Globalization would work just fine, if tax policies were aligned with the money shift. Even less educated workers would prosper if people being paid ridiculous amounts of money were taxed accordingly. With that money REINVESTED into Americas infrastructure and education the future wouldn't appear so grim.
BTW, Trump is not the answers to Americas' problems.
He is the disease that is slowly killing it.
BTW, Trump is not the answers to Americas' problems.
He is the disease that is slowly killing it.
33
Although I'd never vote for him, I can see why he is so popular with people who consider themselves Republicans. These people have realized that the Republican establishment is not their friend. Ever since Reaganomis was was first worshiped by the GOP, the quality of life for many people has gone down. I don't believe it's any coincidents that the destruction of the unions in this declined. The old argument that unions are spending money on things you don't believe it doesn't make logical sense. Is the government at all levels not spending money I don't believe in.
9
Sometimes -- often, in fact -- so-called "efficiency" is NOT efficient, because there are different *kinds* of efficiency. Let's say a labor-intensive job will take 100 hours to do, and you have 20 applicants. If you're interested in economic efficiency, you hire, say, the 8 applicants you think "best"...but what do the other 12, presumably less-skilled workers do? If they can't immediately find work elsewhere, some, at least, will turn to alcohol, drugs, perhaps crime; they become Donald Trump's "losers," and the employer has externalized some social costs -- decreased social efficiency -- in order to preserve / increase his / her own economic efficiency
Another employer, however, might hire all 20 workers , because he / she is thinking socially and long-term, rather than "right now"; the lesser-skilled 12 workers will become better as they work more, and do so alongside more-skilled workers. True, a 50-hour job may become a 60-hour job...but those extra 10 hours aren't "lost" if those 12 workers now feel included in the process, and are better prepared for future work.
Economic efficiency, in brief, can cause social inefficiency, externalizing social costs to groups *not* driven mainly by the "bottom line"....
Another employer, however, might hire all 20 workers , because he / she is thinking socially and long-term, rather than "right now"; the lesser-skilled 12 workers will become better as they work more, and do so alongside more-skilled workers. True, a 50-hour job may become a 60-hour job...but those extra 10 hours aren't "lost" if those 12 workers now feel included in the process, and are better prepared for future work.
Economic efficiency, in brief, can cause social inefficiency, externalizing social costs to groups *not* driven mainly by the "bottom line"....
29
Economist Branko Milanovic ( https://twitter.com/BrankoMilan ) demonstrates the effect of the developed nation's working class losing out in the economic growth with his now famous "elephant curve".
The problem has been that the Republican and Democratic and British political and media elites have ignored the working class or don't even seem to acknowledge their existence. Hence, Trump, Sanders (young who can't afford houses because of the high cost of education and debt), and BrExit.
Trump, BrExit, could have been avoided had the elites had the sense to listen to their voters. Amazingly in both the cases of Trump and BrExit these events were total surprises to the clueless elites.
In the cases of the rise of Trump and BrExit, excessive immigration has played a part that the elites could have dealt with but chose not to. Trump says he is against *illegal* immigration and the elites call him racist, a terrible human being instead of stating that immigrants that come to the US should come here legally. BrExit, in 2015 the elites promised 100,000 new immigrants (many who come from poorer East European countries that competed for working class jobs and drove down wages) and instead there were 330,000 new immigrants to Britain that year alone.
The problem has been that the Republican and Democratic and British political and media elites have ignored the working class or don't even seem to acknowledge their existence. Hence, Trump, Sanders (young who can't afford houses because of the high cost of education and debt), and BrExit.
Trump, BrExit, could have been avoided had the elites had the sense to listen to their voters. Amazingly in both the cases of Trump and BrExit these events were total surprises to the clueless elites.
In the cases of the rise of Trump and BrExit, excessive immigration has played a part that the elites could have dealt with but chose not to. Trump says he is against *illegal* immigration and the elites call him racist, a terrible human being instead of stating that immigrants that come to the US should come here legally. BrExit, in 2015 the elites promised 100,000 new immigrants (many who come from poorer East European countries that competed for working class jobs and drove down wages) and instead there were 330,000 new immigrants to Britain that year alone.
10
And crime is not far behind when people realize the system is rigged and their jobs have been outsourced or offshored and there is no way to get ahead. Many are and will continue to be "breaking bad" unless this is fixed. If we had politicians interested in the country and not in their vanity and pocketbook we would have addressed this long ago. Trump has many faults but he puts the finger in the wound.
9
What would the Western political landscape look like today if policy making were not dominated by wealthy special interest groups? What if the wealthy paid their fair share of taxes and weren't engaged in illegal tax evasion on a grand scale? What if our entire political system hadn't been subverted by oligarchs? It is refreshing to read a few self-reflective pieces in the NYTimes recently, but they tend to miss the point entirely. Is it really so difficult to decipher why large numbers of people are angry?
I do believe the author is spot on when he suggests support for Brexit and for Trump are "imperfect vehicles through which someone can yell, "Stop." But the loss of jobs and changing jobs are just a sliver of the problems facing people. Those who have jobs, whether poor or middle class, are living on the edge - often one injury or illness away from bankruptcy (if they live in the US.) They can't provide for children's education. They fear the spread of terrorism. They fear climate change inaction. They fear the unintended consequences of unchecked immigration. They also know that while they live on the edge - or worse - wealth is steadily concentrating into ever fewer hands.
Policy makers are in the pockets of wealthy corporations and wealthy special interest groups. Reflect a little more on that, please, and you'll find public anger really isn't that hard to understand.
I do believe the author is spot on when he suggests support for Brexit and for Trump are "imperfect vehicles through which someone can yell, "Stop." But the loss of jobs and changing jobs are just a sliver of the problems facing people. Those who have jobs, whether poor or middle class, are living on the edge - often one injury or illness away from bankruptcy (if they live in the US.) They can't provide for children's education. They fear the spread of terrorism. They fear climate change inaction. They fear the unintended consequences of unchecked immigration. They also know that while they live on the edge - or worse - wealth is steadily concentrating into ever fewer hands.
Policy makers are in the pockets of wealthy corporations and wealthy special interest groups. Reflect a little more on that, please, and you'll find public anger really isn't that hard to understand.
26
The article is interesting. The missing item is the fact that so many of the less affluent cohorts see themselves as disposable, as beneath concern. They see affluence go towards the top table. They feel voiceless.
Well, Brexit gave them a voice. And they took it. Trump too is doing the same in his own way
What's needed is to dismantle neo-liberalism. That has to be the No1 issue.
Well, Brexit gave them a voice. And they took it. Trump too is doing the same in his own way
What's needed is to dismantle neo-liberalism. That has to be the No1 issue.
13
It took the crisis of Trump, the challenge of Bernie, and the shock of Brexit to make elites see, weekd later, that all was not well among the peasants. That income maximization (for them, mostly) wasn't making the 99 percent any happier, that the economic suffering, growing uncertainties, and demoralization of the human spirit caused by the massive loss of jobs, and the death of communities just couldn't be justified by the ever rising incomes of elites. They could ignore the rising drug addition, shorter lifespans, and suicides in the working classes, but VOTES, for people who horrified them...THAT was a wakeup call. Thanks to the very few journalists and even fewer economists who, after the initial round of "Oh my God! Look what the Ignoramuses just did!" began to reflect on larger causes, and writings on the wall. Better late than never. But sadly, due to the power and determination of the Clinton machine, too late to give us a reasonable progressive candidate to reshape the Democratic Party. Now we'll have four more years of who knows what horrors till another political coalition emerges under a banner of peace, democracy, and community.
13
US Bureau of Labor Statistics Economist $72,964
Federal Reserve Bank (NY) Economist $171,630
US Bureau of Economic Analysis Economist $84,710
The World Bank Economist $121,334
These Economists salaries might show why the 'pie slice' is less important to such theorists than to the average worker.
Federal Reserve Bank (NY) Economist $171,630
US Bureau of Economic Analysis Economist $84,710
The World Bank Economist $121,334
These Economists salaries might show why the 'pie slice' is less important to such theorists than to the average worker.
9
It's really even simpler than this article makes it out. The Brexit voters were saying that it's possible to have free trade and the benefits that it brings without giving up sovereignty. The EU was using free trade as a bait-and-switch for what they were really after--to impose top-down ideological and cultural conformity on the entire continent.
Now it's up to whoever succeeds Cameron to hang tough and renegotiate the relationship with Europe along these lines. The European elites are arrogant and sneaky and will try to gain back what they lost at the British polls. The UK should not allow this.
Now it's up to whoever succeeds Cameron to hang tough and renegotiate the relationship with Europe along these lines. The European elites are arrogant and sneaky and will try to gain back what they lost at the British polls. The UK should not allow this.
6
I would suggest on the, "rent control" issue, to why are the rents so high to begin with and what forces are at work. I bet you would find cities are selling/authorizing the space for development of high end projects rather then middle/low end projects that match the numbers of people in the area. Say 10% are rich and are getting 80% of the projects rather then 10% of the projects with 90% of the projects for the middle/lower classes. Government should be properly representing all people in the right percentage. It ain't happening.
14
Con men like Donald Trump are experts at distraction, like Three-card Monte runners.
Free trade and immigration increase national prosperity.
The specific issue you pointed out is who shares in that general prosperity.
There are straight-forward and direct ways to address wealth and income inequality, starting with the tax system.
Donald won't release his tax returns to the public like every other Presidential candidate has for 40 years as it would be clear.
The US tax system increases wealth and income inequality, rather than reduces it.
It gives preferential tax treatment to income earned from capital over labor, for no reason other than that benefits the wealthy people who crafted the tax laws.
Warren Buffett has put forth a sound and reasonable tax plan to help address that disparity called the Buffett Rule:
https://www.whitehouse.gov/blog/2012/04/10/white-house-report-buffett-ru...
Also, the corporate taxes paid as a % of GDP has declined for decades, though the share of corporate profits as a % of GDP is at record levels.
The corporate tax loop hole that spawns all others is the multinational income deferral of taxation before repatriation.
Ending that structural loophole is a Kennedy-era idea that would stop tax scams like the Double Irish arrangement, corporate inversions and all the rest.
Putting labor and capital on equal footing and ending corporate tax fraud would be a leap forward for the economy, jobs and equality.
Free trade and immigration increase national prosperity.
The specific issue you pointed out is who shares in that general prosperity.
There are straight-forward and direct ways to address wealth and income inequality, starting with the tax system.
Donald won't release his tax returns to the public like every other Presidential candidate has for 40 years as it would be clear.
The US tax system increases wealth and income inequality, rather than reduces it.
It gives preferential tax treatment to income earned from capital over labor, for no reason other than that benefits the wealthy people who crafted the tax laws.
Warren Buffett has put forth a sound and reasonable tax plan to help address that disparity called the Buffett Rule:
https://www.whitehouse.gov/blog/2012/04/10/white-house-report-buffett-ru...
Also, the corporate taxes paid as a % of GDP has declined for decades, though the share of corporate profits as a % of GDP is at record levels.
The corporate tax loop hole that spawns all others is the multinational income deferral of taxation before repatriation.
Ending that structural loophole is a Kennedy-era idea that would stop tax scams like the Double Irish arrangement, corporate inversions and all the rest.
Putting labor and capital on equal footing and ending corporate tax fraud would be a leap forward for the economy, jobs and equality.
23
Since 1982, the Dow has risen from 750 to 18000, while wages have stagnated as profits soared. Under Obama, the market tripled while, according to the Fed, wages fell for the bottom 90% of the population.
If you are a capitalist (that is, own a significant number of shares of mutual funds in your 401 k), then you love globalization for making profits explode and keeping wages down by ensuring the supply of labor explodes through outsourcing and immigration. If you are not, you think Marx was right about economic exploitation of labor.
Marx wrote the Communist Manifesto during the Revolution of 1849. The elite (Westchester, Rockland, Bucks, Newton, Marin county) have acted as if they want another 1849. Trump and Brexit show they are doing a good job of getting one.
It is time to reverse supply side taxation. Accept Cruz's proposal to abolish the Social Security tax, raise the taxes not just of the super-super rich, but the rich (the top 25% with family income above $110,000) that Obama and Hillary refuse to tax, divert half of foreign earnings to fund health care.
If you are a capitalist (that is, own a significant number of shares of mutual funds in your 401 k), then you love globalization for making profits explode and keeping wages down by ensuring the supply of labor explodes through outsourcing and immigration. If you are not, you think Marx was right about economic exploitation of labor.
Marx wrote the Communist Manifesto during the Revolution of 1849. The elite (Westchester, Rockland, Bucks, Newton, Marin county) have acted as if they want another 1849. Trump and Brexit show they are doing a good job of getting one.
It is time to reverse supply side taxation. Accept Cruz's proposal to abolish the Social Security tax, raise the taxes not just of the super-super rich, but the rich (the top 25% with family income above $110,000) that Obama and Hillary refuse to tax, divert half of foreign earnings to fund health care.
8
Please remember, Federal tax does not pay for government spending. The Fed does the spending and the tax is not recycled.
Knowing, or realising, that will make the arguments different.
How tax is raised is purely a political decision.
Knowing, or realising, that will make the arguments different.
How tax is raised is purely a political decision.
2
Economic efficiency, i.e. GDP, is not the only factor that affect people's lives. Economic equality and justice are equally important. The fact that the 1% having almost all the cake is wrong. However, these direct economics factors are still incomplete measures of a country's economic health. How to measure the value of current economic benefit relative to long term environmental damage? What about trading off some economic efficiency for free time so that people can enrich themselves intellectually and spiritual health? What about making sure that not only our country is doing well economically but also lifting people around the world out of poverty so that there will be peace; there is nothing worst for the economy of the common people than war. Therefore, our economic policies should seek to optimize all these parameters simultaneously based on public debates in our society. There isn't a fixed formula. Is it justified that Trump and the "Leave" crowd citing globalization as the main course of inequality? I think its effect is by far smaller in comparison with 40 years of trickle down economy. Why do we want to revive jobs that are being done by people across the world who are willing to work cheaper? That is a race to the bottom. Our GDP is high means that our EXISTING jobs have values. Therefore, the problem is inequality and it can be remedied by reviving unions ensuring fair pay while creating new jobs that utilize the high skill levels of workers here.
10
It's fairly astounding that in all this blather, ostensibly an apology for a better understanding of those angry, little people out there in the provinces, there is not one mention of redistribution through taxation of the well fattened global elites of which Mr. Erwin is a "peripheral" card carrying member. Piketty must be well nigh sore that his advice went and still goes unheeded.
Given that we cannot conceivably and nor would we credibly want to extricate ourselves from the Kondratieff wave - trough or crest, your pick - we are now riding, here's my Xmas list of the things redistribution should ideally pay for:
1. Education in the STEMM fields. The last M, by the way, is marketing, without which all that nifty coding is mere academic play by the bespectacled set. I guess we could throw in a few pennies for journalists too.
2. Improved, faster transportation within the ever expanding metropolitan areas where the jobs are, where trickle down has an ounce of a chance of being more than a cynical ploy. Really, why, beyond the baleful contribution of the fat oaf who may well be our next vice president, does it not take 20 minutes to travel from the border of Pennsylvania to New York City?
3. Subsidies towards housing and moving expenses, not forgetting more learning, to allow and encourage people stuck in rusted belts to move to places like Texas where jobs are available. Americans used to move, a lot. Why don't they?
That's the lesson I take, as a peripheral member.
Given that we cannot conceivably and nor would we credibly want to extricate ourselves from the Kondratieff wave - trough or crest, your pick - we are now riding, here's my Xmas list of the things redistribution should ideally pay for:
1. Education in the STEMM fields. The last M, by the way, is marketing, without which all that nifty coding is mere academic play by the bespectacled set. I guess we could throw in a few pennies for journalists too.
2. Improved, faster transportation within the ever expanding metropolitan areas where the jobs are, where trickle down has an ounce of a chance of being more than a cynical ploy. Really, why, beyond the baleful contribution of the fat oaf who may well be our next vice president, does it not take 20 minutes to travel from the border of Pennsylvania to New York City?
3. Subsidies towards housing and moving expenses, not forgetting more learning, to allow and encourage people stuck in rusted belts to move to places like Texas where jobs are available. Americans used to move, a lot. Why don't they?
That's the lesson I take, as a peripheral member.
4
From an immediate perspective , brexit and Trump are terrible news for the world. It signals an end of an utopia of global equality and free association of people globally. That that utopia was a lie. It is unjust fundamentally.
But from a systemic perspective i am happy with these collective reactions. However misguided they are. It means that collectively we are questioning and politically taking charge again. In the age of experts more and more
But from a systemic perspective i am happy with these collective reactions. However misguided they are. It means that collectively we are questioning and politically taking charge again. In the age of experts more and more
6
"So what’s a policy elite to do?"
Simple: ask we, the people. Have a referendum. We'll decide on the priorities.
Just, in the USA, keep the (whole!) Bill of Rights. I'd add just one more constitutional amendment: that a referendum could not create or increase
any tax that applied a differential rate (i.e. it would forbid increasing a progressive income tax) nor create or increase entitlements based on anything other than amount of tax paid.
Simple: ask we, the people. Have a referendum. We'll decide on the priorities.
Just, in the USA, keep the (whole!) Bill of Rights. I'd add just one more constitutional amendment: that a referendum could not create or increase
any tax that applied a differential rate (i.e. it would forbid increasing a progressive income tax) nor create or increase entitlements based on anything other than amount of tax paid.
2
Actually, on the contrary, the first thing we need to do, even before de-privatizing our insanely expensive health care system, is to return to the highly graduated income tax schedules of the 60s, 70's and 80's and ending the obscene entitlement programs for 1%ers like the carried interest tax rate. As for the Constitution, it's time to repeal the second amendment.
22
Of course, Doug, you're right, oh let's for an amendment against higher taxes. That would after all be one sure way of making the vaunted referendum meaningless and keeping the elites fat, as well you know since you propose it. Well, good luck with that.
3
The problem with the Brexit/Trump theory is that it assumes that trade and globalization is the problem, or at the very least, that the globalization of trade can some how be circumvented. The concept is that you can return to earlier times by pretending that globalization doesn't exist. Well, water runs down hill and we have globalization whether anyone likes it or not. The key I think is to generate jobs that cannot be outsourced - rebuild infrastructure, improve public education, invest in basic research. To do this, raise taxes on those who have benefitted most from globalizations contribution to GDP. It would generate jobs and improve the standard of living for everyone.
10
Like much of the pseudo-scientific economic gibberish published today, this column is predicated on the wholly unexamined assumption that optimal economic growth is incompatible with democratic fairness.
Is it possible that the global employment dislocations and grossly excessive inequality or income and wealth are caused less by "free trade" per se than by inherently immoral characteristics of plutocracies ruled by cannibal capitalists?
Perhaps the root of the current political unrest is the elites who sincerely believe their inherited superiority entitles them to acquire far more despite contributing far less?
Is it possible that the global employment dislocations and grossly excessive inequality or income and wealth are caused less by "free trade" per se than by inherently immoral characteristics of plutocracies ruled by cannibal capitalists?
Perhaps the root of the current political unrest is the elites who sincerely believe their inherited superiority entitles them to acquire far more despite contributing far less?
13
First of all, I do not equate higher net profit with greater efficiency. It can reflect that, but does not in every case. Secondly, as your column describes and previous commenters have observed, the total impact of unfettered globalization cannot be measured strictly by measuring GDP - if one is truly focused on maximizing positive net benefits one must consider the cost of dislocations associated with the change. Finally, having spent my career in the executive suites of global companies, I know for a fact that "greater efficiency" is almost never the impetus behind decisions to offshore resources. Typically, greaters profits, and therefore bigger bonuses, are. The consequences of same are seldom considered. And, as you say, the result is Trump, and Brexit.
18
International trade theory maintains that it is a good for each trade partner to produce goods and services in which they have a 'natural endowment' to provide less-costly than other partners. Not mentioned in the article is the natural endowment of a market, including buying power. The U.S. had this market 'natural endowment' cornered for the past 100 years. The Chinese may take this mantle away in the years to come. Why? Because the jobs that would evolve along the international market endowment and efficiency theory is that better or more skill jobs would be created.
This doesn't square with economic theory respecting the household's marginal propensity to consume. For example, it is known that as income increases the household's marginal propensity to consume declines and marginal savings increases. Further, those with higher incomes tend to buy more luxury goods and services: they don't eat more beef, they may buy Japanese Kobe beef also. The purchase of more exotic cars, foods, etc. is a limited and often comes from foreign-sourced markets.
The big picture in economics is often cloudy. It fails to consider quality of life issues faced by those who lose their jobs and are not sufficiently skilled in demand jobs to survive the remainder years on the side-lines. Communities shrink tax bases evaporate and local small businesses close. Unless you are a skills lottery winner, you join the line-up for the soup kitchen. Local markets diminish.
This doesn't square with economic theory respecting the household's marginal propensity to consume. For example, it is known that as income increases the household's marginal propensity to consume declines and marginal savings increases. Further, those with higher incomes tend to buy more luxury goods and services: they don't eat more beef, they may buy Japanese Kobe beef also. The purchase of more exotic cars, foods, etc. is a limited and often comes from foreign-sourced markets.
The big picture in economics is often cloudy. It fails to consider quality of life issues faced by those who lose their jobs and are not sufficiently skilled in demand jobs to survive the remainder years on the side-lines. Communities shrink tax bases evaporate and local small businesses close. Unless you are a skills lottery winner, you join the line-up for the soup kitchen. Local markets diminish.
6
Worse.
Unless you are an *intelligence* lottery winner, you join the line-up for the soup kitchen.
Make no mistake about it, winning the 'intelligence' lottery is the luck of the draw and 50% of the population with an average IQ of 100 lost before they were even born.
Should we just toss them in the trash and import immigrants of the same average or lower intelligence because they will do those jobs even cheaper?
Do we have no loyalty to our own citizens?
Unless you are an *intelligence* lottery winner, you join the line-up for the soup kitchen.
Make no mistake about it, winning the 'intelligence' lottery is the luck of the draw and 50% of the population with an average IQ of 100 lost before they were even born.
Should we just toss them in the trash and import immigrants of the same average or lower intelligence because they will do those jobs even cheaper?
Do we have no loyalty to our own citizens?
10
Living in NYC, I experience first hand how globalized market forces subvert the efficiencies enconomists predict, particularly in the housing market. The apt building boom in my North Brooklyn neighborhood has brought about 40 new buildings and tens of thousands of new apartments to an area that had previously been quite affordable. Another 40 buildings are in the works, and with all of this new housing hitting the market, all we find is housing prices rising at an unaffordable rate. Massive construction appears to reduce the vacancy rate and pressure prices upward. In fact, the recession of 2009-2011 had the paradoxical effect of accelerating rent prices into overdrive as the unemployment rate skyrocketed. Foreign investors looking for a safe haven to park their money during a crisis had a lot to do with this distortion. Brexit is sure to accelerate this phenomenon.
Over the past 10 years NYC had the biggest apartment building boom in a 100yrs. At the same time over 50% of rent controlled and stabilized apartments went free market due to decontrol laws. Yet NYC continues to grow ever more unaffordable. The amount of housing needed to quench the worlds thirst for NYC property is obviously so great that any supply and demand model is meaningless. The city would need to build so much as to become unrecognizable. Therefore, other models need to be developed if economists truly want to solve this crisis.
Over the past 10 years NYC had the biggest apartment building boom in a 100yrs. At the same time over 50% of rent controlled and stabilized apartments went free market due to decontrol laws. Yet NYC continues to grow ever more unaffordable. The amount of housing needed to quench the worlds thirst for NYC property is obviously so great that any supply and demand model is meaningless. The city would need to build so much as to become unrecognizable. Therefore, other models need to be developed if economists truly want to solve this crisis.
14
"Foreign investors looking for a safe haven to park their money"
Worse. Russian oligarchs, Arab sheiks, and Chinese Communist Party members are laundering money through LLCs in the Cayman Islands, then buying multimillion dollar homes in the US all cash with those ill gotten gains.
Worse. Russian oligarchs, Arab sheiks, and Chinese Communist Party members are laundering money through LLCs in the Cayman Islands, then buying multimillion dollar homes in the US all cash with those ill gotten gains.
12
The missing piece here in the "economic efficiency" position is that even as the pie gets bigger the slices get smaller and smaller for most with the elite getting the majority. So, the real policy question is: How to expand the pie so everyone benefits? No one's really saying much here, but clearly we need a better educated and/or trained work force, much, much stronger labor unions to protect workers' incomes that benefit from their productivity unlike the current 30-year era of anti-union bashing and wage stagnation, and trade agreements that protect workers rather than the pro-corporate Walmart economic model (of cheap foreign labor with non-existent benefits and weak environmental regulations that produce cheap goods at high profits for the corporate elite).
7
Perhaps societies need to discover efficient ways to dispose of their self-perpetuating elites?
2
It is a bit ironic that, given this article's focus, clicking on the link to some of the key literature is unavailable to non-subscribers who are the vast majority of readers.
Churning is not a costless undertaking. It is financially, physically, and emotionally painful. It is also risky. Indeed, much of this escapes efficiency arguments. But we can't forget that the bigger issue is just plain shared prosperity. When fewer and fewer make more and more at the expense of everyone else, and these pathways are becoming more entrenched, well then you get a Trump and a Sanders...
Churning is not a costless undertaking. It is financially, physically, and emotionally painful. It is also risky. Indeed, much of this escapes efficiency arguments. But we can't forget that the bigger issue is just plain shared prosperity. When fewer and fewer make more and more at the expense of everyone else, and these pathways are becoming more entrenched, well then you get a Trump and a Sanders...
10
Long ago, when I was still a young boy, I rejected the pursuit of wealth and power, status, prestige and fame. I decided to dedicate my life to helping others, to looking out for the underdog, to tackling the bullies, and, all in all, trying to help make the world a better place for all the species that occupy it.
Much more than half a century later, I am sick to the heart of the way that we humans breed like insatiable and predatory rabbits, spreading out over the face of the globe, despoiling and ruining everything we touch, covering woods, hills and meadows with tarmac and concrete, polluting brooks, streams and rivers, lakes, seas and oceans.
I don't care that the GDP of the People's Republic of China, or the USA, or of the UK, or any country is increasing. What I care is that there are more than seven billion of us when there should be less than one billion, and that our greedy, unstoppable species is slowly destroying our planet.
Much more than half a century later, I am sick to the heart of the way that we humans breed like insatiable and predatory rabbits, spreading out over the face of the globe, despoiling and ruining everything we touch, covering woods, hills and meadows with tarmac and concrete, polluting brooks, streams and rivers, lakes, seas and oceans.
I don't care that the GDP of the People's Republic of China, or the USA, or of the UK, or any country is increasing. What I care is that there are more than seven billion of us when there should be less than one billion, and that our greedy, unstoppable species is slowly destroying our planet.
18
What's needed is more equality in education - especially in those skills related to the analysis and creation of argument. These quantitative and rhetorical skills are apparently possessed by only a thin sliver of the population. Valuing, expanding and nurturing such skills may not be the most efficient way to preserve some combination of democracy and prosperity, but it's the most humane and noble approach to the future.
Of course quality lifelong education for all would NOT be a panacea even if most practical obstacles were overcome. But we - as a society - would learn so much from our serious attempts.
Of course quality lifelong education for all would NOT be a panacea even if most practical obstacles were overcome. But we - as a society - would learn so much from our serious attempts.
2
Everyone is attempting to understand and have their own theory on the success of Trump and Brexit. It is actually very simple the politicians of this century have been bunglers who have committed blunders and created a new world order that has benefited a few and caused discomfort to many. In the end the so called silent majority feels insecure financially and unsafe for their individual security. The EU created a very user unfriendly centralized massive bureaucracy with EU countries taxing the people heavily. The USA is not very different. If after the IRS, insurance and interest on borrowed monies have eaten up a majority of one's pay check there is little left to make ends meet for most. Individuals are in debt and the nation is in debt and debtors are not happy campers especially if all their working for a living is going to paying down debt. They say a gravy train of dolittles like career politicians pass them by every day. Is it not something that is going to fuel their anger? When there is nothing to loose but gain satisfaction that a lesson is taught and a vote of no confidence is sent to Brexit and via Trump, the current outcome is to be expected.
5
As one commenter aptly noted, there are simply too many ways to frame and measure "efficiency" - just as there are SO many ways to frame and measure "equality". It's not surprising that people will choose definitions and measures of BOTH equality and efficiency that are most beneficial to themselves and their loved ones. It's also not surprising that people will choose the simplest and narrowest definitions possible that suffice to win arguments and drive policy.
We are now working to see whether the West has learned the harsh lessons of the 1920s and 30s. Managing the elites' ability to rig an economy to create vast inequality is essential if we are to avoid domestic unrest, war, and tyranny.
Disrespect for those who are less articulate and polished in their message (or protest) just creates more division, alienation, and pent-up frustration. On the other hand, emotionally charged frustration (even with a capacity to marshal facts and adapt concepts) is quite susceptible to manipulation and misdirection by unscrupulous elites (or potential elites).
We are now working to see whether the West has learned the harsh lessons of the 1920s and 30s. Managing the elites' ability to rig an economy to create vast inequality is essential if we are to avoid domestic unrest, war, and tyranny.
Disrespect for those who are less articulate and polished in their message (or protest) just creates more division, alienation, and pent-up frustration. On the other hand, emotionally charged frustration (even with a capacity to marshal facts and adapt concepts) is quite susceptible to manipulation and misdirection by unscrupulous elites (or potential elites).
5
It seems to me that an idea already talked about, but I don't think very widely, is rather than assume we can bring everyone called 'immigrant' into the United States, (we still will need to bring some as the birthrate of our Country is not replacing those who leave or die), we should become more aggressive with economic support of those countries whose economies are suffering, for whatever reason. Would Mexico deny U. S. dollars, and use them appropriately, if those dollars would help Mexico's economic infrastructure grow? The idea, by the way, is as old as The Book of Isaiah - "Swords into Ploughshares." Maybe there those in our midst with the smarts and a conscience for the development of global humanity, could begin (or continue) with creating viable strategies to bring different outcomes than we currently have.
4
Why do we need immigrants? Why not let the population fall??
Many, if not all, of our problems are if not caused exacerbated by over population.
Many, if not all, of our problems are if not caused exacerbated by over population.
3
A vote for controlled immigration is a vote for controlled and sensible growth. The biggest factor preventing effective conservation of our environment is not pollution, but people. More people means more (uncontrolled) environmental degradation and more development The birth rate among American citizens has fallen below the replacement rate but the USA population is growing explosively due to immigration (including a tsunami of illegal immigration). Satellite images show that the West is disappearing due to development.
The choice is between responsible growth versus greed.
The choice is between responsible growth versus greed.
9
The same ' inefficiencies ' that are exploited by high-frequency traders, and billionaire hedge fund managers existed for previous centuries as ' middle-person ' incomes and local economic fabric; the rending of that local economic fabric by big box stores, global auto producers, and now the replacing of big box stores with global on-line vendors is not lost on Jane and Joe Six-pack.
The current replacing of journalists, attorneys, and doctors with computer logic is also more efficient, but until the day politicians start getting replaced by machine logic, or until Bruce Bartlett's idea to enlarge the House of Representatives comes to pass, in order to have so many representatives they can't all be bought off:
http://economix.blogs.nytimes.com/2014/01/07/enlarging-the-house-of-repr...
the elite policy wonks won't get it, due to the same in-group biases documented elsewhere in government:
http://www.nytimes.com/2014/05/06/us/politics/in-justices-votes-free-spe...
The current replacing of journalists, attorneys, and doctors with computer logic is also more efficient, but until the day politicians start getting replaced by machine logic, or until Bruce Bartlett's idea to enlarge the House of Representatives comes to pass, in order to have so many representatives they can't all be bought off:
http://economix.blogs.nytimes.com/2014/01/07/enlarging-the-house-of-repr...
the elite policy wonks won't get it, due to the same in-group biases documented elsewhere in government:
http://www.nytimes.com/2014/05/06/us/politics/in-justices-votes-free-spe...
8
When the elite yammer on about economic efficiency, movement of capital and free trade and open borders, that's fine. But they don't represent the bulk of the people.
