If you have any smart phone besides a Moto X, you support free trade. Enough said.
18
Good grief, Professor Mankiw should go to the rust belt states and ask this question. Are those people just imagining they lost their jobs? Are they shopping at Wal-Mart because they want to or because they can't afford to shop anywhere else? Ross Perot was right about NAFTA- "That giant sucking sound."
140
Voters "buy it" based on whether their retirement savings are rising or falling. If the Putin/Trump ticket were to win and subsequently wall off the US and shred our trade agreements, retirement accounts would crash. The people would scream, "Tear down that wall!" And Trump might well flee to Russia to build Trump Moscow with Russian rubles. At present the global economy shows the US to be at the top of GNP growth (albeit slow): Refined figures for Quarter 1 2016 GNP among democracies: US 0.8%' Germany 0.7%; Canada 0.6%; France and Japan 0.5%; UK 0.4%. Globalization is here to stay. Investor confidence in US markets has never been stronger, except among those with little red hats, apparently.
18
If the study tried to address just why it's easy to see globalization as rich countries' giving away good jobs to places with no labor and environmental standards, but hard to see why just getting lower prices and poorer service are worth it, the article failed to convey that. I have to agree with the comments theme that the study's conclusions, and Mankiw's cheerleading, are simplistic and below Upshot and NYT standards.
79
My personal experience with offshoring has been one where "executives" find they can save a buck by shipping jobs overseas at a lower labor rate. They are typically sold a "bill of goods" full of empty promises of increased " value" and terms like focusing the remaining u.s. operations on " core competencies" get bantered about. What happens is that customer service usually deteriorates, the U.S. Managers have no clue as to what is going on, and, the foreign company gets a lot of free intellectual capital so that they can get into the business themselves. You end up with a bunch of unemployed domestic workers and a dissatisfied customer base.
As to globalization, I tend to think of consolidation and concentration of economic corporate power. The efficiencies gained seldom fully accrue to the benefit of the customer.
My concern about foreign influence in the U.S. Is that the recent groups here do not seem to assimilate. Plus, our making diversity the new national religion has resulted in the diminishment of our national character, values, and history. I do not want to see Spanish as an official language in the U.S., but our business and government "leaders" seem hell bent on going in that direction.
I am a trained economist and lifelong Republican, but I do not buy the open free trade argument. Intelligent, thoughtful free trade yes.
I am not part of the Davos Elite, but this country is finally waking up to their malevolent strategy.
As to globalization, I tend to think of consolidation and concentration of economic corporate power. The efficiencies gained seldom fully accrue to the benefit of the customer.
My concern about foreign influence in the U.S. Is that the recent groups here do not seem to assimilate. Plus, our making diversity the new national religion has resulted in the diminishment of our national character, values, and history. I do not want to see Spanish as an official language in the U.S., but our business and government "leaders" seem hell bent on going in that direction.
I am a trained economist and lifelong Republican, but I do not buy the open free trade argument. Intelligent, thoughtful free trade yes.
I am not part of the Davos Elite, but this country is finally waking up to their malevolent strategy.
96
These same folks, with anti globalization feelings, are the ones who ran out to buy jeans and sneakers at Wal-mart at prices they love that can not be manufactured here for that price let alone sold for it. This is what these folks never seem to see. They see the lost jobs but never the much lower prices they are now paying. It has always been the Catch-22. I worked in the Textile Industry for years and watched this all play out. Pushing made in America got one no advantage the consumer always ran for the lower price, bragging about how much they saved, not really thinking about how many jobs were created at that price. Not to mention how many parents told me they did not want their children working in factories. Now we have buyers remorse. Ain't that a kick in the pants for many of us who lost our jobs trying to explain that very thing to a younger generation who poo pooed us.
35
Not all who oppose the TPP and other recent free trade agreements feel that trade is a bad thing. What they oppose is much of content of these agreements and the secrecy in which they have been negotiated, i.e. with the TPP. Unfortunately, attempts to pass bills like H.R. 3012: Trade Reform, Accountability, Development and Employment (TRADE) Act introduced by Sen. Sherrod Brown in 2010 have failed. It's not that trade is bad, it's how we've approached it.
57
It would be great if the jobs for leading economists were shipped to lower wage countries or flooded with people on H1B visas. We would then hear a very different story.
141
"Isolationism:They are not eager for the United States to work with other nations to solve global problems like hunger and pollution". If the US worked with other nations on a basis of equality and respect no one would object. But the US wants to be the boss, the "exception" that tells other nations what to do and how to do it. It organizes "regime change" by military means when other nations don`t agree to obey its orders. This is cloaked in the banner of "spreading democracy". It has caused untold misery, hunger , pollution and death throughout many regions of the world.
The multi-billionaires who have profited care little for the people of the US and even less for those in the nations they destroy. The American people are very gradually becoming aware of the harm this wealthy and insatiable elite are causing to the majority of Americans and to whole world.
They are not "isolationist" but "global" in the true sense.
The multi-billionaires who have profited care little for the people of the US and even less for those in the nations they destroy. The American people are very gradually becoming aware of the harm this wealthy and insatiable elite are causing to the majority of Americans and to whole world.
They are not "isolationist" but "global" in the true sense.
31
Here I thought people were anti-free trade agreements because globalization always seems to lead to jobs disappearing somewhere to reappear in a much cheaper country halfway around the planet.
I'm a skeptic of the TPP, but I don't think the US is culturally superior and I don't advocate isolationism. I think the agreement as it stands is a giveaway to big business and the workers are going to get screwed, like always.
I'm highly educated, I have a white-collar professional job that pays me fairly well. I still don't want to see the TPP signed into law.
I'm a skeptic of the TPP, but I don't think the US is culturally superior and I don't advocate isolationism. I think the agreement as it stands is a giveaway to big business and the workers are going to get screwed, like always.
I'm highly educated, I have a white-collar professional job that pays me fairly well. I still don't want to see the TPP signed into law.
106
It is all about cheap labor end of storty.
43
To us great unwashed, the credibility of economists is a notch above members of Congress. Consider that widely touted panacea embedded in NAFTA to deal with the loss of jobs...training. When I lose my job assembling autos, I will be trained to do what? Will the job I train for be there? Will I qualify? Will the job be taken by someone younger and already over educated for the position? Can I live on the salary? Can I afford to move to another state? Be of good cheer, before my unemployment runs out, I can least afford to buy cheap stuff made in China or Vietnam. Can we import cheap food? As workers lives descend into a cascade of misfortunes, economists and policy wonks can bask in the glow of righteousness: they provided training.
77
"Even if the gains exceed the losses over all, those who get the short end of the stick may still object. Yet ...if people were just looking out for themselves, their view of globalization would be determined by the industry in which they worked."
OK, Greg old pal, we're making progress. We've got you down from asking what benefits the entire economy, to what benefits particular industries. Some day, maybe not soon but some day, you will reach the level of the individual person. And your heart will grow three sizes that day.
OK, Greg old pal, we're making progress. We've got you down from asking what benefits the entire economy, to what benefits particular industries. Some day, maybe not soon but some day, you will reach the level of the individual person. And your heart will grow three sizes that day.
44
Economists also tell us, and their observations seem convincing, that wages have stagnated or fallen for middle and lower income workers over the last forty years. http://www.epi.org/publication/charting-wage-stagnation
Recently, the jump in inequality, as a news item, has led many citizens to ask themselves why this should be so. Simultaneously, economists continue to insist that free trade agreements benefits the general good. Uh oh! Forty years of trade agreements and forty years of wage stagnation. Mr. Mankiw must be telling us that we would really be screwed to the wall without the trade agreements. Okay thanks for the tip. But maybe now he could examine the larger mix of policies that has resulted in wage stagnation, instead of repeating ad nauseum the benefits of trade agreements. Or does that larger question fall outside the interests of economists -- because it is "political"?
Recently, the jump in inequality, as a news item, has led many citizens to ask themselves why this should be so. Simultaneously, economists continue to insist that free trade agreements benefits the general good. Uh oh! Forty years of trade agreements and forty years of wage stagnation. Mr. Mankiw must be telling us that we would really be screwed to the wall without the trade agreements. Okay thanks for the tip. But maybe now he could examine the larger mix of policies that has resulted in wage stagnation, instead of repeating ad nauseum the benefits of trade agreements. Or does that larger question fall outside the interests of economists -- because it is "political"?
41
Or maybe people believe that a thousand person losing their jobs to offshoring is worse that millions saving a penny when they buy a shirt.
48
The so called experts are only expert at not being experts. Iraq we would be welcomed as liberators wrong, the economy deregulation and privatization would lead to prosperity for all, keep your experts away from me.
23
I ordinarily have great respect for the opinions of academics, who are paid, after all, to think hard about their specialties. However, I think Prof. Mankiw's piece is the result of long bouts of thinking isolated from fine-grained examination of real-world details. Prof. Mankiw's job isn't threatened (yet) by globalization (or, as other commenters have noted, by automation). If he were to experience the sense of economic insecurity that most of us experience today, he might gain a much-needed understanding of why his theories aren't welcomed with open arms.
When, Prof. Mankiw, was the last time you had to worry about whether you or your spouse was going to be laid off? Are you prepared to find a different job--or career--if you were? Are you confident that the government or anyone else would step in to help?
When did you last worry about whether you were going to make the next mortgage or rent payment? Have you ever had to choose between buying prescription medicine or the food for dinner?
If you lost your job and were unsure what you were going to do next, would it console you to know that the national economy was doing just fine, and that corporate revenues were hitting all-time highs?
Financial stress isn't the only driver of toxic nationalism, but it plays a bigger part than you seem able to recognize.
