Economics is for Everyone


A conversation with Dr. Raymond Robertson

by Benjamin Collinger

Dr. Raymond Robertson is a professor and the Helen and Roy Ryu Chair in Economics and Government in the Department of International Affairs at the Bush School of Government and Public Service at Texas A&M University. He is widely published in the field of international economics and currently chairs the U.S. Department of Labor’s National Advisory Committee for Labor Provisions of the U.S. Free Trade Agreements. Benjamin Collinger spoke with Dr. Robertson about the role of economics in society, his research and global economic trends.

From an academic perspective, what is the importance of communicating economic policies and ideas to the public?

I think communicating economics to public policymakers, which includes everyone in a democracy, is important because almost all decisions have some economic component to them. Economics is like the study of decision-making at its core, and provides a rubric for understanding how those decisions are made, and how to evaluate them. Obviously, communicating these central ideas of economics is critical for making good decisions.

Are there any economic decisions that you’ve thought have been particularly poorly communicated from an economic perspective? 

One that has been in the news [recently] is Britain’s vote to leave the European Union. That’s one that has astonished people who understand economics and worry very much about the economic implications not just in finance or in trade, but also employment for young people. They’ve completely lost their mobility, which will have huge implications for employment for the British youth. I think that the vote to leave the union was very similar to the movement in the United States to be more isolationist. The support for candidate Trump has been one rooted in wanting to be more isolated from the rest of the world, which from an economic point of view is disconcerting.

Do you think that the economic populism that has recently swept Europe is affecting the rise of Trump, or is it a result of the great recession and other trends?

I think it would have happened regardless. I don’t think it’s very tied to the United States specifically. The common causes are probably very pronounced. One of the concerns that we’ve seen both in Europe and the United States is that trade and globalization bring net benefits to the country, but there are also very strongly felt losses for significant portions of the population. What policymakers have failed to realize in the United States and Europe, is that in a democracy, if you don’t take care of the people who don’t benefit from trade, they are going to respond with anti-trade sentiment, and I think that’s what we are seeing in both places. Not that they’re related per-se, but because of the common phenomenon in both areas.

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Would you be in favor of trade adjustment assistance to offset the negative impacts of free trade?

Free trade agreements and trade adjustment assistance are not at all mutually exclusive. Historically, they have gone together. The idea of trade adjustment assistance is the right way to go, but unfortunately, most people are pessimistic about it because it has not been very effectively implemented in the past. People are very skeptical about how it has been implemented and don’t feel like it’s doing a good job to address the losses suffered by people who are adversely affected by trade.

After you graduated from Trinity, you studied NAFTA’s effects on Mexico. Did you make any evaluations or predictions back then that you can reflect on today?

When I was at Trinity, I did my senior thesis on Mexico’s economic policies over the twentieth century and discussed NAFTA in the context of Mexico’s historic economic policies. One of the things that became very clear to me, was that although NAFTA would have very adverse effects, it was a step in the right direction in the sense that the alternatives were not at all clear or better. I was interested in understanding the winners and losers of NAFTA and it seemed to me, and I’ve found in my subsequent research, that there’s been falling inequality after NAFTA in the longer run, and there’s been growth in both the U.S. and Mexico. There’s been a big increase in trade but obviously, there are people who are worse off. As a result, I think it is important to acknowledge that there are losses and find ways to help alleviate those losses. So it’s the same theme we’re seeing with the U.S. and Europe.

Did you do any research on NAFTA’s impact on Mexican agriculture?

I did not do any formal research, much of my research was on manufacturing in particular, but labor markets generally. I found out [recently] that I had a paper accepted in the Review of World Economics in which we analyze income convergence between Mexico and the U.S. The idea of NAFTA, at least the way it was sold to the public, was that NAFTA would allow Mexico to close that gap. But what we show in our paper is that the gap between U.S. and Mexican incomes has not closed at all, it’s actually a little bit wider than it was prior to NAFTA. Mexico had a number of unanticipated macroeconomic setbacks and secondly, I think that the rise of China has meant that Mexico faces stronger competition than it was expecting. Thirdly, Mexico as a part of NAFTA worked its way into the North American value chain and that primarily was focused on manufacturing—but U.S. manufacturing has been declining. They were hitching their wagon to a star that was not rising as fast as they hoped.

Mexico is usually divided by North and South in terms of economic productivity, and they passed a law in May to create special economic zones with the hope of promoting investment in local economies. How will this affect the national economic output?

In general, I think trying to promote local economic development is a good thing. But it’s been very difficult to point to historical examples where that has been really successful. Is it going to reduce the disparities between north and south? To some degree, that might happen but it’s probably not going to solve or eliminate those disparities. There’s huge disparities in terms of economic activity between the North and South, which probably are not going to be addressed by stimulating local economies as it is by trying to become more globally engaged. The North very globally engaged, and the South is not.

Much has been made of the labor standard benefits from the Trans-Pacific Partnership (TPP), how would you describe the role that your committee has in informing those standards?

First, I’m optimistic about the labor provisions in the TPP. They are the [best] provisions we’ve had in any trade agreement, and is definitely a step in the direction of more rigorous and safe. The role of the committee is to advise the department of labor on different labor provisions as they are in existing trade provisions. We were not very involved in forming the provisions in the agreement, our charge is to reflect on the implementation of provisions after they have been put into the agreements. In that role, we have been reviewing a number of different aspects. In Latin America, there’s a number of cases that have come up and we are working to make sure that a broad range of perspectives and stakeholders are represented in the labor department’s actions. The national advisory committee has twelve people, four from the business sector, four from organized labor and four from the general public. The AFL-CIO is there, the United Auto Workers, and business are also represented. We bring together the main stakeholders in that space.