It's the politicians who now have been bought and paid for by these elite, globalist, narcissistic morons who don't know when to stop. They've already sucked out the life of the lower and middle classes and are on a march, through H1B visas, and offshoring jobs to destroy even the higher paid.
The politicians intentionally forget that they are voted in by people not corporations. But money talks, and it gets an outsized share of attention and implementation of its policies by the politicians.
The people have finally realized that the crony capitalism pushed on us isn't working for us. And the political establishment, the elites, the mainstream media and others can't quite digest that their gravy train is slowing down in preparation for a different direction.
And our government is playing social engineering, ruining race relations, promoting transgender bathrooms and increasing surveillance on its citizens, while ignoring the threat of Islamic terrorism. The progressive and elite policies are morally bankrupt, but the panic is settling in to the WH and other places that insist on increasing illegal immigration, low cost housing in suburbs, etc, or other such unpopular policies until it can't.
I think the more these desperate measures are taken the more obvious it is that they must be stopped.
It's the politicians who now have been bought and paid for by these elite, globalist, narcissistic morons who don't know when to stop. They've already sucked out the life of the lower and middle classes and are on a march, through H1B visas, and offshoring jobs to destroy even the higher paid.
The politicians intentionally forget that they are voted in by people not corporations. But money talks, and it gets an outsized share of attention and implementation of its policies by the politicians.
The people have finally realized that the crony capitalism pushed on us isn't working for us. And the political establishment, the elites, the mainstream media and others can't quite digest that their gravy train is slowing down in preparation for a different direction.
And our government is playing social engineering, ruining race relations, promoting transgender bathrooms and increasing surveillance on its citizens, while ignoring the threat of Islamic terrorism. The progressive and elite policies are morally bankrupt, but the panic is settling in to the WH and other places that insist on increasing illegal immigration, low cost housing in suburbs, etc, or other such unpopular policies until it can't.
I think the more these desperate measures are taken the more obvious it is that they must be stopped.
18
This would be fine if a rising tide really *did* lift all boats. The problem is that for the elites that support these agreements, life really *is* about money, and the prospect of workers having higher and faster rising incomes incomes at a sacrifice of the elites having their wealth increase not quite as fast as it would otherwise is a deeply offensive prospect for them.
17
Agree, completely. A rising tide can only lift those who already have boats.
About 980 million people around our world try to exist on US$1.90 each day.
http://blogs.worldbank.org/developmenttalk/international-poverty-line-ha...
About 980 million people around our world try to exist on US$1.90 each day.
http://blogs.worldbank.org/developmenttalk/international-poverty-line-ha...
11
Peter Graves:
Almost a billion people try to exist on less than $2/day -- and you want to keep them trapped there or worse!
But for globalization that number would likely be twice as high.
Thanks to post-1990 hyperglobalization, “[l]ife is better now than at almost any time in history. More people are richer and fewer people live in dire poverty. Lives are longer and parents no longer routinely watch a quarter of their children die.” That is from Nobelist Angus Deaton's Great Escape (2013).
Almost a billion people try to exist on less than $2/day -- and you want to keep them trapped there or worse!
But for globalization that number would likely be twice as high.
Thanks to post-1990 hyperglobalization, “[l]ife is better now than at almost any time in history. More people are richer and fewer people live in dire poverty. Lives are longer and parents no longer routinely watch a quarter of their children die.” That is from Nobelist Angus Deaton's Great Escape (2013).
4
I think you both miss the fact that globalization HAS lifted hundreds of millions of poor workers in China, India, SE Asia out of dire poverty. In doing so it has slowed the income growth of competing workers in the West, who were and are much better off. That is the point of the article, but to pretend this isn't happening misses a significant human advancement.
4
American CEOs are paid outlandish sums. In the name of economic efficiency, we should outsource this work to some extremely intelligent managers from Vietnam and India, who will be able to do the same work for one tenth the cost. Maybe even less.
Economists too!!
Economists too!!
51
RM
Haven't you noticed? We already have free trade in economists. Look at the economists in the survey cited in Irwin's article.
The same goes for business too. Heard of Satya Nadella? Indra Nooyi?
It's a bit late to be pulling up the drawbridge.
Haven't you noticed? We already have free trade in economists. Look at the economists in the survey cited in Irwin's article.
The same goes for business too. Heard of Satya Nadella? Indra Nooyi?
It's a bit late to be pulling up the drawbridge.
Reducing waste and inefficiency sound great until you realize that the inefficient waste being eliminated is you.
Racing to the bottom should never be national policy. But that is what it has become. There is another article in today's times setting forth why anyone would be a Trump supporter, while their unions back Clinton. The fact that such an article needs to be written shows that the globalization crowd has no clue of what the impact of their policies have been on the masses whose American dream has been taken away. You probably don't know anyone who spent two or more tours of duty in Iraq either.
Wake up, elite classes. "Let them eat cake" is not a solution.
Racing to the bottom should never be national policy. But that is what it has become. There is another article in today's times setting forth why anyone would be a Trump supporter, while their unions back Clinton. The fact that such an article needs to be written shows that the globalization crowd has no clue of what the impact of their policies have been on the masses whose American dream has been taken away. You probably don't know anyone who spent two or more tours of duty in Iraq either.
Wake up, elite classes. "Let them eat cake" is not a solution.
36
"Perhaps the pursuit of ever higher gross domestic product misses a fundamental understanding of what makes most people tick."
There is nothing wrong with pursuing higher economic growth. The problem is that globalization doesn't bring higher economic growth to the West. It takes jobs form the West and ships them to China or else simply imports that cheap labor directly to the West. Many people in the West have huge problem with that model. It constantly underlines the income of low skilled workers here (increasingly high skilled workers too) and undermines social cohesion and social norms that most people cherish, all in the name of dogma.
That it has taken the candidacy of Trump or the Brexit vote in the UK for the ruling elites, including in the media, to notice that only tells us how out of touch they are with the lives of ordinary people.
There is nothing wrong with pursuing higher economic growth. The problem is that globalization doesn't bring higher economic growth to the West. It takes jobs form the West and ships them to China or else simply imports that cheap labor directly to the West. Many people in the West have huge problem with that model. It constantly underlines the income of low skilled workers here (increasingly high skilled workers too) and undermines social cohesion and social norms that most people cherish, all in the name of dogma.
That it has taken the candidacy of Trump or the Brexit vote in the UK for the ruling elites, including in the media, to notice that only tells us how out of touch they are with the lives of ordinary people.
20
IPI:
We've been here before. Think of the disruption to "social cohesion and social norms" caused by the waves of immigration in the early 20th century. (Maybe we should repatriate all their descendants?). Yet we survived and prospered. That is the American way. Why are people like you throwing in the towel now?
We've been here before. Think of the disruption to "social cohesion and social norms" caused by the waves of immigration in the early 20th century. (Maybe we should repatriate all their descendants?). Yet we survived and prospered. That is the American way. Why are people like you throwing in the towel now?
In the linked Krugman article, Krugman assumes that SF's rent control prevents a landlord from demanding whatever price the market will bear when seeking a new tenant--Krugman is completely wrong. He also assumes that the chronic housing shortage is due to rent control; he is unaware that developers have been aggressively fighting for the right to build up SF for decades. I'm sure he has a great handle on other regional markets, probably.
6
I appreciate and agree with Mr Irwin. While efficiency and capitalism has grown the overall wealth of the world, many have been left behind. Most people want to contribute to society in a meaningful way. Unfortunately, the rapid rate of change has left many of our fellow citizens behind. Solving this issue is the biggest challenge we are facing. Donald Trump, at least understands these concerns which is the first step in addressing the problem.
7
Michael:
Hilarious.
You have got to live in the penthouse suite of the Trump Tower to understand the anxieties of America's working class?
Hilarious.
You have got to live in the penthouse suite of the Trump Tower to understand the anxieties of America's working class?
1
The most efficient form of government would be a one person dictatorship. Yet we choose to make it less efficient with an elected legislature, courts etc. Checks and balances. Maybe we need some checks and balances in our economy.
12
Free trade? I was coming back from vacation in Canada. I had made myself a sandwich and put it with an apple in a plastic bag on the back seat. As I came through customs, the agent asked me if I was bringing any produce back into the US.
"Are bringing any meat or produce with you?"
"No."
"What's that in the bag?"
"Thats my lunch!"
"I'll take the apple."
I bet he enjoyed it. The apple probably was grown in the US!
Meanwhile, whole factories can be shipped across the border in no time.
"Are bringing any meat or produce with you?"
"No."
"What's that in the bag?"
"Thats my lunch!"
"I'll take the apple."
I bet he enjoyed it. The apple probably was grown in the US!
Meanwhile, whole factories can be shipped across the border in no time.
16
I remember in the early days of NAFTA, supporters were reporting big exports to Mexico. Only problem was, those exports were factories being sent South of the Border to manufacture products formerly made in teh USA.
13
RM:
Oh right. Perot's giant sucking sound.
Don't let me confuse you with the facts. Nearly all economic studies say NAFTA's net effect on jobs was negligible. Actually, since NFATA the US has gained around 25 million jobs. http://www.factcheck.org/2008/07/naftas-impact-on-employment/
Oh right. Perot's giant sucking sound.
Don't let me confuse you with the facts. Nearly all economic studies say NAFTA's net effect on jobs was negligible. Actually, since NFATA the US has gained around 25 million jobs. http://www.factcheck.org/2008/07/naftas-impact-on-employment/
1
lol, Brexit is a myth and has little to do "with Trump". If they try to Brexit, succession will happen all over the "UK". IMO, the they need to do another reffie with no campaigning. Bet it loses by 60+%.
Trump is a Rothschilds/Permindex/Cohn fraud that rapes children. Get a grip when you make these threads. Use your head.
Trump is a Rothschilds/Permindex/Cohn fraud that rapes children. Get a grip when you make these threads. Use your head.
2
Ask two economists for their opinion- you'll get three answers,
6
The issue is control. Not economics or even immigration. The battle is between the elites who want to control more and more of other people's lives, and everyone else.
The elites in both the EU and the U.S. have said - only we can make your lives better. Just trust us and let us do whatever we think best. Allow us to control everything about your lives as much as possible, and all will be well.
Given that explicit promise, if you perceive that things aren't that great for you personally, it's the elites who will be deservedly blamed. And voted against.
The answer is not to tut-tut about the idiot proles, but respect them. And provide them with more freedom, rather than more control. Only then can people reassume more personal responsibility for their own lives, and, as a result, will blame other external forces less.
The elites in both the EU and the U.S. have said - only we can make your lives better. Just trust us and let us do whatever we think best. Allow us to control everything about your lives as much as possible, and all will be well.
Given that explicit promise, if you perceive that things aren't that great for you personally, it's the elites who will be deservedly blamed. And voted against.
The answer is not to tut-tut about the idiot proles, but respect them. And provide them with more freedom, rather than more control. Only then can people reassume more personal responsibility for their own lives, and, as a result, will blame other external forces less.
6
The connotation of 'Trade Pact' is often under the foil of "Free" Trade. We have to decide how 'free' it is. I am not an American, but whenever I go there (like last month), I usually buy famous US brands of clothes and I was surprised to see that most of them are 'made in China' - so I didn't buy my famous brands. I dont know how many Americans will desist from buying Chinese goods under the garb of famous US brands. The trade surplus of China with USA is taking an unacceptable proportion of the total trade. So, anyone could raise a point of curbing the trade surplus to be plus-minus 8-10% so that American manufacturing gets a priority. Is that too much to expect?
4
The "elites" (wealthy, ruling-class families and corporate owners and leaders) of our world, and their hired help, the politicians, have so badly and selfishly mismanaged our whole economy that the peasants are sharpening their pitchforks. Occupy and the Tea Party are just a hint of the shape of things to come. Prior to the French Revolution, the Queen of France, Marie Antoinette of Austria, was told by a member of the court of King Louis XVI that "the people are starving, they have no bread." Queen Marie replied, "then let them eat cake." Whether her remarks were meant as sarcasm, or whether the pampered, spoiled Queen was so clueless about the famine in France, this selfish, cold, arrogant attitude helped inspire the French middle-class and poor to revolt against the monarchy, and tens of thousands of heads rolled in "the Great Terror." ISIS and the Saudi monarchs did not invent cutting off heads....it is a very old tradition.
24
I can tell you what it's like to work in an efficient, growing, industry. I work in software development. I sit in my cube alone coding, quietly, all day. Meetings are held to an absolute minimum, because they are "not productive".
Walk into someone else's cube to ask a question, and get glared at. You are interrupting them and they need to get some code checked in at the end of the hour, or the end of the day. People that like to socialize are a "time suck". Avoid them.
When I leave work I encounter this strange other culture were people aren't "efficient". They chat; they smile; they ask "how's your day? even though they don't know you.
It's kind of....., well, nice. Somehow.
Walk into someone else's cube to ask a question, and get glared at. You are interrupting them and they need to get some code checked in at the end of the hour, or the end of the day. People that like to socialize are a "time suck". Avoid them.
When I leave work I encounter this strange other culture were people aren't "efficient". They chat; they smile; they ask "how's your day? even though they don't know you.
It's kind of....., well, nice. Somehow.
21
For the global super predators - the 0.1% - increasing efficiency is just one way to speed the transfer money from the pockets of the global 99.9% into their offshore accounts. It's similar to the Nazi quest for efficiency in their Killing Machine, which engineered higher throughput with fewer cost inputs.
But you cannot expect a global super predator to stop rifling through your pockets once their need for efficiency has been satisfied. They are professionals focused also on increasing effectiveness.
These vampires want to maximize your future value to them so they prey on you over and over; they drink just enough of your blood to keep you listless and down - but not enough to kill you.
This is Marx's idea that capitalists pay workers subsistence wages so they will survive and continue to throw off surplus value, but not enough to provide the savings needed to purchase the means of production.
It's also like the "managed care" subscription model of Big Pharma and the Health Industry.
Ownership and control of the political and legal and economic systems is their most effective means to satisfy their psychopathological needs. As important as efficiency is, it's just the oil in their death machine.
But you cannot expect a global super predator to stop rifling through your pockets once their need for efficiency has been satisfied. They are professionals focused also on increasing effectiveness.
These vampires want to maximize your future value to them so they prey on you over and over; they drink just enough of your blood to keep you listless and down - but not enough to kill you.
This is Marx's idea that capitalists pay workers subsistence wages so they will survive and continue to throw off surplus value, but not enough to provide the savings needed to purchase the means of production.
It's also like the "managed care" subscription model of Big Pharma and the Health Industry.
Ownership and control of the political and legal and economic systems is their most effective means to satisfy their psychopathological needs. As important as efficiency is, it's just the oil in their death machine.
21
Economists want the same old religion - exploitation of the earth
Article Summary: Economists want to make the pie bigger, but ordinary people want financial security. Those with talent and educations are not so concerned.
OK fine. This suggests there could be middle position, like a guaranteed income.
But there is a more serious problem that economists ignore. If the economy grows by 4% next year, extraction from the earth will grow by 4%, and green house gases will increase - despite growth in renewables energy and an increasingly IP (intellectual property) oriented economy.
In other words - the more pie for humans, the less pie for the earth, and corral reefs die, species go extinct, and natural areas are ruined. In the rent control example - sited by economist as bad policy because it suppresses home construction - economists ignore the disruption to the earth caused by construction.
Now some math: Take 4% growth to 50 years out. This is 1.04^50. Result from Wolfram: the economy, and rate of extraction from earth, is 7.1 time bigger. Will shifting the economy to IP reduce that? No, not unless there is a concerted effort, and there is none today.
Bottom line: Economic thinking that is rooted in traditional growth ideas are exploitive, and common people who seek stability may have it right for an entirely different reason.
Article Summary: Economists want to make the pie bigger, but ordinary people want financial security. Those with talent and educations are not so concerned.
OK fine. This suggests there could be middle position, like a guaranteed income.
But there is a more serious problem that economists ignore. If the economy grows by 4% next year, extraction from the earth will grow by 4%, and green house gases will increase - despite growth in renewables energy and an increasingly IP (intellectual property) oriented economy.
In other words - the more pie for humans, the less pie for the earth, and corral reefs die, species go extinct, and natural areas are ruined. In the rent control example - sited by economist as bad policy because it suppresses home construction - economists ignore the disruption to the earth caused by construction.
Now some math: Take 4% growth to 50 years out. This is 1.04^50. Result from Wolfram: the economy, and rate of extraction from earth, is 7.1 time bigger. Will shifting the economy to IP reduce that? No, not unless there is a concerted effort, and there is none today.
Bottom line: Economic thinking that is rooted in traditional growth ideas are exploitive, and common people who seek stability may have it right for an entirely different reason.
8
The question was always growth for whom, efficiency for whom? That GDP was an inadequate measure of economic progress was neglected by most economists. What comes as a surprise now should have been obvious all along, but hopefully Trump and Brexit will lead to a revision of the prevailing paradigm.
7
Does globalization and efficiency require increasing inequality? The rich and powerful have used their power to reduce their taxes, reducing the ability of government to build infrastructure, and otherwise "provide for the general welfare." Perhaps economic efficiency should be measured not in total wealth, but in percent of population at or above some minimum threshold.
7
EdX:
Not so fast. Since 1990 or so, global inequality has decreased, not increased.
And, much more important, global poverty has shrunk.
This is what the Times's Nick Kristof wrote 2 years ago: "When I was in college, a majority of the world’s people lived in extreme poverty, and the proportion will have dropped to virtually zero by the time I retire. That’s astounding progress, and it’s also reflected in mortality rates. When I was in college, around 15 million kids a year were dying annually. Now the figure has dropped to a bit more than 6 million, and in my lifetime the figure will drop below 1 million."
True, in America Inequality has increased over the same time. Time to sharpen our pitchforks? No, let's cool it. Wealth was more unequal at the beginning of the 20th Century than now, but by 1960 it was at a historic low. The economy moves in mysterious ways -- let's stop the blame game.
Not so fast. Since 1990 or so, global inequality has decreased, not increased.
And, much more important, global poverty has shrunk.
This is what the Times's Nick Kristof wrote 2 years ago: "When I was in college, a majority of the world’s people lived in extreme poverty, and the proportion will have dropped to virtually zero by the time I retire. That’s astounding progress, and it’s also reflected in mortality rates. When I was in college, around 15 million kids a year were dying annually. Now the figure has dropped to a bit more than 6 million, and in my lifetime the figure will drop below 1 million."
True, in America Inequality has increased over the same time. Time to sharpen our pitchforks? No, let's cool it. Wealth was more unequal at the beginning of the 20th Century than now, but by 1960 it was at a historic low. The economy moves in mysterious ways -- let's stop the blame game.
I very much appreciate Neil Irwin's insight, empathy, and frankly, courage, to state the obvious. The only beef I have with Irwin is his implication that distributional equality runs counter to economic orthodoxy; when, in fact, it is part and parcel of that orthodoxy. My own 1970s education in Neo-Classical economic theory started with the fundamental premise that every economic system must be judged along two measures: (i) its efficiency in creating wealth and (ii) its ability to distribute that wealth equitably. Somehow those dual benchmarks have been lost over the last 30 years. My fear that the academe has been coopted in the course of the Elites' headlong embrace of globalism.
Understood in this light, it is Obama and Clinton who espouse heterodox economic views in the service of their Elite sponsors. Oddly, Sanders and Trump are the true torchbearers of economic orthodoxy.
Understood in this light, it is Obama and Clinton who espouse heterodox economic views in the service of their Elite sponsors. Oddly, Sanders and Trump are the true torchbearers of economic orthodoxy.
12
"Equitably" means something different to an economist than it does to you and me.
1
How we got here matters.
It seems to me that a missing component in discussions of the effect of globalization on American jobs is that of the “historical thriftiness of the American consumer”. In the days before Walmart put mom and pop stores out of business RCA, Motorola and Zenith were the big names in the nascent “Color Television” industry. But back in the days of Bonanza and Green Acres, American-made Color-TVs were expensive. So when K-Mart offered a $169, Taiwan manufactured Color-TV my father and many others jumped at the opportunity to buy one. Never mind that the faces on the cheaply-made TVs were all hot–pink or green, we had a color TV for only $169. And in the 1960’s and 1970’s Americans in significant numbers voted with their pocketbooks for cheaper Asian Color Televisions. Even as American manufacturers still offered excellent electronic products the ever-thrifty American consumer chose the cheapest option. The Asian electronics manufacturers did not steal America’s consumer electronics industry. The American consumer handed the electronics industry to the Asian manufacturers. And so it was eventually with most other household goods.
Americans have lost sight of the fact that the American consumer simply wants cheaper goods. If good paying American manufacturing jobs are ever to return to America the thrifty American consumer will need to alter the spending habits they established at least 50 years ago and pay much more for those American made products.
It seems to me that a missing component in discussions of the effect of globalization on American jobs is that of the “historical thriftiness of the American consumer”. In the days before Walmart put mom and pop stores out of business RCA, Motorola and Zenith were the big names in the nascent “Color Television” industry. But back in the days of Bonanza and Green Acres, American-made Color-TVs were expensive. So when K-Mart offered a $169, Taiwan manufactured Color-TV my father and many others jumped at the opportunity to buy one. Never mind that the faces on the cheaply-made TVs were all hot–pink or green, we had a color TV for only $169. And in the 1960’s and 1970’s Americans in significant numbers voted with their pocketbooks for cheaper Asian Color Televisions. Even as American manufacturers still offered excellent electronic products the ever-thrifty American consumer chose the cheapest option. The Asian electronics manufacturers did not steal America’s consumer electronics industry. The American consumer handed the electronics industry to the Asian manufacturers. And so it was eventually with most other household goods.
Americans have lost sight of the fact that the American consumer simply wants cheaper goods. If good paying American manufacturing jobs are ever to return to America the thrifty American consumer will need to alter the spending habits they established at least 50 years ago and pay much more for those American made products.
7
The dessire to make thingss more cheaply leads to externalization of costs. This means throwing waste products into rivers and the atmosphere, cutting corners to endanger consumers, and reduced safety measures for workers.
We have laws that limit pollution, unsafe products, and unsafe work environments.. These laws are limits on the ability of the establishment to implement economic efficiency at the expense of society. Maybe we also need limits on placing our work force on the scrap heap in the name of "efficiency".
We have laws that limit pollution, unsafe products, and unsafe work environments.. These laws are limits on the ability of the establishment to implement economic efficiency at the expense of society. Maybe we also need limits on placing our work force on the scrap heap in the name of "efficiency".
2
Wealth should be taxed. Period. In the USA, 3 million children live in conditions that the U.N. would describe as extreme poverty. Globalization has left them and millions of others around the world to die in the streets. This is why "extremism" flourishes. It's not about religion or ideology. It is about money. In a world such as this, "philanthropists" like Bill Gates and Mark Zuckerberg, who promise to give their fortunes of hundreds of billions,to charity "in the fullness of time" - read when they die, provide a sort of easy virtue for themselves and support the myth that things will work out in the end for the supporters of globalization. Wealth over $500 million, an amount that would allow a family to live in perpetual unimaginable luxury, should be taxed at 95%, and the revenue accrued should be directed to build economic structures which would provide basic human needs, like food, shelter, clothing and health care to all. Failing that, globalization is and will remain a moral sinkhole.
11
There isn't a single person in the US who meets the global definition of extremely poor. Your statement is spectacularly wrong
6
How is it that Gates & Zuckerberg get to determine what is "best" for the rest of us after have taken advantage of the rigged system which siphons finds to the 1%? Much as Gates helped in the creation and roll out of Common Core for our children, their decisions made in an elite vacuum are not the best answers.
2
People are yearning for meaningful economic lives. Many people in this world were happy to put the left front wheel on Ford Taurus's all day for $25 an hour. Now people struggle for a $8 hour job at the dollar store. Much of America is an economic wasteland that rivals the worst developing economies. Yes, things are broken. Yes, people will begin to lash out. Some of the backlash will be political - Brexit, and some of it will be jumping off buildings naked or shooting up the post office. Going 100k into debt to get an education to then work a minimum wage job will never lead to the kind of America we want. We can fix it now, or wait for it to get worse, much worse, and then wonder why we didn't do something.
16
Odd. You missed the upshot. People are losing self determination. 40% of British common law has either been overturned, usurped or exerted by EU courts. Globalism has no problem paying the freight on a massive and growing Welfare State (the opiate) in trade for the importation of an immigrant workforce to perform those jobs.
Humans are tribal. It is why we live in neighborhoods and form countries. Only THEN comes commerce in the order of things.
Humans are tribal. It is why we live in neighborhoods and form countries. Only THEN comes commerce in the order of things.
4
Wake up guys and look around.
NYC is becoming unaffordable for people who service these so called winners.
Same is true around the world.
NYC is becoming unaffordable for people who service these so called winners.
Same is true around the world.
7
Would you be able to dive deeper into why this is true and the assumptions that go along with it? "Of course the only way a society can become richer over time is to increase national income." It sounds right but I would like to know the details...
World trade and efficiency would be more popular if we had a tax system that at least appeared fair. When heads of company make hundreds of times more then the average workers salary and find ways of limiting their tax liabilities the system will feel rigged to those at the bottom.
7
Who cares if everyone else is wealthier if I am made poorer?
7
Efficiency or selfishness...?
2
Please tell me what "a card carrying member of the economic elite" means?
1
There is a reason economics is called the dismal science. Economists are often more wrong than right - just take a look at our subprime debacle, which many economists (including the NYT fave Krugman) didn't see coming. So the 'irrational' individual can be more 'rational' than the experts. Just because a majority of economists believe globalization is overall more efficient at increasing overall wealth doesn't make it so - perhaps there is more wisdom in the crowd view.
As Prof. Tetlock & colleagues have shown "'experts' predictions barely beat random guesses - the statistical equivalent of a dart-throwing chimp - and proved no better than predictions of reasonably well-read nonexperts. Ironically, the more famous the expert, the less accurate his or her predictions tended to be." http://money.cnn.com/2009/02/17/pf/experts_Tetlock.moneymag/index.htm
And of course it also depends on whose ox is being gored. As noted in the article, one shouldn't expect the losers in this tradeoff to agree that others can benefit at their expense. As our own recent 'recovery' demonstrates, not everyone who loses a job in the churn gets a comparable job - often end up underemployed if not unemployed. And not everyone with a college degree will get a good job - many will not be able to pay off their loans, much less get ahead.
Frankly, I wouldn't put much faith in the projections that globalization is overall a good thing.
As Prof. Tetlock & colleagues have shown "'experts' predictions barely beat random guesses - the statistical equivalent of a dart-throwing chimp - and proved no better than predictions of reasonably well-read nonexperts. Ironically, the more famous the expert, the less accurate his or her predictions tended to be." http://money.cnn.com/2009/02/17/pf/experts_Tetlock.moneymag/index.htm
And of course it also depends on whose ox is being gored. As noted in the article, one shouldn't expect the losers in this tradeoff to agree that others can benefit at their expense. As our own recent 'recovery' demonstrates, not everyone who loses a job in the churn gets a comparable job - often end up underemployed if not unemployed. And not everyone with a college degree will get a good job - many will not be able to pay off their loans, much less get ahead.
Frankly, I wouldn't put much faith in the projections that globalization is overall a good thing.
5
Well, it's nice to see someone out there is beginning to get a glimpse of what "real people" want in life. Stability, roots, a predictable life. We of the 53,700 who are thrown into chaos by some elitist hyper-ambitious banker/economist/analyst are saying to them SLOW DOWN. What make it so important to keep growing, improving, making more money??? There are, believe it or not, plenty of people out here who just want to live their lives in an ordinary way. We do not crave "extraordinary," we do not crave "wealth," we do not crave "super-individuality," or "hyper-intellectuality." We just love our quiet corners of the country. We love our lives as they are!! We do not necessarily want our children to do "better" than us. We've done OK, and we're OK with them doing OK. Do not put us down as lazy, or uneducated. Put us down as quiet, unassuming, and happy the way we've created our lives. SO JUST DON"T GO ROCKING THE BOAT ALL THE TIME! Let us just be us!
7
YES! Why must we grow so rapidly? This underpins the entire economic theory ... The challenge is to have a BALANCE across systems... More equitable wealth distribution, reasonable humanistic employment and equality of races across the world. All this in such a way that we take care of the environment and our food sources to have humanity thrive.
1
That experiment you cite is not about efficiency, it is about greed. I would be willing to bet that the Yale Law students would choose the greedy option even if it meant the total number of tokens would decline.
Let's face it: the 1% doesn't want to share, they want it all.
Let's face it: the 1% doesn't want to share, they want it all.
7
Rent protections serve a social purpose. A "bad" neighborhood gets better when people have a stake in their homes and neighborhoods.
3
Gee, a thoughtful article by a Time's regular writer not brow beating us poor, unwashed masses about what we're supposed to do or think. Nicely done.
Unfortunately, it's obvious that you, Mr. Irwin, don't fit in the Times culture. You keep this up and you'll wind up on the street.
Unfortunately, it's obvious that you, Mr. Irwin, don't fit in the Times culture. You keep this up and you'll wind up on the street.
5
Thanks for a nice article
1
"Perhaps the pursuit of ever higher gross domestic product misses a fundamental understanding of what makes most people tick." Rather, perhaps the pursuit of ever higher gross domestic product fundamentally misconstrues the definition of economic efficiency. "Optimize possibilities, minimize waste and make the most of finite resources" correctly describes efficiency, but that triangle serves as a better slogan for 'Waste Management, Inc.' than as an apt characterization for how most economists view progress.
Irwin is assuming that the lower 99% of us count as human beings. We are "resources" and "means of production", just like machines, wood, steel, etc. except not as valuable.
2
The conclusions of this article should be self evident. At some point the people in power adopted a pure market philosophy that excludes all non-economic costs and benefits. The purpose of human life on planet Earth is to maximize GDP. It is illegitimate to consider any other motivation. It is of no consequence whether this GDP is shared or goes entirely to one person. Given the choice between widespread prosperity and a situation where GDP would be $100 higher but all benefits would go to a very wealthy elite with massive poverty and suffering for nearly all of humanity, this model would choice the latter. Hey, GDP is higher in that model.
3
Kudos. One of the few articles that puts the consequences of the faith in money equals well being into perspective. The destruction to individuals, families and communities by the religion of "market efficiency" and the related, unethical, strategies to gear the benefits of this so-called efficiency to a small elite has been massive. There is an assumption of human resiliency in those that favor market efficiency that is unfounded. The belief that efficiency is better is just that - belief - an article of faith and not a fact. Any therapist will tell you that stability is an essential component of well-being for most people. We should not keep advocating for a religion of efficiency that goes counter to natural human instincts to bond and sink roots and care well for our own.
5
This article calls to mind some of the arguments political scientist Deborah Stone makes in her book Policy Paradox, in which she argues that political decisions are not, at their root, economic problems, but are political matters that require a rather different logic than the logic employed by economists. If nothing else, political scientists may have a more accurate sense of what motivates people beyond economic "rationality."
2
There is a subtle yet often overlooked angle on the idea of 'efficiency' in macro-economic terms that I see over and over again articles such as this one. In the article, the author refers to a finding based on decisions made by four economists when subjected to a computer simulation involving two choices: 1) To be greedy and keep the tokens. 2) To be more 'efficient' knowing that doing so will cause a decline in the quantity of tokens 'to go around'. Is it not true that being greedy will more assuredly cause a decline in the quantity of tokens 'to go around' as well?
Absent is the depiction of the angle to which I refer in this third choice: 3) To be more 'efficient' knowing that doing so would cause an INCREASE in tokens.
In other words by being less greedy (hoarding) the overall efficiency of the system would benefit. What causes macro-economic inefficiency in capitalist systems? Oh, a lot of things, but one of the biggest is hoarding capital.
Absent is the depiction of the angle to which I refer in this third choice: 3) To be more 'efficient' knowing that doing so would cause an INCREASE in tokens.
In other words by being less greedy (hoarding) the overall efficiency of the system would benefit. What causes macro-economic inefficiency in capitalist systems? Oh, a lot of things, but one of the biggest is hoarding capital.
3
Who's ox is being gored?
Globalization generates more profits but to whom do they flow? I'm fairly certain that many more would celebrate increased trade if the benefits reached those who are injured by these policies. It's great to have an abundance of goods available at lower cost because of the removal of tarrifs but not if I no longer have the money I need to purchase those products because globalization has deprived me of a job.
