Richard Spady’s eye-opening piece in First Things examines the consequences that follow when economics becomes an ideology, that is, when economics “willfully projects its own first principles on its subject matter and actively seeks, perhaps unconsciously, material changes to bring social realities into conformity with these first principles.”
He offers an extended example by describing the intersection of the talent market with international trade. He quotes Christopher Caldwell’s analysis of Vietnam making auto parts for a Japanese company: There is no such thing as a nation of geniuses lying low in the jungles of Southeast Asia, nurturing its “specific edge in mufflers” and dreaming of the day when it might strut its muffler-making stuff on the world stage. No. Muffler-making (or what have you) is a role conferred on some poor country by a first-world corporation with one goal and one goal only That goal is to flee high Western wages. Almost all ‘global value chains’ were set up to acquire the same good—a waiver from accumulated obligations to Western workers.”
Given a “global value chain,” a company has no reason to invest in improving the talents of domestic workers. It’s cheaper to find talented people elsewhere. That forces domestic wages down, but, Spady notes, that’s not the worst of it: “In 2018, the very talented have significantly less incentive to invest in developing their less talented neighbors’ capabilities than they did two generations ago when Vietnam’s talent was unavailable.”
Economic theory predicts, in short, “that highly talented Americans will be indifferent to school quality for Americans of middling and low talent. They have less and less need for these people and have fewer and fewer incentives to invest in their educations. This is why high-talent liberals are willing to bargain away school quality for the support of public teachers’ unions. It’s also why large global businesses aren’t engaged by the problem. Who needs to develop domestic talent when you can get it on the global market?”
There is no answer to this, Spady claims, within economic theory: “I can remediate that deficit by reading Plato, perhaps, or, better, the New Testament.” Usually, that doesn’t happen.
Instead, economics turns ideological, which means “a subtle shift away from saying that these outcomes are what the talent market seeks and toward the ideological claim that these outcomes are what we ought to seek, because they will make things better over the long run. This in turn leads us to work to make it so.”