NAFTA, Obama, and Jury Theorems

Manweller (3/26/08)

Here is an old political science question for you. If an innocent man is accused of a crime, should he seek a 12 or 15 person jury? The answer, according to Marquis de Condorcet, is a 15 person jury. Famous for what became known as “jury theorems,” Condorcet argued that, given good information, the relative probability of a group of individuals arriving at a correct decision increases as the size of the group gets larger. If that doesn’t make sense, just think of the “Ask the audience” lifeline in the Who Wants to be a Millionaire game show. The audience almost never gets it wrong because the collective knowledge of the audience is so much greater than any one individual.

Jury theorems are important in political science because they provide an empirical rather than a normative defense of democracy. Condorcet’s theorem suggests democratic forms of government are pretty good at “getting it right” because they involve such large a number of decision makers.

A few years ago, a colleague of mine at the University of Oregon hypothesized the existence of a "reverse jury theorem." He asked, what if people are given bad information? Does Condorcet’s jury theorem conclude that the populace is guaranteed to make the wrong decision?

We never answered that question, but the recent votes in Ohio and Texas provide some evidence that he hypothesized correctly. According to exit polls of Democratic primary voters, 80% Ohioans and 59% of Texans blamed NAFTA for job loses in their manufacturing sector. This means that 80% of Ohio Democrats are simply wrong. Since the passage of NAFTA Ohio has gained 900,000 new jobs and the losses in manufacturing have nothing to do with trade agreements.

The reason Ohio, and everyone else in the world, is losing manufacturing jobs is because productivity is up. Way up. Since 1994, US manufacturing production is up 66%. This means we can make more stuff with less people. Manufacturing jobs are not going to China, they are going away. China has lost more manufacturing jobs than any other nation in the world. Between 1995 and 2002 the US lost 2 million manufacturing jobs. China lost 15 million. I wonder if Chinese workers are blaming NAFTA?

Nothing new is happening here. Two centuries ago 98% of all Americans worked in agriculture. Today it is 2%. We didn't lose 96% of our farm jobs. With increases in productivity 2% of our people can now do what it used to take 98% of our people. This is a good thing. It frees up labor to do something else: build houses, make clothes, write poetry, make music.

So the question remains. How did Condorcet get it so wrong? With millions of Ohio voters, his theory suggests they would have to get it right, but they got it completely wrong. What happened?

There are three culprits in this tale. Politicians, the media, and me.

Take Senator Obama who got caught with his hand in the cookie jar. He tried to get votes by telling Ohio voters that NAFTA took their jobs, but at the same time he was telling Canadian officials he didn't really believe that. Of course he didn't. He is a Harvard graduate who knows trade doesn’t kill jobs. But he lied to people to get votes. Shame on Obama, Clinton, and any other politician who lies about trade to win elections.

But, why did the lie work? Unfortunately, it worked because our citizens are not educated enough about trade and trade policy to call the politicians on their lies. An economically educated public would have been able to expose their demagoguery. The mainstream media, having already drunk the Obama cool-aide, didn’t challenge any of his unsubstantiated assertions. Where was the full court press on our half term senator?

The fact that so many Ohioans got it wrong also means that people like me are complicit in this failure. Unless high school economic teachers, college economics professors, and those who teach political economy do a better job educating our students, they will continue to be victimized by manipulative presidential candidates. It also means that economics, like English and mathematics, should be required courses at all our public universities.