A First Look at Economics
7. Argumentation in economics

Maria: I don't know whom to believe.

McCloskey: Ultimately you need to believe what you can persuasively defend to yourself. But it's only sensible to get some knowledge of economics before spouting your opinion, yes?! For instance, do you believe that the United States should protect itself against foreign competition? Lew Dobbs, the American TV journalist on CNN, certainly thinks so, and says it every day.

Paul: I think we should. My dad owns a factory that makes parts for cars, and the foreign competition is killing him. He says that Asian suppliers are subsidized by their government and aided by an unfair exchange rate. That's not right. If the U.S. government doesn't do something, my father will have to start firing people.

Bayla: Wait a minute. What about the Americans who buy cars? If we stop the import of inexpensive foreign parts, we'll have to pay more for cars produced here, right? Free trade sounds good to me.

Rodney: What about the workers that Paul's father will lay off?

Bayla: Can't they find other work?

Paul: Maybe---flipping hamburgers. And what's going to happen if other countries take all our jobs away?

Bayla: Why think only of Americans? What about people in China and Brazil? They need jobs, too.

Paul: Come on. Trade is like a war: it's us against them. You have to play tough or you lose.

Rodney: And guess who's going to lose the most: the workers, not the bosses.

Bayla: I don't believe that. Trade makes everybody better off.

McCloskey: Great. You've made the standard points for and against free trade. You are all making arguments, just like you expect economists to do. So let's teach you the basics of argumentation.

What is an argument?

The conversation of economics resembles, in some regards, a court of law. True, in the conversation of economics there is no final judge or Supreme Court (though sometimes it seems there is). If after serious thought and thorough research you are convinced that low taxes are best for the United States, you face the task of making your case-your argument-as though to a judge and jury. In other words, you need to present arguments that persuade your audience, whether that audience consists of family and friends, your professor, or the community of economists and policymakers.

How, exactly, to define "argument" is an ancient concern. (Just as you've seen, the definition of "economics" and "rhetoric" is an ancient concern.) A "syllogism" is the simplest form of argument, such as "All men are mortal; Socrates is a man; therefore [in case you didn't notice it], Socrates is mortal." The syllogism is short and sweet. When it's working properly, a correct conclusion flows from two correct premises.

But Aristotle thought that in real life-including economics and physics-most arguments take the form of an "enthymeme" (EN-thih-MEEM), something like a not-quite-air-tight syllogism. The premises of arguments in economics and other parts of life are themselves tendentious and probabilistic, not exactly "correct" now and forever. For example, "Free trade is good" and "Taxes reduce output" are premises that many economists would take issue with. One economist may find those premises 60 percent true, another 90 percent true. The heart of an argument in an enthymeme is in how the economist defends the 60 or 90 percent true as "true enough." Economics, like other sciences, works in approximations. And that's what the enthymeme shows. You will be able to think of similar examples in biology, history, or cafeteria food. Good enough. That an enthymeme is not a syllogism is not damning---despite what some of our colleagues in the Department of Philosophy might say. Our friend Stephen Toulmin, a world-famous philosopher besides being a distinguished rhetorician and ethical theorist, long at Northwestern University, has offered up a definition of argument that serves our purpose nicely:

The Toulmin Model of Argument
An argument is a "claim" (such as: "taxes reduce output") attached to a "stated reason" (because they raise production costs), supported by various kinds of "evidence" or "grounds for belief" (higher costs mean lower current profits; lower profits mean less incentive to produce), and qualified by "rebuttals"(unless the tax is too small, or, unless the tax is never collected, or, unless the industry on which the tax is placed no longer exists; or unless, to give a more sophisticated economic argument, "second-best considerations" result in a rise in output).
In the Toulmin model any single argument has further, supporting layers backing up the central claim of the argument (such as the one here that says "taxes reduce output"). For example, a "warrant" is a generalized form of argument (not necessarily a "higher level" one) hiding in the background of the central claim, supposed to be true, but not necessarily stated. An example is "All government interventions in the economy (taxes included) serve to reduce output." Warrants are in turn "backed" by further sub-claims, such as well-selected historical examples, vivid anecdotes, properly controlled statistical evidence, and the like. And these, finally, are supported by a set of "qualifiers" and "rebuttals," none of which the economic "rhetor" (a fancy Greek word referring to "the speaker") would mention during the course of an argument if he thought doing so would weaken his case. You argue to a friend, let's say, "Sylvester Stallone is mortal." How do you make the case? (See Figure 1.1)

You can claim to understand an argument when you can explain it out loud to another person who already understands it, and they say "Yes, uh huh: that's right." So let's see: yes, you are right, Stallone is mortal: look at the argument in Figure 1.1. The evidence is strong: Stallone was borne of a human mother and father; he speaks with a Brooklyn accent; he has muscles; he lies and he says his prayers. And the rebuttals, you'll notice in the Figure, are not damaging to the major claim. "Unless by 'live' you mean 'live forever through his films'." (You don't.) Or "unless he's from outer space." (He's not.) So yeah, Stallone is mortal all right.

