The Atlanta Fed's macroblog provides commentary and analysis on economic topics including monetary policy, macroeconomic developments, inflation, labor economics, and financial issues.

Authors for macroblog are Dave Altig, John Robertson, and other Atlanta Fed economists and researchers.

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March 29, 2005

More Hurrahs For Free Trade

Cafe Hayek brings to our attention a fascinating-sounding paper by Erwin Bulte, Richard Horan, and Jason Shogren.  The results are summarized at Newswise:

Creating a new kind of caveman economics in their published paper, they argue early modern humans were first to exploit the competitive edge gained from specialization and free trade. With more reliance on free trade, humans increased their activities in culture and technology, while simultaneously out-competing Neanderthals on their joint hunting grounds, the economists say.

Archaeological evidence exists to suggest traveling bands of early humans interacted with each other and that inter-group trading emerged, says Shogren. Early humans, the Aurignations and the Gravettians, imported many raw materials over long ranges and their innovations were widely dispersed. Such exchanges of goods and ideas helped early humans to develop “supergroup social mechanisms.” The long-range interchange among different groups kept both cultures going and generated new cultural explosions, Shogren says.

Pretty cool.  Moving to a more modern example, the Dallas Fed reviews recent economic successes in Mexico, putting free trade front and center:

The success of Mexican macroeconomic policy can be seen in the course of recent history.  Together with the North American Free Trade Agreement and the opening of Mexican markets to trade, it contributed to the rapid recuperation of the Mexican economy after  1994–95. And it was essential in limiting the 2001 Mexican downturn to a mild recession, a landmark in a country where every downturn of the prior 30 years had been accompanied by a financial crisis.

March 29, 2005 in Latin America/South America , This, That, and the Other | Permalink


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" Archaeological evidence"? This isn't research but pure speculation, spouted in the interest of a free-trade ideology that drapes itself in a quasi-darwinian scientism. In other words, total cr*p.

Posted by: camille roy | March 30, 2005 at 01:26 AM

Geez Camille, that seems a little harsh. I admit I have not read the article yet -- I intend to -- but archaeological evidence is where we get most of our evidence on the social behaviors of ancient peoples. It's speculative, for sure, but it doesn't seem much more foolish than, say, forecasting the course of current account adjustments.

On a related note, I just started reading Jared Diamond's new book "Collapse: How Societies Choose to Fail or Succeed." Two of his case studies are the Polynesian Island societies on Pitcairn and Henderson Islands. He claims -- using archaelogical evidence! -- that a prime culprit in the total demise of those populations was a loss of their major trading partner, Mangareva, to its own problems. Diamond definitely does not put sole weight on trade -- it is but one of the factors he emphasizes, with environmental irresponsibility being something like first among equals in a list of five key factors. (The other three are exogenous climatalogical catastrophy, hostile neighbors, and the social institutions in place when the stress hits.) But trade is definitely an important piece in some cases. Is that really that hard to swallow?

Posted by: Dave Altig | March 30, 2005 at 08:27 AM

As an non-economist outsider, I see much interesting and significant data collection and interpretation in the field. But I am frequently annoyed by the way economists don't seem to understand that their models are not science and can never be science. What economics needs is not an injection of darwin-styled scientism, which mystically absorbs the characteristics of natural selection as a justification for free markets, but rather a serious reading and application of the principles of social science and history. One of the best historians I know (my father, a world-renowned anthropologist) told he regarded the historical analysis in Jared Diamond as second-rate, because he doesn't understand history and uses biologically based models in ways that are simply inappropriate.

Posted by: camille roy | March 30, 2005 at 10:42 PM

Hmmm. That's worth a discussion. Is there a written critique somewhere that cogently lays out Diamond's mistakes? Or any misdirection in the Bulte et al article?

PS -- As an economist insider, I really do support the application of the principles of social science and history. And I welcome the opportunity to be educated.

Posted by: Dave Altig | March 31, 2005 at 01:58 AM

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