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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

#201

Post by mdorazio »

yorwba wrote: post #166
mdorazio wrote: post #152

Earlier quoted context omitted.

In general this isn't tenable for two reasons: 1) Older workers have naturally benefited from annual pay increases over the course of decades, so that even if they're in a non-senior role, they would take a sizable pay cut if forced into a new career entirely. 2) Older workers often need higher salaries because they have families to support (along with the many costs associated) which young workers do not. It's a nat…

1) How much of those pay increases is just keeping up with inflation? What's the income multiple earned by a manufacturing worker with 20 years experience vs. a fresh hire in the same role? 2) It's true that supporting a family requires a higher salary, but younger people can have families, too, and in any case retraining for a job that allows you to barely scrape by is better than nothing. Better to get mostly screw…

1) Good question. In my experience it's generally around a 1-2% gain over inflation, although in reality that dropped a lot for many workers since 2009 as companies raced to cut costs. But compounded over let's say 20 years, you're looking at 22-49% over starting fresh. Manufacturing is an interesting case beyond this since a lot of jobs were unionized and came with tenure benefits in excess of my numbers above.

2) In a purely rational way, yes. However,

a) I'm most interested in discussing average scenarios which in this case is young people = generally mortgageless and childless, older people = generally have children and associated costs

b) It often ends up more complicated than that when you factor in social safety nets. You could very well do better by not taking a job that allows you to barely scrape by and instead take the government assistance.

c) Rationalizing away a massive decrease in standard of living for a significant number of people as, effectively, "at least they're not homeless" is one of the ways you end up with massive inequality and eventually the populism push we're seeing now leading potentially to something akin to the French Revolution.

I think we can find a better solution. This is exactly the kind of discussion that has been missing on a national level until very recently.

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

#202

Post by andrekandre »

adventured wrote: post #120
ngold wrote: post #44

Earlier quoted context omitted.

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…

> The 50% to 90% bracket

what percentage of the u.s population fits into that bracket?

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

#203

Post by rayiner »

guelo wrote: post #83
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 truth is, on balance free trade is better for the world Only because economists' only metric is GDP with the baked-in assumption that exponentially increasing natural resource usage is a good thing.

Doesn’t look exponentially increasing: https://images.app.goo.gl/e2Bo8NnsFvGoMCS46

https://images.app.goo.gl/Vycafp5WiuNgUy9m6

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

#204

Post by pas »

abakker wrote: post #46
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…

I like this - and, critically, there really is no reason why free market solutions can’t be creative or innovative. A challenge is that many solutions to problems like unemployment have difficult to quantify primary effects - e.g. actual jobs created - while they have easy to quantify opportunity costs - expected return of investing capital in ETFs, or something. My point is not the details, or to say that creative s…

Cash or credit. Doesn't matter there's always opportunity/alternative cost. If you have a bag of resources you have to decide what to do with it, and for that usually you need to evaluate a bunch of possibilities. This is the same as ranking them by utility.

ROI is just one kind of utility function, but converting everything to said resource-equivalent works pretty well.

It's always a nasty burden to decide between hospitals and roads, but it's a neccesity also, because building just hospitals without roads doesn't help much, because ambulances can't get to them. And vice versa.

Sure, ROI in itself is a bad metric, and the problem is that developed nations are frequently get caught in an overly simplistic financial modelling situation. Because politically a more complex model is very hard to defend and the simple model gives simple answers, which are usually not optimal.

As you said, creative solutions are what's needed, but they are harder to quantify.

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

#205

Post by dominotw »

benibela wrote: post #141
dominotw wrote: post #69

Earlier quoted context omitted.

> so the only 'choice' consumers have its not the only choice in USA atleast. ethically made products cost more.

But the opposite direction does not hold. More expensive products are not necessary more ethically. Often the cheap and expensive products are made by the same workers and just sold under different brands. So the customers cannot know which products are ethically or not. They would need to vet the entire supply chain of every product. That is a full time job just to check one product

> need vet the entire supply chain of every product.

Nah. You outsource that job to the store carrying the product. People shop at REI and whole foods for this precise reason.

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

#206

Post by WheelsAtLarge »

I remember that in my Econ class, so many years, the idea that we could close manufacturing plants and transfer them to low cost labor countries and not have a replacement job in the US was a very big discussion that my professor could never answer with clarity. He would always say that the US economy would develop other ways to employ the people that lost their jobs. So even then there was a lot of dought on the idea of globalization.

Ok fine, there was a mistake in thinking but there's no one that has a satisfactory answer on what to do to fix the problem.

I for one think that we can't go back to the way things were so we need to start by separating benefits, health care ins. and such, from employment. Once that's done people will be freer to take on jobs that are not high paying but are being created by the gig economy. We also need to cut the workweek to fewer hours lets say 30hrs vs 40hrs now.