When, Prof. Mankiw, was the last time you had to worry about whether you or your spouse was going to be laid off? Are you prepared to find a different job--or career--if you were? Are you confident that the government or anyone else would step in to help?
When did you last worry about whether you were going to make the next mortgage or rent payment? Have you ever had to choose between buying prescription medicine or the food for dinner?
If you lost your job and were unsure what you were going to do next, would it console you to know that the national economy was doing just fine, and that corporate revenues were hitting all-time highs?
Financial stress isn't the only driver of toxic nationalism, but it plays a bigger part than you seem able to recognize.
97
It might be interesting, given the motivations cited by researchers, to study whether Walmart shoppers were more likely than the average citizen to favor restrictions on trade with China. After all, as a group they are one of China's major customers.
8
My understanding is the problem of TTP is the establishment of secret Business-Corporate Tribunals that could override sovereign law. Have not seen any denials nor even a reference in this article to that issue. That isn't just a bad deal it is out and out evil.
30
The median education level of an NYT reader is 56% college grad, 24% some college.
Given the reader responses seen here, you might wanna rethink your "study." I know, this result is largely anecdotal, but the almost universal rejection of your article tells me that it's not just "the uneducated" that reject the economist's love of trade.
I've got a PhD. (in chemistry, not economics thank god) and I find the reader responses significantly more convincing than your article. Guess I'm just another rube.
Given the reader responses seen here, you might wanna rethink your "study." I know, this result is largely anecdotal, but the almost universal rejection of your article tells me that it's not just "the uneducated" that reject the economist's love of trade.
I've got a PhD. (in chemistry, not economics thank god) and I find the reader responses significantly more convincing than your article. Guess I'm just another rube.
97
Please explain how perpetual trade deficits benefit United States citizens. That seems to be missing from your analysis.
32
It boils down to the fact the most people do not want the pie in the sky "one world" concept of the elitist progressives. People tend to like their own culture, and do all you want to deny it but some culture are vastly superior to others, and do not not want others, The UN, EU or trade agreements controlling their lives. When your family wants to get a new car, how many of you hold a neighborhood meeting to get permission and determine what kind you should have?
15
I personally have noticed the media has started to portray non-Liberals as anti-immigrant....they have stopped even saying undocumented or other euphemisms for illegal entry, and have started to conflate legal and illegal immigrants as the same. They are not. I'm all for legal immigration at sensible levels. However, illegals need to be deported and employers of illegals need to be thrown in jail.
As for global trade, I'd gladly pay $2 more for an air conditioner if that meant there were 1000 extra good jobs in America. We as Americans need to work hard to support each other, and having cheap Chinese made crap isn't going to help if you rely on the government to subsidize your wages.
Rich people love global trade, poor people dont. The rich can lable the poor as racist xenophobia, and boom, the poor are divided and can't accomplish a thing.
As for global trade, I'd gladly pay $2 more for an air conditioner if that meant there were 1000 extra good jobs in America. We as Americans need to work hard to support each other, and having cheap Chinese made crap isn't going to help if you rely on the government to subsidize your wages.
Rich people love global trade, poor people dont. The rich can lable the poor as racist xenophobia, and boom, the poor are divided and can't accomplish a thing.
34
Look at chart showing wage growth for the past 30 years. Look at chart showing the relation between increased productivity and wage growth. Look at a chart showing the funneling of almost all wealth i to the hands of the 1 percent. There is your answer. Free trade and globalization are scams pushed by capitalists and their useful idiots in the economics department that only serve to enrich the already grotesquely rich.
66
The one possibility that Prof. Mankiw is totally capable of envisioning is that ordinary working people, having experienced what has been happening in their lives for the past few decades and having actually *thought* about it, understand the economy much better than all the freetrader "experts" making up the professor's mental universe.
25
Maybe they just conflate the shifting of economic power into the hands of a few with globalization?
13
The elites, being unable to sell what the joys of increased inequality, fall back and declare that most people are stupid rubes and bigots who do not understand what is good for them.
They should leave their offices and spend a day or two in Toledo or Flint.
They should leave their offices and spend a day or two in Toledo or Flint.
23
This article blatantly ignores the impact global trade has on labor and wage income. Stagnant and dwindling wage income is the true root of frustration and anger with trade deals and globalization.
24
Let's not forget these "expert economists" didn't see the housing crash coming. As soon as we heard about $700k, nothing down, adjustable rate mortgages a group of engineers sketched out the whole future in 30 min over lunch.
It's a little hard to believe when the expert of experts "has detected a flaw" only well after disaster has struck.
"Free" trade just seems like another plank in the long failed, trickle down economic thought that has created so much damage in the last 20 to 30 years.
It's a little hard to believe when the expert of experts "has detected a flaw" only well after disaster has struck.
"Free" trade just seems like another plank in the long failed, trickle down economic thought that has created so much damage in the last 20 to 30 years.
21
If we were just smarter we'd back globalization? In fact most American's are smarter than the Phds who dream this stuff up. Globalization only works if everyone plays by the same rules and it's all too apparent that other countries don't, particularly China. In fact, the biggest bias in this article is that American's are positioned as the problem. The Chinese are more ethnocentric and less educated than American's. Aren't the Phds smart enough to realize that China doesn't have a free trade policy or an open door to American products and ideas about economics.
18
The data show that US manufacturing jobs fell off a cliff after China was admitted to the WTO. Yes, Americans were able to buy cheaper T-shirts made in China, but their standard of living went down as their incomes remained stagnate because the new service jobs did not pay as much as the unionized manufacturing jobs.
Too many economists have been influenced by Ayn Rand. Recall that Greenspan said the "invisible hand" would always regulate markets so we didn't need to regulate the banks.
Too many economists have been influenced by Ayn Rand. Recall that Greenspan said the "invisible hand" would always regulate markets so we didn't need to regulate the banks.
21
Really disappointed in this article. Was hoping to read some real reasons the TPP will benefit most Americans.
Instead,
-No mention of environmental concerns
-No mention of median income or income distribution
-No mention of social concerns such as corporations skirting labor laws in pursuit of cheaper labor, or being able to sue small developing countries over their laws (a la tobacco companies suing over cigarette carton warnings)
These are the concerns that need to be addressed, not a "THEY TOOK OUR JOBS!" mentality.
Some of these "xenophobes" are actually worried about what our mega corporations will do to third world countries after seeing what they do here at home.
Instead,
-No mention of environmental concerns
-No mention of median income or income distribution
-No mention of social concerns such as corporations skirting labor laws in pursuit of cheaper labor, or being able to sue small developing countries over their laws (a la tobacco companies suing over cigarette carton warnings)
These are the concerns that need to be addressed, not a "THEY TOOK OUR JOBS!" mentality.
Some of these "xenophobes" are actually worried about what our mega corporations will do to third world countries after seeing what they do here at home.
21
Is trade isolationism a good idea? No.
3
On the one hand, you have the economists who are pundits telling us how we need to send manufacturing to other countries where the labor costs are lower. On the other hand, you have the economists who are financial advisors telling us how we need to diversify. Look at them together, and you have the economists who are telling us that economists do not know what they are talking about.
10
Globalization and automation commoditizes labor making labor fungible and moving the rewards of commerce to the owners of capital and away from the workers. Thus the rich get richer and the poor get poorer. And that is exactly what happened in the U.S. since free trade overtook any concept of FAIR TRADE where all the people are part of the rewards. This is a country of "We the People" not "We the Corporations" or "We the Wealthy."
22
Most folks in modest or low skill jobs get the short end of the trade stick. Try telling someone that's lost their job to an Indian outsourcer that free trade is good for them. The middle class is not disappearing. It's moving from the US to other countries, leaving Americans underemployed and feeling abandon by their leaders. The leader that speaks to this terrible situation will win.
15
Ron Cohen's comment best reflects the thinking process of many of us regarding this subject. In addition, clauses like The IDIS, Contained in The TPP, don't lend a lot of confidence in the public eye. When an entity can wield that kind of power, it speaks volumes about who benefits from these agreements (i.e. Bloomberg's thumbs up on The TPP). It also makes me think seriously about the objective and future implications, of clauses such as these.
6
For some strange reason, the views/opinions of economists trump every other informed opinion of other professions, when their record does not justify it.
22
International trade agreements have been devasting to American workers. The end.
23
Ron Cohen's thoughts mirror mine, and I will add that clauses such as; IDIS contained in The TPP demonstrate who is favoured. For an entity to wield this kind of power, one really has to question the objective and future implications.
9
There're a lot of reasons for working people to be medium angry at the way the economy's changed and left them out.
It's unclear to me that this has a single cause; as often pointed out, the decline in unions is as important as trade agreements and outsourcing. So is the rise in drugging in the Rust Belt; so is automation; so is...
What's not so good, though,nis that a fair number of people are a) outsourcing their explanations of what's going on--literally shipping them overseas, and b) turning to demogogues and lies about fixing things in a jiff.
It's unclear to me that this has a single cause; as often pointed out, the decline in unions is as important as trade agreements and outsourcing. So is the rise in drugging in the Rust Belt; so is automation; so is...
What's not so good, though,nis that a fair number of people are a) outsourcing their explanations of what's going on--literally shipping them overseas, and b) turning to demogogues and lies about fixing things in a jiff.
5
Ah, how satisfying: "people who disagree with me are ignorant or stupid"! There should be a blanket rejection of any theory that requires its exponent to be smarter than average. It's a red flag, if ever there was one, that it is more self-affirmation than explanation.
Why might people be opposed to globalization? Maybe they see their wages go down. Maybe they trained someone to replace them in their own job, which was then outsourced. Maybe their factory can't build something for the price another sells at retail. Maybe they think being told, "you should just move to a new city and get retrained, at 55, for a new career" by an economics professor with tenure is preposterous and insulting.