It is true that outsourcing of jobs notwithstanding, technology is diminishing the need for lower skilled labor creating a generational disconnect and poverty-inducing displacement.
The solution is obvious. If globalization is a net gain for a country then insure that some of these profits are distributed amongst those who have been harmed.
Now, tell those in power who have negotiated these deals as well as those who have benefited greatly from them to reimburse those who have been injured.
Go ahead. Show them the money.
Globalization generates more profits but to whom do they flow? I'm fairly certain that many more would celebrate increased trade if the benefits reached those who are injured by these policies. It's great to have an abundance of goods available at lower cost because of the removal of tarrifs but not if I no longer have the money I need to purchase those products because globalization has deprived me of a job.
It is true that outsourcing of jobs notwithstanding, technology is diminishing the need for lower skilled labor creating a generational disconnect and poverty-inducing displacement.
The solution is obvious. If globalization is a net gain for a country then insure that some of these profits are distributed amongst those who have been harmed.
Now, tell those in power who have negotiated these deals as well as those who have benefited greatly from them to reimburse those who have been injured.
Go ahead. Show them the money.
9
Mr. Irwin is simply explaining the secret to the way markets work, which is discovering efficiencies and allocating resources by testing extremes and making people uncomfortable. Of course people don’t like them and shy away from them, which is precisely why they work.
The problem at present is not that markets have failed. It is that in the absence of fiscal policy, monetary policies in practice have failed and have actually prevented markets from doing their job, artificially incentivizing money flows into hard assets at the expense of the middle and lower classes that don’t possess them or have the means to possess them, and leaving them further behind.
What is needed is a return to normality, which would include taking our collective foot off the financial sector and allowing it to resume being the lifeblood of our economy, essentially enabling the creation of capital that drives they system.
The problem at present is not that markets have failed. It is that in the absence of fiscal policy, monetary policies in practice have failed and have actually prevented markets from doing their job, artificially incentivizing money flows into hard assets at the expense of the middle and lower classes that don’t possess them or have the means to possess them, and leaving them further behind.
What is needed is a return to normality, which would include taking our collective foot off the financial sector and allowing it to resume being the lifeblood of our economy, essentially enabling the creation of capital that drives they system.
1
The six OECD countries with the greastest income inequality as Turkey, Chile, Mexico, Israel, United States and United Kingdom. Inequality breeds political unrest. Efficiency was appropriate when we had a middle class (ie, less inequality). Rent control made less sense with a middle class. When we kill our college graduates with debt and proudly embrace their jobs numbers as baristas, we are just fooling ourselves.
5
Good analysis Mr. Irwin. The current backlash is surprising only to people as tone deaf as the ruling elites seem to be these days. Actually, the same story of a privileged minority profiting at the expense of the masses has been repeated over and over again throughout history. Our contemporary economists' reasoning about increasing the size of the pie sounds a lot like Marie Antoinette's famous quote, "Let them eat cake". Let's hope the starving peasants don't show up with pitchforks and guillotines this time around.
6
The losers in trade deals, outsourcing etc. were supposed to be compensated for their losses in exchange for the efficiency gain to the economy as a whole.
This never happened. In fact, as the elites have promoted more and more trade deals, welfare benefits and other social support program have been slashed.
Worse elites want to 'privatize' the few remaining social support programs we have such as social security in the name of 'efficiency' even though social security is a very efficiency program.
The elites have grabbed all the efficiency gains for themselves- very little has 'trickled down'.
This never happened. In fact, as the elites have promoted more and more trade deals, welfare benefits and other social support program have been slashed.
Worse elites want to 'privatize' the few remaining social support programs we have such as social security in the name of 'efficiency' even though social security is a very efficiency program.
The elites have grabbed all the efficiency gains for themselves- very little has 'trickled down'.
11
I was at IBM when the pension plan was changed to the 401k programs. The retirement plan up to that point was self-funding due to excellent fiscal management. IBM did not put anything into the fund. The cash was moved out of the pension plan and the financial rewards for the CEO and board that year was massive. This was not efficiency, it was greed. So as another commenter said, executives use efficiency as a way of justifying their greed.
2
A very insightful article, highlighting how policy makers and influencers have lost sight of the trees for the forest. While people are being told we live in a global world, their daily lives, for the most part, are lived in a tribal world. The drive for efficiency and the resulting massive inequality it has spawned has taught people that the gains from globalization (and technology) -- from rising incomes and living standards in other countries to the new class of super-wealthy here at home who has come to control the system -- have come as much from their pockets as anything else. The higher paying jobs we've been told would come do little for the overwhelming majority of people who stand to lose theirs, directly or indirectly, who have neither the skills nor social capital to access those new jobs. And for what? More and cheaper goods that add nothing the qualitative value of life.
Globalization and technology cannot be reversed - we cannot, in the words of Timothy Egan, stop the world and get off the world at 1952. But neither does that mean we should manage our country as slaves to an economic that is increasing obsolete and inflicting so much damage on the millions being left behind in this country. Our global system of competition has to be modified to provide more cooperation, not only in our coming age finite resources, but because that 2% to 3% growth in GDP is meaningless if those at the top are taking all of it -- and then some.
Globalization and technology cannot be reversed - we cannot, in the words of Timothy Egan, stop the world and get off the world at 1952. But neither does that mean we should manage our country as slaves to an economic that is increasing obsolete and inflicting so much damage on the millions being left behind in this country. Our global system of competition has to be modified to provide more cooperation, not only in our coming age finite resources, but because that 2% to 3% growth in GDP is meaningless if those at the top are taking all of it -- and then some.
7
"Of course the only way a society can become richer over time is to increase national income"
US income has increased, steadily, for the last 35 years. However, every cent of that increased income has gone to the top 10%, with most going to the top 1%. The issue in the US is NOT income growth, it is the division of the spoils.
US income has increased, steadily, for the last 35 years. However, every cent of that increased income has gone to the top 10%, with most going to the top 1%. The issue in the US is NOT income growth, it is the division of the spoils.
20
This article is a good first baby step towards validating the passions that are fueling a new political movement.
The proponents of unfettered globalism had generated absolute power. They control our industry, our churches, our media and our government.
If it is true that power corrupts and absolute power corrupts absolutely. it is easy to understand how the Western world has reached its current breaking point.
When writers like Mr. Irwin reach the point where they become more neutral observers of this drive for market efficiency, a real debate on the subject can possibly lead to solutions that can raise the world while leaving sensible policies and protections in place.
As an example, most of us have never read the study Irwin uses to validate the future effects of TPP, I cannot begin to guess if it s true and correct or just another non sequitur tossed out to build his cred.
The proponents of unfettered globalism had generated absolute power. They control our industry, our churches, our media and our government.
If it is true that power corrupts and absolute power corrupts absolutely. it is easy to understand how the Western world has reached its current breaking point.
When writers like Mr. Irwin reach the point where they become more neutral observers of this drive for market efficiency, a real debate on the subject can possibly lead to solutions that can raise the world while leaving sensible policies and protections in place.
As an example, most of us have never read the study Irwin uses to validate the future effects of TPP, I cannot begin to guess if it s true and correct or just another non sequitur tossed out to build his cred.
4
The elites are totally out of touch with the commoners; " just let them eat cake" was not just a phrase for the 18th century. When I was a young boy, I went to a Harley Davidson company picnic and many of the " bosses" were there associating with the factory workers. On Sunday mornings the workers and managers went to church and took communion together. Perhaps that was one reason why executive salaries were not 240x the worker bees!
Now the worker bees are losing their job to trade "deals." "Neighborhood" schools indoctrinate their children in values foreign to their worldview. They are told by the government whom they have to bake cakes for and share the restrooms with. Their offspring die in the battlefields of foreign lands while the elites send theirs to expensive colleges that guarantee 6 figure salaries after graduation. The President lives like a king and the first lady like a queen while their Congress reps get rich in special deals and insider trading. The rich buy favors from Congress in the form of tax exemptions. They are disenfranchised and yes they are angry. Any rational person would be.
Now the worker bees are losing their job to trade "deals." "Neighborhood" schools indoctrinate their children in values foreign to their worldview. They are told by the government whom they have to bake cakes for and share the restrooms with. Their offspring die in the battlefields of foreign lands while the elites send theirs to expensive colleges that guarantee 6 figure salaries after graduation. The President lives like a king and the first lady like a queen while their Congress reps get rich in special deals and insider trading. The rich buy favors from Congress in the form of tax exemptions. They are disenfranchised and yes they are angry. Any rational person would be.
16
The assertion that trade agreements like TPP "grow the size of the pie" is false. In fact, the protectionist features in the TPP are likely to reduce competition, which *reduces* efficiency, and therefore reduces output.
These protectionist features also will raise prices for needed drugs, which will then place *more* financial burden on Medicaid - leading to yet *more* calls from the elite to cut "entitlements".
And that doesn't even take into account our chronic trade deficit. Elites say this is irrelevant, but they are wrong on the economics. In an economy lacking in jobs due to a shortage of demand, our chronic trade deficit puts millions of Americans out of work:
AD = C+I+G+(X-M)
X-M is our trade surplus, which has averaged -2.6% of GDP from 1980 to 2015, and was -2.7% of GDP in 2015. (Negative number means deficit).
Now, we could easily decrease our unemployment by making up the demand by consumer spending (C), if we raised the wages of consumers. But we refuse to do that. Or, we could raise (G) by deficit spending on infrastructure, but the elites don't want to do that either.
The whole premise that our groupthink, lobbyist-driven economic policies are derived from a logical desire for efficiency, is ludicrous. Trump is actually closer to reality when he says our leaders our stupid - if their goal is indeed the greater common good.
These protectionist features also will raise prices for needed drugs, which will then place *more* financial burden on Medicaid - leading to yet *more* calls from the elite to cut "entitlements".
And that doesn't even take into account our chronic trade deficit. Elites say this is irrelevant, but they are wrong on the economics. In an economy lacking in jobs due to a shortage of demand, our chronic trade deficit puts millions of Americans out of work:
AD = C+I+G+(X-M)
X-M is our trade surplus, which has averaged -2.6% of GDP from 1980 to 2015, and was -2.7% of GDP in 2015. (Negative number means deficit).
Now, we could easily decrease our unemployment by making up the demand by consumer spending (C), if we raised the wages of consumers. But we refuse to do that. Or, we could raise (G) by deficit spending on infrastructure, but the elites don't want to do that either.
The whole premise that our groupthink, lobbyist-driven economic policies are derived from a logical desire for efficiency, is ludicrous. Trump is actually closer to reality when he says our leaders our stupid - if their goal is indeed the greater common good.
7
Brexit and Trump are indeed rebellions against efficiency, but not necessarily or only economic. They also represent repudiations of political efficiency as embodied in an enormous, unaccountable administrative state run in some cases by unelected supranational organizations. If anything, Brexit was driven by disgust with Brussels, while Trump's rise is fueled by anger at D.C.'s bullying, hectoring, and know-it-all arrogance, starting from the top down.
11
Let's imagine a hyper efficient production model in the future where robotics make everything. Even the robots will be manufactured so efficiently - by other robots - that they will get really cheap. Even the soldiers will get replaced by drones and other machines.
All this infrastructure will be owned by a few corporations like Google, Apple, Tesla, Intel, Amazon, Facebook, Netflix, etc.. The entire manufacturing to distribution to communication to entertainment and communication chain will be owned by a few global giants and run by an efficient army of robots.
Then, what will the human race do! Does it seem far fetched? I don't think so. This is what they are already working on and are disrupting everything we used to think 'normal'. It will not just replace 53,700 jobs, but render most of the humanity useless and without purpose.
All this infrastructure will be owned by a few corporations like Google, Apple, Tesla, Intel, Amazon, Facebook, Netflix, etc.. The entire manufacturing to distribution to communication to entertainment and communication chain will be owned by a few global giants and run by an efficient army of robots.
Then, what will the human race do! Does it seem far fetched? I don't think so. This is what they are already working on and are disrupting everything we used to think 'normal'. It will not just replace 53,700 jobs, but render most of the humanity useless and without purpose.
8
Your humble instrospection is welcome.
In reality, globalization has been a huge transferral of wealth from the richer countries to the poorer ones.
Think Latin American countries and how its capitals went from being large rural, backward towns to Mini MIamis thanks to all the modernization and duty free plants. Think India. A country which 30 years ago had 95% population living in poverty, today has 30% middle class (that's roughly the US population), all those call centers and technology transfer. I could go on and on, but you get the idea.
What experts didn't take into account was the individual damage they were doing to the people in those rich countries who made possible through their own labor to make their country rich in the first place.
And of course you are leaving out another major component of "globalization" which isn't necessarily economic related but cultural and social. The imposition of the so called "world liberal order" via changing social and cultural Standards accompanied with migration.
So let's be honest here, just as wealth was transferred from rich to poor, migration went one way also, from poor to rich. In either case the labor force of the richest nations lost, whether their jobs were outsourced or replaced at home by immigrants.
In reality, globalization has been a huge transferral of wealth from the richer countries to the poorer ones.
Think Latin American countries and how its capitals went from being large rural, backward towns to Mini MIamis thanks to all the modernization and duty free plants. Think India. A country which 30 years ago had 95% population living in poverty, today has 30% middle class (that's roughly the US population), all those call centers and technology transfer. I could go on and on, but you get the idea.
What experts didn't take into account was the individual damage they were doing to the people in those rich countries who made possible through their own labor to make their country rich in the first place.
And of course you are leaving out another major component of "globalization" which isn't necessarily economic related but cultural and social. The imposition of the so called "world liberal order" via changing social and cultural Standards accompanied with migration.
So let's be honest here, just as wealth was transferred from rich to poor, migration went one way also, from poor to rich. In either case the labor force of the richest nations lost, whether their jobs were outsourced or replaced at home by immigrants.
6
Wow - a change in thinking. It took a poll across the ocean to convince the liberal and conservative stripes on the same tiger to wake up and smell the coffee. Efficiency on a global scale is necessarily not good for local scale. This efficiency devastates social interactions. Walmart in Rural America is the best example. I still remember coming to a small town in Illinois in 1984 and seeing the impact on the town when a new Walmart arose 10 miles away. It is clear though to manage resources for the future, a balance and significant improvement in local efficiency need to be considered. Listening to a PBS interview with Sebastian Junger on his new book "Tribe - On homecoming and Belonging" probably may also provide a link to the socio-economic problems created by Elite Globalism thinking.
6
Exactly. Wow. Thank you for giving us the big picture as it really is.
There is more: the amazing wonderful fantastic gains that were made in the 1/3 of the world that benefitted while the West suffered for the last 20 years.
Yes, the Far East, where annual income growth outstripped the most optimistic UN goals by I believe a factor of over 100%.
Historians will not see this period in black crepe as we do from our fish-eye lens. They will see it as one of the greatests bursts of growth in personal income ever. And if you factor in the fact that a sandwich is much better to a starving man than a roast beef dinner is to a full man, the gains in the Far East were nothing short of stupendous.
Even though a lot of jobs were lost in the US and England &cetera. The ones who lost jobs bought cheap Far East goods all the way down that down escalator, and they loved it. Every cheap shirt was another nail in the coffin of their jobs and they all knew it. And now they are, yes, eating perfectly nice filling sandwiches. Oh well.
Big picture, wow, yes...
There is more: the amazing wonderful fantastic gains that were made in the 1/3 of the world that benefitted while the West suffered for the last 20 years.
Yes, the Far East, where annual income growth outstripped the most optimistic UN goals by I believe a factor of over 100%.
Historians will not see this period in black crepe as we do from our fish-eye lens. They will see it as one of the greatests bursts of growth in personal income ever. And if you factor in the fact that a sandwich is much better to a starving man than a roast beef dinner is to a full man, the gains in the Far East were nothing short of stupendous.
Even though a lot of jobs were lost in the US and England &cetera. The ones who lost jobs bought cheap Far East goods all the way down that down escalator, and they loved it. Every cheap shirt was another nail in the coffin of their jobs and they all knew it. And now they are, yes, eating perfectly nice filling sandwiches. Oh well.
Big picture, wow, yes...
The purpose of our government is not to improve the lot of the chinese.
2
Well said, comrade. The New Man has no need for such trifles as country and self-determination.
2
It's excellent that we are beginning to see published critiques of the prevailing economic orthodoxy that's part of what has landed us in the political mess we're in.
It's not enough to shriek "They're just ignorant bigots!" as too many of my friends are doing in response to Brexit and Trump voters. People voting this way are experiencing real pain & have a perspective that we must truly listen to. That's what democracy entails.
It's not enough to shriek "They're just ignorant bigots!" as too many of my friends are doing in response to Brexit and Trump voters. People voting this way are experiencing real pain & have a perspective that we must truly listen to. That's what democracy entails.
11
International trade agreements don't use American standards for manufacturing (flame retardant, etc.); but then again, the American consumer is expected to repeat the purchase when the (cheap) merchandise self-destructs. And such trade agreements do not reflect American gains in working conditions (child labor, working hours, safety, health, etc.) so the American consumer has lost again. Who has gained: the industrialist with capital. But does America itself gain? The tax code needs to be rewritten to return money to this country--where R&D made the overseas business profitable.
6
The article still reeks of the attitude that the elites are 100% correct in their views and the ones who are suffering are 100% wrong. Globalization, as carried out now, is a throw back to the late 19th century days of capitalism which allowed the ultra rich to abuse the working class. It was a horrible way to treat human beings. We have come a long way in the last 100 years to fix that. So take your so called "efficiency" and shove it.
25
Both succinct and accurate.
Thank you.
Thank you.
2
While most of the voting populace will never see their decisions in the "efficiency/equality" context, they see inequality vividly when it impacts them directly. Those shaping public perceptions have vastly more power to do so, creating focus-tested messages and schemes to obscure the real issues and redirect hapless voters into voting against their own interests. Keeping unfettered capitalism unfettered is the elitists objective, and they are quite good at it so far. Governments can't even make mountaintop removal miners clean up their horrible messes, so how can voters trust governance to make companies that export their jobs to clean up the destruction they cause to communities they abandon? No wonder snake oil still sells.
12
Yes. Until environmental costs are included in economic calculations "efficiency" is a crock.
4
What this insightful piece fails to highlight is that when the pursuit of efficiency is likely to impact on the elites themselves they tend to be virulent in their opposition.
It is always a case of do what I say rather than do what I do.
It is always a case of do what I say rather than do what I do.
24
And there is one other angle. Suppose people not only dislike job "churn" but sometimes deal with it badly. Suppose when globalization destroys current jobs, that stress leads to greater alcoholism, divorce, depression, etc. In economists' jargon that is "destruction of human capital" and loss of any kind of capital harms GDP.
The "happy" story is that all the labor shifts around to new jobs, with some winners and losers. But it can be worse than that if those who lose their job don't just land in a lower paying one, but fall out of the labor force entirely. That happened to some proportion of folks when rust belt manufacturing declined, and is happening now in some coal towns.
This possibility doesn't mean we shouldn't globalize, but it is a concrete example of an idealization in economists' models that means there is a wise not just an ignorant reason to approach them with a bit of skepticism.
The "happy" story is that all the labor shifts around to new jobs, with some winners and losers. But it can be worse than that if those who lose their job don't just land in a lower paying one, but fall out of the labor force entirely. That happened to some proportion of folks when rust belt manufacturing declined, and is happening now in some coal towns.
This possibility doesn't mean we shouldn't globalize, but it is a concrete example of an idealization in economists' models that means there is a wise not just an ignorant reason to approach them with a bit of skepticism.
9
If the experiment were asked differently and focused on a smaller or larger pie as it relates to global warming, we would perhaps see similar results. Some would choose a smaller pie to reduce the risk of climate disaster even if it meant less wealth from globalization and a lower standard of living for them personally. Others would choose greater globalization for a host of rationales or simply for their ideology. The fact is, globalization has both positive and negative implications that people interpret from their own point of view. It is certainly not good for everyone under every point of view, and may actually be unsustainable in the long run.
2
The big Boogie Man of globalization is China. But from the Chinese perspective, that iPhone will cost the worker who built it 2-3 months of pay. For a similar factory worker in the US (for the few factory jobs still remaining), it will cost less than two weeks of pay (a couple days pay for a white collar worker). They see globalization totally favoring Americans. Chinese workers breathe highly polluted air and tainted food that will dramatically shorten their lives. Americans breathe clean air and have a safe food supply (but overeating overcomes those pluses). Thus, they see the unhappy Trump supporters as far better off. Of course, if you include the company executives, bankers, investors, etc., the west has won the world economic lottery. The feeling is that the US (and Britain) is coming out of this on the backs of the Chinese worker, who makes peanuts. Despite all this, they don't want to go back to the way it was, which was years of starvation with an intermittent year or two of full bellies.
3
Chinese workers who feel they are not getting their fair share might discuss this with the elites of their country who are getting monumentally rich off their labor. Elites are the same everywhere.
4
Wow, the arguments presented, refusing to look past winners and losers, are brutal. Economic disruption and displacement are more or less constant, but the means of ameliorating them are not so much the province of economists. They're political decisions.
People can always be retrained and re-employed. There's plenty of work to be done in this world, in the service of both efficiency and equality, but as long as Republicans refuse investment in public goods, and as long as the aggrieved vote for them, we will slowly strangle ourselves. For example, infrastructure projects that Democrats have fought for could replace manufacturing jobs lost to globalization, while stimulating the economy and improving its efficiency, but Republicans see greater advantage in a sabotaged economy and infrastructure and a ton of resentful, struggling, um, losers. So far that's worked out for the GOP. But the voters are not expressing any preference for efficiency or equality. They are responding to nonsensical political appeals. All of which makes this article beside the point, and our polity unique in its ignorance.
People can always be retrained and re-employed. There's plenty of work to be done in this world, in the service of both efficiency and equality, but as long as Republicans refuse investment in public goods, and as long as the aggrieved vote for them, we will slowly strangle ourselves. For example, infrastructure projects that Democrats have fought for could replace manufacturing jobs lost to globalization, while stimulating the economy and improving its efficiency, but Republicans see greater advantage in a sabotaged economy and infrastructure and a ton of resentful, struggling, um, losers. So far that's worked out for the GOP. But the voters are not expressing any preference for efficiency or equality. They are responding to nonsensical political appeals. All of which makes this article beside the point, and our polity unique in its ignorance.
13
Some good points - but fatally wrong on many. For example, it is demonstrably false that 'People can always be retrained and re-employed.' Some can, but many can't (not just won't). And further, those that do get re-employed are often under-employed - the shift is downward. Plenty of middle-managers & professionals with experience, if they get re-employed, have to start again from the bottom, and often in a less remunerative endeavor. Much easier for an employer to take a younger, less-experienced person whom one can train (usually at lower pay to start), than to take a re-tread 'loser' (with higher expectations).
Perhaps your partisanship, and maybe your relative elite identity, leads to this attitude. As much research has demonstrated, most people in many areas of life - especially politics - are using gut feelings rather than dispassionate analysis. And that includes the 'educated' elites who can come up with fascile rationales for their emotive choices. [FWIW - Republicans generally have more advanced schooling than Dems. More R college grads - including those with masters & professional degrees - than Ds, who have large numbers of less-schooled with the very small proportionate numbers of phds. Doesn't make Rs or Ds more or less smart ... or more or less likely to be 'rational'.]
Perhaps your partisanship, and maybe your relative elite identity, leads to this attitude. As much research has demonstrated, most people in many areas of life - especially politics - are using gut feelings rather than dispassionate analysis. And that includes the 'educated' elites who can come up with fascile rationales for their emotive choices. [FWIW - Republicans generally have more advanced schooling than Dems. More R college grads - including those with masters & professional degrees - than Ds, who have large numbers of less-schooled with the very small proportionate numbers of phds. Doesn't make Rs or Ds more or less smart ... or more or less likely to be 'rational'.]
4
Half of your fellow Americans are not losers, ma'am, regardless of which political side you're on. Why not try a little humility?
4
Your numbers are reversed - Ds outnumber Rs among college grads and postgrads. Quote from http://www.people-press.org/2015/04/07/a-deep-dive-into-party-affiliation:
Education. Democrats lead by 22 points (57%-35%) in leaned party identification among adults with post-graduate degrees. The Democrats’ edge is narrower among those with college degrees or some post-graduate experience (49%-42%), and those with less education (47%-39%). Across all educational categories, women are more likely than men to affiliate with the Democratic Party or lean Democratic. The Democrats’ advantage is 35 points (64%-29%) among women with post-graduate degrees, but only eight points (50%-42%) among post-grad men.
Education. Democrats lead by 22 points (57%-35%) in leaned party identification among adults with post-graduate degrees. The Democrats’ edge is narrower among those with college degrees or some post-graduate experience (49%-42%), and those with less education (47%-39%). Across all educational categories, women are more likely than men to affiliate with the Democratic Party or lean Democratic. The Democrats’ advantage is 35 points (64%-29%) among women with post-graduate degrees, but only eight points (50%-42%) among post-grad men.
1
" the deal will add $131 billion a year to Americans’ incomes by 2030, or 0.5 percent of G.D.P."
What does this mean? Will my income go up in any significant way, or will 90+% of this $131 billion simply enrich the 0.1%. So, yes, this benefits "the economy", but even if you agree that "53,700 jobs churned each year is a small cost to be paid for a richer overall economy", do you really think that you are going to get a meaningful slice of this pie?
What does this mean? Will my income go up in any significant way, or will 90+% of this $131 billion simply enrich the 0.1%. So, yes, this benefits "the economy", but even if you agree that "53,700 jobs churned each year is a small cost to be paid for a richer overall economy", do you really think that you are going to get a meaningful slice of this pie?
28
You can't have free trade AND stability.
4
Efficiency by itself has no connotation of class, social status, wealth, political standing and other attributes or complexes. It is a term as neutral as correctness. The economic and policy elite universally want to define efficiency to be that which is relevant to capital and its efficient accumulation. As capital and the labor power are the opposites in a contradiction that has locked in for the past six hundred years between the two, efficiency of and for capital means deficiency of and for the interests of working class. What enriches capital will tumble labor into destitution; win-win situation is a euphemism for compromise and even enthusiastically doing capital’s bidding. Only in special eras and under unusual circumstances, labor would be able to win back a tad of the spoils - their unpaid surplus values that capital expropriates as profit.
Higher G.D.P. doesn’t mean higher wages but stagnant or lower G.D.P.’s certainly mean wage levels have tanked. Equality is always the first casualty in the hands of the politico- economic elite because the undemocratic principle of maximization of profit is untenable if income equality carries through on the democratic principle of “all men are created equal.”
Globalization and foreign trade are latter-day sleight of hand to let people nicely taken in. They are tepid tactics from yesteryear to slough off unwanted labor.
Higher G.D.P. doesn’t mean higher wages but stagnant or lower G.D.P.’s certainly mean wage levels have tanked. Equality is always the first casualty in the hands of the politico- economic elite because the undemocratic principle of maximization of profit is untenable if income equality carries through on the democratic principle of “all men are created equal.”
Globalization and foreign trade are latter-day sleight of hand to let people nicely taken in. They are tepid tactics from yesteryear to slough off unwanted labor.
10
Neither a bias towards overall "efficiency" nor a bias towards "equality" seems, to me, to get directly at the effects of various economic or trade choices on local, regional, and world environments. Nor do these analyses clearly get at levels of human satisfaction, health, or even joy. Does increasing the size of the "economic pie" shrink species diversity and the ecological services of rain forests and oceans? Does it make us on average or in aggregate happier? Wiser? We need to think hard about what truly matters.
4
Nature is very efficient, but in the wild many animals starve. We don't want people to starve. There is no reason to think that the completely unregulated free market would produce better results that what occurs in nature. So the question becomes how much regulation is optimal.
What may not be appreciated is what a great advance it is that a matter such as Brexit can now be addressed through the democratic process, rather than by going to war.
What may not be appreciated is what a great advance it is that a matter such as Brexit can now be addressed through the democratic process, rather than by going to war.
5
I still don't think you get it. As a non-elite, I want the overall national income to go up, too, and am all for trade, as long as it's fairly implemented (wage and environmental standards roughly the same in the trading partners). But, I want the benefits of that trade, the increased GDP and national wealth, to not just go to the very rich and top management as it is now. If the people benefitted from increased trade, there'd be much support. But, when the big shots get big bonuses and big raises on top of already high base salaries and they give their workers 0-2% raises, you get resentment about everything. Every game, including the economic game, has to be fair or the players (e.g., us) get tired of playing and vote for Trump and Sanders.
35
Is there no room in this analysis for empathy, altruism, or a simple preference to live in a society that acts decently towards others, rather than one favouring - whether in economic or in other ways - oneself? once again the version of rational man modelled by economists fails to capture the subtleties of human desire.
15
In all the talk of letting "the market" rule, somehow market externalities are rarely addressed? How much cost should one's activities impose on other people? When I walk a mile in my neighborhood and see the debris from fast-food joints, I think about the costs imposed by to-go orders--sooner or later all virtually all those containers end up in landfills. And when I see people in the local coffee shop weekly for years, buying their drinks in paper cups with plastic tops even though they sit in the coffee shop to drink them, I think about the trees that died (I'm a native of western Oregon, who has lived around the logging, lumber and paper industries most of my life) for those cups. I lived for a year overseas, in a country where people drink coffee in porcelain cups in cafes. I wish more people would consider the costs they impose on their neighborhood and the world with their actions. There are externalities everywhere.
7
One of the most galling aspects of the New Economy is that those making the most money brag about doing good--eg, lifting millions out of poverty in other countries.
But they don't use their own money to do this. They take it from the middle class, in the form of well-paying, stable jobs with health care. And then they reward themselves for earning more money for the company and themselves.
Worse, they insult the people whose jobs they've shipped overseas--they're called lazy, spoiled, cowardly (for failing the appreciate the new economy)-even xenophobic or racist for not welcoming cheap imported labor.
As for those who voted for Brexit after being told things would be worse for the country financially--well, that's the flip side of "overall benefits" from trade deals. If you feel like you've already gotten the short end of the stick, you may want to see those at the top suffer more than you fear harm yourself--especially if you're working 2 part time jobs with no healthcare and are in fear of losing your home.
But they don't use their own money to do this. They take it from the middle class, in the form of well-paying, stable jobs with health care. And then they reward themselves for earning more money for the company and themselves.
Worse, they insult the people whose jobs they've shipped overseas--they're called lazy, spoiled, cowardly (for failing the appreciate the new economy)-even xenophobic or racist for not welcoming cheap imported labor.
As for those who voted for Brexit after being told things would be worse for the country financially--well, that's the flip side of "overall benefits" from trade deals. If you feel like you've already gotten the short end of the stick, you may want to see those at the top suffer more than you fear harm yourself--especially if you're working 2 part time jobs with no healthcare and are in fear of losing your home.
29
Efficiency at a micro level rarely translates to efficiency at the macro level. You may design the most efficient (i.e.profitable) means of manufacturing steel, but if that efficiency means you are poisoning the sky, land and water and leaving your workers without enough money for food, shelter and health care, then you are making the system in which you operate less efficient. In short, you have the Tragedy of the Commons on a global scale.
A case for using regulation to help keep the macro economy working is rarely made explicitly, yet, at least in my mind, it is as important a consideration as creating a level playing field for participants in the economy. Sadly, neither of these "principles" are of interest to the elite whose quest for "efficiency" is focused on a very tiny piece of the world, because that is all they can control by themselves. In the shortness of their lives, the troubles of others will remain the troubles of others. It is only their grandchildren who will share in the consequences of the smallness of their sight.
A case for using regulation to help keep the macro economy working is rarely made explicitly, yet, at least in my mind, it is as important a consideration as creating a level playing field for participants in the economy. Sadly, neither of these "principles" are of interest to the elite whose quest for "efficiency" is focused on a very tiny piece of the world, because that is all they can control by themselves. In the shortness of their lives, the troubles of others will remain the troubles of others. It is only their grandchildren who will share in the consequences of the smallness of their sight.
5
We have certainly seen and/or experienced long periods of inequality here in the United States during my lifetime (since 1957) and we have made great strides to reduce it through laws, actions and changing attitudes. We can and will continue to make changes.