That's great. The Toulmin model aids our understanding of claims such as "Stallone is mortal" and "Taxes reduce output." But in college we want you eventually to do a little more than understand an argument. Having succeeded at understanding, becoming an advanced student, listening, putting the argument through your grey matter, we want you to take the next step. Make the argument your own rather than simply accurately reproducing an argument as found in the text or newspaper or wherever. Try, in other words, to "overstand" each argument. When you overstand you become a maker of argument yourself. You do that by inventing your own dialogue, internal to yourself or in conversation with others. Learning how to overstand economics is a subtext of this book. Overstanding is the biggest part of what we called at the beginning of the book, "education as the practice of freedom." It's an ambitious aim, and you shouldn't get depressed if it doesn't come easy. The secret is in dialogue: engage it often.

Suppose Bayla claims it's raining outside. Paul could take the claim for granted, but he may want her to give reasons for her claim. Bayla will probably tell Paul to look out the window, as she already has. Observing rainfall is an empirical reason in support of her claim. Unless Paul suspects that Bayla has stationed someone on the roof to spray water in front of the window, he will quickly be convinced.

In short, argument consists of a claim and a set of reasons, called "warrants" or "evidence," to support the claim.

Bayla's argument becomes harder to swallow when her claim is "It will rain tomorrow." How might she persuade you she's right? One of her warrants may be an appeal to authority, a warrant to be both suspicious and respectful of, such as "last night's weather report." But in appealing to the authority of the weather report she risks an argument based on the art (or science) of meteorology-learned by her second or third or fourth hand. Appeals to authority may sound weak or worse. But much of what we sensibly believe (that the sun does not really "rise," for example, or that the earth is round, or that prophets exist) is warranted only by appeals to authority. That's not always bad. Appealing to the authority of TV 9's weather forecaster or to what you learned in science class about the earth and the sun is necessary to living. We can't all redo all the arts and sciences since Eve to check on every single claim (though scientists like us will try)!

Paul may have good reason to think meteorological predictions are unreliable. Or he may just think that Bayla is unreliable as a second or third hand reporter of such predictions. Another reason Bayla could give is an appeal to well-known proverbs such as "Red sky in the morning, sailor take warning." The effectiveness of any reason or type of evidence depends upon the audience - in this case, Paul - and what the audience generally finds persuasive.

Concept check 2: Use the Toulmin Model of Argument to describe Paul's argument against free trade.

Rarely does persuasion turn on just one thing, such as statistical evidence or an appeal to authority. But if Bayla has been known to be correct about the weather many times in the past, her "ethos"-that is, in Greek, her good "character"-may rule the day. Therefore:

The persuasiveness of an argument depends in part on the ethos of the speaker and the expectations of the audience. Ethos—that is, the character of the speaker, his or her personal authority and reputation—is a warrant.

To persuade economists or politicians the first step is to establish your ethos. Professionals build their ethos by publishing original research in scientific journals and books, and by giving lectures at high-profile meetings. In class discussion you might make a point that later turns out to have been a Nobel Prize winning idea. But you should not expect your teacher or other economists to immediately embrace you as a brilliant economist. Your handicap is that you still have to establish your reputation-your ethos-as an economist worth listening to. One way to do that is to read what the best economists read, learn which arguments they find persuasive, and then rehearse them and your own arguments in a language they also find persuasive. Mathematics, statistics, and words written in what the poet James Agee calls "pure English" are the languages you can count on. With few exceptions, the leading economists excel at all three.

Scientific argument: "What is" versus "What ought to be"

Another important rhetorical rule-of-thumb is to be aware of your own and other people's values and "vested interests," that is, selfish and altruistic motives coming from where one stands. "Know your audience"-know their values and interests-a wise woman says.

