Source: EconLog
by Jon Murphy
“Counterfactuals are a necessary part of any scientific analysis: If X didn’t happen, then Y would have. But counterfactuals, by definition, can never be known. They never occurred, so we can never truly know if the counterfactual would have happened. … In international trade discussions these days, the focus is often on the counterfactuals … at least, after protectionists make empirical claims that are easily debunked by the data. A famous counterfactual revolves around the (oft-cited-never-read) China Shock paper. If not for China joining the WTO, protectionists claim, the US would be a thriving place, rather than the devastated hellhole it is now.” (08/20/25)