"We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.--That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, --That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness." (Declaration of Independence, July 4, 1776)
"We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.--That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, --That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness." (Declaration of Independence, July 4, 1776)
6
All the discussions of extreme inequality of wealth distribution focus on fairness or lack of fairness. Unfairness is unfortunate, even deplorable, but, if about 62 people control 40 something percent of all "wealth", those people have a controlling interest in everything that happens on the planet that people can control. All the awful things going on, the wars, the destruction of the biosphere, the world wide propaganda machine, all of it is reasonably attributable to their decisions and their decisions seem entirely predicated on what will get that small group more wealth and power. That mode of behavior is entirely characteristic of humans and isn't surprising but the availability of and the control of actual power, expendable energy, is new.
6
It isn't that these people don't want increased efficiency, increased national income, or consider themselves satisfied with less. It is the total lack of fairness in the whole process that has led to all of the proceeds of the last 40 years increased efficiency going to the top 1% that is the driver for these voters.
We are willing to work very hard if need be and, sacrifice if need be, but to do it so that others can benefit from the our labors is not going to be done voluntarily. The perception, and probably the truth, is that much of this transfer of wealth has been done through nefarious means by those in control of our political institutions. We do not see this wealth gap in the Northern European countries or Japan. CEO's are not making 300+ times that of the average worker, medical bankruptcy is unheard of in those countries, health outcomes are far superior and happiness rating far higher than here.
That is the problem. The solution is to vote the bums out. Vote in November.
We are willing to work very hard if need be and, sacrifice if need be, but to do it so that others can benefit from the our labors is not going to be done voluntarily. The perception, and probably the truth, is that much of this transfer of wealth has been done through nefarious means by those in control of our political institutions. We do not see this wealth gap in the Northern European countries or Japan. CEO's are not making 300+ times that of the average worker, medical bankruptcy is unheard of in those countries, health outcomes are far superior and happiness rating far higher than here.
That is the problem. The solution is to vote the bums out. Vote in November.
26
Vote which bums out? Voting for a billionaire real estate magnate who lives in a palace while repeatedly getting sued and going broke is not the answer. There might be a possibility that mainstream Democrats could be influenced by the left: there is NO chance that the right will be.
Most definitely. We need good people to run for office. Check out the qualifiers in your district and get busy.
1
The alternative - another 1%er? Partner of a Prez that helped fuel that 1% via inflated Wall Street markets? To the detriment of the workers?
We do have other choices - think Green & think Liberty.
We do have other choices - think Green & think Liberty.
1
If elites who design policy were to do so in accordance with John Rawls's Theory of Justice, then we would have more fair distributive policies.
The way it works now, the elites are assured of their place in the world that they are fashioning and care little for those who have not been as fortunate as them. Usually these are the people who have won the"lottery of birth" as Buffet has described it succinctly and honestly. The elites are not where they are because they are so overwhelmingly superior than those left behind.
I am sorry to see the Democratic Party become a party of such elites even as they profess to care for the underdog. The failure of the Dems has contributed to the rise of Trump.
The way it works now, the elites are assured of their place in the world that they are fashioning and care little for those who have not been as fortunate as them. Usually these are the people who have won the"lottery of birth" as Buffet has described it succinctly and honestly. The elites are not where they are because they are so overwhelmingly superior than those left behind.
I am sorry to see the Democratic Party become a party of such elites even as they profess to care for the underdog. The failure of the Dems has contributed to the rise of Trump.
26
Casting this as an either/or proposition for stability or growth misses the point. There is nothing unsettling about growth when it drives upward mobility for your group. Growth now mainly helps the 1%. More progressive tax, wage, and spending policies are needed along with smart trade deals in order to make growth good for the 99%. Redistributing a stagnant pie (Bernie) or stagnating the pie but not redistributing it (Donald), are not sensible strategies for moving more Americans forward in the next decade.
6
Globalization brings both winners and losers. The winners are those who purchase HD TV, computers/phones, as well as various services, a portion of which may be done off shore; winners also include the highly skilled and the elites. The losers are those working in industries/companies that outsource in pursuit of competitiveness (and "efficiency"); this very much includes those who lose their job and the communities in which they live. The winners take care of themselves (and lobby/fight to protect their advantage). The issue is how to help those who lose their job--hence, job retraining/community colleges, universal health care, portable pensions/social security and other national and local programs to help people learn new skills, cushion their losses, reduce their stigma and facilitate their move to new industries/companies. How to pay for this? increased taxation of those who reap most of the benefits and changes in the severance/lay off costs paid by the corporations going oversees (so they will be more likely to hold onto/redeploy their employees). There is a very significant social cost born by those who need to find a new livelihood should be born by all of us--reaching out to help as we can. Our political leaders need to better articulate the overall issue or we'll continue to fragment, stalemate and get angrier. Hopefully we don't feel the Brexit's "Buyer's Remorse" following our November elections.
4
TPP might increase GDP, but we know increases in GDP have resulted in net gains for only the 1% in the last 30 or 40 years. Inequality has grown so much that productivity growth has slowed almost to a stop. The 99% do not profit from such growth anymore, and we are revolting. New growth will only come with increased equality.
A trade agreement COULD have been worked out that would have helped the people; free trade usually does. But TPP as negotiated would be good only for corporations and the elite. It would also damage the environment and contribute to global warming.
We gave you a chance with Sanders. But you rejected it. A Trump presidency will probably result. The people are not going to vote for the Establishment elite.
A trade agreement COULD have been worked out that would have helped the people; free trade usually does. But TPP as negotiated would be good only for corporations and the elite. It would also damage the environment and contribute to global warming.
We gave you a chance with Sanders. But you rejected it. A Trump presidency will probably result. The people are not going to vote for the Establishment elite.
13
Odd that the authors didn't make more out of the fact that the people passing judgment in favor of efficiency over sharing also had a personal stake in choosing the more "efficient" outcome. So what's really at stake here is the greed of those making decisions such as these, or lack thereof. If non-elite economic actors can't expect to see any personal benefit in the increased wealth produced by increased efficiency, why should they even consider the efficiency policy program?
Seems like we're rather dimly dulling Occam's razor here -- no need to go into an elaborate psychological profile of the non-elite voter's thinking and start ascribing his or her choices to irrational cultural factors. Maybe it's just self-interest, after all.
Seems like we're rather dimly dulling Occam's razor here -- no need to go into an elaborate psychological profile of the non-elite voter's thinking and start ascribing his or her choices to irrational cultural factors. Maybe it's just self-interest, after all.
13
This is the psychology of the old Russian peasant: if my neighbor has a cow and I don't, then I'm happier if I poison his cow.
The standard economic solution is for the winners to compensate the losers, which unfortunately rarely happens. An even better solution is to move and retain the losers into economically productive activities. But this requires active and enlightened government intervention, something no self-respecting Republican would ever support.
The standard economic solution is for the winners to compensate the losers, which unfortunately rarely happens. An even better solution is to move and retain the losers into economically productive activities. But this requires active and enlightened government intervention, something no self-respecting Republican would ever support.
18
It's possible that there are many more human beings than there are productive economic activities.
3
Exactly. Well and succinctly put, and I don't see a single politician of either of the major US political parties making this argument.
4
Hillary take note. This is a critically important concept. Brilliant use of rent control as an example.
8
I am glad someone wrote this editorial.
The problem is that the elite in many economic and political spheres come from the same milieu so they think and act the same. They have little interaction with others outside of that group. This produces group-think and eliminates the possibility of diversity of thought or discovery.
If we were talking about cooking, no one would care. But, we are talking about policy that directly and indirectly effects the quality of life for BILLIONS of people globally.
The problem is that the elite in many economic and political spheres come from the same milieu so they think and act the same. They have little interaction with others outside of that group. This produces group-think and eliminates the possibility of diversity of thought or discovery.
If we were talking about cooking, no one would care. But, we are talking about policy that directly and indirectly effects the quality of life for BILLIONS of people globally.
27
When I hear the word efficiency, I reach for my resume.
24
Then "synergy" should send you running.
2
Gibberish.
This writer isn't a member of the "Economic Elites". he's hardly qualified to carry water for an actual economist. He's pandering to a juvenile mindset which wouldn't pass Econ 101.
This writer isn't a member of the "Economic Elites". he's hardly qualified to carry water for an actual economist. He's pandering to a juvenile mindset which wouldn't pass Econ 101.
3
This is correct as far as it goes but still fails to see comprehend the bigger picture: that the same economic elites who have benefitted most from globalization (and tech) have invested a significant chunk of their profits in lobbying for yet more tax breaks, yet lower expenditures on anti-trust enforcement, and ever more protections for their "intellectual property rights." Is 90 years for copyright duration really more "efficient" than fifty years? Or is it just our country sinking ever deeper into grand corruption so vast that an "elite" journalist can't even see it any more?
16
Nice to see somebody cue into the larger reality. I've been watching "experts" destroy and downgrade numerous industries for decades. While I am a big believer in education, my blue collar roots are never far enough away from my PhD that I can't tell organized economic suicide when I see it. The elites who benefit from the terribly expensive short term gain will probably never fully realize the impacts of their decisions...they have never walked down those streets. But if they don't understand, at least on some level, that what they are doing is ultimately demonstrably wrong in the longer term, all of us will hang together.
26
Scarce resources ( an apartment in San Francisco) are going to be allocated on the basis of money, quality, or time to wait, and that is independent of the system used to allocate those resources. The people in rent-controlled apartments have " got their's" and would see no reason to end the arrangement any more than someone directly engaged and benefitting the effects of global trade would see the benefits of raising trade barriers. More people would enjoy the benefits of living there if rents weren't controlled and building more was worth the effort.
Advocates of global trade ( I am one) need to separate the benefits of efficiency which are broadly spread across the whole society to all and the costs of globalization that are imposed by a smaller group who feel the pain more keenly than anyone feels the benefits. We can and should respond to that distress for if we do not, demagogues will.
Advocates of global trade ( I am one) need to separate the benefits of efficiency which are broadly spread across the whole society to all and the costs of globalization that are imposed by a smaller group who feel the pain more keenly than anyone feels the benefits. We can and should respond to that distress for if we do not, demagogues will.
13
Any new construction in San Francisco will not be affordable for the average waitress or cleaning lady. That's why they're not building. Scarcity breeds higher prices. And that's every landlord's dream.
4
Sure but the marginal engineer is going to be more productive living in SF than a waitress.
This is by far the best piece I've ever read in The Upshot. It's a quintessentially civic discussion of the kind we just don't have anymore -- what is our political life, and our economic and institutional choices, for? What are the ends served?
27
Odd how this article begins by recognizing that the problem with elitist economic thinking is that it only cares how big the pie is, not how small a slice of it an increasingly large number of folks are getting, but THEN, perhaps terrified at the prospect of really engaging the clearly established connection between income inequality and free trade policies, its author falls back on the oft-circulated elitist MYTH that the problem isn't about actual economics but just about how it feels to certain obviously uneducated, and albeit pitiable, but nonetheless deluded people.
As another commentator pointed out, efficiency isn't the only factor to consider. If efficiency is being used to generate more income for the owners of the means of production, that doesn't help the workers IN REAL ECONOMIC TERMS. The data is out there and as a supposed economic journalist, this author should educate himself regarding the statistically-verified consequences of free trade:
--huge DEFICITS with partner nations when surpluses existed before
--700,000 jobs lost to NAFTA
--increased productivity but no increase in wages
--no wage increases, as promised, for partners like Mexico
--stagnation of US wages, greater income inequality
etc.. Until you start to face the complete economic facts of the impact of "free trade," you won't get what is driving the new populism. Go to: http://journalistsresource.org/studies/economics/business/international-...
As another commentator pointed out, efficiency isn't the only factor to consider. If efficiency is being used to generate more income for the owners of the means of production, that doesn't help the workers IN REAL ECONOMIC TERMS. The data is out there and as a supposed economic journalist, this author should educate himself regarding the statistically-verified consequences of free trade:
--huge DEFICITS with partner nations when surpluses existed before
--700,000 jobs lost to NAFTA
--increased productivity but no increase in wages
--no wage increases, as promised, for partners like Mexico
--stagnation of US wages, greater income inequality
etc.. Until you start to face the complete economic facts of the impact of "free trade," you won't get what is driving the new populism. Go to: http://journalistsresource.org/studies/economics/business/international-...
14
Thanks for link to the Journalists Resource! Great article, and too bad more journalists don't use it.
Why is this columnist like all other Times "reporters" deliberately avoiding the correct diagnosis of what ails the entire western world at this point in time? Brexit, Donald Trump, Bernie Sanders and the far right putsch across Europe is massive revolt against the prevailing ideology of NEOLIBERALISM whose true believers were Thatcher, Reagan AND still to this day the Clintons. It's about brute competition, winner take all, everybody for themselves, everything privately controlled for profit. If you want to see how horrid it is in full blown form just look at the Amerocan medical system and read all the articles about it even the Times can't avoid publishing. Shame on Democrats for so mindlessly and cruelly serving up the perfect face of this dreadful ideology people are revolting against in droves: Hillary Clinton. No surprise if they lose.
25
Yes. The dogma of "competition for efficiency" is the antithesis of civilization. For generations our fore-bearers struggled to make a "good" world; safe, secure, intellectually stimulating, emotionally satisfying, etc. The aim of neo-liberal capitalism is to monetize all that for the enrichment of the .1%. It's shameful.
The election is Clinton's to lose. I'm afraid she's going to do just that.
The election is Clinton's to lose. I'm afraid she's going to do just that.
7
You failed to understand main issue in brexit was not about the money. People knew they could face finacial hit and voted for it anyway.
6
Seems to me that "efficiency" is a euphemism for "greed".
18
Again, I'm tearing my hair out trying to figure out why Donald Trump is "not" the very symbol of elitism. He is a multi billionaire, and especially one who was close to big banks and got favorable terms for himself. He filed for bankruptcy (or threaten), and came out a victor, as only the elite can. An average middle class worker like me would have ended up living in the streets.
The real reason for support for Donald Trump is xenophobia (no one will say this publicly in the Wall Street Journal) - the same reason that voters in England voted for Brexit.
The real reason for support for Donald Trump is xenophobia (no one will say this publicly in the Wall Street Journal) - the same reason that voters in England voted for Brexit.
11
Overly simplistic to say xenophobia is reason. Studies suggest that votes for Brexit might include immigration issues - but not against immigration per se. Countries that have well-controlled immigration (e.g., Australia & others require education & good employment prospects), and countries were immigrants intend to assimilate, are much more accepting of that type of immigration. Most welcome -legal- immigration by those in orderly fashion. Large waves of unauthorized immigrants - or refugees - overwhelm systems, as they are thruout Europe & other parts of the world (including US).
2
Trump has not been the politician in charge of passing these free trade disasters.
People don't blame Trump for profiting off of stupid rules elites wrote to profit themselves and their friends.
People don't blame Trump for profiting off of stupid rules elites wrote to profit themselves and their friends.
2
Efficiency is the excuse used to rationalize almost anything that involves someone losing their job. Economists, CEO's, and MBA's use it without thinking. It's an almost universally accepted dogma.
However, those who use it don't realize how paradoxical it is. They exist and succeed within an economy that is completely dependent upon INEFFICIENCY. If consumers ever stop being inefficient, if they ever stop buying new things to replace "old" things that still work just fine, if they ever stop buying things that are just going to sit, unused, in a drawer, or in the garage, then the economy will implode.
However, those who use it don't realize how paradoxical it is. They exist and succeed within an economy that is completely dependent upon INEFFICIENCY. If consumers ever stop being inefficient, if they ever stop buying new things to replace "old" things that still work just fine, if they ever stop buying things that are just going to sit, unused, in a drawer, or in the garage, then the economy will implode.
14
But free trade policies keep us buying stuff, don't they? Because most things fall apart now much faster than they used to. TVs used to last 20-30 years, now you get 5-10 if you're lucky. The jeans I buy at target that are made in Indonesia fall apart after a year; the jeans I used to buy at K-Mart 20 years ago lasted five years. The New Balance running shoes I bought a year and a half ago have now fallen apart; the previous NB pair lasted me four years (and, no, I didn't change my wear or walking patterns). Supporters of free trade are always telling us that free trade means cheaper stuff and so it's good for consumers, but I'd like to see a study of how much stuff we are having to replace sooner due to the lower quality of this cheaper stuff. If my new shoes cost 30% less but wear out 50% faster, where's this vaunted consumer saving?
16
David, I agree. Furthermore, the phrases "greater consumer choice" and "lower prices for consumers" are also favorites of those who force trade policies upon us, or who decide which mergers are allowed and which are not. Up to a certain point, mergers are allowed on the grounds that they provide "efficiencies" (i.e, fewer people will have jobs after the merger). Beyond that point, mergers are not allowed on the grounds that they restrict "consumer choice" (i.e., the resultant corporation will be an obvious monopoly).
4
Damn right about NB. It took me ten years to beat a pair to death and then only one year to do the same with a new pair - with my habits unchanged.
2
Macroeconomics, as this article shows, is really the rhetoric of class warfare. The business elites -- highly competitive folks for whom getting richer than they already are is their top priority in life -- design and benefit from "globalization" as presently conceived. The rest of us, whose vision of the meaning and purpose of life doesn't necessarily revolve around a perpetual struggle to maximize our wealth, are not really part of the discussions that create things like NAFTA and the TPP, despite the fact that we are supposedly a "democratic society."
Ideas like "growth," "efficiency," "free markets," and mathematical models derived from game theory about people pursuing the own self interest in making economic decisions describe a virtual world that exists only in the minds of economists. The major error economists make is that they over value competition (the drive toward power and domination) and undervalue cooperation and sharing -- the values at the heart of religion and civilization. There is a reason that the Jesus of the Golden Rule, and not Mammon (=Growth) of the Golden Calf/Bull rules the hearts and minds of ordinary people in America and the West. Eventually we reach a moment like this one in which homo non-economicus looks at the soaring inequality in our society and says, "Have you no decency, sir? Enough!"
Ideas like "growth," "efficiency," "free markets," and mathematical models derived from game theory about people pursuing the own self interest in making economic decisions describe a virtual world that exists only in the minds of economists. The major error economists make is that they over value competition (the drive toward power and domination) and undervalue cooperation and sharing -- the values at the heart of religion and civilization. There is a reason that the Jesus of the Golden Rule, and not Mammon (=Growth) of the Golden Calf/Bull rules the hearts and minds of ordinary people in America and the West. Eventually we reach a moment like this one in which homo non-economicus looks at the soaring inequality in our society and says, "Have you no decency, sir? Enough!"
18
Why is growth good? Perhaps, for a sustainable economy, we need a no growth society. There is nothing inherently marvelous about growth except over-use of resources.
9
The elite have always made it seem as if globalization, tax cuts, deregulation, etc., would lift all boats.
That was a lie. It was only meant to lift the yachts.
You can only fool people for so long.
That was a lie. It was only meant to lift the yachts.
You can only fool people for so long.
13
" Here is an overarching theory of what we might have missed in the march toward a hyper-efficient global economy: Economic efficiency isn’t all it’s cracked up to be."
The NYT economic reporter's approach, mentioned above, misses out a fundamental point:politics.
The third world-like income/wealth gap in the US today is the result of economic policy decisions of the last few decades.
In other words, the economic game has been rigged by Congress/ White House in favor of the super rich and against the working middle class.
The rigged economic playing field, in turn, is made possible by a capitalism dogma ideology indoctrinated among the population.
The social upheaval against the status quo in America and Europe is not against hyper-economic efficiency. It is against politicians on the payroll of the powers that be.
The NYT economic reporter's approach, mentioned above, misses out a fundamental point:politics.
The third world-like income/wealth gap in the US today is the result of economic policy decisions of the last few decades.
In other words, the economic game has been rigged by Congress/ White House in favor of the super rich and against the working middle class.
The rigged economic playing field, in turn, is made possible by a capitalism dogma ideology indoctrinated among the population.
The social upheaval against the status quo in America and Europe is not against hyper-economic efficiency. It is against politicians on the payroll of the powers that be.
10
When it comes to rent control, or the building of new homes, either single family, or multi-family rentals, the problem is not resistance to change. You can be accepting of change, as long as you get some of the benefit. What good does building new housing stock do to someone who is priced out of the market. It is not the change they oppose, but the "renewal" of their area with new housing that they will never be able to afford, leaving them with no place to live. When the cost of owning a home goes to the hundreds of thousands of dollars, many tens of millions of citizens are priced out of a place to live. The "elite" economist should figure out how to solve this problem.
6
Exactly! And when those new apartment, townhomes and condo are displacing low and low-middle income residents and are replaced by high-end developments that are receiving tax breaks don't expect the rest of us to cheer this as progress.
7
But is economic efficiency what we really need or want? I remember G Bush senior going to Japan--(that trip where he barfed in someone's lap). And I recall that one of his chief urgings to the Japanese was that they should abandon a nation-wide network of small corner grocery-store/post offices that were the heart and soul of whole neighborhoods there. He wanted the Japanese to join the world in being more efficient, adopting Walmart-type stores in which to do their efficient shopping. Globalization has robbed us of so much of our puttering, wonderful, inefficient ways. No way would I vote for a lout like Trump, but I can see his appeal. Progress isn't always progress.
6
We are now nearing the final approach to becoming a Third World nation.
The plan was to import as many immigrants as possible and allow as many illegal ones to enter our country, to take the low skill service jobs that couldn't be imported. Then pay them as little as possible.
Can you say backlash? Yup that's Trump and Sanders. Elites, robber barons, whatever you want to call them, called all of the shots on the now deceased middle class. Today you either have a maid or your are a maid. We are turning into Brazil in just one generation.
The plan was to import as many immigrants as possible and allow as many illegal ones to enter our country, to take the low skill service jobs that couldn't be imported. Then pay them as little as possible.
Can you say backlash? Yup that's Trump and Sanders. Elites, robber barons, whatever you want to call them, called all of the shots on the now deceased middle class. Today you either have a maid or your are a maid. We are turning into Brazil in just one generation.
10
The losers in these trade deals have no political power to begin with, which is why they end up losers, and after the fact they also have no political power so there is no redistribution.
5
Inefficiency??????????????????????????
I doubt most Leave voters even thought about inefficiency. Many resented that globalization has passed them by and they want theirs. Also, the proLeave adverts stoked xenophobic responses, as they were designed to. People don't stop to admire efficiency when 'others' seem to be the beneficiaries.
I doubt most Leave voters even thought about inefficiency. Many resented that globalization has passed them by and they want theirs. Also, the proLeave adverts stoked xenophobic responses, as they were designed to. People don't stop to admire efficiency when 'others' seem to be the beneficiaries.
The great British Prime Minister (Conservative) Benjamin Disraeli put it well: "The palace is not safe when the cottage is not happy."
7
Disraeli was the father of "One-Nation Toryism" which both Boris Johnson & Nigel Farange are the modern representatives of.
Britain was fine before they joined the EU and they will be fine in time after leaving the EU This theory about the inequitable income distribution (due to many not earning/under earning due to family circumstances, lack of goals, ability, desire) is only fueling socialism which the pie eaters do not want to support. The problem in the U.S. is everyone is worried that the next guy is getting the better deal for himself. Life is what you put into it and reveals your many choices. Take personal responsibility for yourself and do not expect society to throw you crumbs. Have some dignity.
Would you say that Trump illustrates your points? You must think that Trump is a billionaire (or at least, a millionaire) because he took personal responsibility for himself and did not expect society to throw him any crumbs. I'm sure you must think that the wealth of Trump's father and the business and social connections Trump enjoyed because of his father had nothing to do with Trump's successes. Rags to riches.
1
The geographic distribution of globalization's winners and losers is important. The winners are concentrated in places like NY, SF, and London; the losers in places like Detroit, Ferguson, and Leeds.
The voting map for Brexit, like the ones showing Donny Small Hands's supporters, follow exactly the same pattern.
Leeds doesn't care if London has a chance to get richer; it doesn't want to lose its own middle class existence to facilitate it.
And how thrilled do you think the residents of Ferguson, MO are with all the riches globalization has showered on the USA?
The voting map for Brexit, like the ones showing Donny Small Hands's supporters, follow exactly the same pattern.
Leeds doesn't care if London has a chance to get richer; it doesn't want to lose its own middle class existence to facilitate it.
And how thrilled do you think the residents of Ferguson, MO are with all the riches globalization has showered on the USA?
9
The alternative to efficiency is to make every body poor.
1
This is a result of monetizing and corporatizing everything. The only thing anyone seems to care about is profits, profits, profits. What if the top business leaders and economists set their sights on improving the quality of life for all their countries' citizens and on creating good jobs for them? What if that was their main goal? Then we would create systems and analyses that would make THAT most efficient. When money is the goal, everything is focused on money.
Think about your child's welfare. When that is the goal, you don't care about money. Make the welfare of the all the people the goal, and you will find a way to improve their lives.
Think about your child's welfare. When that is the goal, you don't care about money. Make the welfare of the all the people the goal, and you will find a way to improve their lives.
11
The author separates the factions for and against globalization based on a character trait
1
Elites love efficiency. Just for other people, not themselves.
8
And by the way, quoting anything related to that greedy parasite Pete Peterson automatically cuts your credibility in half, even when your conclusion would not be one he would agree with.
6
Finally! Someone hits the nail on the head. Efficiency/productivity does me no good if it loses me my job and I'm not needed anymore.
It is not surprising at all that the "general American puiblic" prefers equality over efficiency while the Yale grad prefers the opposite. Each knows which economic state favors them.
The question confronting us now is how to improve equality in this country. My opinion: significantly higher, more progressive, taxes on the wealthy which are, in turn, recirculated back into the economy for education, health care, infrastructure, arts and sciences, creating many, many inefficient jobs.
It is not surprising at all that the "general American puiblic" prefers equality over efficiency while the Yale grad prefers the opposite. Each knows which economic state favors them.
The question confronting us now is how to improve equality in this country. My opinion: significantly higher, more progressive, taxes on the wealthy which are, in turn, recirculated back into the economy for education, health care, infrastructure, arts and sciences, creating many, many inefficient jobs.
5
A projection of 130 billion dollars of benefit from a TPP deal is an airy and insubstantial thing. Past trade deals (or admission of China to the WTO) have demonstrably not provided net benefits to the nation's economy. They have benefited American companies who shift their production abroad or who gain access to foreign markets (which they largely serve with foreign operations). Neither domestic jobs or repatriated profits have resulted). So, I don't buy that TPP represents a choice between a large net benefit that is poorly distributed or a more evenly distributed impoverishment. It is instead a choice between a large and more widely distributed domestic benefit from more managed trade and a limited and narrowly distributed benefit from free trade deals. There is, of course, a large benefit from free trade that accrues to a large number of people in developing countries. Most of those who favor free trade understand this but do not wish to acknowledge that it comes at the expense of Americans in general.
7
"Efficiency" is a euphemism used by those who are not going to lose their jobs to indicate that others will (the same goes for "restructuring" and The Economist's favorite, "redundancies"). The estimates that total GDP will increase as the result of a trade agreement completely ignore the human costs of churn, which are borne predominantly by the working class. How can the country that created an industry based on legal settlements for mental anguish, completely ignore the mental anguish associated with trade agreements?
BTW, an increase of 53,700 job changes on top of 55.5 M is a change of less than 0.1%. Do economists really think that they can estimate a change in anything to <0.1%? Apparently so. This seems like just another indicator of their disconnection from reality.
BTW, an increase of 53,700 job changes on top of 55.5 M is a change of less than 0.1%. Do economists really think that they can estimate a change in anything to <0.1%? Apparently so. This seems like just another indicator of their disconnection from reality.
12
This column is like the prototypical economist's statement in the bad old joke: "That's completely correct and absolutely useless." And for good measure, half of the even more common old one "...and what's true is not new."
Imho this problem will ease up over the next few decades, not because of any new insights, new policies or programs, but by the oldest promoter of progress: death. As people who experienced the halcyon days of well-paid manufacturing jobs that didn't require much education, were protected by unions and trade barriers and the various oligopolies they fostered, die off, the population will shift to folks more accustomed to lots of risk, lots of change. By the time most adults don't remember anything before 2008, rich societies will be psychologically more eager to grow the pie and less concerned about disruptions to a quiet life that none of them have ever experienced.
Maybe...
Imho this problem will ease up over the next few decades, not because of any new insights, new policies or programs, but by the oldest promoter of progress: death. As people who experienced the halcyon days of well-paid manufacturing jobs that didn't require much education, were protected by unions and trade barriers and the various oligopolies they fostered, die off, the population will shift to folks more accustomed to lots of risk, lots of change. By the time most adults don't remember anything before 2008, rich societies will be psychologically more eager to grow the pie and less concerned about disruptions to a quiet life that none of them have ever experienced.
Maybe...
2
People, there is no solution ahead! Communism and socialism were failed because they were against human nature. Unfortunately, human nature is ugly (and I am seeing it on display everyday). Seriously, if there are ways, most people will want to make lots of money and work much less. Most frequently, they point fingers to others and the common excuses are "I have done my best", "I have tried everything humanly possible" and "I am only human". The only time they push hard is when they negotiate salaries. Put yourselves in the shoes of small business owners, what would you do? Of course outsourcing and automation are the solutions. Why even bother to deal with human natures?! Instead, focus on exciting opportunities and make real changes. Besides, most people don't even realize the hypocrisy - they all want cheap and high quality products and services. Tell me how could it be possible to make money from $1 value meal? Sadly, this class war will have no ending simply because men are not created equal! Unless we face the reality, there is no hope in sight. So stop lying to kids they should follow their dreams and they can become what they want to be. Tell them the truth. If you want to go to college and just party, you will take the consequence. If you want to major in some majors with no bright job perspective, don't blame the society afterwards. Personal responsibility is the obvious solution. Unfortunately, we are only human!
2
How efficient is a biological system that may engorge the brain with nutrients in order to increase mental capacity if the extremities are starved and so weaken the body that must support both the brain and the toes?
How efficient is an economic system that enriches a powerful elite while starving the multitudes and denuding the planet?
Perhaps they seem efficient to the brain and to the elite, until the sickness they produce becomes overwhelming.
How efficient is an economic system that enriches a powerful elite while starving the multitudes and denuding the planet?
Perhaps they seem efficient to the brain and to the elite, until the sickness they produce becomes overwhelming.
9
All the survey results can be summed up in one phrase: "what's
in it for me?"
Crucially, who will get that $130B added to GDP by a new trade deal?
Suppose 50,000 workers lose their jobs and benefits at $70,000 apiece, while another 2 MM workers remain employed, but lose $30,000 each in salary plus benefits as they adjust to the deal's impact. They lose a net $63.5B. Just as an example, suppose corporate profits are increased by
$200B, all of which is distributed as dividends to shareholders. That's a positive $136.5B, but the benefits are all going to capital while labor takes
a very unhealthy hit to life circumstances.
Forget the myth of loving efficiency. In the brutal competition between labor and capital, capital has been winning a lot more than 100% of the real-world benefits over the past 35 years oe so.
The Yalie ambulance chasers are happy to feed their kids the food that is taken out of the mouths of the lost-income workers' kids. What we have had for many years is a form of stealth cannibalism.
Good luck with making that an economic model.
in it for me?"
Crucially, who will get that $130B added to GDP by a new trade deal?
Suppose 50,000 workers lose their jobs and benefits at $70,000 apiece, while another 2 MM workers remain employed, but lose $30,000 each in salary plus benefits as they adjust to the deal's impact. They lose a net $63.5B. Just as an example, suppose corporate profits are increased by
$200B, all of which is distributed as dividends to shareholders. That's a positive $136.5B, but the benefits are all going to capital while labor takes
a very unhealthy hit to life circumstances.
Forget the myth of loving efficiency. In the brutal competition between labor and capital, capital has been winning a lot more than 100% of the real-world benefits over the past 35 years oe so.
The Yalie ambulance chasers are happy to feed their kids the food that is taken out of the mouths of the lost-income workers' kids. What we have had for many years is a form of stealth cannibalism.
Good luck with making that an economic model.
