„A crucial mistake,’ according to Lighthizer, had been to let China into the WTO and treat it as just another country like America’s free-market allies.“
I agree. The WTO should be limited to democratic countries. It was a huge mistake to have countries like China, Russia and Saudi-Arabia in the WTO. These countries don’t play by the rules and consequently should be punished by the highest tariffs possible.
Therefor I‘m in favor of tariffs on good and services from dictatorships. But I‘m against tariffs on goods and services from democratic countries.
Depends at which level. From what I understand, democracy in China exists for local elections (they are mostly in the hand of local small bourgeoisie, but you have a choice).
I doubt they get a choice of communist party or non communist party. I'm not sure any communist party in history has survived giving its grateful proletariat the chance to vote for something else?
The communist party is the government, but within the party there is a significant amount of ideological diversity. The most notable examples are between “true believers” like Mao and pragmatists like Deng and Hu
„Aristotle thought that the life of tradesmen and mechanics was ‘ignoble and inimical to virtue’. He rather approved of the way that Thebes disqualified business types from public office until they had been retired for ten years.“
That would be a great law against lobbyism and revolving doors politics.
Ancient Babylon and other parts of the ancient world would regularly cancel non-commercial debts - effectively a wealth transfer from the wealthy to the workers, preventing the rise of an oligarchic class. However, once an oligarchy is in place, it’s counter to its interests to its relinquish control of the political process - the day it chooses to relinquish power for the common good never comes.
As always, take the translation with a grain of salt. "Virtue" to aristotle has a completely different meaning than the one we're used to: respect your place in the natural order. Mertitocracy was an alien concept to him, and he would find it most "unvirtuous".
Would be more interesting if someone came at this debate from a game theory perspective with bad actors ignoring IP laws, manipulating currency values and implementing tariffs through policies that aren't directly taxing products but restricting who can play in markets. Yes tariffs are bad in a vacuum and I am not saying this article is false even when it's strawmanning some arguments to make it's case but it's seems a bit one sided and possibly nieve without including the context in which these policies are being made so I still remain on the fence as to whether tariffs can be used as leverage.
The "bad actor" strategy in question has been known for ages: it's called mercantilism. It's so old that it convinced Alexander Hamilton away from "free trade laa dee dah" so that he could enact the protectionism which eventually industrialized America.
More recently, China has been running the same playbook to great effect. It's really funny to watch the free trade crowd laud/fear the rise of China with one breath while calling the mercantilist playbook old and outdated with the next.
> It's really funny to watch the free trade crowd laud/fear the rise of China with one breath while calling the mercantilist playbook old and outdated with the next.
It mentions it in the article, which technically references Lighthizer's book passage:
" ‘A crucial mistake,’ according to Lighthizer, had been to let China into the WTO and treat it as just another country like America’s free-market allies. The result was that millions of well-paid jobs in US manufacturing disappeared, as more and more work was outsourced and offshored. "
A close examination of the passage appears to be correct: accordingly, China only met about 50% of the WTO entry requirement in the last 20 years. They were in essence, acting as a bad actor. Not only that, now they were seeking, prior to covid, to replace the current rule based trading system, with one where they got to have unlimited export to other countries, while the government suppressed wages and consumer spending internally, in order to strengthen the state. All other countries production be damned. The low wage low cost export would destroy all of the production capabilities in other countries.
And now with China openly claiming to Europe that Russia must not fail, they are blatant in their desire to destroy the western democracies, in support of authoritarian dictatorships in the world.
Global North corporations actively lobbied for China’s membership in the WTO because expanding the labor pool would lead to higher profits at the expense of the working class, and they were right.
This has created a cascading effect: rising wealth inequality has fomented distrust in institutions; this in turn has manifested as right wing populism. It’s right wing populism that is dismantling western democracies, not China.
No market is truly free. Once you have a free market it very quickly stops being free as dominant players monopolize it and shape the rules of the game causing the government to (sometimes) intervene to counter it and make it more fair, but it is never "free".
>dominant players monopolize it and shape the rules of the game causing the government to (sometimes) intervene to counter it and make it more fair
The dominant players shape it in large part by getting the government to intervene shaping rules to their benefit making it less fair. Naturally everyone with a brain hates this so there's a constant give take where the incumbent interests allow just enough competition, make the barriers to entry just barely surmountable that there's a strong enough trickle of new entrants that they can point and say "look, anyone can do it" and just enough idiots will believe it that they keep their heads.
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.
The difficulty is that while we can move the job to where the cheaper (or specialized) labor is, we can't (currently) easily move the people around to where the job is.
