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January 06, 2007
The Plural of Anecdote is Not Data
Don Boudreaux
My open letter to Lou Dobbs brought me lots of e-mail -- alas, almost all of it hostile. Here (with the writer's name withheld, of course) is the full text of one of these e-mails; its message is typical:
If you lived in Michigan, where factory after factory has a for lease or for sale sign in front of it, you might find Mr. Dobbs a bit more insightful.
While I understand the appeal of anecdotes -- and while I'm not among those economists who dismiss anecdotes as altogether irrelevant -- it is nevertheless important to distinguis anecdotes from data. It pains my brain to read so many people who insist that their anecdotes establish a sound case against the empirical record built from data collected and interpreted according to well-established theories.
I don't know the person who wrote the above e-mail; I don't know any of the persons who wrote to assure me that my imbecility was on parade in my open letter to Mr. Dobbs. But I wonder how many of these people would accept the following line of argument:
Researcher Jones, like most other researchers in the field, reports that a majority of Americans are fluent only in English. But I dispute this claim, for my wife -- who is American -- is fluent also in French. Therefore, I reject the finding that most Americans are mono-lingual.
I suspect that few, if any, of my correspondents would find the above rejection of the claim that most Americans are mono-lingual to be compelling. Yet these same people proudly make similar arguments about the consequences of trade -- and, because they e-mail these arguments to me, obviously believe that these arguments have weight and merit.
Posted by Don Boudreaux in Myths and Fallacies, Trade | Permalink
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Comments
It takes guts to post an editorial like that. But it was needed. Well done.
Posted by: Randy | Jan 6, 2007 2:08:04 PM
Don,
I'm not sure you've addressed the e-mailer's point. I think his point may be that you're not properly weighting the data (in his opinion). I think it may be that for the e-mailer, keeping a single additional factory open in Michigan is worth impoverishing the entire rest of the country. If so, then I can see why the e-mailer would find Mr. Dobbs' commentary so insightful.
Posted by: Bret | Jan 6, 2007 2:46:55 PM
Mashup time:
"Researcher Jones, like most other researchers in the field, reports that a majority of Americans are fluent only in English. But I dispute this claim. If you lived in Florida, where person after person is multilingual, you might find Dan Boudreaux explanation more insightful"
Posted by: jb | Jan 6, 2007 3:00:28 PM
The usual paradigm of statists is that you simply don't feel their pain, and if they explained it to you, then you would feel bad for them and conclude that the policies you advocated are bad. If you don't, then you are obviously heartless.
Posted by: TGGP | Jan 6, 2007 3:02:10 PM
Your comments on Lou Dobbs were right on.
There may be a way to make people more receptive to your critique. If the alternative suggestion was that we paid every person who lost his job one year's salary to train himself for a new occupation, people may see that as caring. Nevermind that they cannot see how free trade has benefitted those Michigan workers in every instance over the last 230 years, except the one time it happened to their particular factory.
There would, of course, be problems with paying people to get laid off. But as problematic a proposal as it is, it is better in every way than stopping trade to protect those jobs. It's better for the displaced workers, and better for the taxpayers.
Posted by: Tim V | Jan 6, 2007 3:06:54 PM
So no one has ever been hurt by trade?
Or do you just ignore that part of the data? How about the personal bankruptcy and home foreclosure data from Michigan 2001-2005?
Or the unemployment data? Or real income data?
And do you consider Governor Granholm and Senators Levin and Stabenow stupid?
Is sneering at non-economists the best you can do?
In your education did you learn nothing about the short run versus the long run?
People don't eat statistics. Or data.
Posted by: save_the_rustbelt | Jan 6, 2007 3:32:56 PM
Save_the_rustbelt,
People don't eat anecdotes, either.