12
I'm not an economist, but it's obvious to me that the problem isn't globalized trade. The problem is what happens to the fruits of that trade. Rather than assuage the economic loss of the people and communities that suffer due to globalization (i.e. factories close so the owner can pay 50 cents an hour to workers overseas rather than 20 dollars an hour) by imposing a tax on some of the enormous profit, we have allowed the owners to keep all the profit based on assurances that those benefits will "trickle down". Well, we have now had decades of experience with this theory, and I don't know what more proof we need that it doesn't work.
30
Standing, thousands of miles away from you, applauding.
2
The idea that the implementation of globalization has been driven by "efficiency" is false. Irwin is getting his economics backwards. What actually drives things in a "free-market" or capitalistic economy is the desire for profit. And when capitalists are in control of things like globalization, then profits will increase at the expense of wages. In principle profits are minimized by competition, but large corporations have the political and economic power to minimize competition. In reality unregulated markets wind up being very inefficient as power accumulates.
Too many pundits pundits and reporters frame the issue as a struggle between "efficiency" or the supposedly unquestionable benefits of world trade and "protectionism". The real struggle is between the interests of capital and labor, and also between nations as they try to maximize their benefits from trade. The latter clearly does not go by idealized textbook processes.
Too many pundits pundits and reporters frame the issue as a struggle between "efficiency" or the supposedly unquestionable benefits of world trade and "protectionism". The real struggle is between the interests of capital and labor, and also between nations as they try to maximize their benefits from trade. The latter clearly does not go by idealized textbook processes.
23
The study cited (smaller pie and more equal distribution versus bigger pie and none for some of those playing the game) presents a false dichotomy. It also happens to be incredibly self-serving.
Who is to say that being more cognizant of the need for less wealth inequality and greater care afor the concerns and needs of those displaced by "economic churn" leads to smaller pies?
In the end, the issue is not bigger or smaller pies... the issue is a political system in which the actors have been captured by self-aggrandizing economic elites who claim that the pie will be bigger if they are allowed to keep most of it for themselves.
Incredible nonsense. Or, as most people might have it, bull s**t.
Who is to say that being more cognizant of the need for less wealth inequality and greater care afor the concerns and needs of those displaced by "economic churn" leads to smaller pies?
In the end, the issue is not bigger or smaller pies... the issue is a political system in which the actors have been captured by self-aggrandizing economic elites who claim that the pie will be bigger if they are allowed to keep most of it for themselves.
Incredible nonsense. Or, as most people might have it, bull s**t.
15
"Economic efficiency isn’t all it’s cracked up to be." Agreed.
But do not agree that economists' only hubris is a lack of empathy for the human consequences of the "efficiency quest" of elites.
I question the assumption that the pie grows by cutting costs.
Cutting costs is not a business growth strategy. It is a reaction to a highly competitive market. It is a short term tactic. It destroys businesses and markets. When so-called expert economists advocate efficiency as a means to grow economies, they are throwing fuel on the fire.
This article is an indictment of the failure of the science of economics to study and understand the real dynamics affecting the growth and decline of business and markets.
When they start studying businesses in which leaders invest in product development and consider customers, investors, and employees as equally important stakeholders, maybe they will be able to have something of value to contribute.
But do not agree that economists' only hubris is a lack of empathy for the human consequences of the "efficiency quest" of elites.
I question the assumption that the pie grows by cutting costs.
Cutting costs is not a business growth strategy. It is a reaction to a highly competitive market. It is a short term tactic. It destroys businesses and markets. When so-called expert economists advocate efficiency as a means to grow economies, they are throwing fuel on the fire.
This article is an indictment of the failure of the science of economics to study and understand the real dynamics affecting the growth and decline of business and markets.
When they start studying businesses in which leaders invest in product development and consider customers, investors, and employees as equally important stakeholders, maybe they will be able to have something of value to contribute.
6
Apparently those citing Yale Law School as a bastion of elites never looked at the socioeconomic status of those who actually attended, and just assumed that since it is the top law school academically, it must be "elite". Talk about non-evidence based stereotyping. I went to Yale Law school, and I was the first generation in my family to attend college and still the first to ever attend post graduate school. I was able to go because of a combination of loans and scholarships . Perhaps, a really great economist might actual look at the actual type of students that attend Yale Law( it has one of the highest percentages of graduates that become professors-- hardly the economic elite) before he/she assumes we are all a bunch of Richie Riches.
4
David - good points. Many of us who attended YLS were from working class or middle class backgrounds, attending public schools, just like Bill & Hill, or Clarence, Sonia, and Sam. But look where Bill & Hill, and many of our classmates ended up. Plenty of 1%ers, or other positions of power - whether it be Wall Street, the White House, Senate, the Supreme Court, or elsewhere. While many of us have remained true to our roots, like it or not, many of us have become part of the elite.
2
Ask the public if they like efficiency when their Amazon package gets lost; the DMV takes 3 hours to renew their driving license; their plane doesn't arrive on time; the government fails to respond effectively to a natural or man made catastrophe; the price a new lap top doubles; their car doesn't function properly; etc. etc. etc. The whiners are always going to whine. It's part of the human condition.
2
I found it interesting that Neil Irwin states that the Peterson Institute provides some of the best analysis of trade agreements. The institute is a right wing think tank that has consistent and often massively overstated the benefits of trade agreements, such as NAFTA and the South Korean agreement. These were supposed to provide us with millions of jobs and actually ended up losing millions of jobs for the US and worsening balance of payment problems. The lack of trust in the experts' opinions about how a trade deal like the TPP would affect economic outcomes appears warranted. Many people, such as myself, see that it isn't so much about increasing trade and churning jobs, as to rewriting the rules of international trade to increase market concentration for several favored companies and industries (ie. pharmaceuticals), reduce environmental and labor constraints (ISDS dictates), and advantage the US in its geopolitical contest with China. It does not address currency manipulation, slavery in participating countries or a host of other problems. That is might and I stress might, add to the overall GDP seems like a poor trade off to the average American.
10
So much wrong here.
The Peterson Institute is not generally considered to be rightwing. As for the benefits of NAFTA, the Brookings Institute said at the time and continues to say that it was a good idea. Most economists who denounce NAFTA and now TPP are employed by labor unions, who in turn are wrong because they look only at workers' incomes and not the benefits from trade.
Certainly the distributional benefits of TPP, for example, are complex and difficult to estimate, and that's why it requires the skills of an economist to do it.
"Currency manipulation" in most cases amounts to the effects of monetary policy, the only quick tool available to fight downturns.
The Peterson Institute is not generally considered to be rightwing. As for the benefits of NAFTA, the Brookings Institute said at the time and continues to say that it was a good idea. Most economists who denounce NAFTA and now TPP are employed by labor unions, who in turn are wrong because they look only at workers' incomes and not the benefits from trade.
Certainly the distributional benefits of TPP, for example, are complex and difficult to estimate, and that's why it requires the skills of an economist to do it.
"Currency manipulation" in most cases amounts to the effects of monetary policy, the only quick tool available to fight downturns.
3
Hear, hear. Your rebuttal of the comment from CGH was exactly right. The sentiments expressed by CGH are ideological, not factual. The biggest giveaway: stereotyping -- the favourite tool of the ideologue.
2
It's really simple: economic growth and increases in efficiency are only positive things for the people who benefit from it.
We've had tremendous economic growth through improvement in efficiency over the past several decades. What did we get from this?
No improvement in the economic circumstances for nearly all Americans. Many Americans making less than they did in the 1970s when adjusted for inflation.
The almost unavoidable outcome that standards of living for most Americans will decline compared to their parents, rather than improve.
And too the efficiency minded technocrats: it is humiliating and depressing to force Americans to teach cheaper foreigners how to do their job using the threat of withholding severance pay to force compliance.
Increased economic growth and efficiency are not increased economic growth and efficiency to most people, because they get no benefits from that growth and efficiency. Economists may be confused by this since their models treat people as indistinguishable units rather than people.
But economists are confused about very many things.
We've had tremendous economic growth through improvement in efficiency over the past several decades. What did we get from this?
No improvement in the economic circumstances for nearly all Americans. Many Americans making less than they did in the 1970s when adjusted for inflation.
The almost unavoidable outcome that standards of living for most Americans will decline compared to their parents, rather than improve.
And too the efficiency minded technocrats: it is humiliating and depressing to force Americans to teach cheaper foreigners how to do their job using the threat of withholding severance pay to force compliance.
Increased economic growth and efficiency are not increased economic growth and efficiency to most people, because they get no benefits from that growth and efficiency. Economists may be confused by this since their models treat people as indistinguishable units rather than people.
But economists are confused about very many things.
10
This article misses what every market researcher must focus on: those most affected by globalization. Some workers do very well, like bankers & tech folks, while others muddle along as personal assistants or domestic help to such giant economic winners. Others fall out of sight in depres- sion, substance abuse & suicide as Nobel Prize winner Angus Deaton & his wife have recently detailed. It's both the support group & those in crises which Trump & the Brexit vote have detailed. Averages are totally mis- leading in such skewed well-being. The Industrial Revolution did the same in Western Europe.
7
unfortunately both efficiency and equality are falling. Robert Gordon's book the rise and fall of american growth demonstrates that efficiency (measured by labor productivity) has mostly fallen since 1970 and greater increases were achieved between 1870 and 1940 than after 1940. if you dont want to read his 800 page book, you can see my slides: http://www.slideshare.net/Funk98/has-technology-change-slowed
1
And they are both tied to falling or stagnating rates of profit (not to be confused with profits) or the deceleration of growth. Phenomena well studied in the 19th century
Thanks, Jeff, I will use your slides in my business courses in Germany & China, with credit to you naturally. I think Gordon doesn't get it. True, the very visible auto, telephone, airplane, etc are not being exactly duplicated, but with new materials & engines a new 777 will carry upwards of 500 people, close to what the 380 does now. This will reduce flying costs & allow more people to routinely travel the world, for both business & pleasure. With online data sources & personal contacts I can write a book or complete a consultation in a third of the time & 10% of 20 years ago. Many of the free-lancers who work for me do extremely well economically by combining the internet with a mix of clients. This is an enormous increase in efficiency--time & cost versus income--even if the incomes earned may not be large to one in a traditional firm. But due to no commutes, business attire, "proper addresses" & the like, these free- lancers can live where they & their families with on 40% of the income.
1
Brexit dynamics were also related to the role played by the City in London as world financial power vis-a-via with the roles played Germany and France in the continent. They face the contradiction of increasing trade and population while attempting to maintain hegemonic roles. So you can see who personifies those forces. Of course, people want to have their cakes and eat them too.
TPP may not be that different. A pact that may benefit financial elites and their associated power players at Yale and Washington fits the narrative of those who support it. Under the guise of national interest there are hidden (perhaps to some degree unconsciously) competing agendas while income inequality within nations continue to grow.
TPP may not be that different. A pact that may benefit financial elites and their associated power players at Yale and Washington fits the narrative of those who support it. Under the guise of national interest there are hidden (perhaps to some degree unconsciously) competing agendas while income inequality within nations continue to grow.
1
The arguments put forth rest on the idea that macro-economic models have a predictive power and so reflect the real world. There is no evidence of this.
First the underlying data conceals statistical and reporting errors and may not accurately reflect the underlying reality. Unlike physicists and chemists few economists have any interest in improving the data. Second, the record of predictions show essentially random noise just as the efforts to predict the behavior of stock market prices. Macro economic making is similar if not identical to discussions of theology. Just as theology is interesting and intellectually exciting so is economics, but this is not science. It is another form of religious ceremony featuring a range of views. At our present level of knowledge I submit that the economic impact of the choice of the British people cannot be known just as we are unable to predict the rate of economic growth. I suspect that an economist looking back in a hundred years would conclude that if the complexity of the real world was taken into account Brexit would not effect the path of the British economy.
First the underlying data conceals statistical and reporting errors and may not accurately reflect the underlying reality. Unlike physicists and chemists few economists have any interest in improving the data. Second, the record of predictions show essentially random noise just as the efforts to predict the behavior of stock market prices. Macro economic making is similar if not identical to discussions of theology. Just as theology is interesting and intellectually exciting so is economics, but this is not science. It is another form of religious ceremony featuring a range of views. At our present level of knowledge I submit that the economic impact of the choice of the British people cannot be known just as we are unable to predict the rate of economic growth. I suspect that an economist looking back in a hundred years would conclude that if the complexity of the real world was taken into account Brexit would not effect the path of the British economy.
4
Interesting that the author doesn't mention the concept that high levels of income inequality depress economic growth which to me means they create economic inefficiency. Perhaps this is a more abstract concept of inefficiency but shouldn't it be part of the discussion.
There's also the approach of maximizing efficiency on the one hand while mitigating the downsides on the other. So if soaring rents are the problem rather than holding rents down we could subsidize them for renters who need help. We could raise the revenue thru a tax on landlords. I'm not an economist and am unsure how this would work out, would there be as much new construction as there would be if we just left the soaring rents alone?
In which case we might be better off just subsidizing renters out of general taxation.
With job losses from trade we would have to spend tax money in such a way as to create new job opportunities. Now, of course, we have a party which is always opposed to taxes, thus ruling our these kinds of approaches as long as they have any power. Will the Republicans ever give up their anti-tax fervor or will they just add an anti-trade fervor?
There's also the approach of maximizing efficiency on the one hand while mitigating the downsides on the other. So if soaring rents are the problem rather than holding rents down we could subsidize them for renters who need help. We could raise the revenue thru a tax on landlords. I'm not an economist and am unsure how this would work out, would there be as much new construction as there would be if we just left the soaring rents alone?
In which case we might be better off just subsidizing renters out of general taxation.
With job losses from trade we would have to spend tax money in such a way as to create new job opportunities. Now, of course, we have a party which is always opposed to taxes, thus ruling our these kinds of approaches as long as they have any power. Will the Republicans ever give up their anti-tax fervor or will they just add an anti-trade fervor?
7
A key point neglected by Mr. Irwin is that efficiency does not exist in the abstract. That is, there is no natural free market into which the government intervenes in disruptive ways. Rather the market is constructed by the govermnent. Efficiency thus loses its standing as an objective criterion and becomes a justification for a particular distribution of income. It's not just winners and losers from government interventions that is at issue here as Mr. Irwin claims, but the way in which the market is structured before any "intervention" occurs. That is what is driving people disaffected with our economy and those in other places. Unless the basic rules are rewritten (e.g., the ability to unionize, the ability of companies to force people into arbitration, the ability of firms to renege on pension resposibilities) the we will see more candidates like Trump and Sander's and more actions like Brexit. The characterization of efficiency as an objective criterion is among the most deceptive practices followed by economists, and there are many.
17
Still most puzzling is the rank and file middle-class Americans who seem to agree with Republican elites that they are better off if their jobs are outsourced and they end up in menial labor jobs. Very efficient use of resources indeed.
I know former North Carolina furniture plant employees who had good jobs, bought houses and cars and who now work at Walmart and no longer buy houses and cars. Yet they gripe and complain about Obamacare and how the Federal Government is the cause of all their problems.
The efficient use of resources was the death knell of the American middle-class.
I know former North Carolina furniture plant employees who had good jobs, bought houses and cars and who now work at Walmart and no longer buy houses and cars. Yet they gripe and complain about Obamacare and how the Federal Government is the cause of all their problems.
The efficient use of resources was the death knell of the American middle-class.
7
What elites mean by efficiency is more profit (for them) with less investment, and little peoples jobs are not going to stand in the way of that. Unfortunately for all of us, they are playing with fire.
13
One day, the robots will take over and the first people they'll eliminate are the one's whose existence is the least defensible: those who perform no productive function except to slosh money around from one server to the next. If they need to find them, they can just consult the real estate columns in the Times.
8
"What kind of monster doesn’t want to optimize possibilities, minimize waste and make the most of finite resources?"
"Monster" is the wrong word, in my opinion. It suggests complete moral depravity, the qualities of a psychopath.
I suggest a word such as good-for-nothing, wastrel, dreamer, fritterer, scatterbrain, ignoramus.
None of these words do justice to someone so benighted that efficiency means nothing to them, but they're all more accurate than "monster."
"Monster" is the wrong word, in my opinion. It suggests complete moral depravity, the qualities of a psychopath.
I suggest a word such as good-for-nothing, wastrel, dreamer, fritterer, scatterbrain, ignoramus.
None of these words do justice to someone so benighted that efficiency means nothing to them, but they're all more accurate than "monster."
3
The irony, of course, is that Ms. Howell works for BMW. Much of the value of those cars, including engineering, is produced in Germany and elsewhere even if they final assembly takes place in South Carolina. Without globalization, Ms. Howell would not have a job.
Regardless, its just not obvious to me that distributing the pie a little more equally necessarily reduces the size of the pie. What economic law requires that? Even if it does, governments can then equalize things somewhat by taxing the winners and using the money to provide services to such as subsidized health care, free college education, etc to everyone else..
Regardless, its just not obvious to me that distributing the pie a little more equally necessarily reduces the size of the pie. What economic law requires that? Even if it does, governments can then equalize things somewhat by taxing the winners and using the money to provide services to such as subsidized health care, free college education, etc to everyone else..
9
Neil,
This is one of he most honest posts on Brexit that I have read. In my view, our form of capitalism requires government regulation and intervention on behalf of broader economic interests.
We have been neglectful in the area of public goods like education, healthcare, infrastructure, etc. The neglect appears to be the result of Donor Class influence. This has been going on for a very long time. I first noticed the mal-distribution of income and wealth in the late 1970s. I read the study & book of Dr. Mancur Olson in 1982, The Rise and Decline of Nations, which made a convincing case that in our system those who are affluent use their influence on government to gain a larger slice of the pie & in so doing cause the pie to shrink.
We need to focus more on public goods that are broadly shared & to fairly tax so that we avoid the concentration of income and wealth.
I would like for the US to pick up the idea of the late Pat Moynihan to build a 300 mph Interstate Maglev Network for passenger and freight. He proposed this in 1987 but his bill for Maglev R&D passed the Senate but was defeated in the House by the existing transport industry led by the airlines. It was a great idea and the network would have saved every American about $1000 per year per capita for in reduced costs of goods delivered and travel costs.
Energy efficiency is the goal and this kind of efficiency has created a high standard of living and life expectancy for nearly 200 years.
This is one of he most honest posts on Brexit that I have read. In my view, our form of capitalism requires government regulation and intervention on behalf of broader economic interests.
We have been neglectful in the area of public goods like education, healthcare, infrastructure, etc. The neglect appears to be the result of Donor Class influence. This has been going on for a very long time. I first noticed the mal-distribution of income and wealth in the late 1970s. I read the study & book of Dr. Mancur Olson in 1982, The Rise and Decline of Nations, which made a convincing case that in our system those who are affluent use their influence on government to gain a larger slice of the pie & in so doing cause the pie to shrink.
We need to focus more on public goods that are broadly shared & to fairly tax so that we avoid the concentration of income and wealth.
I would like for the US to pick up the idea of the late Pat Moynihan to build a 300 mph Interstate Maglev Network for passenger and freight. He proposed this in 1987 but his bill for Maglev R&D passed the Senate but was defeated in the House by the existing transport industry led by the airlines. It was a great idea and the network would have saved every American about $1000 per year per capita for in reduced costs of goods delivered and travel costs.
Energy efficiency is the goal and this kind of efficiency has created a high standard of living and life expectancy for nearly 200 years.
18
What should the elites learn ?
Stop telling the working class that it votes against its economics when it refuses to vote for a party that is pro immigration, pro trade agreements, and disadvantaging their children in University admission
The working class is voting for its economic interests. Immigrants , willing to work for less are taking their jobs, trade agreements facilitate outsourcing, and race conscientious admission to Universities hurt the chance of their children.
Stop preaching !! The working class knows what it does.
It does not want welfare, medicaid, or food stamps , it wants jobs
Stop telling the working class that it votes against its economics when it refuses to vote for a party that is pro immigration, pro trade agreements, and disadvantaging their children in University admission
The working class is voting for its economic interests. Immigrants , willing to work for less are taking their jobs, trade agreements facilitate outsourcing, and race conscientious admission to Universities hurt the chance of their children.
Stop preaching !! The working class knows what it does.
It does not want welfare, medicaid, or food stamps , it wants jobs
8
So in your mind the "working" class is all white! You're also living in the past in terms of how much "affirmative action" we currently have. Not to mention that the Republicans, before Trump, were more fully in favor of trade agreements than the Democrats. We'll see what happens after Trump.
That leaves immigration, an issue the Republicans have been split on for some time now. Democrats are definitely against demonizing "illegal aliens." We understand that for many years we've had a system of winking & nodding at folks who slip across the border to work since many businessmen have been very happy with such a supply of compliant workers.
And what about labor unions? Have you bought into the propaganda about corrupt union bosses? Your party has been working overtime to destroy labor unions. Why are you okay with that?
Seems to me that you have let yourself be played by the party that represents the 1%, in large part because of racial feelings. Not saying you're a hopeless bigot, just suggesting you might want think some things thru: why do you think that black people don't work? Why don't you agree that unions were a huge factor in raising wages? Why do you believe that there's a lot of affirmative action currently?
That leaves immigration, an issue the Republicans have been split on for some time now. Democrats are definitely against demonizing "illegal aliens." We understand that for many years we've had a system of winking & nodding at folks who slip across the border to work since many businessmen have been very happy with such a supply of compliant workers.
And what about labor unions? Have you bought into the propaganda about corrupt union bosses? Your party has been working overtime to destroy labor unions. Why are you okay with that?
Seems to me that you have let yourself be played by the party that represents the 1%, in large part because of racial feelings. Not saying you're a hopeless bigot, just suggesting you might want think some things thru: why do you think that black people don't work? Why don't you agree that unions were a huge factor in raising wages? Why do you believe that there's a lot of affirmative action currently?
3
Re: What lesson should a card-carrying member of the economic elite take from the success of Donald J. Trump, and British voters’ decision to leave the European Union?
Answer: They should learn, first of all, not to write snotty articles such as
" I guess I should have expected that this comment would generate letters along the lines of, "Well, if you lose your comfortable position as an American professor you can always find another job--as long as you are 12 years old and willing to work for 40 cents an hour." Such moral outrage is common among the opponents of globalization"
Mr. Krugman never answered the question.
http://www.slate.com/articles/business/the_dismal_science/1997/03/in_pra...
Answer: They should learn, first of all, not to write snotty articles such as
" I guess I should have expected that this comment would generate letters along the lines of, "Well, if you lose your comfortable position as an American professor you can always find another job--as long as you are 12 years old and willing to work for 40 cents an hour." Such moral outrage is common among the opponents of globalization"
Mr. Krugman never answered the question.
http://www.slate.com/articles/business/the_dismal_science/1997/03/in_pra...
7
I see his answer in the self-same article: "The lofty moral tone of the opponents of globalization is possible only because they have chosen not to think their position through." The current buyers remorse in Britain is ample proof his answer is correct. Also noted is that that article is from 1997. So another answer is: And people never learn.
1
Buyers' remorse?
It's been a week.
Most new parents have buyers' remorse after the first week.
Give it time. It's going to be a great thing for the UK.
It's been a week.
Most new parents have buyers' remorse after the first week.
Give it time. It's going to be a great thing for the UK.
2
Economists seem to always be calling for "free trade agreements", as a cure-all - even when, as in the TPP, they are not really about free trade, since they include so many protectionist policy provisions.
Talk, talk, talk. Endlessly advocating policies which coincidentally benefit donors to think tanks, powerful pols, banks, and the wealthy generally.
European economists are always talking about vague needs for "structural reform". This term is usually a euphemism for cutting wages, cutting government spending, and making life even tougher for workers, but is most often kept intentionally vague, to prevent any real conversation that might lead to policies to enhance broad prosperity - prosperity which correlates with high demand policies in advanced and healthy economies.
We had *much* higher minimum wages as a percent of average earnings during the New Deal era - an era which had high productivity growth, and broadly shared prosperity. Why are most prominent economists so afraid to advocate for higher minimum wages and infrastructure spending? Why are they so *ferociously* opposed? If these were such bad policy, wouldn't that become obvious? On second thought, probably not - or they would have long ago abandoned "free trade agreements", Austerity, and mysterious "structural reforms" as good policy.
You would almost think they like things exactly as they are.
Talk, talk, talk. Endlessly advocating policies which coincidentally benefit donors to think tanks, powerful pols, banks, and the wealthy generally.
European economists are always talking about vague needs for "structural reform". This term is usually a euphemism for cutting wages, cutting government spending, and making life even tougher for workers, but is most often kept intentionally vague, to prevent any real conversation that might lead to policies to enhance broad prosperity - prosperity which correlates with high demand policies in advanced and healthy economies.
We had *much* higher minimum wages as a percent of average earnings during the New Deal era - an era which had high productivity growth, and broadly shared prosperity. Why are most prominent economists so afraid to advocate for higher minimum wages and infrastructure spending? Why are they so *ferociously* opposed? If these were such bad policy, wouldn't that become obvious? On second thought, probably not - or they would have long ago abandoned "free trade agreements", Austerity, and mysterious "structural reforms" as good policy.
You would almost think they like things exactly as they are.
7
I don't think you're correct about many economists. There's a fellow who writes for this very newspaper who's strongly against austerity, strongly for borrowing money to spend on infrastructure. There are, of course, a bunch of right-wing economists who, like all current right-wingers, see themselves as part of a movement and are willing to churn out bogus research to support their movement.
It's all good to say who the winners and losers are, and how the burden can be shared. However, let's consider what happens when the anti-globalists get their way. Remember when there were both official and unofficial tariffs on Japanese cars in the eighties? It didn't make American cars any better- it just made the price go up for all Americans. At the least, we should note the cost of each job saved if we "rip up the trade agreements." We should also consider life in that anti-globalist worker's paradise: North Korea.
4
I'm willing to bet that you expect to be one of the winners!
I just checked on your listed location: "The cost of living in Vallejo, California (CA) is lower than the average cost of living in the state of California but higher than the nationwide city average."
So, there you have it! YOU are living proof that Irwin is right on the money!
I just checked on your listed location: "The cost of living in Vallejo, California (CA) is lower than the average cost of living in the state of California but higher than the nationwide city average."
So, there you have it! YOU are living proof that Irwin is right on the money!
Wow, let's just divide up into teams based on whether the town we live in is above or below the average & attack each other. That'll surely make things better!
Vallejo is way below average for the San Francisco Bay area. The city went bankrupt a couple of years ago. It's actually fairly hard scrabble. If you look up my town you'll find an average that'll probably look pretty good but we have a lot of folks who are doing very badly. All this is just so much nonsense.
You live overseas, you're obviously part of the cosmopolitan elite & thus must actually be trolling with your supposed fighting for the common man schtick. See how easy that was?
His example of Japanese cars was right on the money. Before the arrival of serious Japanese competition the US auto industry was way fat & lazy. They needed to be shook up. They did manage to respond, those "tariffs" might have been needed to give them some breathing room so I don't fully agree with Mr. Vallejo but you seem to think we should have kept the Japanese out altogether which would have ensured that American card got even crappier.
Vallejo is way below average for the San Francisco Bay area. The city went bankrupt a couple of years ago. It's actually fairly hard scrabble. If you look up my town you'll find an average that'll probably look pretty good but we have a lot of folks who are doing very badly. All this is just so much nonsense.
You live overseas, you're obviously part of the cosmopolitan elite & thus must actually be trolling with your supposed fighting for the common man schtick. See how easy that was?
His example of Japanese cars was right on the money. Before the arrival of serious Japanese competition the US auto industry was way fat & lazy. They needed to be shook up. They did manage to respond, those "tariffs" might have been needed to give them some breathing room so I don't fully agree with Mr. Vallejo but you seem to think we should have kept the Japanese out altogether which would have ensured that American card got even crappier.
3
Mr. Irwin lets stand the implication that competition is all cross-border, which is not true. He also lets stand the idea that people are just hours of labor, while in principle firms don't actually have to be organized that way.
1
Exactly... well said.
2
So are you a communist or just a socialist? Well, seriously, what sort of organization are you calling for? Don't get this concept that people are just hours of labor; management doesn't care how many hours work just what your output is. How could they not? In a small firm you might actually know the owners but in a big firm it's about what you produce.
We might not need rent control if there was such a thing as greed control. Oh wait, shouldn't they be the same thing?
6
Just a tiny example of the lack of all things being fairly equal... My rent went up 10%, yet the inflation rate has been .3%. No increase in Social Security to prove that point said the government. Except I guess no one else was listening to that fact.
6
One of the problems with rent control is that it simply transfers the opportunity for greed from the property owner to the renter.
While only a small fraction of renters exploit that opportunity, they are every bit as greedy!
Rent control and greed control are most definitely NOT the same thing.
While only a small fraction of renters exploit that opportunity, they are every bit as greedy!
Rent control and greed control are most definitely NOT the same thing.
4
So it's OK to keep rent low, while real estate taxes , utilities and maintenance all increase? I guess there is no greed on the tenants part? Living in an apartment that would rent for $3,000 per month but only paying $800 I guess isn't greedy?!!!
3
Congratulations on opening your eyes to the real world the rest of us live in.
6
Dynamism and efficiency would sound a lot better to the actual or potential losers if they knew they would be taken care of, that the substantial benefits accruing to the winners would be shared.
8
Yes... The unknown is the tough part as a human being. Its application psychologically/emotionally. It cannot be overstated.
Finally - a thoughtful commentary on the vast gulf between "the economy" and the citizens of a(ny) nation. Unfortunately for the past 40 years, international and domestic macroeconomic policies have been derived from a view of "the economy" stemming from the shift in the economics paradigm, from Keynesian to the Chicago school of economic theory.
The latter favours (private sector) winners, with its emphasis on "the markets" and down-grading of the role of government. Unfortunately, people lose out when markets move against them - like jobs moving off-shore, closing down in depressed local economies, or just evaporating.
Americans call the opposite "socialism" - an unfortunate label for looking after those who can't afford health care when unemployed, or to move to where the new jobs are, or even afford the US costs of higher education in an effort to re-train for whatever jobs may be created in the new economy.
One of the results is the "1%" - the very wealthy who have benefited from jobs in the knowledge economy, on Wall Street, from inheritance, or selling imported goods cheaply. That is one of the by-products of "the efficient economy" so beloved by theorists and policy advisors - the consumer benefits from lowered prices. BUT - only if people have sufficient income to buy those goods.
Real results from the past 40 years removed the economic props from so many peoples' lives: long-term jobs; a healthy life; hope for the future and their children. An alternative ?
The latter favours (private sector) winners, with its emphasis on "the markets" and down-grading of the role of government. Unfortunately, people lose out when markets move against them - like jobs moving off-shore, closing down in depressed local economies, or just evaporating.
Americans call the opposite "socialism" - an unfortunate label for looking after those who can't afford health care when unemployed, or to move to where the new jobs are, or even afford the US costs of higher education in an effort to re-train for whatever jobs may be created in the new economy.
One of the results is the "1%" - the very wealthy who have benefited from jobs in the knowledge economy, on Wall Street, from inheritance, or selling imported goods cheaply. That is one of the by-products of "the efficient economy" so beloved by theorists and policy advisors - the consumer benefits from lowered prices. BUT - only if people have sufficient income to buy those goods.
Real results from the past 40 years removed the economic props from so many peoples' lives: long-term jobs; a healthy life; hope for the future and their children. An alternative ?
18
Great answer. And most times here in America, when people hear the word "socialism" they respond with the word "communism." They don't care, don't bother to understand that they are not the same so it has become the bad guy whenever it is mentioned.
3
What Peter Graves wrote isn't an 'answer' it's supporting evidence.
The conflation of 'socialism' and 'communism' with all things bad is the direct result of many decades of deliberate propaganda within the American establishment. It is and always has been a huge lie and the GOP elites are primarily responsible for it.
It was that same conflation that brought us the Vietnam war.
The conflation of 'socialism' and 'communism' with all things bad is the direct result of many decades of deliberate propaganda within the American establishment. It is and always has been a huge lie and the GOP elites are primarily responsible for it.
It was that same conflation that brought us the Vietnam war.
6
A good point, Jam Kay.
An interesting dimension of the animus widely prevalent in this country against the words socialism and communism is that it never seems to target certain local municipal services. In the town of Mansfield, Mass., electric power is a very efficiently-run and much appreciated municipal enterprise, far better in reputation than the giant private corporations N-Star and National Grid. I imagine that there are also other similar cases in the country . Yet the specter of communism or socialism is viscerally conjured up whenever anything of that nature is proposed for the public good at the state or federal levels.