So lower skilled people living in areas surrounded by high skill/cost people can't easily find a better Cost-of-Living balance. They get trapped with no job to match their skill.
To put it more bluntly - the people of Detroit simply aren't allowed to move to the surrounding areas of the BYD factories in China.
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.
Which is exactly why strategies like UBI are so important. Eventually the average American with no specialized skill will find that they cannot produce value when competing on a global scale.
Our strategy so far has been to let them starve and tell them to "learn to code" or "become a machine operator/technician", but that strategy can only help so many people. We do not need as many technicians as laborers that the machine replaced.
And when you have a mass of people who see that the future globalist economy is moving in a way that has no place for them, or plan to make sure they don't starve, you get the globalism backlash like what's happening in the US and UK over the last decade, and nationalistic pandering politicians taking advantage.
The only solution is to tax the billionare owners of the job-displacing machines to provide basic living UBI to the people they replaced.
For this claim to work, you have to demonstrate why this time is different, why standards of living and disposable income have been rising in the West and all over the world for 50 years or more—all while technological progress was as fast or faster than today.
> standards of living and disposable income have been rising in the West and all over the world for 50 years or more
Standard of living has been steadily declining in most of Western Europe post 2009: stagnating wages, exploding costs of living, declining public healthcare, pension and welfare funds, with longer waiting queues and scarcity in public services, etc.
Hence why so many people are mad and see globalization as one of the main factors. They feel rug-pulled: those with inherited wealth can relax and cash in on this new status quo, those without now have to compete with Asia as they no longer have a moat that guaranteed a good and stable income from basic low-skill jobs.
It's not a UBI needed but a job guarantee. Those people that no longer have a job need to be made productive, both for society and for themselves. It's not like there aren't plenty of things that need doing!
Now you need to move and re-house the people to when it needs doing, train them, invest the capital costs needed, build out the administrative overhead, and tax the productive profitable economy to pay for it all.
If there are things that need doing, you need to consider is it better for the government to do it, or to pay the private sector to do it. In principle the latter will still need to employ people.
How can the private sector magically do it without all those things you describe? In any case, the point is to employ people doing something useful - tending public gardens, removing graffiti, repairing roads etc etc.. this will all take place local to the unemployed. Indeed, being local is part of the point since it directly impacts neglected areas.
The objective is to make use of the lost resource that comprises the unemployed, whilst also removing the social problem of having long term unemployed. It has the final benefit of anchoring the value of the currency against a unit of unskilled labour.
All you people doing Detroit discourse need to also explain why the county just to the north, Oakland County, is one of the richest large counties in the United States.
I guess they have a lot of Pizza Huts or something?
On the other hand, I bet a lot of people in Detroit wouldn't mind paying more for the goods they consume if that meant having stable jobs and living in a city that is not bankrupt.
The QE point you're making is interesting. In addition to that I think it should be noted that the money that was "printed" disproportionately went to the richest, just as the benefits of globalization did.
In conclusion, while globalization has increased global economic growth and made us all richer on average, it has also exacerbated economic inequality. That's fair to criticize.
Not sure. The specific example is less important than the idea that even if total economic output increased there may be a large minority (or possibly a majority) who did not benefit from it because the profits were distributed unevenly
The US unemployment rate currently stands at 4.2% - despite all the hundreds of millions of jobs that have been outsourced to Chinese workers. Why isn't this gap larger? The reason is simple: as jobs move to places where they can be done cheaper, the market reorganizes itself! That's why horses, telegrams, and zeppelins are not missed. Better tech. has replaced them; these Americans got better jobs, mostly by moving out to other parts of the country.
That's why unemployment is so low.
>The QE point you're making is interesting. In addition to that I think it should be noted that the money that was "printed" disproportionately went to the richest, just as the benefits of globalization did.
It's not anyone's fault that Western governments decided to dilute their people's purchasing power and transfer it to the wealthiest. China (and Vietnam, Ethiopia, etc.) is actively helping those who have been so robbed by producing low-cost goods they can buy and enjoy in abundance, despite the constant erosion of their wealth.
But many of the jobs "lost" were replaced by jobs that produces less value and has worse salary. That's only natural. If there was a higher value job that could be done, it would already have replaced the "lost" job before it was lost.
We can turn and twist and look at it from many different angles but the conclusion is the same:
Global economic output increased and economic inequality in rich countries increased.
I don't think it's meaningful to blame any other countries like China and Vietnam for this development. But critique against globalization/our current system of trade should be taken seriously.
> I don't think it's meaningful to blame any other countries like China and Vietnam for this development.
Obviously, they sold what the buyer was asking to buy.
> Global economic output increased and economic inequality in rich countries increased. > critique against globalization/our current system of trade should be taken seriously.
