chrystia Freeland, might cost Canadians their jobs and paycheques.

The ruckus began when U.S. Vice President, Mike Pence, phoned Trudeau last week, as NAFTA (North American Free Trade Agreement) talks were being finalized, to discuss a sunset clause, which would require NAFTA to expire every five years. This is a classic bargaining tactic: throw in an addendum, last-minute, to test a partner’s resolve. Instead of manning up and playing the game, Trudeau went on TV, calling Trump’s position “insulting,” and announcing that Canada will retaliate with protectionist measures. Freeland did her part, appearing on CNN, and mocking Donald Trump’s steel tariffs with her headache-inducing, sanctimonious platitudes.

Such hawkish rhetoric might work for a powerful nation, like the United States or Russia, but it is laughable when Canada uses it for an issue like trade. The United States can survive without us, but we cannot profit without them. U.S. exports to Canada claim 1.9% of their GDP; Canadian exports to the U.S. comprise 22% of Canada’s GDP. This is particularly stark in certain sectors. For example, according to Statistics Canada and the U.S. Census Bureau, 90 to 95 percent of Canadian automobiles are exported to the United States. Textbook economic theory is hardly a guide here. We need the U.S. more than they need us.

Trudeau’s bumbling tomfoolery might, in fact, be a political ploy: appearing resilient against Trump plays well with Canadian voters. This would help Trudeau’s scandal-ridden Liberal Party of Canada, as it loses support across the nation. Justin Trudeau’s father, while he was Prime Minister in the 70s and 80s, also irritated the United States, by genuflecting before barbaric regimes like communist China and Castro’s Cuba.

A small nation can be strong yet conciliatory. Canada’s hand is mediocre at best, and instead of doing his best with the cards he has been dealt, Justin Trudeau has, like a spoiled child, fled the game crying – leaving the chips to be cashed in by Trump.

Advertisements

Canon books: recommendations

Students should acquaint themselves with the Great Books of Western literature, as part of a sound education. Formal education is rarely the way to do this, and I have worked hard to correct deficiencies in my own schooling. Reading classic works sparks our imagination and improves our cognitive skills.

Here are a few works I’d recommend to undergraduate students:

1. The Bible, King James Version. Even if you’re an atheist or agnostic, reading the Bible is crucial to understanding Western culture and civilization. The Gospel of John is my favourite Biblical work, sublime in its simple beauty.

2. The Iliad, The Odyssey, Hesiod, the Greek dramatists. A little understanding of these ancient myths is required in order to grasp subsequent Western literature. However, I wouldn’t go overboard: the incest, bloodlust, and degeneracy in Greek classics can be overwhelming.

3. One Thousand Nights and One Night (translated by Richard Burton). In our modern society, punctuated with fears of Islam, it is worth reminding ourselves of the Islamic Golden Age’s erstwhile ascendancy. These stories are funny, disturbing, and often sexy.

4. Candide. Voltaire’s farcical tale captures the Enlightenment’s spirit in witty prose.

5. Paradise Lost. John Milton composed this Biblical poem while he was blind, yet his visual imagination is unparalleled; I especially enjoyed his description of the battle between the angels.

6. Middlemarch. George Eliot’s tale of romance in the lush English countryside tells us much truth about relations between the sexes. In brief: young men, do not be like Lydate, and young women, do not be like Rosamond.

7. Uncle Tom’s Cabin. Although it has an undeserved reputation for racist caricature, Stowe’s abolitionist novel is a classic American text, and one that unites all men, regardless of race, in unity under God’s love. American abolitionism, after all, was driven by Christian sentiments.

 

I realize that I have neglected Shakespeare, but am of the firm opinion that Shakespeare must be seen, on stage, before he is to be read. Check out your local Shakespeare festival, and enjoy the bard’s eternally elegant words.

I should also add that audiobooks are a fine substitute to reading a physical book; before the printing press, and even afterwards, stories were read aloud at social gatherings. Only prudes are anti-audiobook. Just ensure that you find an audiobook with an accurate and good reader.

German car sales in Greece: memories of WWII?

I greatly admire Hans-Joachim Voth, who does some of the most creative and interesting economic history research.

Here’s his latest working paper, with Vicky Fouka. The abstract follows.

Limited attention and selective memory are important forms of cognitive bias. We investigate how present events trigger selective recall, thereby changing economic behavior. The 2010-14 sovereign debt crisis in Greece created massive political conflict between the German and Greek governments. During the same period, German car sales declined sharply. Effects differed according to the actions of German troops during the occupation of Greece, 1941-44. Declines in German market share were much larger in areas where the Germans carried out massacres. Current events can reactivate past memories selectively, even in the same country, having a large effect on purchasing behavior.