John Dewey would have said, Choose what works, at any level, and discard what doesn't.
An interesting dimension of the animus widely prevalent in this country against the words socialism and communism is that it never seems to target certain local municipal services. In the town of Mansfield, Mass., electric power is a very efficiently-run and much appreciated municipal enterprise, far better in reputation than the giant private corporations N-Star and National Grid. I imagine that there are also other similar cases in the country . Yet the specter of communism or socialism is viscerally conjured up whenever anything of that nature is proposed for the public good at the state or federal levels.
John Dewey would have said, Choose what works, at any level, and discard what doesn't.
5
I am one of these elitist economists, I suppose, halfway through a PhD in economics. I think it's important to look at protectionist arguments through a political economics lens. Consider a basic trade deal where the US opens free trade to a less-developed country. In general, what happens is that consumers face over all lower prices, i.e. "made-in-china" goods, and cheap clothes. At the same time an industry or two in the United States completely collapses. A group of workers is hurt disproportionately. Communities built around these industries fail, including their local economy. Together they have a voice and a bone to pick, while the masses who are benefited don't notice. And, of course, a number of the elite benefit a large amount.
I am an economist who believes in redistribution policies as well. Why can't we add better aid for the communities who lose with every trade deal? We can increase the size of the pie and then work towards making it more egalitarian. I still believe that trade is good, overall, and redistributive policies are good, overall. I don't understand why the two are discussed as mutually exclusive.
I am an economist who believes in redistribution policies as well. Why can't we add better aid for the communities who lose with every trade deal? We can increase the size of the pie and then work towards making it more egalitarian. I still believe that trade is good, overall, and redistributive policies are good, overall. I don't understand why the two are discussed as mutually exclusive.
24
If only the two were even being discussed in mutually exclusive terms. They are NOT. Redistribution really isn't being discussed at all.
Like the cold-war period ban on any rational discussion of the claims of Communism; there is a massive fear among the elites against these ideas which are clearly very attractive to many people.
Redistribution is absolutely unacceptable to the very rich. They spend a vast amount of money on lobbying and on elections, to prevent it.
Like the cold-war period ban on any rational discussion of the claims of Communism; there is a massive fear among the elites against these ideas which are clearly very attractive to many people.
Redistribution is absolutely unacceptable to the very rich. They spend a vast amount of money on lobbying and on elections, to prevent it.
18
In the 90's. during a discussion on NPR about NAFTA, an economist said that there would be winners and losers, and the answer was to take some of the gains from the winners and distribute them to the losers. This never happened. It seems to be heresy to the elite, backed by the "conservative" economic and political establishment in the United States, funded by the wealthy "winners" in the system. This faction, principally fronted by the Republican Party, has controlled most economic and political thought and commentary for the past thirty years. An example of this thinking is the Republicans controlling Congress think the way to cut the deficit is by cutting food stamps for the poorest among us, rather that taxing funds in offshore accounts, as represented by Mitt Romney, or changing such fictions as the "carried interest loophole" to shield money from taxation.
25
Globalization is globalization is part of the problem. The game is rigged. The law is rigged. The enforcement of the law is rigged.
7
Re: "[projected output increase due to TPP will be] 0.5 percent of G.D.P. [by 2030].
That is peanuts, compared to projected growth in productivity.
According to Dean Baker:
"This means that if the study projections are correct we will as wealthy on January 1 2030 with the TPP as we would be in mid-March of 2030 without the TPP."
http://cepr.net/blogs/beat-the-press/
So, we should really focus on productivity growth. A strong argument can be made that productivity growth is slowing due to labor being too cheap - resulting in workers taking low-productivity jobs, such as convenience store night clerks, etc. Many in fact argue that a higher minimum wage will result in automation, as a reason not to raise the wage. This is really arguing that low wages are holding back productivity growth.
And the assumption that ever greater inequality results in ever greater output is false. Supply and demand are both required for output. Depending upon conditions, either one can be the constraint on output. After the sudden loss in demand due to the popping of the housing bubble, output and employment plummeted. Did workers suddenly become uneducated? Absurd. Did supply capacity suddenly disappear? No. A lack of demand was the problem.
If economists were truly concerned about increasing the size of the pie, they would be jumping up and down screaming for higher wages and infrastructure spending, to increase demand.
That is peanuts, compared to projected growth in productivity.
According to Dean Baker:
"This means that if the study projections are correct we will as wealthy on January 1 2030 with the TPP as we would be in mid-March of 2030 without the TPP."
http://cepr.net/blogs/beat-the-press/
So, we should really focus on productivity growth. A strong argument can be made that productivity growth is slowing due to labor being too cheap - resulting in workers taking low-productivity jobs, such as convenience store night clerks, etc. Many in fact argue that a higher minimum wage will result in automation, as a reason not to raise the wage. This is really arguing that low wages are holding back productivity growth.
And the assumption that ever greater inequality results in ever greater output is false. Supply and demand are both required for output. Depending upon conditions, either one can be the constraint on output. After the sudden loss in demand due to the popping of the housing bubble, output and employment plummeted. Did workers suddenly become uneducated? Absurd. Did supply capacity suddenly disappear? No. A lack of demand was the problem.
If economists were truly concerned about increasing the size of the pie, they would be jumping up and down screaming for higher wages and infrastructure spending, to increase demand.
11
A nation comprised of frightened citizens who can't count on their job being around next year is a nation that will ultimately crash. The equation of capitalism requires a large pool of customers with disposable cash to buy what is produced by the economy. We're doing an excellent job of destroying that side of the equation.
In the end, no amount of clever gaming of the system will work when half of the nation is starving and the other half are hiding behind walls to avoid being robbed by the masses of unemployed.
If the elite want to continue to be elite, they had better consider the quality of life of their workers. Without them, they can produce nothing by themselves.
In the end, no amount of clever gaming of the system will work when half of the nation is starving and the other half are hiding behind walls to avoid being robbed by the masses of unemployed.
If the elite want to continue to be elite, they had better consider the quality of life of their workers. Without them, they can produce nothing by themselves.
108
They have been avoiding this problem by producing and selling overseas. The time for a reckoning has come.
There is an even deeper level to consider. Rather than counting winners and losers, consider how rarely our national policies even reach the goals that they set out to achieve. A recent study suggests that since 9/11 about 80% of our policies have resulted in failure. And those are policies by the smartest people in the oval office! Worse, many policies end up creating the opposite of their desired effect. Another recent study shows that our policies are based on faulty logic. So, are destined to fail: http://meaningfulevidence.com/wp-content/uploads/IPA-of-POTUS-candidates...
4
Clicked on the link, bit of a heavy lift! I was looking for the 80% you cited but now I see that was in another article you didn't name.
You say that the largely failed policies were created by "the smartest people in the oval office." Well since 9/11 there've only been two people "in the oval office" and one of them was as dumb as a doorknob.
You say that the largely failed policies were created by "the smartest people in the oval office." Well since 9/11 there've only been two people "in the oval office" and one of them was as dumb as a doorknob.
1
What this article fails to explore is that although an increase in GDP and overall increases in economic growth is not being shared equitably throughout the population and workforce. Yes, the elites and economists look at the overall gains and think this is just great. However, ask most ordinary people whose wages have been stagnant for years, people who can no longer afford to pay rent in the city they have lived in for years, people who are aging and cannot find employment in the "new economy", and they aren't going to be so supportive of the status quo. We have always been told that growth for growth's sake is a wonderful thing, however this may only be true in a macro economic sense. Putting the brakes on globalization is not going to happen, however policy makers need to seriously start considering how trade deals and globalized shifts in jobs are affecting the population - otherwise the populist revolution will only become more strident. I'm not economic genius (although I do have an M.S. in economics), but I think anyone should be able to look around and realize that the trade offs have not be equitable.
15
Mr. Irwin is struggling, but still doesn't get it. His understanding is still clouded by a refusal to reexamine basic tenets in light of actual experience--clothed in the same condescension he thinks he is countering.
He says:
"Of course the only way a society can become richer over time is to increase national income. And if rigorous analysis shows that Policy X is the way to do it, the fact that Policy X is going to disadvantage a few thousand people often isn’t a reason to abandon the idea."
But "of course" national income has increased greatly in the United States over the past forty years. And, incredibly, the means by which it has been increased has disadvantaged not "a few thousand people," but some tens of millions. And, perhaps more important for the way people think, this great increase in "national" wealth has failed to create much advantage for most of the remainder of the population Until these facts--and they really are facts--are accepted, no analysis is worth much.
He says:
"Of course the only way a society can become richer over time is to increase national income. And if rigorous analysis shows that Policy X is the way to do it, the fact that Policy X is going to disadvantage a few thousand people often isn’t a reason to abandon the idea."
But "of course" national income has increased greatly in the United States over the past forty years. And, incredibly, the means by which it has been increased has disadvantaged not "a few thousand people," but some tens of millions. And, perhaps more important for the way people think, this great increase in "national" wealth has failed to create much advantage for most of the remainder of the population Until these facts--and they really are facts--are accepted, no analysis is worth much.
99
How can it be called "national income" when the majority of us never see any of it?
1
Well, are they really facts? Forty years ago was the seventies. How can you be so sure we're not mostly better off than then, economically speaking. (Me, I'm forty years older and it's a mixed bag, aging.)
We have things we didn't have forty years ago. Diseases that were inevitably fatal now can be treated. Not trying to be a polyanna here, just looking to see if we're economically worse off. Really not clear to me.
I think a large part of it is that we often measure our economic success by looking at other people. When we see folks with more than us we get upset. Measured that way we, as whole, can't possibly get ahead (except in Lake Woebegone, of course).
I, obviously, don't know the facts about your personal circumstances. I'm inviting you to take a rigorous look at whether or not you're really worse off in terms of material well being.
I'm also not saying that inequality isn't bad in & of itself. I think it is, actually, and would support intelligent policies to reduce it.
We have things we didn't have forty years ago. Diseases that were inevitably fatal now can be treated. Not trying to be a polyanna here, just looking to see if we're economically worse off. Really not clear to me.
I think a large part of it is that we often measure our economic success by looking at other people. When we see folks with more than us we get upset. Measured that way we, as whole, can't possibly get ahead (except in Lake Woebegone, of course).
I, obviously, don't know the facts about your personal circumstances. I'm inviting you to take a rigorous look at whether or not you're really worse off in terms of material well being.
I'm also not saying that inequality isn't bad in & of itself. I think it is, actually, and would support intelligent policies to reduce it.
2
The attitude displayed in this article infuriates me. If we can't get a more equitable distribution of the benefits from these trade deals and the gigantic piles of money going into the pockets of the elites living up in the stratosphere, we will witness a second civil war in this country. And I do mean that literally.
29
This is an interesting article from a local perspective to a world perspective. Here in the US we worry about US jobs. If trade agreements send manufacturing jobs across the ocean to people who are starving, we still want those jobs back.
A person might say humanity is local.
If a person could donate a dollar to save a life in Siria I suspect most of us would pocket the dollar. It is too far away in distance and experience. If we could give the family next door a dollar to save their daughter we would do it in a heart-beat.
So although globalization helps people across the earth have a better life, few of us, including me, want to see jobs go overseas. It is human nature.
A person might say humanity is local.
If a person could donate a dollar to save a life in Siria I suspect most of us would pocket the dollar. It is too far away in distance and experience. If we could give the family next door a dollar to save their daughter we would do it in a heart-beat.
So although globalization helps people across the earth have a better life, few of us, including me, want to see jobs go overseas. It is human nature.
1
If you want to see efficient look how efficiently the elites have taken the vast majority of the country and the world's wealth to themselves and in the case of the US saddled the country with a $20 Trillion federal debt and over $1 Trillion in student debt.
They correctly calculated that if they rigged the system to give them the most money with the least tax burden, and make everyone else pay the vast majority of their income to survive, then they would win and winning is all that matters. That's why DC has 3 airports serving it. All the planes flying in to lobby the government because that's where the money is.
They correctly calculated that if they rigged the system to give them the most money with the least tax burden, and make everyone else pay the vast majority of their income to survive, then they would win and winning is all that matters. That's why DC has 3 airports serving it. All the planes flying in to lobby the government because that's where the money is.
20
It's not GDP or unemployment but well-being which is the correct metric. Higher GDP with higher churn is not necessarily higher well-being, because churn lowers it. Lower unemployment if the jobs are unstable Uber jobs is not better. Economists are using the metrics which they can measure the most easily - but they're the wrong metrics.
12
Ya' think? In all recent politics it has been clear to many of us that those whose incomes make them somewhat comfortable (as in able to take a vacation, buy a new car when needed, send a kid to college and afford a home) just do not give a thought to the lives of those who do not reach that level, let alone to the 46 million of us who are poor. And those in the top 10% mostly just think about how they can get more money for themselves.
So those of us who do struggle with high costs of living and low wages, or with no jobs? We are hurting so much. But most, maybe 98% of all politicians just ignore the bottom economic half of American. Truly act as if we do not exist, let alone deserve any help or any thought. I am a Sanders supporter because he is the only candidate during my lifetime who gets it! Wake up America before we get a horrible president like the (virtually certain) Republican nominee
We need better trade agreements that work for the people. We need more and better low cost housing and subsidies and higher wages and more social security benefits (as a retiree living on 800/mo. this is important to me). Young people need free state college tuition and jobs! We need to spend money on many infrastructure projects that will benefit us all and create many jobs too.
So those of us who do struggle with high costs of living and low wages, or with no jobs? We are hurting so much. But most, maybe 98% of all politicians just ignore the bottom economic half of American. Truly act as if we do not exist, let alone deserve any help or any thought. I am a Sanders supporter because he is the only candidate during my lifetime who gets it! Wake up America before we get a horrible president like the (virtually certain) Republican nominee
We need better trade agreements that work for the people. We need more and better low cost housing and subsidies and higher wages and more social security benefits (as a retiree living on 800/mo. this is important to me). Young people need free state college tuition and jobs! We need to spend money on many infrastructure projects that will benefit us all and create many jobs too.
68
There is a nuance here: the distribution of the productivity gains will have to be distributed more and more to people that do not participate in the production machine because there will simply not be enough jobs to go around.
I so wish politicians would discuss these issues instead of the populist or demagogic (choose your party) promise to "bring back" jobs.
This article is a great step to understanding that constant economic growth is not necessarily the best goal for society. And it is not even sustainable.
I so wish politicians would discuss these issues instead of the populist or demagogic (choose your party) promise to "bring back" jobs.
This article is a great step to understanding that constant economic growth is not necessarily the best goal for society. And it is not even sustainable.
2
What constant economic growth? I guess 2% is better than nothing. Of course that is what you get when the small minority who actually have the money are hoarding it instead of using it in ways to actually grow the economy. Why the hoarding? Maybe because they want to make sure it absolutely does not benefit anyone but themselves.
2
Aside from the truly charitable billionaires such as Buffet and Gates, I have always wondered when you reach those kind of stratospheric numbers, what "good feelings" do those numbers give you? Seriously. At the point where you really do have more money than you can spend, what is going on for people like Trump and countless others? When unwealthy people suddenly win the lottery it often destroys them. So, the people who rule the world so to speak, really do. Greed?? Then they are in the position to make the rules for everyone else. Simplistic, I know.
3
Free trade has really helped the Chinese who now export lots of cheap stuff to the USA. But China, loaded with cash generated from exports, props up North Korea, threatens Taiwan, suppresses freedom of speech, jails dissidents, and generally behaves as a bully in the region. Seems bad to me, but goods are produced more efficiently in China so this is better to the economic elite like the Waltons. Really, if we are going to engage in free-trade practices maybe we should limit it to our democratic allies. At least the economic pain of employment disruption at home will produce more employment and stronger economies in countries that share our values.
4
You should keep in mind that no civilization in history has ever moved more of their people from poverty to relative comfort than China in the last 50 years. You may not approve of what they do, but you are an American and not a Chinese. Perhaps we should get our leaders to make our lives better instead of working on the PTT which will protect intellectual property and generate increased income to pharmaceuticals and entertainment corporations then their lawyers, lobbyists and PR agencies.
4
You mean all that intellectual property of ours that China has already stolen, and continues to do?
4
The U.S. dollar is up and the stock market is up.
Globalization is bad for 99% of the people in America plain and simple. Show me even one example of somebody outside the top %1 who benefits from it.
Just one. People were sold a bill of goods that has nothing to do with their own well being. If you live in India or Vietnam/China its a swell deal. You now have jobs that Americans used to have. The GDP has moved from North America to Asia. I for one am not interested in improving the lives of people living half way across the world. I am more concerned with my Friends and Family.
Just one. People were sold a bill of goods that has nothing to do with their own well being. If you live in India or Vietnam/China its a swell deal. You now have jobs that Americans used to have. The GDP has moved from North America to Asia. I for one am not interested in improving the lives of people living half way across the world. I am more concerned with my Friends and Family.
10
Globalization benefits the 99% more broadly by lowering the cost of goods, providing some jobs through companies that export and others through international companies that locate in the U.S. It also engages the U.S. and its people on the world stage, which helps with diplomacy by giving us voice in addressing issues that we all share in, like global warming, terrorism, health epidemics like Zika, aggressive states, and refugee crises. But your friends and family probably don't care about such things.
9
"But your friends and family probably don't care about such things."
--If they're about to lose their house and there are longer stretches between smaller meals, probably not.
--If they're about to lose their house and there are longer stretches between smaller meals, probably not.
8
Laura Q:
I think most would take more secure, better paying jobs over the availability of more cheap (in price and quality) junk, the profit of which sales go into the pockets of the 1%. And yes, we do care about our neighbors in the world at large. That world is our home, too. Zika mosquitos don't stop at the border. Neither does climate change. Nor terrorism.Maybe I am one of the stupid cretins, but I don't see those things as contradictions.
I think most would take more secure, better paying jobs over the availability of more cheap (in price and quality) junk, the profit of which sales go into the pockets of the 1%. And yes, we do care about our neighbors in the world at large. That world is our home, too. Zika mosquitos don't stop at the border. Neither does climate change. Nor terrorism.Maybe I am one of the stupid cretins, but I don't see those things as contradictions.
9
Hmmm... what have we learned here?
A. People tend to be greedy, especially the wealthy.
B. Efficiently engineered economic models are no different than machines, they have no emotions and don't take, foresee or contemplate the practical problems faced by humans in everyday life under consideration.
C. The "expert's" are usually wrong, and in truth, idiots.
D. Even the idiots know this to be a fact.....
A. People tend to be greedy, especially the wealthy.
B. Efficiently engineered economic models are no different than machines, they have no emotions and don't take, foresee or contemplate the practical problems faced by humans in everyday life under consideration.
C. The "expert's" are usually wrong, and in truth, idiots.
D. Even the idiots know this to be a fact.....
5
The "idiots" know that the experts are "idiots"? See: Dunning-Kruger.
Neil Irwin misses the point. The problem is not too much efficiency, but poor distribution of what efficiency brings.
By the way, Krugman, a liberal who consistently argues for the overall good of ordinary people, does not argue dogmatically against rent control (see http://nyti.ms/29mJ42j), and understands the limits of efficiency and growth, but is very concerned about distribution (http://nyti.ms/298FM4s). You picked on the wrong economist.
By the way, Krugman, a liberal who consistently argues for the overall good of ordinary people, does not argue dogmatically against rent control (see http://nyti.ms/29mJ42j), and understands the limits of efficiency and growth, but is very concerned about distribution (http://nyti.ms/298FM4s). You picked on the wrong economist.
10
Wealth distribution is a bit like climate change. In the climate change dispute most agree there is a temperature change but no one knows the ideal temperature the world should be. In economics most understand that the rich have been getting richer for decades but we don’t know the ideal or most productive wealth distribution.
In the U.S. the top 10% went from a 68% share of family wealth to 75% share in 20 years. In contrast the poorer half of the population now have just 1% of wealth to the point where many young adults no longer marry and have children. Planned Parenthood no doubt considers this to be good. Every three years the rich increase their share by an amount equal to all the assets of the poorer half. Of course the poor now have so little to take that the middle class is rapidly declining.
Two radical reforms are needed to promote both economic growth and economic equality:
1. Guarantee full employment through a system that increases transitional jobs with charities in times of business downturn and vice versa.
2. Tax wealth and income inversely so low wealth families pay a lower income tax and no job killing payroll taxes.
In the U.S. the top 10% went from a 68% share of family wealth to 75% share in 20 years. In contrast the poorer half of the population now have just 1% of wealth to the point where many young adults no longer marry and have children. Planned Parenthood no doubt considers this to be good. Every three years the rich increase their share by an amount equal to all the assets of the poorer half. Of course the poor now have so little to take that the middle class is rapidly declining.
Two radical reforms are needed to promote both economic growth and economic equality:
1. Guarantee full employment through a system that increases transitional jobs with charities in times of business downturn and vice versa.
2. Tax wealth and income inversely so low wealth families pay a lower income tax and no job killing payroll taxes.
8
It would be better if the poorer half had better access to Planned Parenthood, and then could then decide for themselves more of the time when and if to have children.
2
A broader application of social democracy across the society would seem to fit a majority need if not preference. Increased programs of public investment where the first dollar spent gets spent inside the US economy would increase domestic aggregate demand that puts US workers to work.
So, kill trade deals (the Trump approach) or increase expenditure on infrastructure and public investment and social investment (day care)--the Clinton approach?
So, kill trade deals (the Trump approach) or increase expenditure on infrastructure and public investment and social investment (day care)--the Clinton approach?
2
The choice we face is not between efficiency through unbridled capitalism and free trade and equality, which at its most extreme is socialism, as there is a whole spectrum in between these two poles. Free trade pacts often allow for some accommodation to compensate workers in industries that are net losers. To say that those accommodations are not sufficient is not to say that we should rip up free trade altogether. Free trade also often benefits international relations and diplomacy. We also could and should help workers retrain and improve safety nets, and employ progressive taxation and other means to redistribute income, but that does not mean abandoning capitalism. Most capitalism is managed. Rent control messes with incentives and makes it unprofitable to own rental properties much of the time, and it creates a dichotomy between the haves who were lucky enough to get rent controlled apartments, with the have nots, who as a result pay more for market rent apartments. A reasonable alternative, often, is rent stabilization, which limits rent increases but in a less draconian way. We do not have to give up all efficiency to reduce inequality. The Republican platform still advocates very limited government, and pretty close to unbridled capitalism, and populists have risen to countermand the trend toward more inequality. Efficiency is not wrong, or an undesirable goal. It's just not the only goal.
2
If only... rent control is only a small part of the overall dynamics. Until your $600 rent is increased to $900. A good way to basically evict someone so you can charge new tenants more. You'd think that would be illegal, right? Nope, not here in CA where I live. This happened to me. I agree with you that there should be regulations between outright control that depresses the business and outright legal greed. Really, more like stealing than greed.
Corporations are supposed to be people, right? Back before corporations were people they seemed to accept a whole lot more responsibility than they do now. Why is it that as people, corporations are valued for their efficiency but never held to account for their greed? Unfettered capitalism has no room for anything other than efficiency and greed.
Maybe "dynamism" is just another word for greed.
Maybe "dynamism" is just another word for greed.
15
What the experiment with the tokens fails to take into accounts that (assuming the tokens represent money or something of value that an be traded) is that when they are hoarded, they are basically useless. When they are shared and circulated they contribute to social welfare. As a small example, when large amounts of the worlds fine art is bought up by billionaires and stored in warehouses it becomes like those hoarded tokens. The owners aren't even getting the benefit of looking at and enjoying those beautiful creations. NO one does. When that art is shared in a museum, the world is better for its existence. When more of the worlds people are fed, clothed and sheltered we will have less illness, less crime, less jealousy and hatred, and all will be better off. How much use does John McCain actually get out of his eight houses, especially when he didn't realize he has that many?
16
The operative word in this piece is "efficiency," as in economic efficiency. A more realistic word, a word most folks would better understand, a word that more closely fits the idea, a word more honest, a more truthful word would be "greed."
When 90% of the population get 10% of the pie while the remaining 10% of the population divides the remainder -- with the top 1% getting the hogish slice of the pie -- does not sound to me a sustainable economic model. So, when trouble follows, who but those at the very top, those with the biggest slice could be surprised.
When 90% of the population get 10% of the pie while the remaining 10% of the population divides the remainder -- with the top 1% getting the hogish slice of the pie -- does not sound to me a sustainable economic model. So, when trouble follows, who but those at the very top, those with the biggest slice could be surprised.
13
This article acknowledges what I think many people intuitively recognize: the macroeconomic (aggregate) impact of policies is not necessarily the same as the microeconomic (individual) impact. Trade pretty consistently benefits our economy as a whole, but the costs and benefits are not evenly distributed across our society. When the individuals who bear the costs (recently, the less-educated) find themselves in difficult, if not desperate, circumstance and feel no one in power (of either party) really cares about their situation, they start voting for people like Trump. I don't think this should come as a surprise and some meaningful attention to the plight of these many Americans is long overdue.
15
To anyone trained in the sciences -- the economic "theories" in play are obviously ignoring the realities of a general population. These economists, and particularly the GOP enthusiasts for unrestrained capitalism / Ayn Randism, are ignoring what Darwinism means: the losers die. Evolution and "adaptation" proceed BECAUSE the losers die, or at least fail to have descendants. The more severe the adaptive pressure, the fewer individuals have descendants. And yes, whole species disappear.
The fostering of economic Darwinism here is also idiot in that almost all proponents get away with assuming theoretical linearized equilibrium models of system response (Leontief models), that assume that workers and the population instantly "adapt," and that resources are in steady state. La la la -- everything is groovy -- let the good times roll!
These are truly absurd assumptions to make, for policies that may last decades, in our current world situation. We are rapidly approaching max "all sorts of things" -- indeed failure to get to substantially declining CO2 production SOON will have disastrous consequences within the lifetimes of younger people alive today. Forest and eco-system destruction, species loss, global warming, rising sea levels, ocean acidification, exhaustion of high-grade ores for a variety of critical elements.
Empires fail when the rich push the costs onto the poor, and gobble all the seed corn to boot. Read Gibbons, read Jared Diamond.
The fostering of economic Darwinism here is also idiot in that almost all proponents get away with assuming theoretical linearized equilibrium models of system response (Leontief models), that assume that workers and the population instantly "adapt," and that resources are in steady state. La la la -- everything is groovy -- let the good times roll!
These are truly absurd assumptions to make, for policies that may last decades, in our current world situation. We are rapidly approaching max "all sorts of things" -- indeed failure to get to substantially declining CO2 production SOON will have disastrous consequences within the lifetimes of younger people alive today. Forest and eco-system destruction, species loss, global warming, rising sea levels, ocean acidification, exhaustion of high-grade ores for a variety of critical elements.
Empires fail when the rich push the costs onto the poor, and gobble all the seed corn to boot. Read Gibbons, read Jared Diamond.
26
It's heartening that at least a few of the elites have begun to think anyone who disagrees with might just be something besides an idiot, but I wonder if it isn't too little too late. I saw Tom Friedman on Charlie Rose last night talking about how the world has accelerated. Interesting stuff, but he spent all of fifteen seconds reflecting on how to deal with those who just aren't up to a meaningless, super-fast world, and all he could come up with is that we'd have to increase welfare, as if people would accept being turned into pets for very long. It would just kick the blow-up can down the road. Please, elites, drop the arrogance and greed and revulsion at the great unwashed and listen to them (if you can't do it out of respect for your fellow humans, at least do it because doing otherwise will lead to disaster). You can't have a democracy where a large percentage of ordinary people have no place--they vote and reproduce and can get suicidally angry.
5
The article raises issues more realavent to developed advanced countries. The world is now more integrated and no amount of populist rhetoric will reverse the economic advantages of trade and immigration. The solution is to develop policies that favor growth, provideds basic necessities to all people and opportunities for advancement to all. Raising taxes on the rich to generate funds may be a good idea. I talked to a lot of immigrant taxi drivers in DC and regardless of their best countries of origin, their children are getting degrees in computer sciences, biotechnology, medicine and the like. Many are getting advanced degrees. Income support can be expanded, and education can be made more affordable. The most important ingredient is motivation. In developing countries, the socialist model for providing decent lives to all has failed miserably. And most countries, in Asia , Africa and Latin America are adopting more free market policies. Take for example rent control. Many of the decaying buildings, now collapsing buildings in Mumbai are because of rent control where neither private or public monies were available for basic maintenance. In general, populist policies resulted in poor governance with politicians gaining power and increasing corruption.
1
Perceived fairness in distribution of the income is the key to societal harmony in my opinion, when people see significant concentration of wealth/income relative to their own position, it creates resentment. my mother-in-law always spoke about her small rural farming community during the depression, nobody had much but we were happy she repeated throughout her life. the new economy places a premium on specific skill sets has really brought about the increasing disparity in income distribution and corresponding resentment.
7
The globalist plan is simple.
The U.S. will outsource the low end, labor intensive jobs to low wage countries. Jobs that can't be moved will be filled with low wage legal/illegal immigrants.
In the meantime, the U.S. will become a high value-added country within the system. We'll produce the products and services that required high levels of knowledge and creativity. This includes particularly managing capital.
That's a good concept, in theory, since we get low cost products, high value jobs, and get to essentially maintain control of the system.
In practice, it doesn't work. We have only a fixed number of people capable of filling high knowledge/creativity jobs. Only about 1/3 of U.S. adults have a college degree, and that number is limited not by costs or people's laziness, but simply their ability to do college level work. Therefore, the problem is that the U.S. loses the lower end jobs for less educated people, but then can't move them into higher end jobs. Moreover, the job losses and wage suppression among these workers depresses consumer spending and the economy in general.
The benefits of the globalist system therefore flow to foreign workers who are "lifted out of poverty" and the 10% capital/knowledge class in the U.S., leaving a large percentage of U.S. workers to suffer - and vote for Sanders or Trump.
The U.S. will outsource the low end, labor intensive jobs to low wage countries. Jobs that can't be moved will be filled with low wage legal/illegal immigrants.
In the meantime, the U.S. will become a high value-added country within the system. We'll produce the products and services that required high levels of knowledge and creativity. This includes particularly managing capital.
That's a good concept, in theory, since we get low cost products, high value jobs, and get to essentially maintain control of the system.
In practice, it doesn't work. We have only a fixed number of people capable of filling high knowledge/creativity jobs. Only about 1/3 of U.S. adults have a college degree, and that number is limited not by costs or people's laziness, but simply their ability to do college level work. Therefore, the problem is that the U.S. loses the lower end jobs for less educated people, but then can't move them into higher end jobs. Moreover, the job losses and wage suppression among these workers depresses consumer spending and the economy in general.
The benefits of the globalist system therefore flow to foreign workers who are "lifted out of poverty" and the 10% capital/knowledge class in the U.S., leaving a large percentage of U.S. workers to suffer - and vote for Sanders or Trump.
77
I'm a non-management knowledge worker, and while I'm not poor, the benefits aren't flowing to me either. They're flowing to the "senior" management, who very often have less vision and business sense than the worker bee. Many, many knowledge worker jobs (except those of senior management for some reason) are being outsourced, too. So, while I'm doing better economically than janitors for now, the real benefits of trade and economic efficiency are going to the top 1 or .5%. I have far more sympathy for those earning less than me than for the wealthy.
2
I would add that one of the more dispiriting trends is that Americans who are capable of filling high knowledge/creativity jobs are also losing jobs to outsourcing. Do we know require not just an undergraduate degree, or even a master's degree, but a doctorate to do well in America?
1
The experiments overlook a common occurrence: production and distribution are so efficient that the pie can easily grow to accommodate more people at the table. But, that production efficiency was gained by eliminating jobs. Most people get their income from jobs. We are used to only giving pie to someone with income. We have more pie than we need, but not everyone can pay. So, you tell the Yale elite, would you rather have everyone get some pie, or do you insist that everyone must work for it? After all, you put in those many hours studying arcane knowledge that really produces nothing tangible. You should be rewarded. That person who was replaced by a robot can suck it up. Does that sound right? Our basic method of allocating resources breaks down under ultimate efficiency.