Paul's argument in the dialogue favoring government protection of industry may be effective in the political arena, but it will be ruled so to speak "out of court" in the academic seminar, because it seems to be based on nothing more than emotionalism and his own father's vested interest in keeping a profitable business. Humans can and do reason over values and interests. The "unfairness" of foreign competition is a legitimate topic in an economics course. But there are other points to be made besides Paul's selfish one - for instance, if foreign governments do subsidize their sales to us, then we are made better off, just as you would be better off if your university decided to subsidize your education (which, by the way, most of them do). As a son, Paul believes that his father's business and its employees ought to do well. As a Republican, he wants low taxes and friendly business environments. But as a social scientist he is expected to take a more neutral position. He needs to learn more about the overall effects of protection. (Social scientists, recall, need to zoom in on both the individual and the society.) Finally Paul-as-social-scientist can turn to the ethical question of whether workers in Illinois are more valuable from an ethical point of view than workers in Brazil or Hong Kong. In other words, the ethical question of fairness can be separated from the question of who in fact gets what.

Economists use the terms "positive" and "normative" to distinguish statements about "what is" from statements about "what ought to be." "Positive" here has nothing to do with + and -. It's just a fancy word in philosophy for "factual." (The phrase "positive science" appeared for the first time in sociology circles in the early 19th century.) "Normative" comes from the Latin for carpenter's T-square, or "rule," and so "norm" for "social rule" or "normal" for "fitting the standard rules."

For example, it's true factually speaking that South Korean subsidies' of Korea's exports to the United States make Americans as a whole better off. That's a positive, factual, statement about the world. Perhaps, even so, we ought to disapprove of the Korean subsidies, perhaps because they make Korean taxpayers worse off, or because they hurt American businesses (and their workers) who have to compete with Korean exporters, and we think on other warrants that such an situation is bad. It's is a normative statement about how we believe things should be. Whenever we can, we should separate the two, the positive from the normative. Sometimes we can't.

Positive statements describe the world as it is; normative statements describe how the speaker believes the world ought to be.

Economists can't avoid taking a point of view on both positive and normative statements. We are all "biased" in the trivial sense that we all see the world from somewhere. There's no such thing as a point of view that's. . . not a point of view! As the philosopher's put it, there's no "view from nowhere," or from an "Archimedean point outside the world," or from "God's-eyes." What strikes Rodney as "bias" is usually a point of view he doesn't like. Most American economists don't like Lew Dobbs' bias against free trade. And Dobbs doesn't like their bias in favor of it.

An economist's point of view, or bias, will show up in the very questions she does not consider. Radical economists focus on questions concerning what they view as the injustice of capitalism, but spend relatively little time asking why markets work well. New classical economists ask about market efficiency but spend little time investigating the effects of corporate power. Point of view even shows up in the words economists use. New classical economists like to use the term "equilibrium," which is soothing. Radicals prefer "conflict," which is upsetting.

It's easy for positive and normative statements to become entangled in economics. But this makes it even more important to try to keep them separate in an argument. Normative statements tend to dominate in discussions where people are trying to imagine what they want - such as when politicians try to determine what's best for the country, or their re-election prospects. Positive discussions tend to dominate among scientists, because they want to figure out how the world works, and they think that normative issues don't come into finding out. The best scientists are committed to laying out their biases for all to see, and trying out other points of view.

Ziliak: I've kept quiet long enough! I think the old positive/normative distinction is hogwash. I speak of "rhetorical" or "interpretive" economics, and so do you, Deirdre and Arjo. So what are we doing in this section? Rhetorical economists or, what is the same, interpretive economists, "really want to figure out how the world works." But they admit that their tools and methodologies and data sources and even the kinds of questions they ask contain a "bias" shaped by value judgments, personal goals, identifications with certain social groups, and so forth.

Klamer: Agreed. As you know, Deirdre and I have been saying as much since the early 1980s. But consider the expectations of the audience for this introductory textbook. Does our rejection of the positive/normative distinction persuade them?

Ziliak: That depends on which part of the audience you're talking about. Some, such as the liberals Robert Solow and Albert Hirschman, the radicals Steve Cullenberg and Jack Amariglio, the conservatives Adam Smith and Milton Friedman, and our friends and colleagues at George Mason, agree with us that all of science, including economic science, is rhetorical. That just means that it's argued and that warrants are not slam dunks every time.

McCloskey: Let it emerge from the conversation, Steve. That's better than preaching, I can tell you---having done a lot of preaching in my time!