Paper on state capacity, norms, and violence in Rwanda

This is a great job market paper by Oxford’s Leander Heldring. Here’s the abstract:

This paper studies the effect of state formation on violence, civil society and local government. I show that Rwandan villages that were brought under centralized rule one century earlier experience a doubling of violence during the state-organized 1994 genocide. In surrounding years however, with longer state presence, violence is lower. Instrumental variable estimates exploiting proximity to Nyanza – an early capital – establish the causality of these results. Using data from several sources, including a labin-the-field experiment, I provide evidence for rule following as a causal channel. As the state expanded above the village level, Rwandans shifted their allegiance from their kin group to the impersonal state. In a lab setting today, individuals close to an abandoned border of the historical state are more likely to follow an unenforced rule than individuals just across the border. The state’s impact on individual rule following led to more violence when the Rwandan government mobilized for mass killing and, by contrast, to less violence when the government pursued peace and rebuilding. These results suggest that the interaction of public policy with deep-rooted aspects of civil society has the potential to reconcile long-run persistence with rapid economic change

Noahpinion’s scaremongering

I enjoy Noah Smith’s blog; he has particularly good and well-written insights on macroeconomics.

Yet his latest blog post, on the implications of a Donald Trump Presidency, is symptomatic of a wider phenomenon: otherwise intelligent people hurling reason to the wind when it comes to the President-elect.

In brief, Noah argues that the biggest threat Trump poses is that of World War III. Noah states his own view without citing any evidence. For example, he writes the following:

Strongmen are decisive and can get things done, but they’re also unpredictable. A strongman may be for peace one day and war the next. What’s more, strongmen tend to have big egos. Trump is friends with Putin today, but what happens if the two alpha males get into a pissing contest?

Notice that there is no data here – apparently ‘alpha male’ is synonymous with ‘manic depressive.’ This is the essence of his ludicrous argument.

(The few sources he does cite are provided without context. Yes, Russia has ‘rattled its saber’ in the Baltics, though this is unsurprising given Turkey’s stupid decision to shoot down a Russian fighter jet.)

In fact, the available evidence strongly suggests the opposite: that a Hillary Clinton Presidency would have been more belligerent and jingoistic.

I submit to you the following exhibits:

  1. Hillary wanted a no-fly zone in Syria, which is a tacit declaration of war against Russia.
  2. She ‘pressed the Obama administration to intervene militarily in Libya, with consequences that have gone far beyond the fall of Col. Muammar el-Qaddafi.’
  3. Her diplomatic skills are terrible. How does likening Putin to Hitler encourage peace?
  4. Clinton’s link with hawkish neoconservatives like Robert Kagan is well-documented.
  5. She pushed for more military intervention in Syria, including sending weapons to dubious rebels.

Donald Trump may have some radical ideas, but even Jill Stein said that she finds his foreign policy less scary. I would have to agree.

I share Noah’s concerns about a bipolar or multipolar world, but arguments and debates should involve reasoned discussion, not speculative scaremongering.

Sexism and Trump voters?

We can reject the idea that Trump’s victory last week was due to racism, as the New York Times‘s Nate Cohn’s data show. Obama voters flipped in favour of The Donald.

Is Trump’s win due to sexism?

Responding to this question is tough: existing studies are poorly designed, sampling from only a handful of white men in a single state.

A better, yet still flawed, method of proceeding is to determine whether states that have female Representatives, Senators, or Governors were less likely to vote Trump.

I was bored, so I ran this regression at the state level, with ‘Trump’ as a dummy outcome variable, and ‘female politician’ as a dummy explanatory variable. The coefficient is -0.163, but the p-value is 0.339, meaning an insignificant result.

Removing ‘governors,’ and focusing only on Congresswomen (i.e. federal politicians) yields a coefficient of -0.159, with corresponding p-value of 0.313. Again, this is insignificant.

In other words, there’s zero difference.

Of course, this is bad methodology because female political representation is correlated with other relevant factors, and the sample size is too small. Also, I do not cluster at the state level in the above regressions, though when I do so, this does not change either the effect size or significance by much.

What we really want is county-level data, and a conditional probability: the probability that Trump is elected, given that a county rejected a female politician who was at least as good as her male competitor.

This is difficult to do: what exactly constitutes a qualified politician?

And separating statistical, from authentic, prejudice is not easy.

A more direct approach would be to systematically use good polls, such as the CCES and Pew, correlating characteristics across individual voters, while controlling for demographic factors. This approach, of course, does not permit us to draw causal inferences.

A still better approach, but one that lacks external validity, would be to run psychological experiments with Trump vs. Hillary voters, to determine sexism. This would at least show causation, though it would require a lot of replication that probably is not worth it.

In summary, the answer is that nobody knows, because no one has satisfactorily attempted to falsify the hypothesis.

Trumpland

I am teaching one of my undergraduate research students how to use QGIS. He made a funny map that satirizes Trump’s America (link).

In other news, Harvard economist George Borjas has good advice for the President-elect. Here are a few snippets:

What to do about the 11+ million undocumented immigrants already living in the country? I think the wisest answer is: For the most part, ignore them!.. Most of those immigrants have led peaceful and uneventful lives in our country and became part of our communities…

And what about legal immigration? The time has come to start talking about legal immigration more realistically… If nothing else, the widespread revolt against globalization makes it obvious that there are indeed losers… American workers had no voice in setting up a system that was bought and paid for by the economic interests that gain from increased immigration…

There is little doubt that high-skill immigration is far more beneficial—in an economic sense—than low-skill immigration. In fact, one could plausibly argue that low-skill immigration does not provide any net economic benefit, and likely generates a net loss.