One of my very first posts on Cafe Hayek was on the relevance of the long-run:
http://cafehayek.typepad.com/hayek/2004/04/still_alive_in_.html
Don
Posted by: Don Boudreaux | Jan 6, 2007 3:44:15 PM
Here's another earlier post on Cafe Hayek that addresses concerns such as those that motivate Save_the_rustbelt:
http://cafehayek.typepad.com/hayek/2005/01/reshuffling_wor.html
Don
Posted by: Don Boudreaux | Jan 6, 2007 3:52:23 PM
And here's a third post, this one from April 2004, addressing concerns such as those raised above by Save_the_rustbelt:
http://cafehayek.typepad.com/hayek/2004/04/polio_vaccinati.html
Don
Posted by: Don Boudreaux | Jan 6, 2007 4:02:42 PM
There it is again, the "moralist" argument. If anyone is hurt by a trade, directly or indirectly, then the trade should not be allowed.
Posted by: Randy | Jan 6, 2007 4:08:23 PM
Don
Your letter to Dobbs was brilliant and effective.
The abuse you have received is a sign of the effectiveness of your case (and Adam Smith's comment of the myths of the 'balance of trade').
Posted by: Gavin Kennedy | Jan 6, 2007 4:34:38 PM
Addressing the short-run is great, but not at the expense of the long.
Free trade does, to borrow Milton Friedman's expression, allow us to bring tomorrow's laggards above today's mean.
The cost to the country of saving the jobs of Michigan factory workers is considerably more than what they make.
Posted by: Tim V | Jan 6, 2007 4:41:10 PM
Don, I grew up in downriver Detroit and currently live in the city. I want to thank you for your editorial and your continued efforts. I've tried, but I can not accurately put together the words to describe the hostility this area has towards reality.
Posted by: mattpp | Jan 6, 2007 4:48:03 PM
Don,
You should be ashamed of yourself using logic and reason to justify suffering of millions. The immigrants are taking our jobs and the foreigners are taking our money. We are ruined and you are pointing to useless statistics like high home ownership; low unemployment; add record stock market values; high property values; and growing dominance of US MNCs in global economies including the fastest growing like India and China.
Here is my proposal to retaliate against the foreigners. Let us start investing billions of dollars in companies in India and China- their banks, manufacturers, retailers. And start selling them our cars and computers at cut-throat low profit prices. I propose a budget of $1 trillion for this initiative to save America. It will be used to invest in foreign economies and subsidising products for the poor in India and China.
Posted by: Anshu | Jan 6, 2007 4:58:01 PM
Don,
I think you're a very caring person. I admire your high moral standards and how you help advance the general welfare, by pointing towards the right solutions which are going to help everyone, but especially the very poor.
Calca.
(I hope my post fits the high level of sentimentalism in this "comments" section.)
Posted by: Calca | Jan 6, 2007 6:05:03 PM
I beleive the people in the rust-belt should have a bigger beef with the red necks down south than with foreigners. While Detroit was shipping THEIR factories overseas and down to Mexico...Tokyo and Munich/Frankfurt were building factories in Tennessee, Alabama and Mississippi. Advantage...Tokyo/Germany...and the US!!!
Posted by: Nicholas Lamparelli | Jan 6, 2007 6:28:28 PM
I am puzzled as to how save_the_rustbelt defines harm.
Are Japanese car companies machine-gunning American workers? Are Daimler bombers carpet-bombing the factories ringing Detroit? Russian submarines torpedoing ore barges creeping up the Cuyahoga?
The answer is, of course, no. If you make something that people buy one day, and the next day those people decide to buy from someone else, you are not harmed.
Free trade harms no one, since it is, be definition two or more parties engaging in voluntary, peaceful exchanges of goods and services.
The arguments raised by protectionists remind me of a disgusting editorial I once read in a newspaper justifying date rape on the grounds that since (it argued) men needed sex more than women do, it was morally permissible for men to get the sexual gratification they needed from unwilling women.
The notion that people should be forced to trade with each other is odious for the same reason that the notion that people should be forced to have sex with each other is.
Unfree trade harms people, free trade harms no one.
Posted by: tarran | Jan 6, 2007 7:02:09 PM
Language is always imprecise. I don't believe that it's out-of-bounds for Save_the_rustbelt or anyone else to talk of some people being "harmed" by trade, as long as it's understood that the harm suffered is that a change in trade patterns caused some persons who previously earned $X now to earn <$X.
