Exile Economics: If Globalisation Fails

I read the book referenced - Robert Lightizer's No Trade Is Free: Changing Course, Taking on China, and Helping America's Workers - and it was eye-opening, if somewhat misguided.

In it, the author blames China's industrial ascent for America's deindustrialization, the hollowing out of cities like Detroit, the fentanyl crisis, the looming challenge to American power in the Pacific, the intimidation of America's allies, etc. Basically: China bad, turned into a political doctrine.

My rebuttal is simply a rehashing of what I said in an earlier comment [0] which is simply logical, no matter how you see it:

For most of human history, everyone lived at a subsistence level because we all had to farm our food, bake our bread, sew our clothes, build our own houses, etc.

Specialization is what makes the luxury and wealth of the modern world possible: you do one thing all day long and convert it to cash, then exchange value with people who do other stuff to get what you want. And since they're operating at scale, they can build more houses, make more stuff, etc. that you ever can if you did it yourself. So, you pay less for more stuff.

International trade simply takes it to the next level. For instance, the average American will not bend over to pick cocoa beans for chocolate for even $100k/yr. Many of you will argue, but all I'll say to you is that there's a reason agricultural work is referred to as back-breaking work. There's also a reason why farmers have the highest rate of suicides. Even if the American eventually agrees to do it, the cost will be so prohibitive that buying chocolate will be out-of-reach for everyone but the rich. Abundance ended; the end.

If you believe China is stealing American jobs by making things cheaper an at scale, then tractors stole farmers' jobs by making it easier to consolidate; cars drove much of the horse rearing business into bankruptcy; mobile phones have driven countless industries into extinction, but we're not trying to regulate them out of existence. Why does the logic fail when a nation of 1.5b wants to make stuff cheaply and send it to you for affordable prices? How does it hurt you?

I have this belief that one of the reasons why inflation has been under control despite the QE experiments undertaken by the Federal Reserve, ECB, etc. is because of the impact of 600M Chinese workers, leaving their farms to work in manufacturing, making products cheap enough for the average Westerner to afford, despite dumb government fiscal policy.

If you take that away, your political system becomes even less stable and you have to keep reaching for ever more outrageous stunts to stay relevant or get voted into power.

[0]: https://news.ycombinator.com/item?id=44866645

There are some important wrinkles in there though, such as the externalities of pollution. Imagine two countries on each side of a river, identical except one of them can make Product X more-cheaply because it allows toxic waste to be dumped into the shared river.

Less-tangible--but even more morally-fraught--might be the case where one country's competitive advantage comes from chattel slavery.

Specialization may confer advantage, but not all advantage is specialization.

That's not really the point though, it's not "we can't get Americans to pick cocoa for pennies on the dollar". It's that being able to leverage arbitrage of different countries labor is disproportionately a wealthy "man's" (corporation) game, and just because we can get cheap chocolate in the USA doesn't mean that the salaries relative to housing costs and the thousand other grievances are increasing at the same rate that the "gains" of this vast network would suggest.

EDIT: wording

I think the idea would be that you can train people to move up the ladder into more productive roles, think about how China grew by eating the supply chain of western companies upwards.

IMHO a bigger problem is the whole MBA mentality of stripping companies down to the bones, lots of huge companies are now just trademarks and vendors, to the point that's hard to prove what exactly is their advantage besides the brand.