Globalization promised increased economic output and delivered, I assume you're OK with that.
Then your serious critique must be directed towards the increased economic inequality. However, there's no reason to believe that globalization has anything to do with that, on the contrary, given a trickle-down distribution system, inequality would increase with or without globalization.
It's kind of obvious now that globalization was implemented the way it was in order to increase inequality and... blame "globalization" for that outcome. This little trick allowed the libertarian foundations of trickle-down and competition-is-for-losers to remain intact, out of scrutiny and boosted by a giant dose of steroids.
In other words, the critique against globalization is a coverup for more of the same.
Trade can be balanced without tariffs... why tariffs then? Simple, because tariffs are a tax on the population at large, not on the top tier of inequality who created this mess. The latter get... why, they tax cuts ofcourse.
Yet, the average American can afford abundantly more stuff now, compared to when these jobs were in the US? How does that compute?
Buying 31-inch CRT TV in the 1990s would have set you back somewhere between $2-$3k, adjusted for inflation. But, because it's been outsourced to where it can be made more efficiently, a 32-inch HD TV costs just $99 from Amazon.
This is just one product. I could go on and on. If you want to mention housing, it's a political problem since zoning doesn't permit anything to get built.
The reason inequality increased is because Western governments (everyone, really) printed trillions into existence and it diluted the purchasing power of savers, the poor, and the middle class, and went into stock markets to bid up securities.
That's the problem, not China making affordable stuff that costs fewer hours of labor to buy.
What you said merely inflates the value of stocks. It doesn't actually explain why things have gotten worse and you're making a weird separation between stock holders and savers, they are functionally equivalent.
We have cheap goods from China now, so what exactly is going wrong in your scenario? You didn't flesh that part out at all. If anything, you've decided to gloss over it, because housing is the primary issue.
As someone else has said: current account deficit is capital account surplus, meaning that the Chinese are flooding the US with money that could be used to build housing, but the Americans in their wisdom decided that that's a stupid idea and the money should go in the same quantity of housing and bid it up instead.
Unlike stocks people actually need housing to live in. It doesn't take much to explain how a rising cost of housing makes people feel squeezed, since it can literally lead to their eviction and homelessness.
Delusional market fundamentalist bullshit in its most pure form. Good job.
Many governments around the world have figured out the US unemployment rate filter trick. What is actually being measured at this point is not important.
The market fundamentalist are performing a type of data ritual to the market gods with the unemployment rate. Make the data look good and the gods will reward us.
There is another element that is not addressed by politicians and governments. People need jobs in order to make a living (pay rents, insurance, etc). This is a feedback loop: more in wages lead to expensive housing and expensive insurance and labor. Free market is fine when there are no limits to what can be produced. However, land and specialists are not abundant.
Why not make the cost of living cheaper for every one?
> 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
Definitely. The other way to look at it is that we were exporting our inflation to places like China. But that's (for various reasons political and otherwise) starting to change which means we can expect to have higher inflation than we had for the 30 years or so between 1990 and 2020.
Another reason is the Chinese population is becoming older and starting to decrease. Their median age crossed the US a few years ago. The one child policy allowed for lot more workers (fewer parents) in the past but its going to hurt them going forward.
> Specialization is what makes the luxury and wealth of the modern world possible
Specialization is not the key here. Although it certainly is one of the major methods that we have used to attain the actual key feature - productivity. Less work per thing produced. Specialization is one enabler for this. It is easier to optimize when the scale is huge. But specialization is not a requirement.
We used to have one device per technical problem. Now we have fewer and more general devices. A smartphone or a pc does what a multitude of devices used to do. The same transformation can happen in industry as well.
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.
I think we should live a more fulfilling life even if it costs luxuries. Less globalization, more localization. Economics should stop having the final say on everything.
Taken to its natural conclusion, your idea is that we should farm our own wheat, thresh it, grind it into flour, make our own bread, and build our own homes. Should we do that?
If jobs can't be exported to specialists who can do it at scale in Asia, Europe, etc. then there should be no specialization at all! Your logic demands that everyone fend for themselves primitively, which will lead to a collapse of the abundance mass production/specialization has created for humanity.
Free trade along with capitalism has brought more people out of poverty than any other economic theory/system. It's not perfect but you can't deny it's impact.
See, if anyone who said that took it seriously, or even partway seriously, I would find the prospect of free trade much less offensive. Yet the beneficiaries of "current account deficit equals capital account surplus" squeal like stuck pigs and cry "socialism! communism!" if one even hints at the possibility that they might pay a tax to help counterbalance the extent to which the asset pump / export dump negatively affects employment and drives inequality.