Normative and positive statements in real life

Ziliak is right. The positive/normative distinction is philosophically untenable. The distinction is an inheritance of the economist and philosopher David Hume, who argued in the 18th century that one cannot derive "ought" propositions from "is" propositions. Hume's claim has been debunked by philosophers and rhetoricians over and over, especially in the late 20th century. The famous Harvard philosopher Hilary Putnam, for example, wrote a book in 2002 called The Collapse of the Fact/Value Dichotomy, and argued especially against the dichotomy's use in economics (a "dichotomy" is another of those Greek words that professors like so much: it means "a splitting in two"). Putnam argues that economics would come to a stand still if economists stopped making value judgments of the normative type.

"Ought" and "is" live together like egg and yolk in scrambled egg. But in practice, even Ziliak agrees, the distinction is not entirely worthless. Think of the positive/normative distinction as a "heuristic" (gak! More Greek! This time, "a mental device that captures a part of the world while ignoring important properties of it"). Imagine that your car mechanic tells you, out of the blue, that you should not drive to see your mother this weekend. You would object. Car mechanics should stick to their business and not interfere with your life! It's okay, however, when the mechanic rephrases his remark in a "positive" manner, such as: "If you drive in this car with this brake shoe to your mother, then I predict you will not get there, and will probably die in a crash." Now the mechanic is not telling you what to do. The statement is positive (a probably true or probably false fact of the world) and leaves the normative decision to you. Sort of. But of course we know perfectly well that his "factual" statement is actually a "ought" statement in sheep's clothing, isn't it? Yoke and white mixed.

That's not to say that car mechanics and therapists and friends advising you do not impose a point of view. Try going on vacation with a car mechanic, as one of us once did, and you will find yourself spending much of the day talking and thinking about cars, cars, cars. If you can't find a mechanic to vacation with, you might instead read Robert Pirsig's Zen and the Art of Motorcycle Maintenance. You'll find yourself listening to engine noise with special alertness. Strangely, you will experience more car or motorcycle trouble.

Or try talking about relationships with a psychotherapist who herself is in a bad relationship, as one of us has. You will find that the therapy session is as much about her as it is about you. But even if a bias is unavoidable, the mechanic and therapist are committed by professional duty to speak in allegedly positive terms and to abstain from obviously normative recommendations unless asked for them. So, too, economists, thinking of themselves as mechanics of society and therapists of public policy.

David Ruccio (a radical colleague of ours, and a friend): But it's impossible. The normative recommendation is implicit in the so-called "positive" assessment.

McCloskey: For some questions, yes, we agree David. "Don't vote in favor of the government spending bill because government interventions hurt the economy" is a positive sounding suggestion with a normative commitment. But saying that "the U.S. unemployment rate in June is 4.6 percent" is value-free, yes?

Ruccio: No, it's not value-free. Underneath the "is" lurks an "ism." A sexism, for example, or a racism. Look at the lack of work in our own city of Chicago, in the African American neighborhoods around White Sox stadium extending southeast down to Indiana. Most of those men and women are not counted in the U.S. unemployment figures because they are not actively seeking work in the above-ground sectors. Personally I'd put the U.S. unemployment rate at 12-to-14%, at least.

Klamer: But that's changing the definition of unemployment to include people who aren't searching for work.

Ruccio: They're searching all right. Hang out in their neighborhoods and check it out for yourself, as Ziliak and I have. True, their search for earned income is not above ground. It's in the underground, trading a paint job on an apartment for a ring job on a car engine. Economists and the government need to get serious about why.

McCloskey: Agreed. The great tragedy called the War on Drugs is one reason for the drop-out rates. An abolition of the drug laws would cure a lot of the problems, I think. You may be right, David.

Ruccio: Now we've got a real conversation going! An intellectual conversation is as much about listening, really listening, as it is about talking.

Klamer: Absolutely.

Give the last word on positive and normative to Alfred Marshall (1842-1924), an economics professor at Cambridge University who in fact consolidated the "neoclassical" way of looking at the world: "It will be my most cherished ambition . . . to increase the numbers of those whom Cambridge, the great mother of strong men, sends out into the world with cool heads but warm hearts, willing to give some at least of their best powers to grappling with the social suffering around them." Forgive him the sexism of "men" and listen to what he was saying. Marshall intended when he went to college in the 1860s to become an Anglican priest. He ended as a worldly philosopher, combining positive and normative in economics.