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Economists are now admitting that they were wrong about globalization

foreignpolicy.com

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

#121

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.

Developed countries benefit from free trade, while developing countries benefit from some level of protectionism. This isn't peculiar to China.

There's always a tension. Developed countries want as much access as possible for their advanced corporations to all markets around the world. They also want to be able to exploit cheap labor in developing countries without transferring any know-how to local competitors. Developing countries want to be able to export to the large markets in the developed world, but also want to protect their fledgling industries from much stronger competition from the advanced countries. They also want to acquire know-how from the developed world, in order to move up the value chain. Toyota probably wouldn't exist today if Japan hadn't protected it from American competition after WWII. This is why there are special provisions in the WTO for developing economies - the same policy doesn't fit countries in all stages of development.

Because of its uniqueness (both as the largest developing country in history and as a former non-market economy), China is actually subject to additional restrictions under the terms of its accession to the WTO. For example, other countries have increased leeway to place tariffs of Chinese goods, without China having the usual right to retaliate. It's not true that China is a particularly egregious rule-breaker.

I think that fundamentally, these claims of China breaking all the rules and taking advantage of everyone come from a place of fear that China will become the dominant world power - not from an actual understanding of Chinese economic policy.

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

#122
post #74

Earlier quoted context omitted.

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 mo…

It would be nice if you could name the country and bureaucracy of the success story. I know of one such move; the experts made it known they'd rather resign and find new jobs than move to the periphery with their families. The move was cancelled as it was pointless without the experts.

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

#124
post #112

Earlier quoted context omitted.

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.

That's because most vulnerable workers are either skirting labor laws through the gig economy or have given up and dropped out of the labor pool altogether, which means for whatever reason they don't get counted in the unemployment rate

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

#125
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 truth is, on balance free trade is better for the world and for every nation in it; Well not quite. Free trade is better for every nation after they have achieved development and wealth. Pretty much all of whom got wealthy by pointedly ignoring free trade. There's a decent book from 10 or 15 years ago by Ha-Joon Chang called Bad Samaritans that explores globalisation, free trade and in particular the insistence…

This x1000.

Everybody interested in economics should read Ha-Joon Chang and study the South Korean phenomenon. Those who haven't and still feel obliged to put down their 2 cents praising free trade / markets are talking out of their asses.

The fact that people are still willing to listen to Krugman (even this FP article is sympathetic) rather than cast him out as a colossal buffoon - not quite Alan Greenspan status but close - whilst geniuses like HJC wallow in relative obscurity is beyond sad.

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

#126
post #112

Earlier quoted context omitted.

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.

That's because most vulnerable workers are either skirting labor laws through the gig economy or have given up and dropped out of the labor pool altogether, which means for whatever reason they don't get counted in the unemployment rate

To whatever extent that is happening, there is no evidence that it has happening more today than it was happening 50 years ago (before globalization) so comparing the unemployment rate of today to the unemployment rate then is still a perfectly valid comparison.

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

#127
post #95

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? No, it isn't. Living in the Rust Belt, I find it so obvious that globalization is a race to the bottom that I'm amazed any reasonable person could believe otherwise. All the jobs move to countries with the worst wages, environmental protection, safety, workers' rights, etc. In economists' language, through labor organization and the democratic process, re…

What are Trump’s tariffs a lever for?

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

#128

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.

We picked the wrong guy in 92.

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

#129
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.

while economists dismiss tariffs out-of-hand, they can certainly be used strategically to dampen the otherwise sudden effects of free trade on industries. the tariffs should be implemented dynamically and smoothly, increasing and decreasing over time without a sudden dislocation.

the other tool we tend to overlook is immigration. grow the economy through internal demand and upstart labor rather than external. but that means the possibility of more non-white people--unfortunately a real roadblock here (in the US).

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

#130

Earlier quoted context omitted.

This seems like a great idea. It ensures that even if government efficiency is low, it is providing positive value. I'm surprised this concept isn't more widespread.

Usually it just means gutting the department that moves. The UK has been trying this with the BBC, forcibly relocating the organisation to the north of the country. It encodes a basic assumption that in government, skilled and experienced people are so unimportant you can just lose all of them (as very few people want to relocate to a place chosen specifically because it's fallen behind). Says a lot, really.

The bbc move seems successful though.not just Manchester either... also to Wales
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