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

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

#71

Post by noonespecial » Fri, Oct 25, 2019, 7:47 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…

You adjust the system, however obfuscated and difficult it seems, so that they work to better themselves instead of for you. Because at the very bottom layer, that's what's happening.

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

#72

Post by marshray » Fri, Oct 25, 2019, 7:50 PM UTC

Animats wrote: post #52

What really made globalization work was containers and faxes. Before containerization, shipping was kind of an iffy business. Sometimes it showed up, sometimes it got lost or stolen, and sometimes it got broken. After containers, if you ordered a container load, it usually showed up intact. The importance of faxes to trade is underestimated. Not only was it faster, faxes work well across language barriers. An invoice…

These things are so fundamental that you don't see economists writing articles about them. Macroeconomics generally lumps those things under "productivity".

Container ships were almost the poster child of globalization.

Faxes (and telex, etc) had been around for decades. We have the alphabet we use today because international Phonecian traders (phonetics, see?) used it for exactly the type of documents you're talking about.

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

#73

Post by sarah180 » Fri, Oct 25, 2019, 7:51 PM UTC

TheOperator wrote: post #68

One thing I notice about Trade now is the perverse power we've given to groups which fundamentally don't have other countries or individuals interests in minds. One thing I notice is that left wingers are essentially universally aghast over what's happening to Hong Kong. They will hold to the idea that a trade war with China is the stupidest thing ever that causes economic damage to yourself and incurs great risk. Wh…

This is true in a discussion where the relative value you place on international trade is either infinite or zero.

You can oppose an ill-considered trade war without opposing all actions that would impact trade. This is not an either/or proposition. It's not hypocritical to suggest that, in the real world, sometimes you might have to weigh competing goods.

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

#74

Post by ep103 » Fri, Oct 25, 2019, 7:52 PM UTC

bryanlarsen wrote: post #40

ep103 wrote: post #22

Earlier quoted context omitted.

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 center…

Such a strategy failed utterly in Canada. They moved a government department from Ottawa to Miramichi, New Brunswick for similar reasons. All the skilled bureaucrats used their reputations to get transfers to a different department so they wouldn't have to uproot their family, and the department was rebuilt around a core of incompetents. I'm sure the locals they hired weren't so incompetent, but rot starts from the t…

All good plans can be executed badly, the devil is always in the details : D

I was not proposing the above example as a foolproof plan applicable to every situation, so much as an example of a type of plan that has worked in some scenarios in the past.

I should also point out that part of the plan for the Scandinavian plan wasn't the replacement of government workers with locals, as much as the expectation that by moving so many jobs into such small areas, they were guaranteed to majorly shift the local economies. Numerous jobs opened up overnight supporting all these well paid government employees moving into the area.

Nonetheless, I am happy to learn about the counter-example, thank you!

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

#75

Post by wahern » Fri, Oct 25, 2019, 7:53 PM UTC

bryanlarsen wrote: post #40

ep103 wrote: post #22

Earlier quoted context omitted.

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 center…

Such a strategy failed utterly in Canada. They moved a government department from Ottawa to Miramichi, New Brunswick for similar reasons. All the skilled bureaucrats used their reputations to get transfers to a different department so they wouldn't have to uproot their family, and the department was rebuilt around a core of incompetents. I'm sure the locals they hired weren't so incompetent, but rot starts from the t…

Failure has to be an option.

Not attempting such things doesn't mean we avoid the risk of such wealth destruction; it just means we have nobody to a point a finger at when it happens. Politically this is easier because of how people think and the dynamics of our social discourse. See Appeal to Nature Fallacy (https://en.wikipedia.org/wiki/Appeal_to_nature). This is especially true the more cynical and ideological we become as we're more likely to pounce on failures of action, but excuse failures of inaction as inevitable natural events or limitations.

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

#76

Post by OrangeMango » Fri, Oct 25, 2019, 7:54 PM UTC

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 thing is, we can never put the free trade genie back in the bottle.

Tariffs as a weapon in the fight against climate change would sure make free trade look at LOT more equitably distributed.

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

#77

Post by elliekelly » Fri, Oct 25, 2019, 7:55 PM UTC

AnimalMuppet wrote: post #65

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…

The thing is, for those workers in "poor" countries, this is a step up . My wife can tell you what two months' work for $300 meant to subsistence farmers in Guatemala. They were happy to get it. You may say "Sure, they're poor and exploited, but that doesn't make it morally right for us to exploit them just a little less ". I agree, up to a point. But insisting on first-world working conditions (including pay) mean t…

It's one thing to pay a lower wage for the same work - especially when the cost of living varies considerably. But I don't really think there's anything that justifies inhumane or unsafe working conditions.

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

#78

Post by sarah180 » Fri, Oct 25, 2019, 7:56 PM UTC

ThomPete wrote: post #51

Paul Krugman and other mainstream trade experts are now admitting that they were wrong about globalization: It hurt American workers far more than they thought it would. Did America’s free market economists help put a protectionist demagogue in the White House? Even if you didn't vote for Trump or don't like him, Trump has been critiquing globalization for years before he came to office especially with regards to Chi…

I think most economists would say that the purpose of globalization was to make the nation better off, and that the nation's values, systems and leadership would be called on to distribute those gains in a way consistent with that nation's values.

Perhaps the real issue here is not one of trade, but of the collapse of unions, the dramatic change in the nature of our media, broken leadership structures, and a lazy mindset that views capital and markets as the goal rather than the tool.

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

#79

Post by wahern » Fri, Oct 25, 2019, 8:01 PM UTC

WalterBright wrote: post #41

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…

> Nothing about free markets guarantees "equitable" distribution More than that, free markets guarantee nothing at all. But the historical record is that free markets have lifted far more people out of poverty than anything else. The most recent example is China turning to free markets, and the resulting vast improvement in their economy.

That's why I used the qualifier "democratically tenable". The human calculus of equity and fairness isn't something we have a firm grip on or even an adequate appreciation of, but I think it's safe to say objective, absolute improvements in either individual or collective welfare don't necessarily account for much; and our cost functions for particular benefits and risks less than obvious or intuitive.

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

#80

Post by namirez » Fri, Oct 25, 2019, 8:02 PM UTC

But I thought economists have known this for a long time (at least since 2013). Basically, the Elephant Graph [1] summarizes the effects of globalization. Most of the economic gains of the past few decades went to the super-wealthy and the middle class in the developing world. Meanwhile, the middle class in wealthy countries and the poor in developing countries were left behind.

https://www.vox.com/policy-and-politics/2018/2/2/16868838/el...