They knew the effects of globalization. It's going exactly as intended, exactly the effects I learned about during my econ studies, they just didn't think there'd be as much political blowback. It's easier for them to claim ignorance than to admit they willfully deceived the public.
Economists are now admitting that they were wrong about globalization
111–120 of 265 posts
Re: Economists are now admitting that they were wrong about globalization
#112Earlier quoted context omitted.
It is generally thought of as immoral to rend one person in order to help one other. Not when it comes to buying things, which is what this situation is. Blue collar workers in the US (or other developed nations) don't have a moral demand on you to purchase their labor at the same rate forever. If someone across the street (or across an ocean) is selling the same product for less money it's perfectly fine to buy it f…
The thing is that US workers have a lower bound on the fee they can charge for their labor, due to minimum wage laws. Those laws were enacted because we as a country believe there's a moral duty to ensure a minimum quality of life for it's working citizens (and in extension humans in general). Letting industries who would historically underpay US workers to instead just underpay some other countries workers defeats t…
The current US unemployment rate is 3.5% which is near all time historical lows.
Virtually no one is unemployed in the US because of the combination of international trade and minimum wage laws.
Re: Economists are now admitting that they were wrong about globalization
#113The Council on Foreign Relations (publisher of Foreign Policy) sure is quick to point the finger at economists.
Re: Economists are now admitting that they were wrong about globalization
#114Earlier quoted context omitted.
"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…
> Starting at the bottom of another career hierarchy at the age of 40 is a complete disaster, you will be out-competed by 22 year olds who cost alot less, are easier to train, have less grievances about a low salary, are okay with the bottom rung, and do not have huge expectations. Only if those 40 year olds believe they're entitled to higher pay just because they're older. The number of available jobs in a given car…
"Only if those 40 year olds believe they're entitled to higher pay just because they're older. The number of available jobs in a given career hierarchy shrinks pretty quickly as you ascend, which means that most people won't rise very far. Start at the bottom rung, stay at the bottom rung for the rest of their life."
So your solution is to delegate a 40 year old replaced by trade policies to the bottom of the economic rung. This is the exact situation that the article is saying is a problem. Don't think you read the article.
My point was that we should tilt economic policies so that this situation does not occur. And make no mistakes, this situation is avoidable, and caused by the destruction of that 40 year old's career.
Re: Economists are now admitting that they were wrong about globalization
#115I doubt that there was ever any illusion that if financiers could arbitrage labor rates between nations that they would. Hence the expectation always was that living standards among nations would tend to equalize. Post WW II the US had about 50% of the global GDP. The situation was huge inequality between nations. That was politically untenable and the solution was seen to be development of other nations' economies.…
It was sold as "rising tide lifts all boats" (implication: boat = person, and "all" = "nearly all, at least") and "everyone benefits under free trade, trade barriers always make people worse off, it's just a fact, what don't you even know Ricardo?"
Never mind that "all boats" was, in the best case, "all GDPs", not individual incomes, and "everyone" was... well, the average of all GDPs, actually, so also not actually every individual, and still with a pile of caveats for even that to be true. In point of fact nothing about all this said that even most people would benefit, if you either 1) applied common sense, or 2) actually looked at their sources.
source: figured out the common sense reasons this was BS when I was in like 4th or 5th grade watching the China-MFN debate & vote on CSPAN (god I was a nerd); later did the reading and learned that yes, my elementary school intuition mapped closer to reality than the crap they sold us.
Re: Economists are now admitting that they were wrong about globalization
#116Of course, the other side of this is billions of people outside the United States raised out of extreme poverty. Eventually, globalization means that everyone in the world has access to the same opportunities. The nationalist argument that workers in the us are better or more deserving of that high standard of living and those opportunities doesn't really stand up to much scrutiny here.
> The nationalist argument that workers in the us are better or more deserving of that high standard of living and those opportunities doesn't really stand up to much scrutiny here.
This might be too simplistic of a take on it. If you don't consider your own interests first then your good will can be exploited. If the whole world embraced free trade then you might have a point, but as it stands countries such as China are not playing fair. I'd also have to question wherever the moral good of Chinese workers being lifted out of poverty is worth the growth of China as a global superpower. If we're embracing free trade for charitable reasons don't you think we need to be sure our money isn't ending up in the hands of governments like the CPC?
