As the first of these Economist Jokes says, economists have a reputation for disagreeing. And given that Jason Soon is a big Hayek fan, and I’m an admirer of (though not a follower of ) Gunnar Myrdal, we would be expected to disagree more than most. But, facts have a way of forcing themselves on our attention, and, given the experience of the past 100 years or so, it’s not too hard to conclude that:
(i) in general, free trade in goods is a good idea
(ii) free trade in financial capital is not such a good idea
As Jason observes, even strong free-traders like Jagdish Bhagwati agree on this. Similarly, despite writing some very effective critiques of standard trade theory, so does Paul Krugman. Since there’s no fundamental difference between international and domestic trade, I’d take the points further to say
(i) in general, free markets in goods are a good idea
(ii) in general, financial markets need regulation
Those who like plenty of cut and thrust in their blogging should not be disheartened by this sudden outbreak of consensus. There’s still plenty of room for disagreement. I see health, education, infrastructure services and labor markets as being more like the financial sector while I’m sure Jason sees them as being more like ordinary goods markets.