Economists are now admitting that they were wrong about globalization • Hacker News Board

Re: Economists are now admitting that they were wrong about globalization

#21

Post by shkkmo » Fri, Oct 25, 2019, 6:55 PM UTC

beagle3 wrote: post #5

methodover wrote: post #2

The big question I’ve been struggling with in regards to the free trade debate is this: Is cheap labor a legitimate source of comparative advantage? I increasingly don’t think that it is. Yes, we get products more cheaply. But those products are made in countries with fewer labor restrictions, often in places that are not democratic, where workers cannot vote for changing laws. We’re effectively saying we want democr…

Let me play the devil’s advocate: you buying those products is measurably better for those disadvantaged blue collar workers, than you not buying it (on a 10 year horizon IIRC - There are some UN studies on this, on phone and can’t find them right now). So you are damned if you don’t enjoy them, damned if you do (but a bit less). Obviously, it is better if you could improve their situation to the point where their la…

> Let me play the devil’s advocate: you buying those products is measurably better for those disadvantaged blue collar workers, than you not buying it (on a 10 year horizon IIRC - There are some UN studies on this, on phone and can’t find them right now).

Maybe in some cases.

However, you then have labor in those countries trying to struggle for the same protections and advances in wages that workers in the US struggled for, but they are struggling against a far more powerful corporate entity that has the backing of a more corrupt/disfunctional government while also having diversified options to break and weather strikes.

Then you have to add to that all the non blue collar workers who have had their subsistence livelihoods destroyed through land seizures for resource extraction.

Most of the benefits of globalization roll uphill (richer citizens, especially in richer countries extract most of the benefits) the trickle down is minuscule to non-existent.

Re: Economists are now admitting that they were wrong about globalization

#22

Post by ep103 » Fri, Oct 25, 2019, 6:56 PM UTC

codingslave wrote: post #7

wahern wrote: post #6

> But after the Cold War ended, the debate over trade (Krugman’s Nobel-winning specialty) became a proxy for a larger intellectual struggle over free markets versus government intervention. This is the crux of it. The notion that economics, as a field, was blindsided by the rapidity and extent of economic dislocation doesn't match the history. Such a narrative is a whitewashing of a particular clique of superstar eco…

"The problem in the U.S. was much the same problem we've always had: free trade became synonymous to opposition to government intervention. All the free trade bills in the U.S. invariably included funding for re-education and R&D to help manage dislocation and build competitive advantages, but they were meager financially and suffocated by neglect. And that's because these measures were considered "government interve…

I read an article once, that claimed when a Scandinavian country joined the EU, they expected significant job distortion as a result of free trade. So they literally moved government agencies from their current locations, to locations that they expected would be hardest hit. The end result was the shifting of thousands of government jobs from one location to another. Highly trained people in the old government centers were still in really competitive markets with significant government opportunities. But those communities that were about to be devastated by free trade (usually smaller backwater communities) suddenly saw federal agencies appear that required thousands of jobs overnight, and whom had a mandate to hire those affected by free trade, thereby saving the economy for those workers in the area.

My point is that creative solutions are possible, if we dispense with the notion that the only solution possible is the free market.

Re: Economists are now admitting that they were wrong about globalization

#23

Post by trophycase » Fri, Oct 25, 2019, 6:56 PM UTC

zarro wrote: post #11

I don't get why "Equitable rules to play by" is a concept so hard for everyone to understand. The free market is about creating a level playing field. Globalization was shit because because it did not create a level playing field, it created a subsidy for "developing" countries, at the expense of "developed" ones. Its hilarious that people think that somehow free markets and libertarians are responsible

From Wikipedia: "In a free market, the laws and forces of supply and demand are free from any intervention by a government or other authority and from all forms of economic privilege, monopolies and artificial scarcities."

I think most people stop reading at "government" and don't realize that for a free market to exist, it needs to exist in a vacuum. There is no frictionless market, and every market has it's share of cost externalizations (plastics, energy, etc.), or leverage imbalance (healthcare, labor market).

Re: Economists are now admitting that they were wrong about globalization

#24

Post by systematical » Fri, Oct 25, 2019, 6:58 PM UTC

A giant sucking sound

Re: Economists are now admitting that they were wrong about globalization

#25

Post by AWildC182 » Fri, Oct 25, 2019, 6:58 PM UTC

beagle3 wrote: post #5

methodover wrote: post #2

The big question I’ve been struggling with in regards to the free trade debate is this: Is cheap labor a legitimate source of comparative advantage? I increasingly don’t think that it is. Yes, we get products more cheaply. But those products are made in countries with fewer labor restrictions, often in places that are not democratic, where workers cannot vote for changing laws. We’re effectively saying we want democr…

Let me play the devil’s advocate: you buying those products is measurably better for those disadvantaged blue collar workers, than you not buying it (on a 10 year horizon IIRC - There are some UN studies on this, on phone and can’t find them right now). So you are damned if you don’t enjoy them, damned if you do (but a bit less). Obviously, it is better if you could improve their situation to the point where their la…

Maybe a better way forward is for labor cost disparity to be just small enough to encourage jobs by being cost effective after shipping with a hint of extra profit rather than a make-several-one-trillion-dollar-companies cost disparity.