9
Economic recession benefits nobody, and hurts the already marginalized the most. On the other hand, a rising tide in today's America lifts all yachts, but only yachts. Clearly government investment, taxation and wealth distribution can and should provide remedy to the obscene national inequity but it needs a growing economy to do so.
www.endthemadnessnow.org
www.endthemadnessnow.org
5
There is a reason elites focus on creating strong GDP growth. It has an enormous impact on social peace and political harmony. The best measure of the improvement in living standards is the growth of GDP per capital. From 1951 to 1999, GDP per capita in developed countries grew at close to 3% per annum. In this sort of environment wages could triple, government programs could expand and working hours and conditions could improve.
Since the year 2000, GDP per capita growth for the developed countries has dropped to a meager 1% pre annum. It is no accident that politics has become more divisive and voters have lost their faith in establishment politicians and solutions. In a slow growth environment wages stagnate and companies and governments run painful austerity budgets.
Even social democratic countries with a high level of redistribution like Denmark and Sweden have seen a dramatic increase in appeal of right wing anti-immigrant parties.
During much of the post world war growth boom people were losing jobs to technology, global competition and lower wage immigrants. The social problems could though be offset by the prospect of advancement in a new job or a generous social benefit. Until leaders can figure out a way to boost economic growth, democratic governments are going to have a very hard time satisfying the expectations of their constituents.
Since the year 2000, GDP per capita growth for the developed countries has dropped to a meager 1% pre annum. It is no accident that politics has become more divisive and voters have lost their faith in establishment politicians and solutions. In a slow growth environment wages stagnate and companies and governments run painful austerity budgets.
Even social democratic countries with a high level of redistribution like Denmark and Sweden have seen a dramatic increase in appeal of right wing anti-immigrant parties.
During much of the post world war growth boom people were losing jobs to technology, global competition and lower wage immigrants. The social problems could though be offset by the prospect of advancement in a new job or a generous social benefit. Until leaders can figure out a way to boost economic growth, democratic governments are going to have a very hard time satisfying the expectations of their constituents.
1
William F. Buckley, Jr., in his mission statement in the first issue of "National Review (1955), clearly stated that his mandate was to stand "athwart history, yelling Stop."
Maybe he was, inadvertently, on to something economically, if not politically...
Maybe he was, inadvertently, on to something economically, if not politically...
What really amazes me about elites and the studies that 'they' do is that they show their bias consistently without caring a jot that their biases are on display :
1. The elite will have the final say ;
2. the mass of 'public' (the chumps that are not in their privileged club) will accept anything they do;
3. the 'mass' is so stupid, a good marketing campaign will convince them of anything.
1. The elite will have the final say ;
2. the mass of 'public' (the chumps that are not in their privileged club) will accept anything they do;
3. the 'mass' is so stupid, a good marketing campaign will convince them of anything.
18
The real political value of Trump's endorsing Brexit is that, should he win, we'll be able to use it to get out of the US. Fortunately, no other politician is dumb enough to give us such a tool.
1
I am not buying that economic insecurity is the only or even most important Trump/BREXIT driver. Down here on the street, the perceived driver is job and good-job losses to "them" (immigrants or natives of color, especially non-Christians).
2
Keep the thoughts you've shared in this edition of The Upshot foremost in your mind while researching and writing future Upshot submissions, Mr. Irwin. I have struggled to understand how economists, including the estimable Dr. Krugman, can see that job growth perceived as one-sided and unfair by the hoi polloi of this country as good beyond question. I am a member of said hoi polloi and not only had no raises in the last ten years of my working career, but actually saw my nominal pay decrease. Any "solution" to the problem of jobs that doesn't address questions of pay, pay distribution, fairness and job safety isn't going to satisfy very many people these days, "efficient" or not.
16
I don't know anyone who has worked at a factory job, or in any of the industries usually cited as being hurt most by trade. Yet they're having a hard time of it anyway. It's affecting everyone's well-being and ability to earn a living, except for those who are already well-protected.
3
During the times of the French Revolution Rousseau wrote:
“Man is born free, and everywhere he is in chains.”
― Jean-Jacques Rousseau
People fought for Liberty, Equality, and Fraternity. Today many still feel deprived by the elites.
“Man is born free, and everywhere he is in chains.”
― Jean-Jacques Rousseau
People fought for Liberty, Equality, and Fraternity. Today many still feel deprived by the elites.
3
A lot of money is made from global trade. Isn't the issue about more equitable distribution of the profits than imposing trade barriers? Why should the profits from global trade go to only the top 1% or 5% or whatever?
7
Who was it that started referring to the 0.1% as the "elite"? Perhaps resurrecting the 19th century term, "robber barons" would be more accurate both economically and socially.
116
The reason so many people are angry is that they are among the losers in the age of computerization and globalization. If they are American workers, they've seen real wages stagnate for decades while those at the top get richer and more powerful. Often these angry people take it out on immigrants and minorities, even though the problem lies with the economic elite.
Global trade may be a net plus, but who is benefiting? If we take as an example Carrier, which announced it's plans a few months ago to move production facilities from Indiana to Mexico, clearly their production workers don't benefit. The benefits will go to executives and shareholders, who are already doing quite well. It's an upward redistribution, not down the economic ladder. According to Credit Suisse's latest Global Wealth Report, Americans are 4th in the world in mean wealth per adult but 25th in median wealth per adult. The bottom 70% own just 7% of U.S. wealth. That's a huge disparity.
Global trade may be a net plus, but who is benefiting? If we take as an example Carrier, which announced it's plans a few months ago to move production facilities from Indiana to Mexico, clearly their production workers don't benefit. The benefits will go to executives and shareholders, who are already doing quite well. It's an upward redistribution, not down the economic ladder. According to Credit Suisse's latest Global Wealth Report, Americans are 4th in the world in mean wealth per adult but 25th in median wealth per adult. The bottom 70% own just 7% of U.S. wealth. That's a huge disparity.
20
It's interesting to me how the Efficiency argument of trade for the past 30 years ignores so much global economic history. For example, during the 1890s President McKinley and the country knew based upon experience that good-quality tariffs helped industrial area like Ohio thrive, and enacted them. The result: one of the biggest U.S. industrial bursts in history. The British empire practiced mercantilism (i.e. export protection) for many years, and they thrived economically, as well as had a good economic bargaining chip in international relations. And just look at what growth China's trade protectionism has brought it. What upsets me most is that even from a self-interest standpoint, the economic elites are wrong.
10
I'm not sure greed, gluttony and self-infatuation with one's role in uber capitalism equate with "economic efficiency" here. The gross imbalances further perpetuated by the global elite pursuit of "globalization" have been wrought by the process of finding the lowest common denominator for the cost of labor, workers, etc. while at the same time taking much larger percentages of corporate dollars home for themselves. Because their global planning has worked out so well?!!?
6
I appreciate the thoughtful questioning of economic assumptions that often divide us. Another factor at play here is the dramatic growth of income disparity. This increase coincides in the US with a growing influence of money in politics resulting in policies that tilt the playing field even further towards the benefit of the super wealthy. Unfortunately, this is often viewed as a zero sum game, which creates missed opportunities. In other words, we can treat our people better and grow the pie. Investments in education and infrastructure are good examples that get spun as left or right issues unnecessarily. I see the more energized reactions on the left and right, when you look at Bernie and Trump in the US, to be reacting in part to the same underlying cause. Bernie and his supporters are looking around and saying the game is rigged, our politicians are spending all their time raising money from the wealthy few who then have undue influence. Our politicians then enact policies that do not share the benefits of wealth and often do harm. Trump supporters see they are losing ground economically and want to "Make America Great Again". They are both experiencing a system that is out of balance and unresponsive and coming to different conclusions about causes and solutions. Personally I would like to see us work again to decrease the influence of money in our politics. People get desperate and radical when they see their democracy doesn't represent them.
34
"People get desperate and radical when they see their democracy doesn't represent them".
And in the US, these same people have easy access to guns....lots of guns.
And in the US, these same people have easy access to guns....lots of guns.
Always the talk of elites without a definition of terms muddies who we think of as elite. People who went to Yale and became economists? I'd agree with that for the purposes of this article but the word is thrown around in a way that muddies the discussion. A wealthy friend of mine, who owns a mansion on LI's gold coast, complains about the elites and supports Trump. I think he and Trump are both elites.
5
Does this column create an unnecessary dichotomy between efficiency and equality? Does the real world operate like the economists' game? The problem seems to be that all current economic growth is going to a small segment of the population. That seems to me a problem separate from the overall benefit of a free economy. Trump himself seems to embrace that distinction - limit free trade, but keep taxes low on the wealthy. Why can't it be the reverse?
3
I guess it could be if Trump weren't running as a republican. Do you think Clinton will go for your suggestion???
1
In many ways, it is a real old but important, choice resurfacing in a different guise. Throughout most of the 20th century, the world can be viewed partly as a competition between capitalism and communism. In one system, everyone is for themselves guided only by the "invisible hand." In the other system, the state makes sure that everyone gets a share. The outcome is clear, communism was too inefficient to be viable although it ensured equality. Of course, human being human, the political leaders almost always enriched themselves anyway. With the fall of Soviet Union and China effectively became hyper-capitalist in the new century, capitalism has all but won the field. The current backlash against inequality is a clear rebuff of unrestrained capitalism. I think that this article points out an important point, growth and equality are different measures of the economy. One can devise economic policies to maximize one or the other or a combination of both. What is the right mix should be periodically examined and agreed upon by the people of the society. The danger is always that people are prone to buy into economic orthodoxy. For a time, some think that capitalism is evil while others think that communism is evil. This is nonsense; a society should choose economic policies that target a combination of economic measures including growth and equality but may also include other parameters such as environmental impact and leisure time. There is never ONE right answer.
8
Reminds me of a line in Julius Epstein's screenplay 'Happy All the Time': "Communism is the equal distribution of poverty and capitalism is the unequal distribution of wealth."
2
Communism in practice surely did NOT guarantee equality.
1
A very few people have nearly all of the world's wealth. For many many people hunger, illness, and misery are daily routine. This is utter failure of any economic system -- communist, socialist, or capitalist. We don't need to make a destructive force more efficient or more successful.
11
Dan Ariely's book "The (honest) truth about dishonesty" makes clear that dishonesty is an acute problem whenever competition is a factor in relationships. Yet isn't honesty (although not frankness) the single most important factor in relationships? It certainly is in marriages. When, however, we count well-being as GDP/capita and the implications of that counting for ever faster change and ever greater impersonality in relationships, temptations to be dishonest multiply. So what's a policy elite to do? Try being honest, which doesn't mean being frank but does mean honouring both self AND others reciprocally.
There is now a proven way for being reciprocally honest without giving away the farm or falling like the populist politicians do into frank but fatuously mendacious temptations to be hostile. It's called Eye-Zen English because its roots are honest expressions of the IHXEN structure. IHXEN stands for "I have 'X emotion' now", where 'X emotion' is limited to an honestly selected noun or noun phrase. IHXEN exchanges make it easier for people experiencing moments or periods of difficulty/challenge in their relationships because they are simple, their honesty is easier to authenticate, they avoid hostility, and they shift priorities in subsequent conversation from material abstractions (such as GDP/capita) to the QUALITY of our states of being.
Who wants the gizmical features of the next smart phone?
There is now a proven way for being reciprocally honest without giving away the farm or falling like the populist politicians do into frank but fatuously mendacious temptations to be hostile. It's called Eye-Zen English because its roots are honest expressions of the IHXEN structure. IHXEN stands for "I have 'X emotion' now", where 'X emotion' is limited to an honestly selected noun or noun phrase. IHXEN exchanges make it easier for people experiencing moments or periods of difficulty/challenge in their relationships because they are simple, their honesty is easier to authenticate, they avoid hostility, and they shift priorities in subsequent conversation from material abstractions (such as GDP/capita) to the QUALITY of our states of being.
Who wants the gizmical features of the next smart phone?
1
Those of us who don't wear suits resent those that do.
Why? Because the suits assume they know more than we do. Personally, I see no evidence of that.
Why? Because the suits assume they know more than we do. Personally, I see no evidence of that.
5
Generally speaking PhDs in just about everything except business and law don't wear suits. Indeed "the suits" is next-to-universal sneering reference to the corporate management and particularly marketing people who know next to nothing about the technical aspects of the product or business.
Show me a guy in a suit ... and unless he's the groom at a wedding, I assume he's a blowtard dressed up like that to cover up the fact that he (almost always he) never got past calculus, let alone differential equations, doesn't know any thermodynamics, and doesn't believe that such a thing can limit him, knows no physics, chemistry or biology ... but can tell you what you are worth and how long it should take to accomplish something he has no clue how to do.
The rare female versions of this (lookin' atcha Carly) are often slightly better educated on paper, but have gone overboard in ignorance and aggressive stupidity to become "one of the boys."
Spare us from the "leadership" of the C students from Yale.
Show me a guy in a suit ... and unless he's the groom at a wedding, I assume he's a blowtard dressed up like that to cover up the fact that he (almost always he) never got past calculus, let alone differential equations, doesn't know any thermodynamics, and doesn't believe that such a thing can limit him, knows no physics, chemistry or biology ... but can tell you what you are worth and how long it should take to accomplish something he has no clue how to do.
The rare female versions of this (lookin' atcha Carly) are often slightly better educated on paper, but have gone overboard in ignorance and aggressive stupidity to become "one of the boys."
Spare us from the "leadership" of the C students from Yale.
4
You are way over-thinking this. The problem is the elites, who engineered and implemented globalization, rigged it so they have been receiving 100% of the productivity gains of the past 35 years. To call it mere oversight seems disingenuous to me.
133
This People's revolution is oh so very long over due..
All I know is that about 25 yrs ago every item you bought had a gold "made in China" foil sticker .... how the hell did this happen virtually overnite with no protests?
Know how we could pay people a living wage .. Health insurance.. Affordable housing ECT ..
Let the major corporations contribute by slashing their
Obscene Profits ..
All I know is that about 25 yrs ago every item you bought had a gold "made in China" foil sticker .... how the hell did this happen virtually overnite with no protests?
Know how we could pay people a living wage .. Health insurance.. Affordable housing ECT ..
Let the major corporations contribute by slashing their
Obscene Profits ..
1
Elites have had no objection to beggar thy neighbor when it’s their fellow countrymen.
2
From the article: "Of course the only way a society can become richer over time is to increase national income."
This is a flawed premise, and has been blindly accepted by economists and policy makers. It has also been crammed down the throats of the citizenry, and is the camouflaged reason for consumerism -- more more more equals greater satisfaction.
This is a flawed premise, and has been blindly accepted by economists and policy makers. It has also been crammed down the throats of the citizenry, and is the camouflaged reason for consumerism -- more more more equals greater satisfaction.
6
Really great analysis by Neil Irwin and some philosophy to boot. I think he identifies the principle issues in the anti-establishment trend.
One of the things that elites can do is be more transparent. They need to *show* people how a globalized economy benefits them. Otherwise, there is a lot of warranted skepticism about the future benefits of global trade deals. Elites need to construct a good, clear argument for the benefits of open trade and take it to the people.
If the elites can't demonstrate success, then maybe there's something wrong with their argument.
One of the things that elites can do is be more transparent. They need to *show* people how a globalized economy benefits them. Otherwise, there is a lot of warranted skepticism about the future benefits of global trade deals. Elites need to construct a good, clear argument for the benefits of open trade and take it to the people.
If the elites can't demonstrate success, then maybe there's something wrong with their argument.
1
It also puts the lie to the notion that government is business and is best helmed by an experienced business person.
Business is about maximizing profit and eliminating competition. Govt is about making sure the entire nation thrives. Those two ideas are not necessarily congruent in every case.
Sometimes the more expensive, less efficient way is the best way for all concerned, and efficiency can lead to disaster -- like Halliburton in Iraq, feeding everyone in the same mess tent at one time, instead of staggering the load like the military used to do. Halliburton's change worked great until the place got mortared and we lost 23 personnel.
Business is about maximizing profit and eliminating competition. Govt is about making sure the entire nation thrives. Those two ideas are not necessarily congruent in every case.
Sometimes the more expensive, less efficient way is the best way for all concerned, and efficiency can lead to disaster -- like Halliburton in Iraq, feeding everyone in the same mess tent at one time, instead of staggering the load like the military used to do. Halliburton's change worked great until the place got mortared and we lost 23 personnel.
5
Good point @skinnyD.
Since this article is not discussing the uproar over issues like immigration but is analyzing only economic forces at work, let me just say that the anti-elite or anti-establishment passions we have been witnessing in the U.K. and here perhaps do not require a lengthy and complicated essay like Neil Irwin's to unravel.
The efficient production of goods and services would never cause any unrest anywhere if the expanding affluence took care of decent housing, food, clothing, reasonable leisure, health care, access to quality education, and the like for all. Demands for good jobs with satisfactory wages and fair working and living conditions do not stem from any quest for some dreaded socialist equality, but represent a rightful pressure for an equitable share of wealth( equitable is different from equal).
When we have CEOs raking in compensations that are 500-1000 times the wages of entry-level workers, we don't have free enterprise; we have highway robbery along with obscene ostentation. It's foolish to assume that workers under such a dispensation will not some day run out of patience; they will inevitably seize the pitch forks and seek to topple the elites.
There's still time in this country to learn and adapt-- not adopt lock, stock and barrel-- something from the Scandinavian model of social equity that Bernie Sanders has been ardently advocating.
The efficient production of goods and services would never cause any unrest anywhere if the expanding affluence took care of decent housing, food, clothing, reasonable leisure, health care, access to quality education, and the like for all. Demands for good jobs with satisfactory wages and fair working and living conditions do not stem from any quest for some dreaded socialist equality, but represent a rightful pressure for an equitable share of wealth( equitable is different from equal).
When we have CEOs raking in compensations that are 500-1000 times the wages of entry-level workers, we don't have free enterprise; we have highway robbery along with obscene ostentation. It's foolish to assume that workers under such a dispensation will not some day run out of patience; they will inevitably seize the pitch forks and seek to topple the elites.
There's still time in this country to learn and adapt-- not adopt lock, stock and barrel-- something from the Scandinavian model of social equity that Bernie Sanders has been ardently advocating.
26
Although this analysis makes some excellent points it is flawed in one very important fundament way. It generally describes the losers from trade as only that small group of workers who lose their jobs from increased imports and it even suggests that workers in foreign firms operating in the US (ie, BMW) are winners. This is simply incorrect. Trade harms all workers through numerous channels including Stolper-Samuelson effects and loss of human capital, etc. He cites the Peterson study but the result that unemployment does not change is not an outcome of the study but an assumption that was made at the beginning. Numerous empirical studies have shown this is not a correct assumption. The overall view of the author is that trade benefits most and harms a few who lose their jobs, but both theoretical international trade theory and empirical analysis shows that trade harms far more people than it benefits (even if GDP increases). I have a UN working paper, A Utilitarian Analysis of Trade Liberalization (search on google) that explains all of this for the technical reader.
25
the future will be localisation. just like grow local, eat local is the rage in food, countries must learn to develop economies that function as much as possible as self surviving mechanisms. using green energy and cloud technology locals can operate globally while insourcing services and goods to make local economies work. its human nature to function within families, tribes, teams, communities and help each other on a decentralized basis. the information is in the cloud and makes this possible anywhere.
4
The tension between efficiency and its opposite is a fact not only of mass society but every person's most intimate experiences. Every time we pause to admire a pristine landscape, every instance in which we stop being productive long enough to be inward and melancholic, we are "inefficient." I'm not *for* inefficiency; however, the so called benefits of maximum economic output, of constantly "expanding the pie," threatens to wring the life out the individual self, the soul, with all its "inefficient" joyousness.
13
The debate here over production efficiency vs. equality of outcomes points out a duality and conflict within Economics. Economics persuades us to see the world of human exchange in terms of existing human propensities. Economists consider it outside their realm to explain why such propensities exist in the first place, perhaps because their subjects then drifts toward the realm of philosophy. Economics builds behavior models and keep building with the highest level of poetical mathematical sophistication, and in this process, drifts further into a very abstract world, more like philosophy for that matter, disconnected with the everyday moorings of real people, which it starts out, ironically, to explain in the first place.
Take, for example, the basic supply-demand theory. It attempts to explain why prices rise and fall. The price rises, it says, when the supply falls and the demand does not. The price falls when the opposite happens. Why it has to be that way? 'Free market' theorists would consider such a question a foolish question. This is the way the world always works, they say. But we also see its failings all around, as evident from the need of a variety of regulations, with the perceived goal of achieving a 'greater good'. By Econ theory, a rise in price is a 'natural' phenomenon by which the goods are 'auctioned' off to the highest bidder. Such an abstraction is disconnected with the reality of human need, and economics finds itself having to step back and rethink.
Take, for example, the basic supply-demand theory. It attempts to explain why prices rise and fall. The price rises, it says, when the supply falls and the demand does not. The price falls when the opposite happens. Why it has to be that way? 'Free market' theorists would consider such a question a foolish question. This is the way the world always works, they say. But we also see its failings all around, as evident from the need of a variety of regulations, with the perceived goal of achieving a 'greater good'. By Econ theory, a rise in price is a 'natural' phenomenon by which the goods are 'auctioned' off to the highest bidder. Such an abstraction is disconnected with the reality of human need, and economics finds itself having to step back and rethink.
3
We do ZERO to help the "losers" -- the huge swath of lower-paying middle class industrial workers now out of work...ZERO. We let the uber rich hide taxes, we let corporations park profits in Europe, we cut the "basic income" idea of welfare (thank you NOT Bill Clinton), we stigmatize the poor, we refuse to realize 50% of workers make so little they don't pay income taxes. We need income redistribution by whatever means possible..for the people and for the safety of our democracy..Wage insurance? How about a try.
184
Where are Teddy and Franklin when we need them?
4
One would think the most obvious test of the "success" of free trade would be its impact on median income. So why don't the experts cite the rise in median household in the US since the passage of Nafta in their proof? Probably because there has been no rise. And as an expert, you wouldn't want the absence of any supporting data to undercut your most cherished economic models, would you?
15
...deciding on the size of a pie vs deciding on distribution of slices of the pie -- seems to be a metaphor comparing capitalism(size of a pie) vs democratic socialism(distrib of slices of the pie)...
in the interest of peace and justice, it seems distributing slices equitably makes more sense...
in the interest of peace and justice, it seems distributing slices equitably makes more sense...
5
Suppose two policies, X and Y, will make a society richer. Policy X will make society as a whole, richer than policy Y. But policy Y will make the poorest quarter richer than would policy X. Which is more desirable: X or Y?
2
Really comes down to how it makes us all feel about how the system is working- or not working. JGAIA
Liked the article illustration- helps makes the article easily understandable. JGAIA
Wow ignorance is bliss :"In that account, a woman named Andrea Howell holds down a good job at BMW’s manufacturing plant in South Carolina, making her one of globalization’s winners. She supports Mr. Trump, she said, because she doesn’t want other countries to beat the United States at trade, and because two uncles lost their jobs at a cotton mill that closed in the 1980s, presumably because of globalization." Is she aware that BMW is a German company and she only holds that job due to globalization ? If she votes for Trump and he will impose hurdles for foreign enterprises, she may loose her well paying job quicker than her two uncles did at the cotton mill.
3
The answer to the dilemma is effective and trustee transition policies designed to compensate and support those who lose out in the churn from trade and technology changes.
1
What economists call 'efficiency" is a process in which, in a fully free market, all resources are allocated to their best uses, that is, where their economic returns are highest.
There is little economists say about those whose highest returns are insufficient for living, such as those whose wages are below subsistence, or who are not capable of earning a living because of education, disability, outmoded skills, or working in the wrong industry or occupation, or even if located in the wrong region.
If a person loses a job because the industry in which one works is in decline (e.g., steel) and if that industry has a specific regional location (e.g., the Mid-West), then not only do wages fall, but so do the real property assets owned by displaced workers - their homes. Economics doesn't deal with the wealth effects that arise when talking about efficiency.
Economic efficiency also does not deal with the longer run changes that arise from distributional changes. In effect, economics implies that all will be adjusted in the end. But, as the great Keynes had said, in the long run we are all dead. Economic efficiency is just a veil hiding an argument for Social Darwinism - the survival of the (economically) fittest. An inequitable economy, moreover, is inconsistent with democracy, all other things equal.
There is little economists say about those whose highest returns are insufficient for living, such as those whose wages are below subsistence, or who are not capable of earning a living because of education, disability, outmoded skills, or working in the wrong industry or occupation, or even if located in the wrong region.
If a person loses a job because the industry in which one works is in decline (e.g., steel) and if that industry has a specific regional location (e.g., the Mid-West), then not only do wages fall, but so do the real property assets owned by displaced workers - their homes. Economics doesn't deal with the wealth effects that arise when talking about efficiency.
Economic efficiency also does not deal with the longer run changes that arise from distributional changes. In effect, economics implies that all will be adjusted in the end. But, as the great Keynes had said, in the long run we are all dead. Economic efficiency is just a veil hiding an argument for Social Darwinism - the survival of the (economically) fittest. An inequitable economy, moreover, is inconsistent with democracy, all other things equal.
9
Good observation about the impact to people on the ground from the change and churn that may eventually result in more rosy economic predictions.
Yet, the anti-TPP movement isn't primarily against open trade. It is against this trade agreement that sacrifices labor protection laws, environmental protection regulations, and consumer safety protections on the alter of "free trade." The Anti-TPP movement doesn't want to see our domestic sovereignty to be yielded over to international tribunals run by private corporations.
Yet, the anti-TPP movement isn't primarily against open trade. It is against this trade agreement that sacrifices labor protection laws, environmental protection regulations, and consumer safety protections on the alter of "free trade." The Anti-TPP movement doesn't want to see our domestic sovereignty to be yielded over to international tribunals run by private corporations.
20
Gosh, you think?
2
Theory is not the real world, and people are not tokens.
People have needs, they can see what others are doing, they can feel envy, they can get mad about inequality.
Sharing may not be the most "efficient" of systems, but when the rich and the poor are equally able to sleep under bridges, you probably won't find the rich between the water and the pavement.
People have needs, they can see what others are doing, they can feel envy, they can get mad about inequality.
Sharing may not be the most "efficient" of systems, but when the rich and the poor are equally able to sleep under bridges, you probably won't find the rich between the water and the pavement.
4
"A sense of stability, of purpose, of social standing — all these things matter in ways that economic models don’t do a very good job of taking into account."
-------
That's an understatement. Economic models don’t take them into account, period. Witness the recent article or op-ed here in the Times stating that people's reluctance to simply pick up and move to a new place for a job was hurting the economy.
What economists seem to always forget is that the economy is supposed to work for people, not the other way around, as we used to complain about the Soviets thinking.
-------
That's an understatement. Economic models don’t take them into account, period. Witness the recent article or op-ed here in the Times stating that people's reluctance to simply pick up and move to a new place for a job was hurting the economy.
What economists seem to always forget is that the economy is supposed to work for people, not the other way around, as we used to complain about the Soviets thinking.
121
Nailed it.
2
C'mon. We were told that the wealth would trickle down which was why we chose the bigger pie, and that the bottom would not stagnate or decline. We did not choose between being poor together or rich but very unequal. In other words we were told we could have our cake and eat it too.
7
Mr. Irwin: You are getting closer but not there yet. You wrote:
"Maybe the people who run the world, in other words, have spent decades pursuing goals that don’t scratch the itches of large swaths of humanity."
It is about matters much more important than "itches" -- sometimes life or death.
It is about instability, inequality, and injustice.
"Maybe the people who run the world, in other words, have spent decades pursuing goals that don’t scratch the itches of large swaths of humanity."
It is about matters much more important than "itches" -- sometimes life or death.
It is about instability, inequality, and injustice.
24
ALL of this stuff seems to be made a lot more complicated than it really needs to be. The fairly new international economy permits the plutocrats to exploit workers, the planet, and our governments. If these plutocrats found their souls...they would determine to 1) pay each and every worker a living wage 2) re-invest in lots of ways to protect our planet and 3) assist with developing democracies and refuse to continue fostering plutocracies. These endeavors would make the world a better place for ALL.
4
Interesting article but it doesnt mention the #1 reason people give for voting for Brexit & Trump: immigration. The immigration aspect of 'globalization' seems to be the most sore spot with many voters. And their reasons against immigration (legal or illegal) is only partially economic (job competition) but also I think (i'd guess especially in UK) a feeling that the culture is changing, newcomers who look different and too-slowly assimilated. I personally think its a shortsighted and selfish attitude, but it seems to sway many voters.
4
So much for God's abundant kingdom. Well, that has never existed anyway and given human greed, which feeds on itself, it no doubt will never exist. "The last shall be first and the first shall be last" would truly be a world turned upside down, but it's not happening. We should govern ourselves so that those who are rich and in power let go of some of it and share so that all get at least a chance, but that appears to be a pipe dream. I say shame on the selfish greedy rich.
1
What is the economic synonym for efficiency orientation ? Greed.
I wonder if an explication of efficiency orientation is central to the law school curriculum at Yale law ?
I wonder if an explication of efficiency orientation is central to the law school curriculum at Yale law ?
If you want to focus on increasing national income and still be mindful of the humans getting squashed in the process, it might be time to take a serious look at a guaranteed minimum income.
2
A guaranteed minimum income - basically, welfare for all - and an open borders policy are not compatible, as Europe is now learning.
2
Our problem with trade deals and other policies that increase "economic efficiency" is that we never do enough to compensate those who lose out in the process. If there were counter-acting policies toward greater equality of income and wealth overall, and strong supports for people who lose jobs (not just retraining but, say, 3 to 5 years of income support) that are fully-funded, then there may be less opposition to policies that increase the size of the economy but cause some level of "churn."
5
The whole basis of trade is ricardo's theory of competitive advantage.
He showed that trade benefits two countries even if one is more efficient than the other in all goods because what matters is the relative efficiency ratios and not the absolute efficiencies.
Crucially, it's also assumed that the supply of labour in either country is not unlimited and wages are equal.
If in one country, there is no labour supply constraint and wages are lower, it becomes more competitive in every good-precisely the situation in which we are today.hence it's no surprise jobs have disappeared from the u s to china,etc.
Yet economics is still taught as if Ricardo holds.
One of the posts spoke of the threat of jobs for the better educated ALS suffering the same fate.
Very true. In india, you can get STEM grads as good as those in the u s for about a third of the cost for say data analytics work.
Economics has no answer because these are matters of political economy, the long neglected and ignored reality of policy making.
Economists want the subject to be value free, a euphemism for avoiding the uncomfortable of the irrelevance of their work to the most pressing issues of unemployment,inequality of incomes and wealth and increasing poverty.
He showed that trade benefits two countries even if one is more efficient than the other in all goods because what matters is the relative efficiency ratios and not the absolute efficiencies.
Crucially, it's also assumed that the supply of labour in either country is not unlimited and wages are equal.
If in one country, there is no labour supply constraint and wages are lower, it becomes more competitive in every good-precisely the situation in which we are today.hence it's no surprise jobs have disappeared from the u s to china,etc.
Yet economics is still taught as if Ricardo holds.
One of the posts spoke of the threat of jobs for the better educated ALS suffering the same fate.
Very true. In india, you can get STEM grads as good as those in the u s for about a third of the cost for say data analytics work.
Economics has no answer because these are matters of political economy, the long neglected and ignored reality of policy making.
Economists want the subject to be value free, a euphemism for avoiding the uncomfortable of the irrelevance of their work to the most pressing issues of unemployment,inequality of incomes and wealth and increasing poverty.
5
Neil-
Your point, "Economic efficiency isn’t all it’s cracked up to be," is the heart of the issue. Think back to Greenspan's use of increasing productivity and profits as the key measures of economic health and growth. Take a manufacturing plant, add technology, lay off workers and - voila! - productivity jumps, showing all's right with the economy. Likewise, transfer labor-intensive productivity oversees and import stuff back: lower costs, more profits and proof that everyone's better off in the U.S.
Underemployment, income differentials, things going bump in the night? The message remained: just relax -- it will all work out (AKA trickle down) in the end. Well, that logic from over 20 years ago is now disbelieved because the disruptions, dysfunctions and dislocations were not offset -- worse they weren't even addressed as real problems.
So, here we are, looking at "popular" knee-jerk "solutions" that are incomplete and incorrect, undoubtedly taking us down a rocky road that didn't have to be traveled. Ergo, frustration on all fronts.
