Policymakers and Trade Legislation

Memo: Robert LawrenceDiscussant: Fiona McGillivray

• 10 yrs ago– interviewed newly retired Senator John Danforth (MI).

• Over 20 years in Senate– Finance Committee. – Pro-free trade, unless footwear or autos.

• Danforth key player– agenda setting in committee and crafting legislative coalitions.

Two Points

• Policymakers Preferences • The survey questions legislators about

who asks for trade assistance.

• But who do politicians listen to, and what can they do to help?

Two Points

• Constituent Preferences.• what is the connection between voters

views on globalization and their social network.

• Andrew Gelman get social network info from a non-network sample.

The Harvard Globalization Project

• Sample approx 100 legislators per country– “targeting those in electoral districts in which selected firms/industries are heavily concentrated.”

• in-depth interviews with specific legislators.

Survey Questions

• In general, do you favor, or oppose policies aimed at increasing trade with other nations?

• Roughly what proportion of these letters and phone calls raise concerns about trade with foreign nations or outsourcing?

Survey Questions

• On the issue of increasing trade with other countries, what position would you say is held by the majority of your constituents? Are they generally in favor of trade, generally opposed, evenly divided, or are you unsure?

• Which industries and groups in your constituency are generally the strongest opponents (supporters) of policies aimed at increasing trade with other nations?

Extra Questions• In your district, where do trade policies come

from—the executive, individual legislators, Cabinet, Europe?

• You’ve now told me that trade policy comes from….. But suppose you want to aid an industry in your constituency—what can you do to help? – Approach other legislators– Approach the party– Use publicity to raise national awareness?– Help organize workers.– Other…

Extra Questions

• If an industry in your district is on the verge of closing—what do you think is the most appropriate policy response from government?– subsidize– nationalize– trade protection– redundancy payments.– Retraining of workers– Take no action

Possible Questions

• The industries you want to help, are they in your constituency?

Supply-side Theory

• Survey random 100 legislators in every country— theory predicts legislators will have different induced preferences given institutional incentives.

– US weak party, small single-mb districts– UK strong party, small single-mb districts– Belgium strong party, large multi-mb districts

Multiparty systems

• Multiple parties represented in legislature.– 100 legislators needs to include legislators from each

major political party.

• Coalition politics– general question • Does the type of assistance sought affect the

coalition formation and passage of policy? i.e. to get a retraining program would you try a different approach to getting a subsidy to your industry.

Multiparty systems

• Multiple candidates per district– can match with party supporters in district but might be useful to know which industries different parties want to help.– 10 years ago, which industry groups did your

party seek support?– Today, which industry groups does your party

seek to support?– If they have changed, why?

Survey of Workers• In general, do you favor or oppose policies

aimed at increasing trade with other nations?

• Lots of questions on employment history—are you worried about losing your job.

• (If employed) Do you think that increased trade with other nations makes you own job more secure, less secure, or does it have no clear effect?

Where do voters get their information?

• Lawrence– uncertainty about how trade policy affects economic interests. The info voters receive and the mechanisms through which they filter this info matter.

• Diffusion of information through social networks.

Andrew Gelman: social network info from a non-network sample.

• How many people do you know who have gone to jail?

• How many people do you know?

• Simple way of figuring out how important a particular group are in your social network, plus use this info to estimate that group size in population.

Gelman’s Scale-up Method.

• How many people do you know named Nicole?

• Suppose, on average, you knew 0.6 Nicoles.• Assume 0.13% of Americans are named Nicole.• Assume 0.13% of your acquaintances are

Nicoles.• Estimate, on average, you know 0.6/0.0013=450

people.

Gelman’s Scale-up Method.

• On average, you know 2.6 lawyers• Assume network size is 450 people• Estimate, lawyers represent 2.6/450=

0.58% of the network.• Estimate: 0058*290million=1.7million

lawyers.

Gelman’s Scale-up Method.

• On average, you know 2.6 people who were made redundant.

• Assume average network size is 450 people.

• Estimate: redundant workers represent 2.6/450=0.58% of social network.

• Estimate 0.0058*290million=1.7million redundant.

Extra Questions

• How many workers from your job do you socialize with?

• How many lawyers do you know?• How many foreigners do you know?

• How many construction workers do you know?

Extra Questions

• In the firms where you work, how many other firms do you deal with on a regular basis?

• How many of these are not in the United states.

Voter Information

• Survey questions on Knowledge

• Do you happen to know what job or political office Dick Cheney now holds?

• Do you happen to know which party has the most members in the House of Representatives in DC?

Possible Questions

• Who is David Ricardo?– A soccer player for Real Madrid– A dead economist– The head of the World Bank.– Never heard of him.

• What does the WTO do?– Meeting of G7 to discuss finance– Organizes trade negotiations– Pro-Wrestling organization.

Trade policy as Private or Public Good.

• little nostalgia these days in the UK for declining British industry.

• Rover plant at Longridge finally closed down. 5,000 jobs are going to China.

• National icon—BBC viewer opinion website, no sympathy.

BBC “Your Reaction” Rover closure.

• “I have been made redundant four times. No-one from the government came to aid with a compensation package. Rover workers need to realize times have changed. It is totally unfair to everyone else who has lost jobs if they get taxpayers’ money.”– Philip Johnson, Telford, England.

• “I work in construction and was made redundant four times in the recession of the 90s and take poorly paid jobs to survive. There was no rescue package for me. I’m against tax-payers money being used to bail out a private company. The workers should pick themselves up of the floor, stop whinging, and move on like what I and many of my colleagues had to do.”– Martin, Birmingham, England.

Possible Questions

• Have you ever been made redundant? If so, how many times?

• Do you support state intervention for a failing industry?

Conclusion

• Question politicians on how they supply policy.– In-depth interviews?

• How do social networks filter workers information on globalization.