Re: Economists are now admitting that they were wrong about globalization

#26

Post by hn_throwaway_99 » Fri, Oct 25, 2019, 6:59 PM UTC

zarro wrote: post #11

I don't get why "Equitable rules to play by" is a concept so hard for everyone to understand. The free market is about creating a level playing field. Globalization was shit because because it did not create a level playing field, it created a subsidy for "developing" countries, at the expense of "developed" ones. Its hilarious that people think that somehow free markets and libertarians are responsible

Was about to upvote you until your last sentence.

Reason being, yes, I agree that a huge problem with globalization is that, while developed countries have spent many decades building things like labor rights, environmental protections, IP protections, etc., globalization essentially allows an out for companies to undermine all of these base-level rules.

But there is a very good reason people are blaming "free markets" and "libertarians" - lots of the cheerleading behind globalization was based on people espousing their love for free markets and libertarianism. The fact that you may disagree with their definition of free markets and libertarianism doesn't change the fact that their definition is the one that is most widely acknowledged.

Re: Economists are now admitting that they were wrong about globalization

#27

Post by wahern » Fri, Oct 25, 2019, 6:59 PM UTC

codingslave wrote: post #7

wahern wrote: post #6

> But after the Cold War ended, the debate over trade (Krugman’s Nobel-winning specialty) became a proxy for a larger intellectual struggle over free markets versus government intervention. This is the crux of it. The notion that economics, as a field, was blindsided by the rapidity and extent of economic dislocation doesn't match the history. Such a narrative is a whitewashing of a particular clique of superstar eco…

"The problem in the U.S. was much the same problem we've always had: free trade became synonymous to opposition to government intervention. All the free trade bills in the U.S. invariably included funding for re-education and R&D to help manage dislocation and build competitive advantages, but they were meager financially and suffocated by neglect. And that's because these measures were considered "government interve…

It is, to be sure, an immensely difficult problem. But my argument doesn't hinge on anything; IMO, it's simply a statement of fact.

It's sort of like saying that if we want to avoid global extinction we need to acquire space travel and populate distance worlds. Not knowing how to get to space, let alone travel to distance worlds, doesn't change the logic. The alternative is that we accept extinction.

We're exceedingly myopic about what strategies like re-education imply. We associate it with a small number of particular programs and are quick to conclude they're ineffective. But re-education can mean many things, things we haven't even explored yet. We could look to German countries with a stronger history of apprenticeships and union labor programs, though that only scratches the surface. And maybe it does require incentivizing or even mandating age-based affirmative action. And maybe re-education (and education policy more generally) will ultimately prove to be relatively limited and constitute only a small part of a larger constellation of strategies. The point is that we have to stop pushing back and earnestly move forward.

There's simply no choice in the matter; we have to be open-minded. Unless we're comfortable continuing to roll the dice to see how many more generations the United States can go fecklessly chasing fantasies. What someone like Trump and the cast of opportunists across the spectrum he has ushered in have shown is that we're not immune to the political pathologies that have afflicted so many other countries in the Americas and around the world.

Re: Economists are now admitting that they were wrong about globalization

#28

Post by eznoonze » Fri, Oct 25, 2019, 6:59 PM UTC

Free market only works when everyone follows the same rules. When you have a player like China who is dead set on taking advantages of the rules but never taking the responsibility, you create an one-sided situation.

Trade is not just an economic issue. It's a political issue when you have China in the game.

Re: Economists are now admitting that they were wrong about globalization

#29

Post by Animats » Fri, Oct 25, 2019, 7:04 PM UTC

methodover wrote: post #2

The big question I’ve been struggling with in regards to the free trade debate is this: Is cheap labor a legitimate source of comparative advantage? I increasingly don’t think that it is. Yes, we get products more cheaply. But those products are made in countries with fewer labor restrictions, often in places that are not democratic, where workers cannot vote for changing laws. We’re effectively saying we want democr…

Is cheap labor a legitimate source of comparative advantage?

That really is the big question.

It worked out OK for the pre-China era of "Asian tigers". Japan, Korea, and Taiwan had a labor cost advantage and exported heavily to the US. Their standard of living went up, wages went up, and they lost the labor cost advantage.

Then the next round - Bangladesh (world leader in T-shirt production), Vietnam, Thailand. Labor costs are still low, but the countries are not big enough to seriously hurt the US.

But they were not as big as China. China is 3x the size of the US in population, close in GDP, and has industrialized very fast. The US can't absorb that shock. Eventually, China may lose the labor cost advantage; it's already declined quite a bit as wages go up. But for now, the US is taking a big hit on this.

Re: Economists are now admitting that they were wrong about globalization

#30

Post by WillPostForFood » Fri, Oct 25, 2019, 7:04 PM UTC

systematical wrote: post #24

A giant sucking sound

Funny that the article tries to portray Al Gore as the guy that could have stopped free trade if he won the election in 2000, when he was the figurehead of free trade, and really helped lock in the free trade policy when he beat up Ross Perot in the NAFTA debate.