Or, maybe they're just uneducated louts. Who knows?
Why might people be opposed to globalization? Maybe they see their wages go down. Maybe they trained someone to replace them in their own job, which was then outsourced. Maybe their factory can't build something for the price another sells at retail. Maybe they think being told, "you should just move to a new city and get retrained, at 55, for a new career" by an economics professor with tenure is preposterous and insulting.
Or, maybe they're just uneducated louts. Who knows?
40
John Lukacs, the historian, once called economics "the most widespread idiocy of the 20th century." It appears, from what one can tell from this article, to be still true in the 21st. Experts unite! All you have to lose is your ....
13
Title of article: 'Why voters don't buy it when economists say global trade is good'.
Answer: Because it's not.
It's terrible for average Americans. Keep your cheap crap, China, Mexico et al. Walmart execs are rich enough. We don't need mass imports of more cheap products no one really needs or wants. Let's be smart. Let's put Americans back to work by producing things here. I as an American am willing to pay higher prices across the board to see that happen.
Hillary Clinton will grant amnesty and citizenship to 15 million illegals. How many more will come after that? Too many to count. How will we provide for all of them? There are only so many jobs out there and millions of Americans are already hurting. If elected, Clinton will also defend Nafta, the TPP, etc. With her in office, Wall Street, big Pharma, the healthcare and insurers can rest easy. She's one of them and bankrolled by them. She will owe them big time. With a Clinton presidency, corporate America will continue to take corporate welfare, pay as little as possible in taxes and outsource our jobs and bring in workers on foreign visas (instead of hiring Americans) just to increase their profits.
A vote for Clinton is a vote for continuing the status quo. She will defend the system of the 1% because she and her husband are a part of it and helped to create it! Don't be fooled by the slick infomercial of the Democratic convention and Clinton's campaign.
Answer: Because it's not.
It's terrible for average Americans. Keep your cheap crap, China, Mexico et al. Walmart execs are rich enough. We don't need mass imports of more cheap products no one really needs or wants. Let's be smart. Let's put Americans back to work by producing things here. I as an American am willing to pay higher prices across the board to see that happen.
Hillary Clinton will grant amnesty and citizenship to 15 million illegals. How many more will come after that? Too many to count. How will we provide for all of them? There are only so many jobs out there and millions of Americans are already hurting. If elected, Clinton will also defend Nafta, the TPP, etc. With her in office, Wall Street, big Pharma, the healthcare and insurers can rest easy. She's one of them and bankrolled by them. She will owe them big time. With a Clinton presidency, corporate America will continue to take corporate welfare, pay as little as possible in taxes and outsource our jobs and bring in workers on foreign visas (instead of hiring Americans) just to increase their profits.
A vote for Clinton is a vote for continuing the status quo. She will defend the system of the 1% because she and her husband are a part of it and helped to create it! Don't be fooled by the slick infomercial of the Democratic convention and Clinton's campaign.
15
The free trade study is from 2009, and it appears the survey may have been from 2006. There's no date on the outsourcing one but appears to be in the 2012-ish timeframe. You cannot base evolving political opinions on surveys from that long ago. I expect more quality reporting from this site.
15
Tariffs don’t work?
Forbes, 7/21/16
“Mercedes-Benz broke ground Wednesday on a $500 million addition to its commercial van factory in South Carolina in a bid to beat competitors by building the next-generation Sprinter stateside and sidestep a steep tariff.
The ceremony marked a major step toward the German automaker’s vision for aggressive growth in the U.S., the Sprinter van’s second-largest market. The half-billion dollar investment will expand the Ladson, S.C., plant, where Mercedes currently assembles the Sprinter, as well as its new smaller Metris commercial van, after components shipped from Europe arrive at the Port of Charleston.
Moving the Sprinter’s production to North Charleston will pump U.S. sales by allowing Mercedes to build more vans, deliver them faster, and cut costs. A 25% tariff on imports including pickup trucks and commercial vans, known as the “chicken tax,” has kept the Sprinter at a competitive disadvantage against the segment-leading Ford Transit and other large commercial vans.
Mercedes executives said they expect the South Carolina plant to start producing the next-generation Sprinter by the end of the decade. The automaker has long been one of the region’s largest employers, and the new investment will create up to 1,300 jobs at the plant and 400 positions with local suppliers.”
BUT, TRUMP HAS NO IDEA WHAT HE IS TALKING ABOUT.
Forbes, 7/21/16
“Mercedes-Benz broke ground Wednesday on a $500 million addition to its commercial van factory in South Carolina in a bid to beat competitors by building the next-generation Sprinter stateside and sidestep a steep tariff.
The ceremony marked a major step toward the German automaker’s vision for aggressive growth in the U.S., the Sprinter van’s second-largest market. The half-billion dollar investment will expand the Ladson, S.C., plant, where Mercedes currently assembles the Sprinter, as well as its new smaller Metris commercial van, after components shipped from Europe arrive at the Port of Charleston.
Moving the Sprinter’s production to North Charleston will pump U.S. sales by allowing Mercedes to build more vans, deliver them faster, and cut costs. A 25% tariff on imports including pickup trucks and commercial vans, known as the “chicken tax,” has kept the Sprinter at a competitive disadvantage against the segment-leading Ford Transit and other large commercial vans.
Mercedes executives said they expect the South Carolina plant to start producing the next-generation Sprinter by the end of the decade. The automaker has long been one of the region’s largest employers, and the new investment will create up to 1,300 jobs at the plant and 400 positions with local suppliers.”
BUT, TRUMP HAS NO IDEA WHAT HE IS TALKING ABOUT.
12
In other words Gregory Mankiw: "I'm an economist from Harvard and listen to me, global free trade is good. It's a fact."
The message to the vanishing middle class: Who are you going to believe, an elite expert, or your own lying eyes.
The message to the vanishing middle class: Who are you going to believe, an elite expert, or your own lying eyes.
29
Small gains for many, life-ruining losses for a few = overall gain. Better living through math!
12
Thank you Professor Mankiw. A lot of real intelligence here.
5
Academic economists, including those associated with Princeton and NYT are rarely given line positions with direct decision making power. President Clinton made a difference by learning from his single parent mom how things really came down in the neighborhoods. He lifted up a generation of citizens!
I am concerned regarding the health of Bill Clinton.
He looked weak at the verge of collapse while his wife was speaking. I am sure I was not the only one to notice it.
I am concerned regarding the health of Bill Clinton.
He looked weak at the verge of collapse while his wife was speaking. I am sure I was not the only one to notice it.
1
I am not an economist, but I am a curious fellow, so I clicked on link to the "top economists" Mankiw lists. It struck that of the 44 people listed, two Nobel Prize winners, Paul Krugman and Joseph Steiglitz were not on the list. Is there a higher "top" than a Nobel Prize winner? Or does being of a liberal bent disqualify you from the category?
So I googled:
Krugman, in his Times blog (10/16/15) declared himself "a lukewarm opponent" of TPP". Steiglitz, in an address in Canada during March 2016 said the Trans-Pacific Partnership may well be the worst trade agreement ever negotiated.
So, Mr. Mankiw, if you have an opinion or an argument, express it. But don't misrepresent your profession, assuming we are idiots (or that internet searches haven't been invented).
So I googled:
Krugman, in his Times blog (10/16/15) declared himself "a lukewarm opponent" of TPP". Steiglitz, in an address in Canada during March 2016 said the Trans-Pacific Partnership may well be the worst trade agreement ever negotiated.
So, Mr. Mankiw, if you have an opinion or an argument, express it. But don't misrepresent your profession, assuming we are idiots (or that internet searches haven't been invented).
23
Edward Mansfield and Diana Mutz points are well taken, one need only read the comments on the topic of ‘Free Trade’ to see that world view is riding heavy and a guess at the average income level of the readers of the Times would place them in groups likely not damaged by the shift in income distribution in the last forth years.
But the Economist’s may be well off base, leaning as they do on David Ricardo Comparative Advantage theory.
If you want to see the rejection of such reasoning look at the work of Raúl Prebisch, a Latin American Economist, destruction of the arguments used to support it by referencing the real world of Latin America.
Likewise the Economic Profession has no easy slot for the braking of the middle/working – class in the last 40th years and the crumbling towns they live in. It’s a long way from the chalkboard, or the keyboard to the streets most know.
‘Some benefit some lose’ leaves much to be revealed.
But the Economist’s may be well off base, leaning as they do on David Ricardo Comparative Advantage theory.
If you want to see the rejection of such reasoning look at the work of Raúl Prebisch, a Latin American Economist, destruction of the arguments used to support it by referencing the real world of Latin America.
Likewise the Economic Profession has no easy slot for the braking of the middle/working – class in the last 40th years and the crumbling towns they live in. It’s a long way from the chalkboard, or the keyboard to the streets most know.
‘Some benefit some lose’ leaves much to be revealed.
4
Other economists disagree about the benefits of globalization - which is *NOT* the same as free trade. Here's one:
http://www.huffingtonpost.com/michael-hughes/free-trade-doesnt-work-in_b...
If there were *really* free trade, you could buy an American car in Japan as easily as a Japanese car. or import American cars into China as easily as we import microwaves from China, etc. That is very *VERY FAR* from being the case.
I have found that people who didn't finish college believe what they see with their own eyes. People who went to college do what they're told and believe experts are always right because that's how you get through college. (FWIW, I have a Masters and it has taken years to finally realize "no one knows anything".)
It is just the merest coincidence that as globalization has proceeded, the concentration of wealth in the hands of the top 1% has accelerated?
http://www.huffingtonpost.com/michael-hughes/free-trade-doesnt-work-in_b...