This harm, though, is not a wrong. Put differently, not everything that plain language calls a "harm" is a candidate for remedial efforts.
It is also important to keep in mind nearly everyone harmed by trade is someone who also benefits from trade -- and that today's harm, as painful as it is, likely is overwhelmed by the real if taken-for-granted benefits that trade continues to bring.
At the end of the day, any one who wishes to do so can shield himself and his family from the risk of being harmed by trade: he can remove himself and his family from the exchange economy. He can get a plot of land somewhere -- say, in Montana or in Arkansas or upstate New York or low-country South Carolina -- and live without trading with anyone.
Such subsistence living will guarantee that this family lives in crushing poverty -- but they never need worry about being "harmed" by trade. The reason is that they keep themselves from benefiting from trade.
Posted by: Don Boudreaux | Jan 6, 2007 7:23:20 PM
satire
I'm upset with corporations outsourcing their jobs to other states such as Nevada or Texas. Aren't we all willing to pay a great deal of moola to our protection force to keep things the way they were?
It's a good thing that we have a mechanism for stepping outside the bounds of morality whenever we FEEL threatened by discomfort or reality.
Posted by: Sam | Jan 6, 2007 7:41:44 PM
This isn't about anecdotes vs. data.
"If you lived in Michigan, where factory after factory has a for lease or for sale sign in front of it, you might find Mr. Dobbs a bit more insightful."
The problem is that this fact, which need not disputed, is interpreted quite differently depending on what theories it is interpreted by.
Often, people such as your emailer think that facts speak for themselves, but facts never speak for themsevles. A fact, such as this, is consistent with a wide array of different theories and entails different consequences in each. To a libertarian, and most economists, to see those "for sale" signs indicates that scarce resources are being reallocated more efficiently ultimately bettering everyone in the long run (that is, provided market conditions rule).
To the protectionist (or obstructionist), these for sales signs as a transfer of wealth from one place to another, benfitting one group at the expense of another. The classic zerosum fallacy.
An anecdote, if true, really does have the power to sink a theory that denies it should occur, no matter how wellestablished and corroborated that theory is. The mistake your emailer has made is in assuming that his anecdote is incompatible with your own position, which simply demonstrates that he does not understand the theory he is trying to criticise.
Posted by: Lee | Jan 6, 2007 8:42:15 PM
The difference between bilingual wives and closed factories is that bilingual wives never caused anyone any pain. There are two basic responses to being kicked in the ass by life. One is to bitch, the other is to move on and do your best to make things better for yourself. The protectionist crowd is in camp #1, and most of us here are in camp #2. About 99% of us who've reached our 30s are in the camp where life kicked our ass at some point, so I don't buy the argument from camp #1 that camp #2 just doesn't know what it's like to face adversity beyond our control. The terrible irony of the leaders of camp #2 such as Buchanan, Dobbs, and Brown are that they have that "strict father" aura around them, which ought to be telling the people to suck it up and try again rather than to whine about foreign competition. I bet Oprah and Rpsie O'Donnell would be more open to free trade arguments than those guys. Which basically makes them... well, this is a family blog, so I'll just say "pansies".
Posted by: Brad | Jan 6, 2007 11:02:14 PM
My parents lived in the age of duty and honor. As a baby boomer I grew up in the age of aquarius. We are now living the age of entitlement. These are ignorant times.
Posted by: Flash Gordon | Jan 7, 2007 12:17:19 AM
I think Lee's post is insightful, and I agree it is not about anecdote vs. data. One could assemble a data set that demonstrates factories across the country have been closed and work there moved offshore.
As Lee points out the facts do not speak for themselves, and I'd add that there is an array of benefits not being accounted for by Dobbs and friends that are unavoidably accompanied by closed factories. This argument is more about seen costs vs. harder-to-see benefits.
