Welcome to Say More, a new weekly newsletter that brings Project Syndicate's renowned contributors closer to readers. Each issue invites a selected contributor to expand on topics covered in their commentaries, delve into new ones, and share recommendations, offering readers exclusive insights into the ideas, interests, and personalities of the world's leading thinkers.

This week, Project Syndicate catches up with Dani Rodrik, Professor of International Political Economy at Harvard University and author of Straight Talk on Trade: Ideas for a Sane World Economy.

In last week's edition of Say MoreRichard N. Haass, President of the Council on Foreign Relations, focused on Hong Kong, Iran, and US President Donald Trump's excessive reliance on economic sanctions.

Dani Rodrik says more

Project Syndicate: You wrote in January that US President Donald Trump's unilateralism and mercantilism, though bad for the world economy, will have manageable consequences, as long as other countries do not overreact. Six months later, the trade war with China still flares up between half-hearted truces, and Trump is still lashing out against allies and neighbors, recently threatening to impose non-trade tariffs on imports from Mexico. Does your assessment still stand?

Dani Rodrik: I think so. If anything, Trump's trade antics have reinforced the desire of other countries to cement their trade relationships with one another. A recent case in point is the trade agreement that was signed between the EU and Mercosur (which covers Argentina, Brazil, Uruguay, and Paraguay).

As for Trump, I have long thought that his bark would prove worse than his bite. He makes all of these threats, and then backs away. This recently happened with Mexico. Even with respect to China, against which there is considerable US domestic backing for some trade action, I would not be surprised if he gradually backed down. The bottom line is that other countries should not panic, let alone needlessly shoot themselves in the foot by retaliating.

PS: Much of the West, not just the Trump administration, has been sharply critical of Chinese industrial policy. Rather than jumping on that bandwagon, you encourage Western economies to pursue industrial policies of their own, in order to create “good jobs.” What is the biggest barrier to such policies, and how can it be overcome?

DR: I think the biggest barrier is an intellectual one. Many policymakers and technocrats, not to mention economists, are still under the sway of an outmoded market fundamentalism that, on the one hand, exaggerates what markets can accomplish on their own, and on the other hand, downplays the role of successful public action.

In my own work, I have always emphasized the need for a mixed economy, in which the government and markets reinforce each other. Leaving China aside, the advanced economies have been built on their respective versions of a mixed economy. In some respects, this model began to malfunction after the 1970s, and there was an over correction in the direction of market fundamentalism in the 1980s. My proposal for a new “industrial policy” focused on good jobs is part of a rethinking that is now going on across many domains – from antitrust to labor-market policies.

PS: One way to spur the creation of good jobs, you argue, is to stop subsidizing labor-replacing, capital-intensive technologies. The course of innovation, you suggest, is tractable, and it can be steered in “socially more beneficial directions, to augment rather than replace less skilled workers.” What specific measures could, say, the US government pursue to bring this about?

DR: First, we need to understand that the usual models of employment generation are inadequate. Macroeconomic policies determine the aggregate level of jobs, but they have less influence on the structure of jobs. At the micro end of the spectrum, policies such as tax incentives or “enterprise zones” all too often serve as giveaways to private firms, and do not create many jobs.

I would take the model of successful industrial policies in the US, but target good jobs specifically. At the federal level, there are, for example, the Defense Advanced Research Projects Agency (DARPA) and Advanced Research Projects Agency-Energy (ARPA-E), which focus on defense-related and green technologies, respectively. They bring together public resources and private-sector initiative and technological expertise to launch new industries. We need their equivalent in the domain of productive jobs.

At the local level, we have range of successful workforce-development and training initiatives, in which municipal or state agencies team up with corporations, educational institutions, and local civil-society partners to invest in skills. We need to extend these in ways that target employment growth. So there are already many good models to draw on; what we have not had is a focus on good jobs.

PS: You criticize your fellow economists for permitting ideology to hamper bold solutions, and you make a similar complaint about the political left: years of “ideological abdication” have left progressive politicians advocating policies that are “aligned more closely with financial and corporate interests.” What is the key to ensuring that ideology leads us toward more innovative and holistic solutions, rather than limiting our perspectives?