Your point, "Economic efficiency isn’t all it’s cracked up to be," is the heart of the issue. Think back to Greenspan's use of increasing productivity and profits as the key measures of economic health and growth. Take a manufacturing plant, add technology, lay off workers and - voila! - productivity jumps, showing all's right with the economy. Likewise, transfer labor-intensive productivity oversees and import stuff back: lower costs, more profits and proof that everyone's better off in the U.S.
Underemployment, income differentials, things going bump in the night? The message remained: just relax -- it will all work out (AKA trickle down) in the end. Well, that logic from over 20 years ago is now disbelieved because the disruptions, dysfunctions and dislocations were not offset -- worse they weren't even addressed as real problems.
So, here we are, looking at "popular" knee-jerk "solutions" that are incomplete and incorrect, undoubtedly taking us down a rocky road that didn't have to be traveled. Ergo, frustration on all fronts.
8
Well said, finally an article that "gets" it.
1
Perhaps voters bristle at more trade agreements because they suspect that free trade only works when it boosts corporate profits. Voters see no push for free trade in many things they buy when freer trade threatens powerful lobbies.
How else to explain the total lack of free trade in legal drugs? Americans can't import legal drugs made by U.S. companies from Canada or anywhere else. Why? Because foreign governments negotiate with drug companies to lower prices for their citizens and free trade would let Americans benefit from those lower prices.
The same can be said for regional codes put on DVDs. They serve no other purpose than preventing Americans from using cheaper legally made DVDs from abroad.
Where was the free trade community when John Wiley & Sons sued Thai graduate student Supap Kirtsaeng, who used eBay to resell copies of the publisher's copyrighted books that his relatives first bought abroad at cut-rate prices? Do free traders support opening up the US market to cheaper foreign textbooks now?
How else to explain the total lack of free trade in legal drugs? Americans can't import legal drugs made by U.S. companies from Canada or anywhere else. Why? Because foreign governments negotiate with drug companies to lower prices for their citizens and free trade would let Americans benefit from those lower prices.
The same can be said for regional codes put on DVDs. They serve no other purpose than preventing Americans from using cheaper legally made DVDs from abroad.
Where was the free trade community when John Wiley & Sons sued Thai graduate student Supap Kirtsaeng, who used eBay to resell copies of the publisher's copyrighted books that his relatives first bought abroad at cut-rate prices? Do free traders support opening up the US market to cheaper foreign textbooks now?
129
yet another excellent observation, free trade is selective and Americans feel that they are losing on both ends of the equation. I would be interested to hear, if someone out there has an example of a product/service where the free market gives us lower prices vs other countries.
5
The average American benefits from free trade and immigration so it's important that the minority of people that were negatively effected are not allowed to dictate future policies. The answer is to properly compensate the people that were negatively impacted by free trade and immigration, not get rid of it.
5
Bob,
Can you give of some examples of these benefits?
Can you give of some examples of these benefits?
3
While the points here are well-taken, there are a couple of issues here:
1) "Presumably" is doing a lot of work in the Andrea Howell story. There is a temptation on the part of any human to blame outside forces for negative events. Would the mill have closed anyway? More generally, would American manufacturing jobs have been lost to automation if not for imports from abroad? The number of people who blame trade for their job losses likely far outstrips the number of people whose jobs were actually lost due to trade.
2) Going the other way, though, trade is supposed to make the pie bigger both at home, and abroad. At least among elites and economists, a large part of the net benefit is the growth in incomes that occurs among the global poor abroad. Global inequality has been falling rapidly even as first-world inequality has been increasing. While that may be quite moral in a universalist sense, it doesn't appear that way from the perspective of the American polity.
1) "Presumably" is doing a lot of work in the Andrea Howell story. There is a temptation on the part of any human to blame outside forces for negative events. Would the mill have closed anyway? More generally, would American manufacturing jobs have been lost to automation if not for imports from abroad? The number of people who blame trade for their job losses likely far outstrips the number of people whose jobs were actually lost due to trade.
2) Going the other way, though, trade is supposed to make the pie bigger both at home, and abroad. At least among elites and economists, a large part of the net benefit is the growth in incomes that occurs among the global poor abroad. Global inequality has been falling rapidly even as first-world inequality has been increasing. While that may be quite moral in a universalist sense, it doesn't appear that way from the perspective of the American polity.
2
Yes, Mr. Irwin, we must have a new model for capitalism and economists where social good is on equal footing with "efficiency". Only when a true social benefit - not a few low-paying jobs - has as much weight as profit will we see a new, more civil prosperous world. For instance, rather than cities and states "bidding" for new business by giving away taxpayer money as incentives they must make the developer/owner document what actual social good that business will bring. What good is a new business with two hundred "new" jobs when the taxpayers are actually subsidizing the new employees? Want to have your goods manufactured in Bangladesh? Then you must make sure the facility is safe and friendly for workers - build a new facility if it is necessary. The profit-over-all business model must end if we want to live in economically and socially sustainable communities. On this eve of our 240th year of our American Declaration of Independence I am grateful that we have a democracy that will allow us to vote for socially conscious people to restore true democracy in America.
13
It's good to see a little introspection on the efficiency-equality trade-off. One must remember for economists this is about global efficiency, for economic elites it is about opportunities for profit, but for the mass of regular people it's a roulette wheel promising churn, but also threatening drops in standards of living. Rising inequality is part and parcel of globalizing efficiency, there are winners and losers. When redistribution in winner take all systems becomes the go to theme from economists and global elites, we might be getting closer to social efficiency.
1
Mr. Irwin's analysis is incomplete. Economics can indeed explain why the majority is against increased efficiency - it just requires a deeper analysis than Econ 101 can provide.
Economic efficiency can be broadly thought of as a combination of productive efficiency (how big the pie is) and distributional efficiency (how it is divided). Economists focus on productive efficiency because they can measure it not because distribution efficiency is not relevant. The argument for not considering distribution is that income can redistributed through the tax system; it is the real of politicians. This ignores institutional constraints on redistribution as well as the ability of moneyed interests to "capture" the political process.
Economics teaches that what should be maximized is "utility" (i.e. happiness) not income or wealth. Utility is not linear in income, it increases at a decreasing rate as income (wealth) increases. Hence, a dollar more in income results in more happiness for a person with a low income than one with a high income.
What we are experiencing is that those with lower incomes are receiving less or none of the gains of expanded trade. Therefore, they are gaining less happiness or losing happiness. At the same time, these citizens' incomes are more at risk than those of the elite (they are the "unprotected"). So the lower income people have little or no gain in income and face greater risk.
Economics can explain the problem.
Economic efficiency can be broadly thought of as a combination of productive efficiency (how big the pie is) and distributional efficiency (how it is divided). Economists focus on productive efficiency because they can measure it not because distribution efficiency is not relevant. The argument for not considering distribution is that income can redistributed through the tax system; it is the real of politicians. This ignores institutional constraints on redistribution as well as the ability of moneyed interests to "capture" the political process.
Economics teaches that what should be maximized is "utility" (i.e. happiness) not income or wealth. Utility is not linear in income, it increases at a decreasing rate as income (wealth) increases. Hence, a dollar more in income results in more happiness for a person with a low income than one with a high income.
What we are experiencing is that those with lower incomes are receiving less or none of the gains of expanded trade. Therefore, they are gaining less happiness or losing happiness. At the same time, these citizens' incomes are more at risk than those of the elite (they are the "unprotected"). So the lower income people have little or no gain in income and face greater risk.
Economics can explain the problem.
7
Economic efficiency is just missing one single piece: a fair sharing of profits in real time with sweat equity partners, meaning workers.
13
Hang on, let's be clear about the distinction between someone changing a job (churn) and someone losing a job (an involuntary loss). There is no dearth of research on why people choose against their best interest to avoid a loss, even when the potential for gain statistically outweighs that of loss aversion. It's a decision made from an emotional basis where many choose not to lose what they have over potentially gaining something not guaranteed yet probabilistically likely.
If academics, elites, and economists are perplexed as to why some people choose equality with diminishing returns over potential efficiencies, perhaps the answer has something to do with academics, elites, and economists not having to worry about their jobs being outsourced. Forgive the term, but emotional context will trump projections of efficiency when you least want it.
If academics, elites, and economists are perplexed as to why some people choose equality with diminishing returns over potential efficiencies, perhaps the answer has something to do with academics, elites, and economists not having to worry about their jobs being outsourced. Forgive the term, but emotional context will trump projections of efficiency when you least want it.
24
It really is pretty simple. Economists, liberal and conservative assume efficiency in markets will allow for distribution of those efficiencies. In fact, historically, economists have simply been wrong. Rent control is a great example. Getting rid of it in New York and replacing it with rent stabilization has only increased housing prices to astronomical levels. Economists need to get out of their bubbles and start thinking about humans instead of dollars.
63
Well, maybe it's time for an aggressively redistributive approach to taxation. Proud and unabashed. An open global economy may have advantages in terms of efficiency and maximized outcome. A winner-take-all tournament distribution of economic results may have appeal in some sectors of the society. But operating in tandem they are pretty much a recipe for revolution without strong government action to create a social safety net and tax policies that destroy concentrations of great private wealth significant enough to wield political power. What's required is a defensive response to the class warfare began by the rich against the poor a quarter of a century ago. Neither Trump nor Clinton offer it, Bernie wasn't wired right, and the times aren't right, for that matter.
In short, it's time to put the 'politics' back into 'political economics'. This isn't about Fresh Water vs. Salt Water schools of economics, or assaulting the technological proficiency of the Keynesians with the voodoo nonsense that's taken hold in one of the American political parties. For economists, it's about a whole set of issues that were uncomfortably shelved a generation ago. For the rest of us, it requires a political reset. And I'm not sure how well that's going to go . . .
In short, it's time to put the 'politics' back into 'political economics'. This isn't about Fresh Water vs. Salt Water schools of economics, or assaulting the technological proficiency of the Keynesians with the voodoo nonsense that's taken hold in one of the American political parties. For economists, it's about a whole set of issues that were uncomfortably shelved a generation ago. For the rest of us, it requires a political reset. And I'm not sure how well that's going to go . . .
13
The equality/efficiency experiment is a bit misleading. The rationale behind economic efficiency is that with a larger pie, everyone's slice is larger than with a smaller pie, even if the slices aren't equally sized. Free market economics never guaranteed everyone equal income. It would behoove folks complaining about free trade & the "invisible hand" to study the example of communist and socialist countries to see how well these economic and political systems whose aim was to eliminate or reduce income inequality fared.
1
You misunderstand Soviet efficiency. I remember attending a lecture by Olympiad S. Yoffe at the Kennan Institute. I was curious to hear what he would say, for he had headed the civil law department at Leningrad State during the year I was there. He emigrated well before the Soviet Union’s collapse.
His thesis was that the Soviet economy was extremely efficient, for its goal was never to produce the greatest output with fewest inputs, such as one sees in the West, nor was its goal reducing income equality. Its goal was to concentrate political power in the hands of the Communist Party and it did that quite efficiently.
His thesis was that the Soviet economy was extremely efficient, for its goal was never to produce the greatest output with fewest inputs, such as one sees in the West, nor was its goal reducing income equality. Its goal was to concentrate political power in the hands of the Communist Party and it did that quite efficiently.
7
Some of those socialist economies are doing quite well. Socialism did right by Sweden, Denmark, and Norway, for example. Those nations moved from being some of the world's poorest to some of the richest, and they did it under socialist politics.
67
First of all communism and socialism are two different theories. The true socialists in europe, Sweden, Norway, Denmark, are doing quite well, thank you. I've never really understood why, in the US, we continue to think that the two philosophies are one in the same. Then I remember that we are the most over informed least knowledgable people in the world.
Look what's happening now we have two people, one masquerading as a republican and the other masquerading as a democrat, when what we seem to have is 2 republicans running for president. And we don't like either one of them. If it wasn't so sad we could think of it as the biggest joke ever put over on the American people.
Look what's happening now we have two people, one masquerading as a republican and the other masquerading as a democrat, when what we seem to have is 2 republicans running for president. And we don't like either one of them. If it wasn't so sad we could think of it as the biggest joke ever put over on the American people.
4
This article by Mr. Irwin is one of the best I have seen.. not to give an answer to all the dilemmas faced now in the US election and in Europe, but rather to frame the situation in a way not typically voiced, a way which could actually get us as a culture to a "better" place.
Are we defining efficiency in a way counter to our own sense of values and felt responsibilities? Are we defining a "systems approach" that considers the global perspective predominately and down plays the importance of subsystems as we move to smaller scale: nations, industry sectors, and finally after all to individual people in our society?
One flaw I believe I see though in the conversation is to equate global economic efficiency with economic loss by population segments or individuals. It would seem that the global economy could maximize global economic growth, that countries/states could follow, but that we could still have more egalitarian distribution of the fruits of that growth. To effect that would require a strong reworking of the base concepts of "capitalism".
Maybe western culture is ready for that rethink?
Are we defining efficiency in a way counter to our own sense of values and felt responsibilities? Are we defining a "systems approach" that considers the global perspective predominately and down plays the importance of subsystems as we move to smaller scale: nations, industry sectors, and finally after all to individual people in our society?
One flaw I believe I see though in the conversation is to equate global economic efficiency with economic loss by population segments or individuals. It would seem that the global economy could maximize global economic growth, that countries/states could follow, but that we could still have more egalitarian distribution of the fruits of that growth. To effect that would require a strong reworking of the base concepts of "capitalism".
Maybe western culture is ready for that rethink?
19
....Kudos for addressing one element of the issue. Yes, we're all aware of how technology has permanently changed employment. The big "however", for me is, the ethos of our current iteration of capitalism. Forbes recently called Milton Friedman's assertion about returning value to shareholders as the overarching priority of the CEO of a public company the "dumbest idea in the world." The arc of the past 40 years (yes, I've lived them) has been to minimize the expense of employees to the lowest possible to produce a rational result. What has evolved is the C-suite is being paid ludicrous remuneration, while low-end employees receive pay at or near rates where they qualify for government assistance. Elevating a belief in markets has become a religion, particularly in light of how our markets currently function. This ain't gonna end well unless and until massive change is effected. Ha! President Trump? I will not be surprised.
175
trade agreements do not happen in a vacuum. i think this article misses the point that globalization, in this case the TTP, coupled with technical innovation does not result in job churn for many, low skill workers, both younger but especially older, but instead unemployment. what the elites, particularly american politicians, have not done is provide either the social safety nets or the resources for (re)integration into the work force for these people. this, plus plays to xenophobia, is what, in my opinion, fueled both the Brexit outcome and the Trump candidacy ref mr Schleimer.
mr Obama in his speech to the Canadian house of commons in Ottawa this week, which CNN did NOT televise live, briefly addressed this issue stating that there needs to be more effort in the US to improve infrastructure - which would create jobs immediately and in the longer term, reduce the burden of education costs to the individual student and improve retraining to allow more people to work in a modern economy. trump cannot bring back coal and steel jobs.
however, such measures would require coordinated actions from all levels of government and likely some increase in tax revenues. from my observations of present day USA neither of these will happen in the short or intermediate term.
the threat to the american worker is not the low wage earners in the pacific rim countries that trump demonizes. it is the 1,000,000 engineers that China graduates from its universities each year.
mr Obama in his speech to the Canadian house of commons in Ottawa this week, which CNN did NOT televise live, briefly addressed this issue stating that there needs to be more effort in the US to improve infrastructure - which would create jobs immediately and in the longer term, reduce the burden of education costs to the individual student and improve retraining to allow more people to work in a modern economy. trump cannot bring back coal and steel jobs.
however, such measures would require coordinated actions from all levels of government and likely some increase in tax revenues. from my observations of present day USA neither of these will happen in the short or intermediate term.
the threat to the american worker is not the low wage earners in the pacific rim countries that trump demonizes. it is the 1,000,000 engineers that China graduates from its universities each year.
7
This analysis creates a false equivalence among "elites" with regard to policy. Liberal and conservative philosophies are, to various degrees depending on the location and issue, substantially different.
Progressive policy is far more concerned with harnessing the unique ability of government to aid economic equality in addition to efficiency, while conservative orthodoxy ostensibly relies solely on the illusory magic of the marketplace while actually weighing in on the side of the rich.
The irony of Trump and the American working class's move to the right is that conservatives have steadfastly obstructed any policy that could move us toward greater economic equality - higher taxes on the very wealthy, universal health care, increased government spending on infrastructure - and then blamed progressives for economic inequality. As with Brexit, Trump voters are choosing the path least likely to help them.
Progressive policy is far more concerned with harnessing the unique ability of government to aid economic equality in addition to efficiency, while conservative orthodoxy ostensibly relies solely on the illusory magic of the marketplace while actually weighing in on the side of the rich.
The irony of Trump and the American working class's move to the right is that conservatives have steadfastly obstructed any policy that could move us toward greater economic equality - higher taxes on the very wealthy, universal health care, increased government spending on infrastructure - and then blamed progressives for economic inequality. As with Brexit, Trump voters are choosing the path least likely to help them.
52
The problem is when you treat people as objects of observation then we end up with results like Brexit and Brexit likes. Trying to explain Economics in a scientific way is not a bad idea. However, when we forget that people can take economic decisions is bad. People take hard decisions when their life is threatened. Decisions, however good they are, if taken without taking the people who are affected into confidence, will backfire.
1
This is a really fascinating discussion and perhaps a decent explanation about why there is so much angst within the population that has been negatively affected by globalization. However, what the author did not discuss was ways in which those lives negatively affected by globalization can be improved. If a country's economic output can improve because of more trade, then some of that improvement, rather than staying in the coffers of multi-national corporations or in the pockets of wealthy investors/shareholders, should be used for improved and lower cost retraining and education, as well as for reinvestment in our country's infrastructure. That type of reinvestment, not only helps to keep our country competitive, but the investment stays local. It would help to re-employ workers who have lost jobs and get them trained for higher paying jobs.
So the problem has been that the new country wealth created by globalization has stayed too concentrated in too few hands, creating too much inequality and too little investment in our country's competitiveness. This creates populist backlash too.
So the problem has been that the new country wealth created by globalization has stayed too concentrated in too few hands, creating too much inequality and too little investment in our country's competitiveness. This creates populist backlash too.
45
Same story with immigration. Americans don't want to do the low skilled jobs but don't want others coming in to do it. People are not rational. And economists are susceptible to black swans and unforeseen events that wreck havoc with their predictions. Life, sigh, is a hodge-podge of uncertainty! A good leader, therefore, should not be bound to ideology.
4
So the answer is we dumb down progress that basically upgrades the collective well being for the benefit of a minority that has been mostly left behind because of poor planning and undisciplined lifestyles.
And who vote against the very polticians who stand for policies that would help them get up to speed, Like education -retraining -infrastructure spending - early childhood and parenting assistance -increases in the minimum wage.
You want selective regression for people who haven't got the sense to know who their friends are.
Vote for Trump! He has them in his pocket!
And who vote against the very polticians who stand for policies that would help them get up to speed, Like education -retraining -infrastructure spending - early childhood and parenting assistance -increases in the minimum wage.
You want selective regression for people who haven't got the sense to know who their friends are.
Vote for Trump! He has them in his pocket!
I don't think the article was recommending this at all. It was an explanation of why people might vote against policies that might improve the long-term economic condition of their community, if they cause shorter term disruption to their individual lives.
What are the conditions that produce the "minority that has been mostly left behind because of poor planning and undisciplined lifestyles"? Some of them exist certainly in the realm of free will. But do they all? No. The rich need the poor and ignorant. They erect structures such as Fox News to reproduce the poor and ignorant through mass communication/mass persuasion. The rich need a class to be rich TO.
2
Short persons are less likely to be fond of playing a sport like basketball, where size matters. Most people like activities that all them to be successful at least some of the time. The same goes for an economy, which makes only a minority successful. Before long, the majority will ask to play a different game or change the rules to give them a better chance. To prevent this, economists cannot continue to largely ignore equity issues and focus almost all of their attention on efficiency or dissatisfaction among the majority will continue to grow.
75
So well said!!
1
At last, a bone is thrown to the real purpose of society...if it can be said to have one....and that is to support the people in it. There is no intrinsic good to efficiency, only in the sense that it serves the greater good. When it becomes an end in itself - or an end that serves the few -, it is at best useless and at worst destructive.
All ideas and theories should be continually tested against the human effects. There is ample evidence showing that the very very few are benefitting in obscene proportions. This is not rocket science. The table is tilted and all but a pittance runs into the gargantuan ever expanding pockets of the tilters.
Now it is a moral question and its not hard to parse. We've had to do it before and always...and now again.
All ideas and theories should be continually tested against the human effects. There is ample evidence showing that the very very few are benefitting in obscene proportions. This is not rocket science. The table is tilted and all but a pittance runs into the gargantuan ever expanding pockets of the tilters.
Now it is a moral question and its not hard to parse. We've had to do it before and always...and now again.
241
The Petersen Institute is not remotely an impartial research organization. It is funded by a hedge fund billionaire with specific interests. The problem is that there are few spheres left in academia and among think tanks that are not tainted by the big money that funds them. There is almost NO INDEPENDENT research at all left in the U.S. Even our research universities are tainted by the big donations.
6
The author does well to be more introspective about what they perceive as irrational decision making by the electorate. However, there are economists that are pointing out the inherent flaw of the free-market theorist, and this is an article about Milton Friedman style laisez-faire economics. Economists like Yanis Varoufakis who has pointed out that "Capitalism cannot outlive its own technological inventions." This expression explains the current environment of slow growth even as central banks are postured at their most accommodative stance in history. Why? It's because our economy is built on consumerism and debt, and as the pool of consumers with disposable incomes declines due the capitalism's tendency to always push unit costs lower, the demand side dwindles, while the debt infused floor for financial instruments persists. These two taken together are undermining the implied agreement between labor and capital...labor has lost its "stake" in the success of capital and they are now reaching for ropes like someone drowning and in the throes of survival. The elite, in the boat, look around hearing the noise and wonder, why all the fuss?
It's amazing this cycle is such a surprise to many. I now know why some religious sects require vows of poverty. It's clear to me now having any material distractions obscures ones thoughts and renders them biased an less capable of empathy.
It's amazing this cycle is such a surprise to many. I now know why some religious sects require vows of poverty. It's clear to me now having any material distractions obscures ones thoughts and renders them biased an less capable of empathy.
50
Their is a social cost to pursuing efficiency that economic models do not include. When industries are moved local economies collapse and the social wreckage is profound. Towns decline, families are dispersed and wrecked, unemployment is paid, substance abuse escalates and suicides increase.
Government and elites fail to protect people from these impacts and costs so people don't trust them and for good reason.
Government and elites fail to protect people from these impacts and costs so people don't trust them and for good reason.
153
This is an inane analysis that simply ignores the inexorable link between economic progress, growth and prosperity and the presence of disruption. Technology and the globalization of trade have reduced poverty and increased prosperity for many millions of people both here and around the world. This also means others, but far fewer, may be negatively affected. How is this a problem of elites?
The author bestows far too much intelligence and wisdom on "voters" as if they cast their votes rationally with considerable insight into complex issues. They don't. That's why narcissistic know-nothings like Trump garner support from low-information voters who are sure that ending free trade, globalization and immigration will fix things. Completely wrong.
Equality is a great concept but does not mean a level playing field. It means that economic growth should raise all boats, not just the yachts. But not equally. If the disparities become too large, the answer is to deal with those who need help, not undermine the prosperity of everyone else.
Eclectic Pragmatist — http://eclectic-pragmatist.tumblr.com/
Eclectic Pragmatist — https://medium.com/eclectic-pragmatism
The author bestows far too much intelligence and wisdom on "voters" as if they cast their votes rationally with considerable insight into complex issues. They don't. That's why narcissistic know-nothings like Trump garner support from low-information voters who are sure that ending free trade, globalization and immigration will fix things. Completely wrong.
Equality is a great concept but does not mean a level playing field. It means that economic growth should raise all boats, not just the yachts. But not equally. If the disparities become too large, the answer is to deal with those who need help, not undermine the prosperity of everyone else.
Eclectic Pragmatist — http://eclectic-pragmatist.tumblr.com/
Eclectic Pragmatist — https://medium.com/eclectic-pragmatism
There is a third option that could have been included the economists' computer simulation game--keeping all but some percentage of the tokens. Those remaining tokens would be given to people who didn't get them in the first scenario. If you wanted to take it another step, offer opportunities for the people originally left out to maximize the tokens they do eventually receive.
In other words, maximize the pie, but be realistic about the costs of doing so, and make those who keep most of the pie bear those costs.
In other words, maximize the pie, but be realistic about the costs of doing so, and make those who keep most of the pie bear those costs.
I think you are on to a plausible explanation for the current disconnect between a large portion of the population and those who see themselves as being somehow insulated from the negative effects of rational decisions (your economists for example). I would point out that timing has a lot to do with the disconnect, whether we are talking about rent control or changes in trade agreements Fundamentally, your elite group of analysts tend to minimize near term dislocations in pursuit of long term benefits. Unfortunately, those who lead in politics do not have the luxury of dealing in the long term. They therefore rationally opt for near term, non-economic, solutions that at least allow them a chance of getting reelected. Your typical congressman has a relevant time frame of perhaps one year before he has to start running on his "record".
3
Thank you. It is very refreshing to read a perspective that in my experience is rarely given consideration. All one has to do is spend time talking to real people who are not clones of oneself to see the legitimacy of what Irwin describes. I'm a successful graduate of an elite university, own my own small company, and have no fears of economic catastrophe in my future. But I spend most of my time with people who cannot say the same thing, and their priorities and lived experience need to be better understood by those who presume to make decisions on their behalf.
149
Actually globalization and greater economic efficiency has improved the lives of hundreds of millions of people. They live in China and India and other third world countries and not in the US and the UK. One can argue that the benefit for the many outweighs the fact that some people's financial situation has stagnated or gone downhill. The problem is that the elite have also figured out many ways to extract money from the economy and put it in their pockets which is neither fair or moral. The kickback by perts of the UK and US electorate is the imperfect way that democracy acts as a self correcting mechanism when things go wrong. The alternative to democracy is authoritarianism which eventually collapses when the internal socioeconomic pressure become too great. Syria is a good example. Yes some people like Trump an Boris Johnson will try to exploit the situation for their own gain. The challenge for responsible leaders is to pay attention and find ways of fixing the problem of income inequality.
10
I don't understand why, in the experiment, the "efficient" choice is the one of one person hoarding the tokens/value. Given that the tokens/value were undoubtedly socially produced, as in the real world, it would seem inefficient for one person to hoard them (not to mention unjust). Because in the real world, the needs of the others have to be addressed and, if they are not, social and political instability will occur when these people have had enough, and that will be addressed in ways that will cost, in one way or another, tokens/value (rising taxes, rising policing costs, etc.). Society pays either way. A more equitable distribution of the tokens up front would therefore seem more equitable and more efficient (in the real world, if not in such an experiment).
86
You are saying that if the experiment runs long enough and the tokens are valuable enough, the people who don't get very many of them will beat up the ones who do and steal their tokens. Even law students are supposed to learn in Kindergarten that such behavior is immoral and illegal.
Tom, law students have a lot to learn. It may take average people a while to learn that they have been duped and robbed but once they do they will respond, take back what was stolen and destroy as many of the chief thieves as they can. Witness the French Revolution.
5
The term "efficiency" is about making a profit for those hard working, upstanding people who deserve more money than everyone else. If you read a bit about neoliberal economics and politics you will see that the common man did not enter into their thinking. The "market" is their god. You world think they'd get it that a consumer with no money cannot support their greed.
6
Thank you for this perceptive analysis of our current situation. My only critique is with the description of job "churn". It implies that everyone gets another equally good job after they are laid off. That is not the experience of the people I know about. Once you train the folks from Costa Rica to do your job -- provide customer support in the computer industry (real example) -- you get laid off and realize ALL the customer support jobs in the computer industry have been moved to Costa Rica or India or wherever. You look for work unsuccessfully and finally retrain to design websites, as a freelancer, and make far less money with no benefits and lots of insecurity. That's today's economy and that's a happy ending. There are plenty of people who never get another job after a layoff. Imagine that disruption playing out over and over in households throughout the US, Canada and the U.K. Then you understand Brexit and Trump, And the rest.
312
The problem with this argument is that outsourced services are just a very small piece of the economy with negligible GDP impact. Even for the outsourcing nations, eg India, outsourcing makes up a negligible part of their GDP. We tend to demonize and focus on certain aspects because they make for easy talking points. US multinationals derive significant profit gain from emerging markets - that's where consumerism is flourishing. So simply thinking of outsourcing and trade broadly as this one way traffic is misleading.
Yes, Heidi, and Mr. Irwin forgot to mention Senator Bernie Sanders' popularity. He is the one who spoke to people like you and I and, whereas he does not have a viable plan or the political capital to make his suggestions work, we must vote only for socially conscious people like Ms. Hillary Rodham Clinton, Senator Elizabeth Warren, Senator Sanders and other democrats and independents who want to create the kind of America that works for everyone.
4
It also explains Bernie Sanders. It isn't just the less educated who see/feel the results of neo-liberalism.
5
I don't beleive the question is should inefficiency be less so that there can be more equality. This framing of the question is what has led us to our current situation. This definition is what justifies the current lopsided winner take all distribution of the growth in our GDP. The question has alway been how the rewards of efficiency be shared in our society. The rules of the game need to be changed so that those at the bottom 90% of the bell curve share somewhat in the nations productivity gains brought about by globilization and automation efficiency. Our leders both right and left need to come together to fix this. Otherwise get used to the idea of a person like Trump becomming president.
172
Yes, the lopsided benefits of globalization are not just about replacing jobs. Our tax policy, our crazy higher education system, etc are all geared toward benefiting the few who make the laws that seem to magically always benefit those who make the laws. This system that seems to finally be reaching a breaking point around the world--unfortunately a lot of people seem to think people like Boris Johnson or Donald Trump are the answer, though neither is capable (or motivated) to fix the inequity.
43
Jim from Florida writes, "The question has alway been how the rewards of efficiency be shared in our society." This sentence (or maybe a pithier version of it) deserves to be etched in stone and placed in front of every Democratic Party headquarters in the country. It's the core mission of the party: increase the size of the pie and make sure everyone gets a fair share. Make capitalism work for everyone. All the core values the party stands for (or should stand for) flow from this--including free trade, regulation of markets, civil rights (equal access to goods, services, and opportunities), pay equity, inclusion of immigrants, the right of workers to organize, and so on.
3
Mr. Irwin, has it ever occurred to you that the slim majority who supported Brexit and the even-smaller numerical plurality who voted to nominate Donald Trump consists of nothing more profound than a mass of voters who have been duped? And a lot of them are going to be pissed when they (ultimately) find that out?
13
That slim majority was merely the tip of a great big iceberg. Mr. Irwin is on to something.
3
Wow. A journalist who hangs with the elites grinds the gears and breaks out of the box. This is encouraging!
Here's another way to see it: Consider the flow of something (water, money) through a system (pipes, people). High efficiency would occur when there's not much friction. When there's lower efficiency, there's more friction, and more people resources flow through.
The more efficient, the more inequality.
How do you create a system that finds a happy balance?
Here's another way to see it: Consider the flow of something (water, money) through a system (pipes, people). High efficiency would occur when there's not much friction. When there's lower efficiency, there's more friction, and more people resources flow through.
The more efficient, the more inequality.
How do you create a system that finds a happy balance?
6
It's called the Nordic Model. It's not perfect, but it's a start.
1
The USA is not Nordic, not 96% white, and does not imprison illegal immigrants.
2
I was raised and remain an atheist, but I think Pope Francis understands economics better than most economists and Irwin's elite. Laudato si was not just about climate change; give it a read.
95
but no clear solution proposed
What if education (home and school) and, later, politicians and "élite" would explain what is at stake ?
what if "media", in general, would do their job properly instead of pushing "trending" ideas?
what if you, and me , and our relatives, friends and so, begins to be conscious that they/we are part of the problem ?
I really don't think, from personal experience, that there are "elite" on one side, and just "normal" people of the other side... in both side there are people who try to maintain an acceptable level of ethic behaviour, and people for whom ethic is just a word for scrabble players!