The thing is, US manufacturing jobs started as fewer and declined more than, say, Italy and Germany [1]. US policies weren't particularly opposed to the decline.
That said, the conception that manufacturing jobs are "good" compared to other jobs is simplistic if not outright false.
The US once had quiet a few relatively high paid, unionized manufacturing jobs. Some of those went to China and some of those went to the South/South-West where wages were also lower and union protections less.
The fuzziness of US political rhetoric creates a real distorting lens. Manufacturing jobs can be substituted for safe, well-paying skilled jobs. The existence of jobs can be sold as a goal rather than (employment, wage and safety) protections for workers, etc. And then what politicians actually do winds-up with little relation to the rhetoric anyway.
It's so prevalent that Wikipedia has dedicated pages for specifically American, [0] Indian, [1] and Canadian [2] farmer suicides. In the US, farmer suicide rates are 3.5* the general population. The rate for the general population is between 2-4%, so for farmers it'd be 7%-14%, comparable to the rate for anesthesiologists, at 7%-17%. For physicians, it's just over 1%.
The problem with China is that it is not a level playing field. Not even close. If they were an open market, then you would not see as big of a trade imbalance. They are predatory, manipulative and duplicitous.
The ideas behind globalism was to promote peace through trade and it worked for a while until China used it to try to become an empire.
The Brettons Woods inevitable collapse was known when it was introduced, but it was implemented anyway because it unfairly advantaged the US. Meanwhile Keynes proposed balanced trade via his Bancor System. This would have addressed abuse by any specific nation, but the US didn't want it, because it would have limited their ability to be abusive as well.
If the Chinese want to dilute the wealth of their people and use it to subsidize stuff for Western consumers, the smart thing to do would be to buy it!
Anti-trade activists always agitate about how they'll jerk up prices after capturing markets, but Uber hasn't managed to pull it off, despite >$50 billion burned. The moment a company's margins hike significantly, they attract competitors chasing those same dollars and they have to lower prices or lose market share.
Trade history is too often a sideline reserved for economic historians, yet any effective study of the past four hundred years ought to move it to centre stage, as a prime generator of war and peace, stability and chaos, prosperity and dearth. As Clausewitz might have said, shooting wars are trade wars carried on by other means. Napoleon’s invasion of Russia, for instance, came after the tsar quit the Continental Blockade.
That entire paragraph suffers from monocausal reductionism. For example, Napoleon's invasion of Russia, while linked to the Continental Blockade, was not purely an economic maneuver. It was equally rooted in geopolitics, prestige, and the shifting balance of power in Europe.
That said, besides pasting a paragraph from the linked article, I was asking what causal events you are basing your opinion on. Did you form the opinion solely from the article?
„A crucial mistake,’ according to Lighthizer, had been to let China into the WTO and treat it as just another country like America’s free-market allies.“
I agree. The WTO should be limited to democratic countries. It was a huge mistake to have countries like China, Russia and Saudi-Arabia in the WTO. These countries don’t play by the rules and consequently should be punished by the highest tariffs possible.
Therefor I‘m in favor of tariffs on good and services from dictatorships. But I‘m against tariffs on goods and services from democratic countries.
Unfortunately we are in the process of dismantling democracy at home as well.
AFAIK China is democratic and has elections.
According to https://en.wikipedia.org/wiki/The_Economist_Democracy_Index China is on place 145 from 167 countries. About the first 100 countries are all democratic. Everything below 100 is a dictatorship.
And since mainland China was never a democracy it can be said that China is more than 2000 years behind the West in democratic development.
Are there choices?
Of course I guess in America with our two party oligopoly we can’t really talk that much.
Depends at which level. From what I understand, democracy in China exists for local elections (they are mostly in the hand of local small bourgeoisie, but you have a choice).
I doubt they get a choice of communist party or non communist party. I'm not sure any communist party in history has survived giving its grateful proletariat the chance to vote for something else?
The communist party is the government, but within the party there is a significant amount of ideological diversity. The most notable examples are between “true believers” like Mao and pragmatists like Deng and Hu
„Aristotle thought that the life of tradesmen and mechanics was ‘ignoble and inimical to virtue’. He rather approved of the way that Thebes disqualified business types from public office until they had been retired for ten years.“
That would be a great law against lobbyism and revolving doors politics.
Ancient Babylon and other parts of the ancient world would regularly cancel non-commercial debts - effectively a wealth transfer from the wealthy to the workers, preventing the rise of an oligarchic class. However, once an oligarchy is in place, it’s counter to its interests to its relinquish control of the political process - the day it chooses to relinquish power for the common good never comes.