You’ve written about the business case for better labor standards, is that becoming a more common argument to increase standards or do you focus on the intrinsic benefits of better standards like improvements in human rights?

What I’ve found in my research is that one of the reasons why labor standards are relatively low in developing countries is because the human resource technology, which is what we have learned about how to treat workers and provide incentives, is not known to a lot of factories in developing countries. Our argument has been that sharing information on different ways to improve conditions, it might improve the performance of the factories themselves. Factories always have the need to incentivize their workers, and one way to do that is to yell at workers and hit them. Another way might be to give them incentive pay. Our argument is that if you give workers incentive pay, that might work better. If it does incentivize them, it boosts labor productivity and improves the factory’s performance. One of the things that we have found is that factories that move to improve their working conditions are more likely to survive than comparable factories.

The labor force participation rate is three percentage points worse than it was in December 2007. What does this mean for the U.S. economy and what policies would you recommend to combat its effects?

It’s not that surprising that the labor force participation rate would drop, there’s a number of things that have been driving that for a long time. One that is relevant in particular, is the idea of discouraged workers. If workers are looking for local jobs and aren’t finding them, people just give up. This is a very significant loss for the country because now the workers who would have otherwise been contributing, are not. I think it’s really important to create opportunities for these workers, but one of the problems with that is workers are very hesitant to move. I think an important part of trade adjustment assistance is relocation and information sharing to try to mitigate those costs that workers have from moving in between areas. I don’t think we’ve come up with a very good way to help workers with those costs, and from a public policy point of view, how to reduce the costs.

What is your view on how artificial intelligence and robotics is changing the labor market?

Many of the business owners and entrepreneurs I have talked to have often expressed interest in finding ways to automate the work that they have. This has been going on for over 100 years, and what we’ve found in the research is that this automation and artificial intelligence is not just affecting the lower end of the wage distribution, it’s now affecting the middle. This creates a lot of anxiety because now, people who thought they might be safe from automation, are not. It is a significant policy concern. It means that people will need to upgrade their skills and actively seek out opportunities, but that’s really costly and difficult which will mean continued tension on automation.

What do you think about the Labor Department’s new rule forcing employers to disclose the consultants they’ve hired for help fighting unions?

The broader picture is really anti-union sentiment. One of the things I’ve found from working with people all over the world is that the U.S. has a very different view and experience of unions than the rest of the world. One of the things that has really surprised me, and that I don’t fully understand, is that the anti-union sentiment is so much stronger in the U.S. than the rest of the world. It’s really palpable. It’s a little puzzling. Other parts of the world see unions just as a way to communicate with workers, facilitate improvement and changes in the factories in an organized way and that’s not the way we approach it. It would be a really good idea for businesses to take a step back and consider how unions work in the rest of the world. Maybe there’s something we can learn from international experiences that would reduce the kind of tension we see between unions and businesses in the U.S.

What do you attribute the anti-union sentiment in the U.S. to?

It’s a great question, and I’ve tried to understand it. I think part of it was the rise of unionism in the U.S. being a very violent struggle, there were lots of lives lost—not to say there isn’t violence against unions everywhere in the world because there is—but here in the U.S. it created deep wounds that we have not been able to heal. I don’t fully understand it.

In the future, do you think that global economic cooperation will become more regionally fragmented or internationalized?

In the medium term, I think it’s very likely that we see returns to regionalism. I’m finishing a World Bank report on regionalism in Latin America in which we find that there’s a lot of potential gains from increased regionalism. But honestly, if you look at the evolution of human beings in society, as the population grows and travel increases, the connections become deeper and deeper across borders. In the longer run, it would be impossible that those trends don’t result in deeper economic integration. I think it’s very clear that there might be temporary movements toward regionalism, but in the long run, we’re becoming a global community.

 What do you enjoy the most about the things that you do?

I got a message from one of my World Bank teams that India just implemented a new apparel policy, and in the op-ed, the chief economic adviser to the Indian government cited some of the work that I had done as a reason why they were changing the policy. That was the best professional result I could possibly get, I really have gotten into what I do driven to apply my understanding of economics to improving people’s lives. That’s exactly what I wanted to do, and what I enjoy the most.

What is one misconception that people have about economics?

The one that frustrates me the most is that people have the belief that they can’t do or understand economics—before they even try. Economics is all around us, and I hear statements from students and the public that say they can’t understand it without giving it a fair try. That’s been really frustrating, because I think it’s just a matter of being open and trying.

Is there something that you believe that most people don’t?

Yes. The thing that I find in a lot of discussions is I don’t understand the idea of “can’t” or “impossible”. I think that everything that is accomplished should shake our idea of impossibility to the core. When people say “That isn’t possible”, I just don’t understand that. I don’t believe in the impossible.

Are there any books you recommend that everyone read?

I really like Economics Everywhere, which I think is great because it’s a simple book that has all kinds of examples of how economic understanding shapes our lives and is accessible for everyone.

Do you have recommendations for students thinking about pursuing careers in public policy?

You really have to find your passion in public policy and push forward on it. One piece of advice that Ryan Crocker, a five time U.S. ambassador gave was to go hard places and do hard things. Challenge yourself, don’t take the easy way because it could be rewarding for the world and you personally. I also just wanted to say thank you to all of my professors at Trinity for a fabulous education—my entire life I would not have been able to do anything without the excellent support and teaching I got while I was at Trinity.

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