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

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

#211

Post by barry-cotter » Sat, Oct 26, 2019, 1:15 AM UTC

NeedMoreTea wrote: post #50

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 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…

Counter example: Hong Kong. It had no industrial policy whatsoever and went from a bombed out ruin in 1945 to the first world in 40 years based on unilateral free trade, while taking in massive numbers of refugees from China.

Completely executed trade policy works but so does free trade if you have rules of law and security of contract and property.

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

#212

Post by barry-cotter » Sat, Oct 26, 2019, 1:16 AM UTC

Animats wrote: post #58

NeedMoreTea wrote: post #50

Earlier quoted context omitted.

> 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…

There's a similar book, "How Asia Works".[1] This has a good survey of industrial policy in Asia, what worked and what didn't. Summary: Step 1: Mechanize agriculture, to free up people for an industrial labor force Step 2: Support export-oriented industries. Step 3: Transition to a developed country. Trouble comes when you botch step 2. [1] https://www.amazon.com/gp/product/0802121322/

Korea didn’t do step 1 and it did fine. Their post war land reform lead to farms so small that there were no tractors in the country until something ridiculous like 1970.

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

#213

Post by pas » Sat, Oct 26, 2019, 1:16 AM UTC

codingslave wrote: post #176

wahern wrote: post #27

Earlier quoted context omitted.

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 exceedingl…

Your argument here is sound, if you assume this is true: "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." My point, and the point of the economics article, is that this is not the case. We create…

At the same time free trade happened because specialization (comparative advantages) help everyone.

The decrease in US wages is offset by the decrease in prices (due to the increased efficiency of the whole global and local economy).

The problem is that individual workers are not strongly incentivized to relocate, retrain, rethink their life.

Just look at Appalachia. There are still villages/towns where people sit around on welfare and do basically nothing plus moan about how that particular mine has run out. This has been going on forever. Humans are not that strategic masterminds when it comes to planning for the future. See also how paradigm shifts coincide with a new group rising in power because the old guard is too wedded to their ideology.

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

#214

Post by imtringued » Sat, Oct 26, 2019, 1:19 AM 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…

>The whole thing makes literally no sense.

Compared to staying jobless it's a hell of a good deal.

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

#215

Post by pas » Sat, Oct 26, 2019, 1:21 AM UTC

barry-cotter wrote: post #212

Animats wrote: post #58

Earlier quoted context omitted.

There's a similar book, "How Asia Works".[1] This has a good survey of industrial policy in Asia, what worked and what didn't. Summary: Step 1: Mechanize agriculture, to free up people for an industrial labor force Step 2: Support export-oriented industries. Step 3: Transition to a developed country. Trouble comes when you botch step 2. [1] https://www.amazon.com/gp/product/0802121322/

Korea didn’t do step 1 and it did fine. Their post war land reform lead to farms so small that there were no tractors in the country until something ridiculous like 1970.

They had a big population boom, also they very much did a lot of reforms needed to increase economic output (eg. private property laws, market liberalization, free trade agreements, clear-ish laws, education, healthcare, dense urbanization, public transportation).

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

#216

Post by barry-cotter » Sat, Oct 26, 2019, 1:22 AM UTC

CharlesColeman wrote: post #161

WalterBright wrote: post #41

Earlier quoted context omitted.

> 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.

> The most recent example is China turning to free markets, and the resulting vast improvement in their economy. China hasn't turned to anything like textbook Anglosphere free markets. Yeah they loosened up and turned away from classical central planning, but state-owned firms still control 30% of assets and their government does quite a to set economic policy and direction. They didn't privatize everything and let t…

The SOEs are not behind China’s economic growth. The export sector is.

https://scholars-stage.blogspot.com/2014/08/passages-i-highl...

> Westerners often describe China's explosive economic growth as a product of its export sector. This sector, however, is not "in the system": “The private export oriented sector suffered massive losses in jobs, earnings, and the closure of small companies in 2008 and 2009. But China’s banks were not exposed in any material way to this sector. It is simple fact that China’s financial system and its stock, bond, and loan markets cater only to the state sector, of which the “National Champions” represent the reddest of the Red. These corporations, the heart of China’s state owned economy, are “inside the system.” The private economy, no matter how vibrant is “outside the system,” and in fact serves the will of the system.” (p. x)

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

#217

Post by christophilus » Sat, Oct 26, 2019, 1:24 AM UTC

WheelsAtLarge wrote: post #206

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 ide…

I agree completely.

One other aspect that often gets lost in these conversations is that manufacturing capacity is a huge part of what wins wars. The US won World War II largely because we could produce planes and ships faster than our enemies could destroy them. When we shipped our manufacturing capabilities overseas, we also undermined a key wartime advantage.

It is within our national interest to have a strong industrial base. The only way I can see that happening from here is automation.

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

#218

Post by imtringued » Sat, Oct 26, 2019, 1:24 AM UTC

mdorazio wrote: post #152

yorwba wrote: post #102

Earlier quoted context omitted.

> 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…

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…

>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 naturally unbalanced situation.

That's completely illogical. What you need doesn't matter. The only thing that matters is what type of work is available for you and retraining expands the availability of work. If retraining is unattractive because you see higher paying opportunities elsewhere then you don't even have the problem that retraining is supposed to solve.

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

#219

Post by imtringued » Sat, Oct 26, 2019, 1:27 AM UTC

mdorazio wrote: post #201

yorwba wrote: post #166

Earlier quoted context omitted.

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) I…

>c)

If they don't care then there is no problem. If they are unwilling to take paths toward self improvement maybe it's for the best to not force them to do something they don't want?

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

#220

Post by barry-cotter » Sat, Oct 26, 2019, 1:30 AM UTC

shkkmo wrote: post #132

cactus2093 wrote: post #38

Earlier quoted context omitted.

Yes people still have challenges and problems. But at the end of day, there are hundreds of millions fewer people in poverty than there were just a few decades ago. None of what you're saying justifies that the alternative would have been better, where most of these people remained poor subsistance farmers.

> , there are hundreds of millions fewer people in poverty than there were just a few decades ago. And how much of that is due to globalization and how much of that is due to the growth of local economies? How much faster would those local economies have grown if wealth was not being siphoned out by multi-nationals? (These are not honest inquiries, not rhetorical questions.) > None of what you're saying justifies tha…

In China it’s almost all due to globalization. Multinationals doing siphon out wealth. They invest huge amounts of money in foreign direct investment, enabling faster growth than if all capital had to be domestically sourced and they take some of those profits and repatriate them, but the wages they pay and the capital investment they make stay in country.

In China the people who were poor subsistence farmers absolutely are those lifted out of poverty. The numbers are just too great for it to work any other way, with urbanization going from ~20% in 1980 to 70 or 80% now. Similarly in Korea.