If there were *really* free trade, you could buy an American car in Japan as easily as a Japanese car. or import American cars into China as easily as we import microwaves from China, etc. That is very *VERY FAR* from being the case.
I have found that people who didn't finish college believe what they see with their own eyes. People who went to college do what they're told and believe experts are always right because that's how you get through college. (FWIW, I have a Masters and it has taken years to finally realize "no one knows anything".)
It is just the merest coincidence that as globalization has proceeded, the concentration of wealth in the hands of the top 1% has accelerated?
15
Like the Eurpean Union, the billionaires in banking, tech, GE et al will reap huge profits and to the Clinton Foundation, Podesta of K st. and the Clinton Regime will come gifts, fees for speeches, jobs for friends and so it goes. The worker in this country falls
Farther and farther behind.
Farther and farther behind.
6
I don't want to sound unfriendly or judgmental, but economists deal in cloud castles, flawed data and silliness. We've all known this for years (starting with the Laffer curve, if not before). We haven't made a fuss because, basically, we were just being polite. But that time has past.
Also, we're easily smart enough to be suspicious of people who refer to themselves as "experts".
You seem like a very intelligent person. I'm surprised you missed this.
Also, we're easily smart enough to be suspicious of people who refer to themselves as "experts".
You seem like a very intelligent person. I'm surprised you missed this.
10
Maybe if US corporations weren't able to park their assets untaxed offshore, Americans would perceive a benefit from the global economy.
11
Is the sort of education Professor Mankiw promotes, ungrammatical but with correct politics? This from a graduate student in English to a Department of English listserv: "Fellow English Folks:
As some of you may know, several of we MFAs have been emailing our City Council Members to start dialogues about the idea of instituting a citizen review panel for police accountability in [our city]." If so, then one wonders what being educated means in this instance.
As some of you may know, several of we MFAs have been emailing our City Council Members to start dialogues about the idea of instituting a citizen review panel for police accountability in [our city]." If so, then one wonders what being educated means in this instance.
6
Why is it that an organisation specifically created to regulate Trade, I speak of the WTO, is ignored? The second half of the XXth century worked satisfactorilly under WTO.
Some of the reasons that some want a "masive and complcated AND secretive" agreement on trade (TPP, TTIP, CETA, etc) is that some "big"companies want the inclusion of (secret) agreements on so called "investments" mening that when a country wants to legislate they can prossecute states OUT OF THE ORDINARY LEGAL SYSTEM... and this is UNACCEPTABLE
Some of the reasons that some want a "masive and complcated AND secretive" agreement on trade (TPP, TTIP, CETA, etc) is that some "big"companies want the inclusion of (secret) agreements on so called "investments" mening that when a country wants to legislate they can prossecute states OUT OF THE ORDINARY LEGAL SYSTEM... and this is UNACCEPTABLE
1
Government is supposed to be a follower not a leader.
Haven't you ever heard of representative democracy? I realize that we really have a plutocracy led by campaign contributions and highly paid lobbyists. As for the "experts" e.g. economists--who is signing their paychecks? Financial companies?
Haven't you ever heard of representative democracy? I realize that we really have a plutocracy led by campaign contributions and highly paid lobbyists. As for the "experts" e.g. economists--who is signing their paychecks? Financial companies?
4
If you are out of work and struggling, you don't need an economist to tell you which direction the wind is blowing.
20
Two words are enough to explain it for most Americans: Rust Belt. Wonder why you didn't address it. Another common comparison also escaped you. Middle class American wages vs the penny wages that third world workers get for similar jobs. They can prosper because of their low standard of living costs.. We can't cause of our high standard of living.
20
I bet one thing all these economists have in common is that they're employed. The same for pundits like Mr. Mankiw for whom the law of supply and demand never seems to apply; there's always a think tank or two that will be willing to rent your academic imprimatur on quite generous terms.
19
Of course trade with China is beneficial overall. Anytime someone gives you goods (Nike shoes) in exchange for pieces of paper (Fed notes) you produce at virtually no cost, you're a winner. As for these trade deals I doubt they have much effect one way or the other on the incomes (gross or net) of average Americans. Why would they? They're supposed to benefit T-M-T and drug companies who park their gains in Ireland and other tax havens.
Now, if America Firsters could only see that it's the trade deficit -- the result of an overvalued dollar currently caused by a deficit which is much too low -- which is costing jobs, we'd be talking. But being deficit hawks and Mankiw fans they never will.
Now, if America Firsters could only see that it's the trade deficit -- the result of an overvalued dollar currently caused by a deficit which is much too low -- which is costing jobs, we'd be talking. But being deficit hawks and Mankiw fans they never will.
3
Economists say free trade is good for the ECONOMIES involved, that they enrich the ECONOMIES. They essentially never discuss how the greater riches in the economies are distributed among the PEOPLE. The people are the voters. The people (voters) have noticed that enriching the economy may do noting to help the people. Or, in fact, may impoverish the people (voters).
34
Until American workers have the right to go take jobs in China global trade will remain bad.
5
Dr. Mankiw might read his Harvard colleague Dr. Summer's recent paper to get a different view.
"Others, such as New York Times columnist Paul Krugman and Michael Pettis at Peking University have already noted how in a world with too little demand, one country’s trade surplus inflicts unemployment on the country with a deficit."
http://blogs.wsj.com/economics/2016/04/11/the-case-for-free-trade-is-wea...
"Others, such as New York Times columnist Paul Krugman and Michael Pettis at Peking University have already noted how in a world with too little demand, one country’s trade surplus inflicts unemployment on the country with a deficit."
http://blogs.wsj.com/economics/2016/04/11/the-case-for-free-trade-is-wea...
10
The problem with Economics is that it is a quasi-equilibrium social science. The free trade/globalization benefits touted by this science has no time derivative. Hence, it is not surprising that people may not see a benefit to their lives in their prime earning years. It is not realistic to expect those people to sign up for globalization if they do not experience its promise in their lifetimes.
10
Free trade agreements aren't truly "free trade" unless the economy of the country we are trading with is a market economy. Chinese trade policy is protectionist. China manipulates its currency so as to keep its exports competitive and workers rights in China are virtually non-existent. US workers are essentially competing with slave labor.
21
Lindsey, how would a more protectionist trade policy from the US encourage China to pay its workers more or give them more rights? In fact, just the opposite would obtain. As Chinese exports declined, Chinese workers would be paid less.
3
Isn't the best thing about global trade is that you get better and cheaper products? Isn't the worst thing about global trade is that you lose manufacturing jobs to low wage workers in other countries? With Trump's 45% tariff on Chinese goods, Walmart stuff would cost 45% more and it would take a while, maybe a long while, to get manufacturing up and running in the U.S.?
4
The cost of goods at Walmart is not 100% of the price we pay. A 45% tariff would increase the cost at the store a lot less than 45%.
4
Mainstream economists always think their cherished consumerism has reigned over the world so much so that all people, willingly or otherwise, become self-interested and immersed in material satiation. As the so-called exchange economy has made the abundant society in this and other advanced capitalist countries possible, people’s viewpoints towards the globalization of capital are changed from self-centered and –interested to common good. Capital globalization has paid the one percent handsomely whereas labor globalization remains a flummoxed dream of the world’s labor whose struggles against capital’s despotism continue.
“Isolationist, nationalist, ethnocentric worldview” is nonsensical and a long shot at the best because before “affluent societies” came to fruition by class struggles the destitute, precariat and the working majority had to embrace it under the pressure of the self-aggrandizement of capital. In the late stage of capitalism today, its egregious nonsense is no longer as effective as in the old days to discomfit the increasingly disenchanted working masses.
Working people’s Brexit and other movements of disenchantment against the establishment supported by capital will have nowhere to go but up. Globalization as means to dismiss local unwanted labor is just as clear as T.P.P. as means to finesse the apotheosis of monopoly.
“Isolationist, nationalist, ethnocentric worldview” is nonsensical and a long shot at the best because before “affluent societies” came to fruition by class struggles the destitute, precariat and the working majority had to embrace it under the pressure of the self-aggrandizement of capital. In the late stage of capitalism today, its egregious nonsense is no longer as effective as in the old days to discomfit the increasingly disenchanted working masses.
Working people’s Brexit and other movements of disenchantment against the establishment supported by capital will have nowhere to go but up. Globalization as means to dismiss local unwanted labor is just as clear as T.P.P. as means to finesse the apotheosis of monopoly.
4
People do not believe in their politicians and do not believe in multi nationals anymore. even when the Fed stepped in and saved some of their wealthy friends in 2009 , they used the excuse that they were concerned with the middle class and the low income households, but meanwhile they have $ 4 trillion on their books that used to belong to both banks and investment banks. They put that pile of bad investments onto the tax payer. If they just let the system fail, it would of proved that capitalism is actually a failure unless the Federal government bails it out. Billionaires are not taxed at a high rate, for they by and large control our political system. Foundations with hundreds of billions in wealth do not pay taxes, but control US politicians. the game continues, and no one is sure how they are going to roll over $ 20 trillion in debt and another $ 4 trillion on the books of the Fed, not to mention $ 75 trillion in uncovered government obligations. Voters are not told the truth , but keep getting the same answers. Google, apple, Oracle, have hundreds of billions offshore and do not want to pay a repatriation tax, so they wait until why can buy the right politician to get rid of the tax saving hundreds of billions int axes. The politicians are up for sale. the Fed has kept rates near zero, and retired individuals hardly get any return on
their accounts. The stock market is now a casino. Why believe in it? the beat goes on.
their accounts. The stock market is now a casino. Why believe in it? the beat goes on.