I also think that even if you were right from a morally objective point of view you're employing a kind of "for the greater good" reasoning here that many would find objectionable.
Re: Economists are now admitting that they were wrong about globalization
#117> 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…
This is spot on and one of the reasons why I think that running countries on a timescale of four year election cycles will not work in the very long term. It almost guarantees short sighted policies especially if there are no term limits or multiple runs for the incumbents. This is a very hard problem to solve, we've settled on democracy as the least of a bunch of bad solutions but we have yet to find something better and this more or less is baked into the system.
Free trade did the world a lot of good. At the same time it caused a lot of problems, mostly offset by the good but not all of it. It's a bit like controlling a model airplane before the days of proportional control. You get to 'yank the lever' every so often and you always end up overcorrecting. And that's before we get into even more complex issues such as corruption (which is part and parcel of every political system in one form or another) and simply dealing with human nature.
Re: Economists are now admitting that they were wrong about globalization
#118Earlier quoted context omitted.
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…
The CIA under Eisenhower overthrew the government of Guatemala when trade unionists were elected on the promise of eight hour workdays and better conditions for field workers. What do you think the country would be like today if we hadn't killed the union leaders and installed a dictator friendly towards US business?
In that alternate history, I don't think that the subsistence farmers would be middle class.
That doesn't mean that I think the US was in the right. I don't. But it does not follow that all the problems in Guatemala are our fault.
Re: Economists are now admitting that they were wrong about globalization
#119>> The U.S. president has effectively discarded modern economics, reembraced crude protectionism, and, like the mercantilists of the pre-Adam Smith era, appears to see trade as a zero-sum game
Trump is right.
Almost all business activity today is a zero-sum game. Americans have all the abilities and skills to produce everything they need on their own. If (hypothetically) the US were to start banning foreign companies, new US companies which are just as good would pop up in their place. This would create better, high-paying jobs for Americans and more opportunities for entrepreneurs and technologists.
This is true for pretty much any developed country with respect to foreign goods and services. For example, if France blocked Facebook, within a matter of weeks, better alternatives would pop up to cater for the French market. This is not speculation BTW, it's pretty much what happened in China with respect to all major US tech companies.
China knows exactly what kind of zero-sum game they're playing. Ability is not the bottleneck. The bottleneck is human attention. Governments have to leverage their laws and regulations to maintain control over the attention of their citizens so that they can focus it to benefit local businesses.
Free markets only make sense at the small scale; for example, I'm a builder and I want to focus all my time and energy on building houses so that I can gain more experience to fine-tune my skills and become more efficient over time - but I have a problem: While I'm busy becoming an expert in construction, I need to eat bread to survive... The solution to this problem is a free market; it will allow me to use the money that I earn from building houses to buy bread from a baker (who is an expert in baking). The efficiency gains here are obvious.
When you look at the same problem at a global scale, it doesn't make sense because, taken as a whole, a country (especially one with a large population) can focus on many things at once whilst being an expert at all of them. Being really good in one area does not prevent a country from also being really good in a different area.
Applying a microeconomic solution (in this case, a free market) to a macroeconomic problem doesn't work. It's like if you were a plumber and your kitchen sink was leaking and instead of fixing it yourself (which would take 5 minutes and cost you $0), you decide to call another plumber to come to your house and fix it (which would take 1 hour of travel time extra and cost you $100). It makes no sense. If you have the skills to do something on your own, and you have an unlimited ability to multi-task you'd have to be an idiot to pay someone else to do it.
Re: Economists are now admitting that they were wrong about globalization
#120To be clear this article isn't whether globalization is good or bad but about how it affects "American workers". Its pretty clear it has been on average very good for America and the world, but bad for say factory workers or coal miners. The response should have been to tax the wider benefits and subsidize the people who lost out, but that money got lost somewhere en-route... Most of the world is far better off in ne…
It's been fantastic for the 400 people that own more wealth then the entire country.
An extreme exaggeration that ignores the extraordinary wealth holdings of the US middle class, which is wealthier than their peers in Germany or Sweden. That is despite heavy middle class demographic change from Latin America immigration the past ~45 years, they're still wealthier than those elite nations.
The 50% to 90% bracket in the US for example holds $31-$35 trillion in household wealth. The 90% to 99% bracket holds another $39-$44 trillion. So 50-99% holds $80+ trillion.
The Forbes 400 is worth $3 trillion.