Folk Economics

Economists have long argued that international trade can be beneficial for both trading partners.

Part of the reason for the relative success of protectionist arguments has to do with evolution. We have certain tendencies and beliefs that may have been useful in evolutionary times, but they are now counterproductive. This evolved belief easily translates into a fear of loss of jobs.

The human evolutionary environment was approximately “zero sum” — resources and incomes were fixed, and more for one person meant less for another.

If Mexicans are finding jobs in the United States, then it “must” be that American citizens are finding fewer jobs because, in a zero sum world, the number of jobs is fixed. Similarly, if we are importing goods from China, or outsourcing tasks to India, then the Americans who would otherwise make those goods or perform those tasks must be losing jobs.

Among hunter-gatherers, rates of homicide and deaths from inter-band conflict were much higher than in modern times. This high level of conflict has led to strong, evolved, in-group and out-group preferences.

Those individuals who lose from international competition can harness innate beliefs to create obstacles to competition, such as by keeping out products made by foreigners (in the case of tariffs) or keeping out the foreigners themselves (in the case of immigration). Anti-foreigner arguments resonate because they fit into evolved mental compartments.

Understanding economics is like reading, which must be taught, not like speech, which we acquire naturally with no instruction.

‘Folk’ international economics,” by Paul H. Rubin

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