As always, take the translation with a grain of salt. "Virtue" to aristotle has a completely different meaning than the one we're used to: respect your place in the natural order. Mertitocracy was an alien concept to him, and he would find it most "unvirtuous".
https://archive.ph/iyv6W
Would be more interesting if someone came at this debate from a game theory perspective with bad actors ignoring IP laws, manipulating currency values and implementing tariffs through policies that aren't directly taxing products but restricting who can play in markets. Yes tariffs are bad in a vacuum and I am not saying this article is false even when it's strawmanning some arguments to make it's case but it's seems a bit one sided and possibly nieve without including the context in which these policies are being made so I still remain on the fence as to whether tariffs can be used as leverage.
The "bad actor" strategy in question has been known for ages: it's called mercantilism. It's so old that it convinced Alexander Hamilton away from "free trade laa dee dah" so that he could enact the protectionism which eventually industrialized America.
More recently, China has been running the same playbook to great effect. It's really funny to watch the free trade crowd laud/fear the rise of China with one breath while calling the mercantilist playbook old and outdated with the next.
> It's really funny to watch the free trade crowd laud/fear the rise of China with one breath while calling the mercantilist playbook old and outdated with the next.
"You dare use my own spells against me, Potter?!"
It mentions it in the article, which technically references Lighthizer's book passage:
" ‘A crucial mistake,’ according to Lighthizer, had been to let China into the WTO and treat it as just another country like America’s free-market allies. The result was that millions of well-paid jobs in US manufacturing disappeared, as more and more work was outsourced and offshored. "
A close examination of the passage appears to be correct: accordingly, China only met about 50% of the WTO entry requirement in the last 20 years. They were in essence, acting as a bad actor. Not only that, now they were seeking, prior to covid, to replace the current rule based trading system, with one where they got to have unlimited export to other countries, while the government suppressed wages and consumer spending internally, in order to strengthen the state. All other countries production be damned. The low wage low cost export would destroy all of the production capabilities in other countries.
And now with China openly claiming to Europe that Russia must not fail, they are blatant in their desire to destroy the western democracies, in support of authoritarian dictatorships in the world.
Global North corporations actively lobbied for China’s membership in the WTO because expanding the labor pool would lead to higher profits at the expense of the working class, and they were right.
This has created a cascading effect: rising wealth inequality has fomented distrust in institutions; this in turn has manifested as right wing populism. It’s right wing populism that is dismantling western democracies, not China.
>America’s free-market allies
No market is truly free. Once you have a free market it very quickly stops being free as dominant players monopolize it and shape the rules of the game causing the government to (sometimes) intervene to counter it and make it more fair, but it is never "free".
(apologies to G. Michael Hopf)
>dominant players monopolize it and shape the rules of the game causing the government to (sometimes) intervene to counter it and make it more fair
The dominant players shape it in large part by getting the government to intervene shaping rules to their benefit making it less fair. Naturally everyone with a brain hates this so there's a constant give take where the incumbent interests allow just enough competition, make the barriers to entry just barely surmountable that there's a strong enough trickle of new entrants that they can point and say "look, anyone can do it" and just enough idiots will believe it that they keep their heads.
Trade bad. Real estate good. The more mine the better.
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
The difficulty is that while we can move the job to where the cheaper (or specialized) labor is, we can't (currently) easily move the people around to where the job is.
So lower skilled people living in areas surrounded by high skill/cost people can't easily find a better Cost-of-Living balance. They get trapped with no job to match their skill.
To put it more bluntly - the people of Detroit simply aren't allowed to move to the surrounding areas of the BYD factories in China.
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.
> I think the idea would be that you can train people to move up the ladder
In an ideal world, yes, this would help/solve the problem. In reality, government and the private sector have done little about this.
Which is exactly why strategies like UBI are so important. Eventually the average American with no specialized skill will find that they cannot produce value when competing on a global scale.
Our strategy so far has been to let them starve and tell them to "learn to code" or "become a machine operator/technician", but that strategy can only help so many people. We do not need as many technicians as laborers that the machine replaced.
And when you have a mass of people who see that the future globalist economy is moving in a way that has no place for them, or plan to make sure they don't starve, you get the globalism backlash like what's happening in the US and UK over the last decade, and nationalistic pandering politicians taking advantage.
The only solution is to tax the billionare owners of the job-displacing machines to provide basic living UBI to the people they replaced.
For this claim to work, you have to demonstrate why this time is different, why standards of living and disposable income have been rising in the West and all over the world for 50 years or more—all while technological progress was as fast or faster than today.