19
The discussion has been focused only on loss of jobs to our trading partners. I have seen no estimates on how many jobs have been lost to the digital and automation revolution. The razor subscription clubs are a prime recent example. On-line shopping I would guess is having a far greater impact. The personal computer, the Internet and the word processor has revolutionized my personal and professional life with no direct increase in middle income jobs. The net impact across the board from automobile robotics to newspaper industry needs to be articulated. Some estimates of the contribution of each factor is overdue.
8
Nations have prospered from trade since the beginning of civilization.
Trade agreements are not the problem.
This nation is a nation of immigrants, and the nation grew wealthy attracting talented people from around the globe, though each new wave did have a backlash of bigotry and discrimination from those more established.
Immigrants are not the problem, they have founded companies like Google, eBay, Yahoo!, AT&T and P&G.
The problem is the wealth from free trade and immigrants accrues disproportionately to frauds like Trump.
He complains about trade agreements, but produces his cheap quality products overseas.
The Corporate Establishment personified by Donald Trump refuses to pay their share of taxes - getting preferential tax treatment for income from capital over wages.
He won't release his tax returns as the more you know about him, the less you like him.
The deferral of multinational income from taxation before repatriation is a loop hole that has spawned the Double Irish tax scam and numerous corporate inversions, allowing corporate taxes paid as a % of GDP to decline despite record profits versus GDP.
Trump is a huckster who defrauds gullible students at Trump U and has a pattern of bankrupting his companies after extracting cash that could never be reasonably repaid.
For nearly 40 years he has been the worst representation of the worst practices in the Corporate Establishment.
He is the Pied Piper of Brexit-like calls to self destruction.
Trade agreements are not the problem.
This nation is a nation of immigrants, and the nation grew wealthy attracting talented people from around the globe, though each new wave did have a backlash of bigotry and discrimination from those more established.
Immigrants are not the problem, they have founded companies like Google, eBay, Yahoo!, AT&T and P&G.
The problem is the wealth from free trade and immigrants accrues disproportionately to frauds like Trump.
He complains about trade agreements, but produces his cheap quality products overseas.
The Corporate Establishment personified by Donald Trump refuses to pay their share of taxes - getting preferential tax treatment for income from capital over wages.
He won't release his tax returns as the more you know about him, the less you like him.
The deferral of multinational income from taxation before repatriation is a loop hole that has spawned the Double Irish tax scam and numerous corporate inversions, allowing corporate taxes paid as a % of GDP to decline despite record profits versus GDP.
Trump is a huckster who defrauds gullible students at Trump U and has a pattern of bankrupting his companies after extracting cash that could never be reasonably repaid.
For nearly 40 years he has been the worst representation of the worst practices in the Corporate Establishment.
He is the Pied Piper of Brexit-like calls to self destruction.
11
If the current free trade agreements are beneficial to all Americans, and if any disadvantageous provisions in these agreements are just the natural consequence of the give and take of trade offs during negotiations:
Please explain, what did America receive in exchange for providing China most favored nation trading status?
I have never heard of one single thing China gave America in return for being granted that trading status.
Granting China most favored nation trading status did not benefit a single American individual or company except multi national companies who wanted to use cheap Chinese labor and non existent Chinese environmental protections to manufacture products in China so that they could now sell them freely in the US market.
Please explain, what did America receive in exchange for providing China most favored nation trading status?
I have never heard of one single thing China gave America in return for being granted that trading status.
Granting China most favored nation trading status did not benefit a single American individual or company except multi national companies who wanted to use cheap Chinese labor and non existent Chinese environmental protections to manufacture products in China so that they could now sell them freely in the US market.
18
Another factor is that many of losers in globalization live in proximity to some winners most of whom, in both cases, are working class employees of impacted companies. After watching how the losers loose their jobs and loose control of the terms of their employment, even the winners become anxious, even angry about what is happening.
By contrast, the biggest winners, the often better educated, owners and managers, may live in separate, often better, neighborhoods where the day to day negative effects of globalization on neighbors are not so evident. No wonder this group, who have the most to gain from globalization, have little visceral sensitivity about laid off workers.
For employees, and not so much for owners and managers, this anxiety has reached a critical mass coinciding with various elections where losers and anxious employee winners finally are empowered to change the course of events. The result is a perfect storm that will harm all.
Academic economists spend too much time dealing with populations in the aggregate and do not spend much time down in neighborhoods, to see with fine granularity, what is going on sociologically.
By contrast, the biggest winners, the often better educated, owners and managers, may live in separate, often better, neighborhoods where the day to day negative effects of globalization on neighbors are not so evident. No wonder this group, who have the most to gain from globalization, have little visceral sensitivity about laid off workers.
For employees, and not so much for owners and managers, this anxiety has reached a critical mass coinciding with various elections where losers and anxious employee winners finally are empowered to change the course of events. The result is a perfect storm that will harm all.
Academic economists spend too much time dealing with populations in the aggregate and do not spend much time down in neighborhoods, to see with fine granularity, what is going on sociologically.
12
Perhaps Prof. Mankiw should take a tour of former manufacturing towns in the Midwest that have been devastated by globalization. The entire value chain associated with manufacturing have been moved to lower wave countries by overpaid American CEOs. The result: Within one generation US manufacturing capabilities have been hollowed out to such an extent that even high tech goods like PCs, mobile devices are manufactured in China. The argument that lower cost of manufacturing in China helps US consumers does not hold true; reverse engineering helps other countries to move up the value chain. Today, China has more top 10 supercomputers than the US.
Globalization and free trade are good for financially privileged, but have harmed the competitive interests & capabilities of the country.
Globalization and free trade are good for financially privileged, but have harmed the competitive interests & capabilities of the country.
25
Two common threads in these comments: the first is poorly conceived scepticism regarding the benefits of trade, and the second is confusion regarding American prosperity. Free trade benefits all participants, and America is dependent on trade for prosperity, as are all other nations. It is empirically defensible, and reasonable, to complain that our economy currently distributes the fruits of economic prosperity unevenly ("unfairly" is the word most often used, but this is more complicated); to blame this phenomenon on trade is misguided. Relatively unfettered movement of goods, services, capital, and labor across international boundaries increases net global prosperity. To dispute this is irrational. And to argue that somehow the United States is immune to the laws of economics and could prosper under a regime of high tariffs and impeded capital and labor movement is also irrational.
So, sure, be angry about income inequality, and agitate for the government to be more proactive about helping Americans displaced by globalization find new occupations. But to argue that trade is the problem is like solving the problem of how to spend your money by burning it, something you will surely in the end regret.
So, sure, be angry about income inequality, and agitate for the government to be more proactive about helping Americans displaced by globalization find new occupations. But to argue that trade is the problem is like solving the problem of how to spend your money by burning it, something you will surely in the end regret.
7
The Hordes of barbarians from flyover land have only just begun to gather. Irrational mouth breathers awakened from incessant wandering amidst piles of blue ribbon cans now united with only two goals.
1. The liberation of Archie Bunkers chair from captivity and it's placement into the Oval Office in the White House.
2. Installing a person in that chair who befits it's heritage.
Perhaps you could have spent twice as many words on the second part of your comment versus the first. But folks always talk about what affects them first.
1. The liberation of Archie Bunkers chair from captivity and it's placement into the Oval Office in the White House.
2. Installing a person in that chair who befits it's heritage.
Perhaps you could have spent twice as many words on the second part of your comment versus the first. But folks always talk about what affects them first.
1
The issue is not whether global trade is a good thing; of course it is; that was proven when erecting barriers to the free trade of Germany led to WWII.
The issue is who is at the table negotiating these trade agreements and who is not. One has to ask, why did the rust belt vote against free trade candidates, while wealthy areas in the NE did not?
The AFL-CIO has made it abundantly clear that unions had no representative at the negotiating table and had no knowledge or input on specific proposals being discussed at the table. Unions had unprecedented access to the Obama administration to voice in general their perspective on how to improve trade agreements, but they were kept completely in the dark on what specifics being negotiated.
The second clue is derived from the trade deficits America runs with its trading partners after each trade agreement is enacted.
Universally, even with the Korean Trade Agreement, America's trade deficit grew at an unprecedented pace after the trade agreement became effective.
Trade agreements are healthy if they include enforceable provisions that require all trading partners to let their workers build independent unions and also that require trading partners to have high minimum environmental safeguards.
Without both of these, trade agreements are good for a small few but devastating to the rest of us.
The issue is who is at the table negotiating these trade agreements and who is not. One has to ask, why did the rust belt vote against free trade candidates, while wealthy areas in the NE did not?
The AFL-CIO has made it abundantly clear that unions had no representative at the negotiating table and had no knowledge or input on specific proposals being discussed at the table. Unions had unprecedented access to the Obama administration to voice in general their perspective on how to improve trade agreements, but they were kept completely in the dark on what specifics being negotiated.
The second clue is derived from the trade deficits America runs with its trading partners after each trade agreement is enacted.
Universally, even with the Korean Trade Agreement, America's trade deficit grew at an unprecedented pace after the trade agreement became effective.
Trade agreements are healthy if they include enforceable provisions that require all trading partners to let their workers build independent unions and also that require trading partners to have high minimum environmental safeguards.
Without both of these, trade agreements are good for a small few but devastating to the rest of us.
19
I agree. If we have to bear the immense cost to our economy of unions, we should make sure our trading partners run the race carrying the same anvil. Better yet, require specifically that their teachers unionize so that, over time, their kids will start to test down around where ours test.
Does anyone believe that we would even be considering free trade agreements if they strengthened workers bargaining power and wages and weakened the wealthy's bargaining power and ROI?
Not hardly.
America has only one governing principle: free contract.
In such a society, bargaining power is everything. What you make or earn is a function of that.