Posted by: ben | Jan 7, 2007 3:44:37 AM
Save the rustbelt gets my straw man of the day award for: "So no one has ever been hurt by trade?"
Posted by: ben | Jan 7, 2007 3:53:04 AM
The basket in which Michigan had most of its eggs, automobile manufacturing, became topheavy expressly because the various decision makers ignored the impact of international trade. Today's "harm" is largely the loss of past largesse which in retrospect should not have existed.
Posted by: triticale | Jan 7, 2007 9:08:09 AM
There are close to 250,000 people in Michigan working for non-U.S. companies.
Would save-the-rust-belt, Senators Levin and Stabenow, or the Governor of Michigan tell these companies to stop outsourcing these jobs to Michigan?
Of course not. Michigan politicians hold press conferences to proudly proclaim their brilliance when they are successful in convincing non-U.S. companies to locate in Michigan and hire Michiganians.
If you oppose out-sourcing, you must also oppose in-sourcing. Can't have it both ways.
Posted by: bob wright | Jan 7, 2007 9:28:28 AM
"And do you consider Governor Granholm and Senators Levin and Stabenow stupid?"
Yes.
Posted by: Alan H | Jan 7, 2007 1:08:15 PM
rustbelt:
Why do you think Michigan is at the bottom of the economic barrel in America?
You should take a long, objective look at things, and maybe reassess your basic understanding of cause and effect.
professor, you're right on as usual. I'm genuinely surprised that you'd get such email as I really wouldn't expect these kinds of people to frequent such websites.
Posted by: Ray G | Jan 7, 2007 3:41:57 PM
"If you lived in Michigan, where factory after factory has a for lease or for sale sign in front of it"
Michigan manufacturing is hardly dead.
Here's some 2005 facts about Michigan from the National Association of Manufacturers:
Mfg businesses.....15,669
Mfg employees.....644,400
Gross state product...$376 billion
Mfg share of GSP......18%, or $69 billion
Goods exported to other nations...$34 billion
There is no question that a large portion of Michigan's 644,400 mfg employees owe their jobs to international trade.
Posted by: JohnDewey | Jan 7, 2007 7:27:31 PM
Michigan hasn't been hurt by trade, it has been hurt by pro-union labor laws.
The non-unionized US economy is doing fine.
Unfortunately, labor regulations that favor unions distort the market, which was OK when Japan and Europe were still devastated by WWII, but unfortunately did not end up being long-term stable for US car makers.
Meanwhile, less burdened by crazy union agreements to pay people not to work etc., Toyota opened its sixth North American factory in Texas in November. Honda will open a sixth North American assembly plant in Indiana in 2008.
Of course, the ability of Japan to invest in these new plants came from the US trade deficit - no deficit, no net foreign investment by definition.
"Our factories in North America are operating at full capacity," said Honda President Takeo Fukui in an interview on Dec. 26 in Tokyo. "This is a pleasant problem to have."
Posted by: Mr. Econotarian | Jan 7, 2007 11:13:12 PM
Thank You John Dewey. Umpteen posts into the comments section and someone finally nails it. The only thing "unfair" about the situation is the "unfair" burden imposed on many of the workers of Michigan by the anti-competitive, anti-free trade regulations promoted by labor unions and their ilk..
Hey if anectdotal evidence is the standard then come to Florida where companies are hiring "displaced" workers from the rustbelt in droves.
Posted by: superduckz | Jan 8, 2007 9:16:58 AM
People have argued semi-seriously that people that lose their jobs because of increasing foreign trade flows have been demonstrated to have been "ripping off" Americans for decades. And, rather than compensating these newly displaced workers for their newfound economic misfortune, they should actually be forced to pay a penalty to compensate "us" for all those extra dollars "we've" had to spend prior to trade. This compensation could be higher if the higher prices were due to outright proctionism and other restrictions on competition.
More seriously, it doesn't seem to me that Rustbelt residents should be entitled to make livings there as manufacturing employees. Why should they enjoy those protections at the expense of every other American in every other industry? Am I entitled to continue on forever as a shopkeeper in the Finger Lakes of NY? If Dick's sporting goods comes to town, should the citizens of Ithaca take measures to keep me in business?