DR: Ideology always plays a role: it provides a map to orient our thinking. But we need to know when to use a different map. Our views of how the world works should always be tested against reality and evidence, and we need to be ready to acknowledge our mistakes. I think many on the left have not only bought into the story that “there is no alternative” to market fundamentalism; they have stuck with it, even when the reality proved more complicated. Perhaps unwittingly, they served as useful fools for the corporate and financial interests that re-wrote the rules of the game. This, I think, is part of the reason why center-left parties (the Democrats in the US and social democrats in Europe) were late in responding to the populist upsurge. But I think this is now changing. There is a healthy battle underway to remake the US Democratic Party, for example.

PS: In June, Turkey's ruling Justice and Development Party (AKP) lost control of Istanbul, which President Recep Tayyip Erdoğan, the AKP's founder and a former Istanbul mayor himself, once called the key to controlling the entire country. And Ankara, the capital, and Izmir have fallen to the opposition as well. So, is this the beginning of the end for Erdoğan's autocratic model?

DR: In the end, Erdoğan became the victim of his own hubris. He thought a re-run of the election in Istanbul would vindicate him. Yet his party lost by a much larger margin. But I think it is too soon to call this the end of autocracy in Turkey. What Istanbul Mayor Ekrem İmamoğlu's victory has done is energize the opposition and give it hope. But Erdoğan remains firmly in control, and I doubt he will let go of power. If anything, I think the regime will become more repressive, as its public legitimacy becomes weaker. Erdoğan knows that he cannot afford to lose another election. So, unfortunately, I expect things to get worse before they get better.

By the Way...

PS: Do you visit Turkey regularly? What is one thing you always have to see, do, or eat?

DR: Take the passenger ferry that crisscrosses the Bosphorus, which is the waterway that cuts Istanbul in half, between the European and Asian parts. No city in the world has anything like it. And eat Manti – a yogurt-based pasta dish.

PS: What is a Twitter account everyone should be following right now?

DR:  Why, @rodrikdani, obviously.

PS: Do you find that ideas come more easily in a particular setting – a place, a time of day?

DR: It is remarkable how many of my ideas come when I am taking a shower in the morning. I also often discover errors or mistakes in my thinking under the shower. There must be a scientific explanation for this, but I don't know what it is.

PS: What did you want to be when you grew up?

DR: Either a DJ or an electronics engineer.

Rodrik recommends

We ask all our Say More contributors to tell our readers about a few books that have impressed them recently. Here are Rodrik's picks:

The Code of Capital

By Katharina Pistor

In this book, Pistor shows how property is not a natural concept, but is based on law. Capital thus depends on the state, and can be reshaped and reconfigured to serve public purpose.

Ghost Work 

By Mary Gray and Siddharth Suri

This is an excellent recent book. It shows how digital platforms rely on a large number of invisible workers who carry out the “last mile” work for them, but are deprived of the protections we associate with the employment relationship.

Cultural Backlash

By Pippa Norris and Ron Inglehart

While I disagree with some of the authors' contentions, this book offers the most complete and sophisticated argument about the cultural origins of today's authoritarian populism.

From the PS Archive

From 2017
Two years ago, Rodrik argued that, at a time when strong social protections to compensate the losers of economic openness is no longer a viable strategy, policy elites must change the rules of globalization itself. Read his full commentary Too Late to Compensate Free Trade's Losers.

From 2015
Nearly four years ago, Rodrik examined the rising tide of criticism of the economics discipline, which has increasingly come not from the fringes, but from the field's own leaders. Read his full commentary Economists Versus Economics.
Straight Talk on Trade
From Princeton University Press

Straight Talk on Trade
Ideas for a Sane World Economy

By Dani Rodrik 

Deftly navigating the tensions among globalization, national sovereignty, and democracy, Straight Talk on Trade presents an indispensable analysis of the world economy, and shows how the balance between national and global governance can be restored.

Around the Web

In case you missed it, here are some other places around the web where Rodrik's work or ideas have appeared recently.

People in rich countries often react to labor-market shocks by demanding trade protection, with the largest effects observed when unemployment is caused by imports from a poor country. Recognizing this tendency, Rodrik and his co-author argue, has been essential to enabling political campaigns to manipulate policy attitudes. Read the article here.
Not only does international trade have sharp distributional implications; the public often views redistribution caused by trade as more harmful and disruptive than other domestic market shocks. Given this, Rodrik proposes restricting trade to promote domestic inclusion through a “social safeguards clause.” Read the policy brief here.
In a lecture at Brown University, Rodrik explores the historical roots of the current backlash against globalization, predicts how that backlash will evolve, and offers insight into what a better globalization would look like. Watch the video here.
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