Everything that goes on around us involves individuals or groups of individuals trying to enhance their bargaining power, be it personal grooming, advertising on TV or lobbying in Washington. This piece is no different.
The median wage has not increased since 1972, yet GNP has gone up 150% since then. All the gains in the last 45 years has gone to the 1%, despite - or because of - the plethora of free trade agreements out there.
We live in an era of global and national deflationary pressure and low interest rates, prone to investment bubbles. The only way to change this is to enhance wages. The only way to enhance wages is to increase employee bargaining power vis-a-vis their employers. Free trade does not enhance employee bargaining power.
Just about any argument in favor of free trade agreements is an argument extended on behalf of the 1% to enhance their bargaining power in society at the expense of everyone else.
If it did anything else, the arguments would not even be put forward. This article is just carrying water for the 1%.
Not hardly.
America has only one governing principle: free contract.
In such a society, bargaining power is everything. What you make or earn is a function of that.
Everything that goes on around us involves individuals or groups of individuals trying to enhance their bargaining power, be it personal grooming, advertising on TV or lobbying in Washington. This piece is no different.
The median wage has not increased since 1972, yet GNP has gone up 150% since then. All the gains in the last 45 years has gone to the 1%, despite - or because of - the plethora of free trade agreements out there.
We live in an era of global and national deflationary pressure and low interest rates, prone to investment bubbles. The only way to change this is to enhance wages. The only way to enhance wages is to increase employee bargaining power vis-a-vis their employers. Free trade does not enhance employee bargaining power.
Just about any argument in favor of free trade agreements is an argument extended on behalf of the 1% to enhance their bargaining power in society at the expense of everyone else.
If it did anything else, the arguments would not even be put forward. This article is just carrying water for the 1%.
41
The companies and people that benefit from global trade pay too little in US taxes. All the money remains abroad or tied up in real estate or some other untaxed instrument.
The middle class loses every time there is a force reduction to pay a dividend or buy back stock to fuel excessive executive pay
The middle class loses every time there is a force reduction to pay a dividend or buy back stock to fuel excessive executive pay
13
I agree with many of the comments made here but I am surprised one issue has not been raised. While many people see primarily the negative effects of globalization and are, in theory, opposed to it, they vote with their wallets every time they buy anything. Those of us who have bought locally-made furniture and crafts, and get our vegetables from a nearby farm, do so intentionally even as we recognize that we pay a price premium for these locally produced goods. I wonder how people who believe they are opposed to globalization would react if prices went up significantly for every day items such as clothing and household goods because of import restrictions or tariffs. It is true that the costs and benefits of globalization for Americans are unevenly distributed so the concern is warranted and should be addressed by more equitable policies. At the same time, the much-maligned economists (of which I am one) should be able to enumerate the significant consumer benefits arising from international trade.
4
I think more people would listen to economists if economics wasn't mostly partisan politics by another name, suffering from physics envy, and full of charlatans who had misappropriated the Nobel name (against the Nobel family's wishes) in order to tell the world how smart they were.
11
It is absurd to blame free trade agreements for job losses. Free trade expands the economy.
It is automation, technology and tax preferences for capital over labor that incentivize employers to replace workers.
Even low wage workers are being replaced by automation at McDonalds with machines, because they don't have benefits and McDonalds can depreciate the cost of the machines.
Free trade agreements and immigration are convenient scapegoats presented to voters so they have something to blame for their diminished standards of living.
What is never said is how many jobs free trade and immigration have created.
Companies founded by immigrants include eBay, Google, Yahoo, Procter & Gamble, DuPont, Goldman Sachs, AT & T, Comcast, Nordstrom, Colgate, Sara Lee and Kraft Food.
Any person of a certain age understands that no job is protected.
The only protection comes from education, vocation, and adaption.
We can level the playing field between human capital and machine capital by providing:
- access to higher education and vocational training at all ages;
- ending employer sponsored health care and replacing it with Obamacare's objective - Medicare for all;
- ending tax presences for income earned from capital over labor;
- moving regressive payroll taxes to the general budget where it belongs
- ending the deferral of taxation before repatriation for multinational corporations, the Granddaddy of all Corporate Tax Dodges;
- and enacted the Buffett rule.
It is automation, technology and tax preferences for capital over labor that incentivize employers to replace workers.
Even low wage workers are being replaced by automation at McDonalds with machines, because they don't have benefits and McDonalds can depreciate the cost of the machines.
Free trade agreements and immigration are convenient scapegoats presented to voters so they have something to blame for their diminished standards of living.
What is never said is how many jobs free trade and immigration have created.
Companies founded by immigrants include eBay, Google, Yahoo, Procter & Gamble, DuPont, Goldman Sachs, AT & T, Comcast, Nordstrom, Colgate, Sara Lee and Kraft Food.
Any person of a certain age understands that no job is protected.
The only protection comes from education, vocation, and adaption.
We can level the playing field between human capital and machine capital by providing:
- access to higher education and vocational training at all ages;
- ending employer sponsored health care and replacing it with Obamacare's objective - Medicare for all;
- ending tax presences for income earned from capital over labor;
- moving regressive payroll taxes to the general budget where it belongs
- ending the deferral of taxation before repatriation for multinational corporations, the Granddaddy of all Corporate Tax Dodges;
- and enacted the Buffett rule.
9
If that were the case, jobs would decline equally all over the world since the entire world is continually modernizing.
But the job loss is not equally shared. Rather, American manufacturing jobs are disappearing, while Chinese manufacturing jobs are increasing.
Only unfair trade practices and unfair trade agreements (not modernization) could account for this disparity.
But the job loss is not equally shared. Rather, American manufacturing jobs are disappearing, while Chinese manufacturing jobs are increasing.
Only unfair trade practices and unfair trade agreements (not modernization) could account for this disparity.
13
America has a service economy - it is 70% of total GDP. Government is 20%, manufacturing is a relatively small part of the economy.
Yearning for the past won't bring back jobs that have been automated.
Even if there were no trade agreements, automation and technology would still replace jobs that are not competitive. Even low paid jobs are being automated (see McDonalds).
The fact that Donald Trump is anti-trade, yet manufacturers everything outside of the country makes that clear to everyone but the most gullible and uninformed.
Yearning for the past won't bring back jobs that have been automated.
Even if there were no trade agreements, automation and technology would still replace jobs that are not competitive. Even low paid jobs are being automated (see McDonalds).
The fact that Donald Trump is anti-trade, yet manufacturers everything outside of the country makes that clear to everyone but the most gullible and uninformed.
4
Blaming automation for job losses in the US is questionable. The infamous case of Carrier Corporation is a case in point. Carrier is not cutting 1,400 US jobs and moving their factory to Mexico because Mexico has better automation than the US. No, it's simply to lower labor costs. I'll bet we have better, perhaps the best automation technology in the world right here in the US. By the automation argument we should be attracting industry and manufacturing to the US but we're not. We're moving the automation with the factory overseas in addition to cutting the jobs. It's an astonishing fact that since the early 80's, 60+ thousand factories have been closed in the US. And oft ignored is when a factory closes, a community is upended, even destroyed. There's bound to be fallout.
11
Hmmm, I dunno, maybe some whackos out there think we should not enshrine the right of corporations to sue legitimate governments over public health legislation? Does that make me insular? Isolationist?
When the earnings of your median worker have DECLINED over the past 40 years you cannot with a straight face say that free trade makes more or less 'everyone' richer. The only way someone makes that argument is if they are totally detached from actual people and are dealing in the world of pure theory....where far too many economists seem most comfortable. Sadly, too many people have come to regard economics as gospel when it is really closer to voodoo. It is not truly scientific, is hounded by ideology at every turn, and far too often forgets that human beings are just that...fallible, emotional, creative creatures who do not respond in reliably predictable ways to complex, long-term phenomena.
Anyway, what do I know? Apparently I'm an isolationist, nationalist, ethnocentrist American living and working abroad in a multicultural city at an institution that predates the United States by about 550 years.
When the earnings of your median worker have DECLINED over the past 40 years you cannot with a straight face say that free trade makes more or less 'everyone' richer. The only way someone makes that argument is if they are totally detached from actual people and are dealing in the world of pure theory....where far too many economists seem most comfortable. Sadly, too many people have come to regard economics as gospel when it is really closer to voodoo. It is not truly scientific, is hounded by ideology at every turn, and far too often forgets that human beings are just that...fallible, emotional, creative creatures who do not respond in reliably predictable ways to complex, long-term phenomena.
Anyway, what do I know? Apparently I'm an isolationist, nationalist, ethnocentrist American living and working abroad in a multicultural city at an institution that predates the United States by about 550 years.
26
The only way someone makes that argument is because they included the 1% in the statistics, so the 'averages' are skewed.
Remove that group, the only ones who have benefitted over the past 40+ years, and the problem becomes obvious, even to an economist.
Remove that group, the only ones who have benefitted over the past 40+ years, and the problem becomes obvious, even to an economist.
2
The point of globalism in trade is to chisel down wages in 1st world economies by forcing workers there to compete against workers in 3rd world countries. This would allow shareholders & executives of corporation to extract a higher share of the returns at the expense of labor. This is all well & good in the short run but suicide in the long run.
In the final analysis the source of demand is wages. So if you chisel down wages you are undermining demand in 1st world economies, where demand constitutes 70% of all economic activity. The global great recession is nothing more than these chickens coming home to roost. The upside lies entirely for the rich.
The situation for workers in 3rd world countries is mixed. The way to move from 3rd world to 1st is by injecting capital & education into an underdeveloped society: this increases per capita productivity allowing wages to follow. Foreign trade is not necessary just foreign investment, though trade does offer higher returns on that investment.
