Almost exactly a year to the day after How the World Works first fell under the spell of economist Dani Rodrik, the New York Times is featuring a profile by Louis Uchitelle of the Harvard professor who believes that "Washington must counteract the damage from America's trade policies more than it has in the past."
In other words, more attention should be paid to boosting the domestic safety net than seeking greater trade liberalization.
"It is a message that is resonating not just with populists in both parties, who have long been skeptical of the benefits of globalization, but increasingly with mainstream policy thinkers, many of them associated with former President Bill Clinton."
Greg Mankiw, former chairman of Bush's Council of Economic Advisors, links to the profile this morning, noting Rodrik's "somewhat heterodox views on trade." Meanwhile, from the left, Dean Baker doesn't mention Rodrik's name, but uses the article to launch his now-familiar rant wondering why stories on trade liberalization never discuss the protectionism that bolsters the salaries of American doctors, lawyers and economists. Right there, we have a nice summary of why How the World Works is a big Rodrik fan: Rodrik occupies a challenging middle ground -- he supports the principle that trade, in general, boosts prosperity, but he doesn't discount the positive role that government can play in the economy, and he emphasizes that those who pay the price for globalization should be compensated.
As I wrote last January, the standard putdown of Rodrik-like support of industrial policy is that "governments can't pick winners" -- and sure enough, Uchitelle quotes MIT economist David Autor stating that "Government does not have special information that allows it to pick winners and losers." But a theme running through Rodrik's work is that the developing countries that have been most successful in achieving economic growth -- China, India, Brazil -- have all devoted considerable government resources to nurturing specific industries or industrial sectors to great success. Meanwhile, the countries that slavishly followed Washington Consensus policy prescriptions for deregulation, privatization and trade liberalization have fallen behind.
Is the love being showered on Rodrik evidence of fallout from the November election? A year ago, Rodrik seemed like a voice in the wilderness; today he's on the front page of the New York Times business section. Let's hope the so-called populists newly installed in Washington heed his heterodoxy.
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