The last part is automation. As a country we need to embrace it. They say that automation brings on more jobs than it destroys but nothing says that those jobs will be in the US. Whether we like it or not it's coming so we need to be the country that controls it.

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

#207

Post by guelo »

rayiner wrote: post #203
guelo wrote: post #83

Earlier quoted context omitted.

> the truth is, on balance free trade is better for the world Only because economists' only metric is GDP with the baked-in assumption that exponentially increasing natural resource usage is a good thing.

Doesn’t look exponentially increasing: https://images.app.goo.gl/e2Bo8NnsFvGoMCS46 https://images.app.goo.gl/Vycafp5WiuNgUy9m6

Ok, if I could trust that those images are accurate then I am wrong. But if they are accurate you could read that graph as a population has just hit some kind of resource limit.

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

#208

Post by barry-cotter »

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…

The long gun registry would have failed even if it had been delivered on time and under budget, to spec. They had less than 10% compliance with the law and putting 5-10% of the population in jail was never going to happen. Much like Prohibition in the states banning things that large portions of the population have no problem with doesn’t work, and the Canadian populace is plugged in to the US media enough to know that a gun registry is a prerequisite for any campaign of confiscation.

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

#209

Post by CydeWeys »

andrekandre wrote: post #193
CharlesColeman wrote: post #165

Earlier quoted context omitted.

> More and more it seems like some sort of UBI or welfare system is the only real option. Give people an income floor and don't worry if they flourish above that, at least to a certain extent. Except: 1) UBI is unproven and 2) it strikes me as a bit of a band-aid solution designed mainly to avoid confronting certain ideological assumptions.

also if it’s a fixed value (say $1000 a month), it 1. doesn’t cover the rising costs of medical care and insurance (in the us at least) 2. won’t keep up with inflation 3. sets up private markets to potentially inflate prices “because people have 1000 dollars extra to spend” UBI in concert with price limits for basic goods and services, insurance reform, and medical costs limits might have a chance.... but then you ar…

I'm skeptical of UBI too, but I think it would work best with the following combination:

1. UBI (including some fractional amount per child) 2. Free universal healthcare (i.e. Medicare is no longer age-limited) 3. Better education & free public universities 4. Some kind of higher tiers of UBI for disabled people who really need it (judged strictly)

And then get rid of every single other means-tested benefit (including Social Security), as well as tax-advantaged retirement plans (which overwhelmingly benefit the already well-off), and get rid of the favorable tax on LTCGs and carried interest; everything pays full-freight income tax. After this, benefits are either free to everyone (i.e. healthcare) or you pay full freight out of your UBI. And UBI is not scaled by CoL, because it doesn't make sense to subsidize landlords in expensive cities.

And even with all of that, it's not clear that it won't be vastly more expensive than the current system, making it effectively unaffordable. There's also the issue that some people will not spend their money correctly, e.g. they'll fritter it away on drugs/alcohol and not have enough to pay rent or buy food. So you'd need some kind of combination of food stamps and Section 8 housing vouchers, paid out of UBI, for people who need to be forced to allocate their money correctly (as there will no longer be any separate means-tested food stamps or housing assistance).

I could see something like this working in smaller, well-connected, yet independent communities, but I'm struggling to see how it could scale up to a country the size of the US. The rich would be paying so much more in taxes to essentially subisidize many people who might choose not to work at all, that I think it's inevitable they'd manage to overthrow it.

Like you, I think from a realpolitik view of things (if nothing else), that it can't work.

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

#210

Post by CydeWeys »

yorwba wrote: post #166
mdorazio wrote: post #152

Earlier quoted context omitted.

In general this isn't tenable for two reasons: 1) Older workers have naturally benefited from annual pay increases over the course of decades, so that even if they're in a non-senior role, they would take a sizable pay cut if forced into a new career entirely. 2) Older workers often need higher salaries because they have families to support (along with the many costs associated) which young workers do not. It's a nat…

1) How much of those pay increases is just keeping up with inflation? What's the income multiple earned by a manufacturing worker with 20 years experience vs. a fresh hire in the same role? 2) It's true that supporting a family requires a higher salary, but younger people can have families, too, and in any case retraining for a job that allows you to barely scrape by is better than nothing. Better to get mostly screw…

On the second point, the successful penetration of family planning into the western world means that most people do not have children until they can support them. So it is actually worse to lose income and go down to income level X than to have only been at income level X (and for a shorter amount of time) because someone in the first situation has likely had kids by now whereas someone in the second situation hasn't.

And at the risk of stating the obvious, it is in society's best interest to support families, because children are literally the next generation and everything will quickly collapse if it becomes economically untenable for most to have children. So society has to set itself up in a way that promotes the ability for most people to have and support families.

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