Capitalist investors need ROI. These days its hard to find because demand is so low relative to supply, thanks to stagnant wages, the result of globalization. So investors go hunting for ROI and if 3rd world countries offer opportunity even w/out global trade, they'll find their way there eventually.
But its worth pointing out, the point of managing the economy of a nation isn't just to make wealthy investors better off but everyone in that nation. Clearly globalism doesn't do that.
In the final analysis the source of demand is wages. So if you chisel down wages you are undermining demand in 1st world economies, where demand constitutes 70% of all economic activity. The global great recession is nothing more than these chickens coming home to roost. The upside lies entirely for the rich.
The situation for workers in 3rd world countries is mixed. The way to move from 3rd world to 1st is by injecting capital & education into an underdeveloped society: this increases per capita productivity allowing wages to follow. Foreign trade is not necessary just foreign investment, though trade does offer higher returns on that investment.
Capitalist investors need ROI. These days its hard to find because demand is so low relative to supply, thanks to stagnant wages, the result of globalization. So investors go hunting for ROI and if 3rd world countries offer opportunity even w/out global trade, they'll find their way there eventually.
But its worth pointing out, the point of managing the economy of a nation isn't just to make wealthy investors better off but everyone in that nation. Clearly globalism doesn't do that.
27
Economists fail to reveal their personal investments and when studied we see Economists favor what increases their own investments. D'oh!
Further, the gains from globalization are now flowing 90% to the 1% so there is no conflict when the public is against globalization because it is not in their best interests as it is now run.
Economists are not looking at real life they are only playing games with numbers. They see the price of a shirt from China costing US citizens a dollar less so they think a consumer wins. However, that shirt lasts 90 days instead of five years so is a loss. An extended loss is that America's used clothing used to be baled up and sent to poor nations and that flow of clothing has dropped dramatically, so now the poor countries must also buy China made goods, so Economists say that is good because more money moves, and every time money moves the uber wealthy get a piece of the action and Economists are funded by research grants doled out by uber wealthy foundations, corporations and individuals. Essentially, if you are a working person, anything and everything an Economists says is not in your best interest. The whole field is focused on the increase of capital and the concentration of that capital and how to raise stock markets which are totally non-productive of goods and services and the well being of the world. The financial industry is now dominant in our world and it offers nothing for the worker.
Further, the gains from globalization are now flowing 90% to the 1% so there is no conflict when the public is against globalization because it is not in their best interests as it is now run.
Economists are not looking at real life they are only playing games with numbers. They see the price of a shirt from China costing US citizens a dollar less so they think a consumer wins. However, that shirt lasts 90 days instead of five years so is a loss. An extended loss is that America's used clothing used to be baled up and sent to poor nations and that flow of clothing has dropped dramatically, so now the poor countries must also buy China made goods, so Economists say that is good because more money moves, and every time money moves the uber wealthy get a piece of the action and Economists are funded by research grants doled out by uber wealthy foundations, corporations and individuals. Essentially, if you are a working person, anything and everything an Economists says is not in your best interest. The whole field is focused on the increase of capital and the concentration of that capital and how to raise stock markets which are totally non-productive of goods and services and the well being of the world. The financial industry is now dominant in our world and it offers nothing for the worker.
20
The vocal opposition to TPP voiced by Trumpers and Berners alike, seems to me to miss the most vital point about this agreement. I don't know if this is aappropriate agreement, but I am pretty sure that there are aspects that are advantageous to the US and aspects that are less desirable. That's the nature of international pacts and agreements.
The opposition centers on two main issues:
1) Job loss. The example used is usually NAFTA, which did cost some jobs, but also created different jobs in sectors dependent on exports of US goods and services.
2) Transparency. The complaint is that the agreent was negotiated in secrecy. ALL international pacts and agreements are negotiated out of public sight. Only the result of the negotiations is made public. This is how business agreements are negotiated and this is how labor agreements aree also negotiated.
3) Ceding of sovereignty to corporate interests. Not having read the TPP, I don't know if this is true, but, from what I gather of media reports, this is the weakest and badly structured part of the pact. Perhaps some re-negotiation is required to strengthen the force of US law (and the sovereign interests of the other participating nations) is not only possible, but required.
The issue that is not considered is the real rationale for TPP: to control China's overt moves to exert as much influence over the Pacific Rim through economic hegemony. And this we cannot allow.
The opposition centers on two main issues:
1) Job loss. The example used is usually NAFTA, which did cost some jobs, but also created different jobs in sectors dependent on exports of US goods and services.
2) Transparency. The complaint is that the agreent was negotiated in secrecy. ALL international pacts and agreements are negotiated out of public sight. Only the result of the negotiations is made public. This is how business agreements are negotiated and this is how labor agreements aree also negotiated.
3) Ceding of sovereignty to corporate interests. Not having read the TPP, I don't know if this is true, but, from what I gather of media reports, this is the weakest and badly structured part of the pact. Perhaps some re-negotiation is required to strengthen the force of US law (and the sovereign interests of the other participating nations) is not only possible, but required.
The issue that is not considered is the real rationale for TPP: to control China's overt moves to exert as much influence over the Pacific Rim through economic hegemony. And this we cannot allow.
1
"This we cannot allow"
Who do you mean by "we"?
The constitution of the united states, our national contract, says that we are in pursuit of a more perfect union. That does not include foreign entities especially on the East Asian rim.
I have no imperial interest in the rim of East Asia. Nor do any of my friends or families. Yet, it is those people who would have to put their lives on the line to "not allow" this to happen.
The same with Iraq back in 2003.
A suddenly competitive Imperialistic Communist China might force the American establishment to realize that they need the dregs of society to fight to protect their property from ugly communist foreigners, so they then might cut them a better deal/social contract.
So, speak for yourself.
You can create your own movement: Americans Interested in losing wages and jobs and willing to fight and die and cough up tax $ to deny China greater influence in their own back yard. I'm sure you'll find lots of folks willing to join your movement.
Who do you mean by "we"?
The constitution of the united states, our national contract, says that we are in pursuit of a more perfect union. That does not include foreign entities especially on the East Asian rim.
I have no imperial interest in the rim of East Asia. Nor do any of my friends or families. Yet, it is those people who would have to put their lives on the line to "not allow" this to happen.
The same with Iraq back in 2003.
A suddenly competitive Imperialistic Communist China might force the American establishment to realize that they need the dregs of society to fight to protect their property from ugly communist foreigners, so they then might cut them a better deal/social contract.
So, speak for yourself.
You can create your own movement: Americans Interested in losing wages and jobs and willing to fight and die and cough up tax $ to deny China greater influence in their own back yard. I'm sure you'll find lots of folks willing to join your movement.
8
How can there be legitimate tradeoffs in trade agreements when only businesses are at the table? They cannot speak for all.
I believe the strength of America is "one man, one vote." This motto recognizes that a country's decisions are rational and fair only if everyone has a voice.
With trade agreements 99% of America has no voice. And so, if we could harken back to Andrew Jackson, are inherently irrational, biased and unfair.
I believe the strength of America is "one man, one vote." This motto recognizes that a country's decisions are rational and fair only if everyone has a voice.
With trade agreements 99% of America has no voice. And so, if we could harken back to Andrew Jackson, are inherently irrational, biased and unfair.
5
Mr. Green, You have not read the TPP agreement because it is still secret, at least most of it, the truth buried under thousands of unreadable pages. Net, net, millions of jobs have been lost to Clinton's NAFTA. Even more will be lost to TPP as it covers even more economic activity. Corporations and dimwitted political hacks structured the agreement to favor globalization of the world's economies and to remove the authority of US citizens to control our own destiny. It is a disaster for America and Clinton called it the "gold standard" in trade agreements before she decided to be against it (without telling us why). Anyone but the most naive knows that as soon as she is elected Clinton will call for minor changes she will describe as 'major' and push it through congress with her Wall St. partners urging her on.
7
This analysis is an insulting bit of rubbish. Concern about outsourcing jobs is legitimate, and tying it exclusively to one's educational level as well as negatives represents the worst of academic punditry. For the record, I reject putting US workers in competition with the appalling wages often paid abroad. My politics are progressive, and I hold a PhD.
49
This comment brings up the issue of education, which the writer of the main article gaily says will eventually bring people to realize how beneficial trade is. He has not looked at the appalling state of education in this country. Young people with a high school diploma that I encounter, whether in a commercial or social context, would have been lucky to get out of grade school in my day (1940's), they are so intellectually incompetent. As a society, we are dumbing down, a race to the bottom.
4
As a progressive, you should champion policies that give the world's poor access to better paying manufacturing jobs. Those on the far left believe it is more important to "save" a few hundred (relatively) low paying jobs in the US than to allow companies to move overseas and provide better paying jobs to the world's poor. By protesting free trade, you put up a wall around the world's poor. Free trade agreements and globalization has lifted million if not a billion out of poverty over the past 70 years.
What you SHOULD advocate for is job training programs and other government programs to help those effected by trade.
What you SHOULD advocate for is job training programs and other government programs to help those effected by trade.
Jean, you hit the nail on the head. I shudder to think this is the thinking being imprinted on the minds of our young people and future leaders in the academic towers of Harvard University, an institute that otherwise I hold in high regard.
1
Globalization would enjoy more support if the economic losers were actively protected, eg with Basic Income, or other job and livability supports. The article's antipathy towards the losers of globalization is exactly why it loses; they may lose their jobs but they still have their vote. That correlation is dismissed by the author, but it is elementary.