> standards of living and disposable income have been rising in the West and all over the world for 50 years or more
Standard of living has been steadily declining in most of Western Europe post 2009: stagnating wages, exploding costs of living, declining public healthcare, pension and welfare funds, with longer waiting queues and scarcity in public services, etc.
Hence why so many people are mad and see globalization as one of the main factors. They feel rug-pulled: those with inherited wealth can relax and cash in on this new status quo, those without now have to compete with Asia as they no longer have a moat that guaranteed a good and stable income from basic low-skill jobs.
It's not a UBI needed but a job guarantee. Those people that no longer have a job need to be made productive, both for society and for themselves. It's not like there aren't plenty of things that need doing!
Now you need to move and re-house the people to when it needs doing, train them, invest the capital costs needed, build out the administrative overhead, and tax the productive profitable economy to pay for it all.
If there are things that need doing, you need to consider is it better for the government to do it, or to pay the private sector to do it. In principle the latter will still need to employ people.
How can the private sector magically do it without all those things you describe? In any case, the point is to employ people doing something useful - tending public gardens, removing graffiti, repairing roads etc etc.. this will all take place local to the unemployed. Indeed, being local is part of the point since it directly impacts neglected areas.
The objective is to make use of the lost resource that comprises the unemployed, whilst also removing the social problem of having long term unemployed. It has the final benefit of anchoring the value of the currency against a unit of unskilled labour.
All you people doing Detroit discourse need to also explain why the county just to the north, Oakland County, is one of the richest large counties in the United States.
I guess they have a lot of Pizza Huts or something?
Are you trying to imply something racist? Just come out and say it.
No, not being racist.
Southeast Michigan still has plenty of manufacturing is the point.
On the other hand, I bet a lot of people in Detroit wouldn't mind paying more for the goods they consume if that meant having stable jobs and living in a city that is not bankrupt.
The QE point you're making is interesting. In addition to that I think it should be noted that the money that was "printed" disproportionately went to the richest, just as the benefits of globalization did.
In conclusion, while globalization has increased global economic growth and made us all richer on average, it has also exacerbated economic inequality. That's fair to criticize.
Did Detroit loose out to China or automation?
Not sure. The specific example is less important than the idea that even if total economic output increased there may be a large minority (or possibly a majority) who did not benefit from it because the profits were distributed unevenly
Which doesn’t seem to have much to do with globalisation.
https://en.wikipedia.org/wiki/Giant_sucking_sound
The US unemployment rate currently stands at 4.2% - despite all the hundreds of millions of jobs that have been outsourced to Chinese workers. Why isn't this gap larger? The reason is simple: as jobs move to places where they can be done cheaper, the market reorganizes itself! That's why horses, telegrams, and zeppelins are not missed. Better tech. has replaced them; these Americans got better jobs, mostly by moving out to other parts of the country.
That's why unemployment is so low.
>The QE point you're making is interesting. In addition to that I think it should be noted that the money that was "printed" disproportionately went to the richest, just as the benefits of globalization did.
It's not anyone's fault that Western governments decided to dilute their people's purchasing power and transfer it to the wealthiest. China (and Vietnam, Ethiopia, etc.) is actively helping those who have been so robbed by producing low-cost goods they can buy and enjoy in abundance, despite the constant erosion of their wealth.
But many of the jobs "lost" were replaced by jobs that produces less value and has worse salary. That's only natural. If there was a higher value job that could be done, it would already have replaced the "lost" job before it was lost.
We can turn and twist and look at it from many different angles but the conclusion is the same: Global economic output increased and economic inequality in rich countries increased.
I don't think it's meaningful to blame any other countries like China and Vietnam for this development. But critique against globalization/our current system of trade should be taken seriously.
> I don't think it's meaningful to blame any other countries like China and Vietnam for this development.
Obviously, they sold what the buyer was asking to buy.
> Global economic output increased and economic inequality in rich countries increased. > critique against globalization/our current system of trade should be taken seriously.
Globalization promised increased economic output and delivered, I assume you're OK with that.
Then your serious critique must be directed towards the increased economic inequality. However, there's no reason to believe that globalization has anything to do with that, on the contrary, given a trickle-down distribution system, inequality would increase with or without globalization.
It's kind of obvious now that globalization was implemented the way it was in order to increase inequality and... blame "globalization" for that outcome. This little trick allowed the libertarian foundations of trickle-down and competition-is-for-losers to remain intact, out of scrutiny and boosted by a giant dose of steroids.
In other words, the critique against globalization is a coverup for more of the same.
Trade can be balanced without tariffs... why tariffs then? Simple, because tariffs are a tax on the population at large, not on the top tier of inequality who created this mess. The latter get... why, they tax cuts ofcourse.
Do you still blame inequality on globalization?