Posted by: Mike | Jan 8, 2007 10:35:22 AM
Additional Michigan export data from the USDOC's Trade Stats Express site:
Michigan ranks fourth among the states in international exports, behind only more populous Texas, California, and New York.
Michigan's international exports continue to grow:
2003 to 2004......8.1%
2004 to 2005......5.7%
2005 to 2006......8.8%
Not sure if these figures represent growth in nominal or real dollars. Even if these are based on nominal dollars, the growth exceeds inflation, so the growth is certainly real.
Posted by: JohnDewey | Jan 8, 2007 10:37:19 AM
Trade is only one force taking jobs from hard-working Americans. If we didn't have so much technology, we'd have a lot more jobs. F'rintance, if you had to hire an orchestra instead of listening to a recording every time you wanted to listen to music, think how many more musicians would have jobs. If you bought your clothes handmade from a neighbor, those corporations wouldn't make all that money, and people could work from home. If we met in the local inn to discuss these problems (drinking locally made booze), our innkeepers and brewers would have jobs.
....right?
Posted by: hanmeng | Jan 8, 2007 11:47:25 AM
hanmeng: "Trade is only one force taking jobs from hard-working Americans."
I understand the rest of your post, but I object to the concession to the Dobbs-ists implied in this first sentence. Trade has created many more jobs in the U.S. than were lost as a result of that trade.
Posted by: JohnDewey | Jan 8, 2007 12:04:18 PM
If a trade deficit is good and America has the world's largest (as a percentage of GDP), is a trade surplus bad?
Posted by: Kent Gatewood | Jan 8, 2007 1:56:00 PM
"is a trade surplus bad?"
By trade surplus, I assume you mean current account surplus and capital account deficit.
Doesn't it depend on the cause for the flows of goods and capital? Suppose Germans are investing in the U.S. because they perceive U.S. investment opportunities are superior. Such investment will increase Germany's capital account deficit as well as its current account surplus. Does that indicate the German economy is "good"? "bad"? I think it just indicates that Germans wish to invest in U.S. opportunities.
Posted by: JohnDewey | Jan 8, 2007 2:21:09 PM
Thanks.
Americans don't see any compelling investments; therefore, we consume.
Posted by: Kent Gatewood | Jan 8, 2007 3:19:48 PM
"Americans don't see any compelling investments; therefore, we consume. "
I wonder why. Perhaps many believe Medicare and Social Security will meet their needs in retirement. I didn't believe that, so my Medicare/SS benefits will be means-tested away.
Posted by: JohnDewey | Jan 8, 2007 3:34:14 PM
Rustbelt sayd "Is sneering at non-economists the best you can do?"
I don't know; we enjoy sneering at non-singers on American Idol when they try to sing. Why shouldn't we enjoy sneering at non-economists when they try to come to economic conclusions? The problem is that many people confuse finance with economics, so those who can balance their checkbooks feel perfectly justified in coming to economic conclusions. They would be wrong (sneer).
Posted by: Russell Nelson | Jan 9, 2007 3:57:11 AM
The statistics on the benefits of free trade verses protectionism are undeniable.
The problem which statistics overlooks (which it is expected to overlook, as it is Utilitarian if it has any moral underpinning at all) is that change causes suffering to some individuals.
The sad truth is that change always causes pain to some - I can think of no social/cultural/economic upheaval that has not caused some to lose out. The public policy question is whether we have a right to stop some individuals benefiting by trading with whom they choose (even, dare I say, the Chinese?!!) because others would lose out by no longer having their business.
I find the thought that I should be obliged to do business with companies/people of whom the Government approves (say, because they share my nationality) to be terrifying. However, we should not lose sight of, or fail to feel sympathy for, those who lose out from change.
Posted by: Tom Papworth | Jan 9, 2007 6:35:01 PM
Posted by: laptop battery | Oct 13, 2008 2:46:54 AM
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