David R. Henderson  

De Rugy et al on Export-Import Bank: Good Article, Wrong Title

PRINT
Please stop talking about bank... Betting, Liberty, and the Stat...

In the latest issue of Econ Journal Watch, economists Veronique de Rugy, Ryan Daza, and Daniel B. Klein have an article titled "Why Weren't Left Economists More Opposed and More Vocal on the Export-Import Bank?" It's a good article but it doesn't really answer the question in the title.

Why is it a good article? Mainly because of what appears to be a fairly thorough job of collecting and categorizing the blog posts on the Export-Import Bank. They write:

We used an August 2013 Onalytica ranking of the top 200 influential economics blogs, ordered by their "Onalytica Influence Index". At each of the blogs, we searched for "export-import bank," "export-import," "ex-im," and "exim," using the blog's internal search engine (if available), supplemented by Google's search engine when the internal engine yielded no results. We did not limit the search to any particular start date, so the results reach as far back in time as results were found, and go up to August 1, 2015. All results are included in this research.

Reminder: As noted at the time, Econlog was rated 12th out of the top 200.

But why is the title inappropriate? Because they don't answer the question it raises. Indeed, they don't even try very hard.

That's too bad because the results stand on their own. A better title would have been "Left Economists Not Vocal or Not Opposed to the Export-Import Bank." That in itself is a powerful finding. What they found is consistent with my casual impression, but the data are overwhelming.




COMMENTS (6 to date)
ThomasH writes:

I'll give you a reason I don't believe. :)

Even with multiple rounds of multilateral and bilateral trade agreements, imports still face some degree of protection. As we know from the Lerner theorem, import protection is the same as a tax on exports. Therefore an export subsidy can be a second best remedy for the distortionary import restrictions. Subsidized credit for exporters is an export subsidy. ExIm bank may be justified. QED [Except that Boeing is probably already subsidized out the kazoo by exemption from local business taxes, subsidized credit favors some kinds of products over others, etc., etc.]

A more interesting question is why of all the business subsidies in the world, why did ExIm attract the attention. I somehow don't believe it's the largest single departure from unregulated perfect competition. Does a nationalized export credit guarantee scheme have larger dead weight losses than a nationalized airport security business?

David R. Henderson writes:

@ThomasH,
A more interesting question is why of all the business subsidies in the world, why did ExIm attract the attention. I somehow don't believe it's the largest single departure from unregulated perfect competition. Does a nationalized export credit guarantee scheme have larger dead weight losses than a nationalized airport security business?
I don’t know that it’s a more interesting question, but it’s certainly a very interesting question. My own guess is that all the talk about crony capitalism in the last few years has had some effect. I’m willing to bet that the nationalized airport security business has bigger deadweight losses and that socialized schooling and Medicare each has way bigger deadweight losses.

Henri Hein writes:

Isn't the answer in the abstract, to some extent?

The impetus of our investigation is to promote reflection on a question of political psychology: Why weren’t left economists more opposed and more vocal on the issue?

If the purpose of the paper is to "promote reflection," the question is more important than the answer.

Henri Hein writes:

About why the Export-Import bank is receiving so much attention, I would expect it is because of its cycle of renewal. It was renewed for 3 years in 2012 and expired this summer. If you go to exim.gov, you will see a big "Authority has lapsed" banner.

The Patriot Act, of which airport security is a part, also gets renewed, but it's a longer cycle and it's a big, sprawling package. Items like education and Medicare is non-discretionary. The Ex-Im bank is a discrete, elective corporate welfare program. It makes perfect sense to point fingers at it.

Charlie writes:

Good point. Jeffrey Sachs supported the Ex-Im bank in his conversation with Tyler.

Khodge writes:

@ThomasH: given the frequency with which de Rugy writes against Ex-Im it would not make much sense to poll other economists as to how they felt. The question posed implies that it is a self-evident problem.

The main problem is the one raised in your question: It is a small, insignificant government program that violates any possible economic justification. So, simply, why can we not make it go away? If we cannot kill this one, what can we kill? Government programs NEVER go away. That is the first thing one learns when observing the government in action.

They never go away.

Already it has been pulled from the trash with the current budget resolution.

Comments for this entry have been closed
Return to top