Yet, the average American can afford abundantly more stuff now, compared to when these jobs were in the US? How does that compute?
Buying 31-inch CRT TV in the 1990s would have set you back somewhere between $2-$3k, adjusted for inflation. But, because it's been outsourced to where it can be made more efficiently, a 32-inch HD TV costs just $99 from Amazon.
This is just one product. I could go on and on. If you want to mention housing, it's a political problem since zoning doesn't permit anything to get built.
The reason inequality increased is because Western governments (everyone, really) printed trillions into existence and it diluted the purchasing power of savers, the poor, and the middle class, and went into stock markets to bid up securities.
That's the problem, not China making affordable stuff that costs fewer hours of labor to buy.
It's hard to make a fair comparison of "living standards" in different times.
What would an iphone be worth in the 1990s? $20 million? Does that mean every American is now a millionaire? Not really.
What you said merely inflates the value of stocks. It doesn't actually explain why things have gotten worse and you're making a weird separation between stock holders and savers, they are functionally equivalent.
We have cheap goods from China now, so what exactly is going wrong in your scenario? You didn't flesh that part out at all. If anything, you've decided to gloss over it, because housing is the primary issue.
As someone else has said: current account deficit is capital account surplus, meaning that the Chinese are flooding the US with money that could be used to build housing, but the Americans in their wisdom decided that that's a stupid idea and the money should go in the same quantity of housing and bid it up instead.
Unlike stocks people actually need housing to live in. It doesn't take much to explain how a rising cost of housing makes people feel squeezed, since it can literally lead to their eviction and homelessness.
What you're looking for is called "labor participation" not unemployment. After six months people stop being counted as unemployed.
Delusional market fundamentalist bullshit in its most pure form. Good job.
Many governments around the world have figured out the US unemployment rate filter trick. What is actually being measured at this point is not important.
The market fundamentalist are performing a type of data ritual to the market gods with the unemployment rate. Make the data look good and the gods will reward us.
There is another element that is not addressed by politicians and governments. People need jobs in order to make a living (pay rents, insurance, etc). This is a feedback loop: more in wages lead to expensive housing and expensive insurance and labor. Free market is fine when there are no limits to what can be produced. However, land and specialists are not abundant.
Why not make the cost of living cheaper for every one?
> 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
Definitely. The other way to look at it is that we were exporting our inflation to places like China. But that's (for various reasons political and otherwise) starting to change which means we can expect to have higher inflation than we had for the 30 years or so between 1990 and 2020.
Another reason is the Chinese population is becoming older and starting to decrease. Their median age crossed the US a few years ago. The one child policy allowed for lot more workers (fewer parents) in the past but its going to hurt them going forward.
"Break your back" or "Do without cocoa beans" is a false choice. When the price gets to a certain point, full automation becomes feasible.
> Specialization is what makes the luxury and wealth of the modern world possible
Specialization is not the key here. Although it certainly is one of the major methods that we have used to attain the actual key feature - productivity. Less work per thing produced. Specialization is one enabler for this. It is easier to optimize when the scale is huge. But specialization is not a requirement.
We used to have one device per technical problem. Now we have fewer and more general devices. A smartphone or a pc does what a multitude of devices used to do. The same transformation can happen in industry as well.
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.
Farmer suicide rates are generally attributed to the brutal financial struggle of it. A lot of farmers are just digging themselves into a hole.
I find the idea that difficult physical labor is the driver of suicide rates to be silly.
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 we should live a more fulfilling life even if it costs luxuries. Less globalization, more localization. Economics should stop having the final say on everything.
Taken to its natural conclusion, your idea is that we should farm our own wheat, thresh it, grind it into flour, make our own bread, and build our own homes. Should we do that?
If jobs can't be exported to specialists who can do it at scale in Asia, Europe, etc. then there should be no specialization at all! Your logic demands that everyone fend for themselves primitively, which will lead to a collapse of the abundance mass production/specialization has created for humanity.
| sed 's/natural conclusion/absolute extreme'
You don’t have to take it that far
Free trade along with capitalism has brought more people out of poverty than any other economic theory/system. It's not perfect but you can't deny it's impact.
> It's not perfect
See, if anyone who said that took it seriously, or even partway seriously, I would find the prospect of free trade much less offensive. Yet the beneficiaries of "current account deficit equals capital account surplus" squeal like stuck pigs and cry "socialism! communism!" if one even hints at the possibility that they might pay a tax to help counterbalance the extent to which the asset pump / export dump negatively affects employment and drives inequality.
The thing is, US manufacturing jobs started as fewer and declined more than, say, Italy and Germany [1]. US policies weren't particularly opposed to the decline.
That said, the conception that manufacturing jobs are "good" compared to other jobs is simplistic if not outright false.
The US once had quiet a few relatively high paid, unionized manufacturing jobs. Some of those went to China and some of those went to the South/South-West where wages were also lower and union protections less.
The fuzziness of US political rhetoric creates a real distorting lens. Manufacturing jobs can be substituted for safe, well-paying skilled jobs. The existence of jobs can be sold as a goal rather than (employment, wage and safety) protections for workers, etc. And then what politicians actually do winds-up with little relation to the rhetoric anyway.
https://ourworldindata.org/data-insights/manufacturing-accou...
I have seen multiple stats and farmers were never on top of suicides. It was either miners or doctors (anesthesiologist the most).
It's so prevalent that Wikipedia has dedicated pages for specifically American, [0] Indian, [1] and Canadian [2] farmer suicides. In the US, farmer suicide rates are 3.5* the general population. The rate for the general population is between 2-4%, so for farmers it'd be 7%-14%, comparable to the rate for anesthesiologists, at 7%-17%. For physicians, it's just over 1%.
[0]: https://en.wikipedia.org/wiki/Farmers%27_suicides_in_the_Uni... [1]: https://en.wikipedia.org/wiki/Farmers%27_suicides_in_India [2]: https://en.wikipedia.org/wiki/Farmers%27_suicides_in_Canada
And yet, the top list of suicide per occupation do not have farmers. Miners, doctors, construction are higher.
The problem with China is that it is not a level playing field. Not even close. If they were an open market, then you would not see as big of a trade imbalance. They are predatory, manipulative and duplicitous.
The ideas behind globalism was to promote peace through trade and it worked for a while until China used it to try to become an empire.
Why would you expect anyone to play fair?
The Brettons Woods inevitable collapse was known when it was introduced, but it was implemented anyway because it unfairly advantaged the US. Meanwhile Keynes proposed balanced trade via his Bancor System. This would have addressed abuse by any specific nation, but the US didn't want it, because it would have limited their ability to be abusive as well.
If the Chinese want to dilute the wealth of their people and use it to subsidize stuff for Western consumers, the smart thing to do would be to buy it!
Anti-trade activists always agitate about how they'll jerk up prices after capturing markets, but Uber hasn't managed to pull it off, despite >$50 billion burned. The moment a company's margins hike significantly, they attract competitors chasing those same dollars and they have to lower prices or lose market share.
Pretty obvious counter is it's not smart if in the process you've totally destroyed your domestic production
Uber prices have been increasing for years now at a rate much faster than inflation
So they had subsidized prices. Now a lot of people just go back to taking cabs or public transportation--or rent cars/drive.
[dead]
Tariffs wars are the prelude to military wars. Capitalism breeds globalization and then his destruction.
> Capitalism breeds globalization and then his destruction.
Do we have any precedence for the destruction part?
The Great War (WWI), before it there was a period that we call now the "First Globalization" (https://en.wikipedia.org/wiki/First_globalization ), then the war erupts after commercial wars (https://en.wikipedia.org/wiki/Pig_War_(1906%E2%80%931908) ) . The killing of Franz Ferdinand was only the excuse, the base were the commercial and imperialist contradictions. See also https://en.wikipedia.org/wiki/Trade_war and https://news.cgtn.com/news/3d3d514e3459444f34457a6333566d54/...
WWII was also preceded by tariffs wars.
Besides climate change and the fact that we killed like ~70% of wildlife in less than a hundred years ? Nope
I meant precedence for the destruction of a “social system”, obviously I know that we’re destroying the planet.
The quote was
> Capitalism breeds globalization and then his destruction.
Since this is our first capitalism it’s hard to extrapolate what happens at the end.
The World Wars? It was after capitalism conquered the entire planet, and the main powers began disputing markets and colonies.
>Tariffs wars are the prelude to military wars.
You're basing this on what?
Well, the article says:
Trade history is too often a sideline reserved for economic historians, yet any effective study of the past four hundred years ought to move it to centre stage, as a prime generator of war and peace, stability and chaos, prosperity and dearth. As Clausewitz might have said, shooting wars are trade wars carried on by other means. Napoleon’s invasion of Russia, for instance, came after the tsar quit the Continental Blockade.
That entire paragraph suffers from monocausal reductionism. For example, Napoleon's invasion of Russia, while linked to the Continental Blockade, was not purely an economic maneuver. It was equally rooted in geopolitics, prestige, and the shifting balance of power in Europe.
That said, besides pasting a paragraph from the linked article, I was asking what causal events you are basing your opinion on. Did you form the opinion solely from the article?