The other reasons even the marginal beneficiaries of globalization oppose it are twofold. Primarily, it's because such agreements establish an undemocratic regulatory agency that can't be controlled by any one sovereign electorate. One of the odious provisions of the TPP is that it would allow corporations to subvert locally enacted restrictions on their business, such as environmental and worker benefit mandates. It's difficult enough when there is a democratic tyranny of the majority, but the TPP and such agreements dispense with democratic representation altogether. Allow a direct vote on the representatives on the governing organizations of the globalization treaties by the impacted electorate, and such agreements will have more appeal.
Secondarily, globalization agreements don't protect the hard won regulations imposed on business, but actually do the opposite. Instead of allowing corporations to seek the lowest common denominator of regulation, shouldn't the minimum standard be the highest level of protection?
The other reasons even the marginal beneficiaries of globalization oppose it are twofold. Primarily, it's because such agreements establish an undemocratic regulatory agency that can't be controlled by any one sovereign electorate. One of the odious provisions of the TPP is that it would allow corporations to subvert locally enacted restrictions on their business, such as environmental and worker benefit mandates. It's difficult enough when there is a democratic tyranny of the majority, but the TPP and such agreements dispense with democratic representation altogether. Allow a direct vote on the representatives on the governing organizations of the globalization treaties by the impacted electorate, and such agreements will have more appeal.
Secondarily, globalization agreements don't protect the hard won regulations imposed on business, but actually do the opposite. Instead of allowing corporations to seek the lowest common denominator of regulation, shouldn't the minimum standard be the highest level of protection?
6
On an economic basis, I have no fear of foreigners. Who I fear is American entrepreneurs who will exploit foreigners with low standards of living, or who otherwise work for peanuts, shift the labor component of their products to those foreign workers, and then pocket the savings.
When Carrier, or any other major corporation, shuts its USA factory, opens one in Mexico, and shifts its production out of the country, do their air conditioners fall in price to reflect the full labor savings? Of course not.
At that point, more is taken out of the USA than in being put back in. And someone, instead of assembling air conditioning units, gets a job instead as a minimum wage hamburger flipper.
Which, at that point, means an increase in the minimum wage to get that person out of poverty is nothing but a band aid on an economic wound.
When Carrier, or any other major corporation, shuts its USA factory, opens one in Mexico, and shifts its production out of the country, do their air conditioners fall in price to reflect the full labor savings? Of course not.
At that point, more is taken out of the USA than in being put back in. And someone, instead of assembling air conditioning units, gets a job instead as a minimum wage hamburger flipper.
Which, at that point, means an increase in the minimum wage to get that person out of poverty is nothing but a band aid on an economic wound.
24
sure, people with xenophobic attitudes are going to reject global trade, but this analysis ignores the many people in the united states who would support global trade if the benefits were more broadly distributed among our citizens.
the democratic party should withhold approval of the TPP until congress enacts higher taxes on wealthy americans: the people who benefit most from global trade should be ready to foot the bill—not only for the infrastructure that supports their economic activities, but also for the social services required to meet the basic needs of the people who lose.
the democratic party should withhold approval of the TPP until congress enacts higher taxes on wealthy americans: the people who benefit most from global trade should be ready to foot the bill—not only for the infrastructure that supports their economic activities, but also for the social services required to meet the basic needs of the people who lose.
8
Actually you and most middle income Americans enjoy the benefits of free trade with cheap iPhones and TVs and higher values in your 401k. The rich will do well regardless of whether we are open to trade or not. It is the middle class that is the most vulnerable to shutting out the world....
The one possibility that Prof. Mankiw is totally incapable of envisioning is that ordinary working people, having experienced what has been happening in their lives for the past few decades and having actually *thought* about it, understand the economy much better than all the freetrader "experts" making up the professor's mental universe.
23
The *tenured* professor's mental universe.
3
Because voters global trade reality encompasses their household. And economists are merely gender race colored ethnic sectarian political arithmetic historians. Economics is neither science nor fortune telling. There are too many variables and unknowns without any meaningful controls to make any meaningful depictions of the present or predictions of the future global economy.
6
Like any other policy, program, or tool, the results and effects of global trade depend on who is using it and how it's used. The wealthy elite who control it (corporate executives, investment managers, bankers) are playing a zero-sum game that redistributes an increasing share of the world's wealth to themselves at the expense of everyone else.
In particular, globalization lets them move production to places with the cheapest labor and least regulation. They can then enjoy the savings. Yes, the cost of the resulting goods is also lower. But that won't benefit people who "necessarily" lose their jobs and can't afford to buy those cheaper goods.
Voters are understandably angry when they suffer those consequences of global trade, regardless of what economists (who aren't suffering those consequences) might claim. Especially when they have reason to believe their own leaders are in the pockets of the elite who enjoy all the benefits. And more so when those leaders refuse to do anything to help the millions of "expendable" people left behind, or even insist that the unemployed have only themselves to blame. People who feel threatened naturally turn inward. They also turn to demagogues who insist that "I alone can fix it."
Like Capitalism, global trade does not have to be a zero-sum game that enriches the powerful at the expense of everyone else. Unfortunately, that's how the powerful are implementing global trade. Change, if it happens, will be neither easy nor painless.
In particular, globalization lets them move production to places with the cheapest labor and least regulation. They can then enjoy the savings. Yes, the cost of the resulting goods is also lower. But that won't benefit people who "necessarily" lose their jobs and can't afford to buy those cheaper goods.
Voters are understandably angry when they suffer those consequences of global trade, regardless of what economists (who aren't suffering those consequences) might claim. Especially when they have reason to believe their own leaders are in the pockets of the elite who enjoy all the benefits. And more so when those leaders refuse to do anything to help the millions of "expendable" people left behind, or even insist that the unemployed have only themselves to blame. People who feel threatened naturally turn inward. They also turn to demagogues who insist that "I alone can fix it."
Like Capitalism, global trade does not have to be a zero-sum game that enriches the powerful at the expense of everyone else. Unfortunately, that's how the powerful are implementing global trade. Change, if it happens, will be neither easy nor painless.
18
The comments illustrate the conundrum that Mankiw is trying to answer. The comments are filled with “economic” explanations against free trade that illustrate a misguided understanding of economics. Here is why free trade works and why the comments are misguided. Suppose that Mexico only trades with Canada and Canada only trades with Mexico. In the absence of trade, Canada would be growing avocados in greenhouses and Mexico would be mining industrial diamonds. Now there is free trade, Canadian avocados workers lose their jobs. But Mexico is not going to sell its avocados to Canada unless it gets something in return, which is industrial diamonds. That means that the diamond mines in Canada hire more workers. So the 1st error in many of the comments is not to consider the increase in jobs. A second error is to say that free trade helps the 1% at the expense of workers. The Canadian one percenters who own greenhouses will find their investment in greenhouses to be worthless and the Canadian one percenters who own Canadian diamond mines will be wealthier. There is no redistribution from the workers to the wealthy. Of course, some workers are hurt and this disruption to their welfare is certainly of concern. So we should be concerned about the upheaval. Now, the 3rd conundrum: with technological advance, there are similar upheavals. But people are not a as antagonistic to technological advance as they are against free trade even though both have similar qualities. Why?
1
Perhaps Canadian consumers prefer organic avocados that are certified by Canadian inspectors, visiting greenhouses that employ Canadian workers who can speak freely and independently about their working conditions.
Against this, we have avocadus economicus, a green object with a rounded shape that can be priced at X dollars per metric ton...
Against this, we have avocadus economicus, a green object with a rounded shape that can be priced at X dollars per metric ton...
5
Like everything else, attitudes towards globalization have become polarized and binary - it's either good or bad. But even Adam Smith, the high priest of free markets, saw that national interest sometimes trumps unfettered free trade. The world is more complicated than what clueless economists dream up in their ivory towers. Decisions about trade have real world implications on national security, employment, the environment, etc., that economists overlook because they don't fit into their simplistic world. Economics is truly the dismal science, and we should take economic advice with a huge grain of salt. Yes, there can be real benefits of free trade, but not always. We need to have a view that is more nuanced than all good or all bad.
6
Trade and immigration frequently get lumped together (as they did with Brexit) and to a certain degree they are flip sides of the same coin.
Here in Central Ohio, low skilled construction jobs such as roofers and dry wallers were once dominated by uneducated whites (aka "Hillbillies.") In fact, years ago a friend described the crew putting a new roof on his house as "the cast from 'Deliverance.'" Today, all those jobs are being done by Hispanics. Last year the house next to ours was extensively remodeled. The carpenters, electricians and plumbers were white men (and a few women), the roofers and dry wallers were Hispanic, and the masons were black.
If you are unemployed because recent immigrants - legal or illegal - are willing to work harder or for less pay, you might have negative attitudes towards globalization.
Here in Central Ohio, low skilled construction jobs such as roofers and dry wallers were once dominated by uneducated whites (aka "Hillbillies.") In fact, years ago a friend described the crew putting a new roof on his house as "the cast from 'Deliverance.'" Today, all those jobs are being done by Hispanics. Last year the house next to ours was extensively remodeled. The carpenters, electricians and plumbers were white men (and a few women), the roofers and dry wallers were Hispanic, and the masons were black.
If you are unemployed because recent immigrants - legal or illegal - are willing to work harder or for less pay, you might have negative attitudes towards globalization.
10
I am somewhat surprised the top comments are all anti-trade but I am also surprised at the angle Mankiw approaches this subject. While I expect what he says is true I do not think it is going to change any minds. If instead he had told us how free trade has lifted living standards globally and significantly reduced global inequality would that have made a difference? What if he talked about how people should be free to hire and buy as they desire? In many industries (steel for example) automation has destroyed far more jobs than globalization. Are we going to ban machines? As Mankiw says we need to stop thinking for the short term.
1
At the outset, economists, government and the business community tried to sell the citizenry on the idea that when a country with a lower standing of living was to be brought in to the fold of any trade agreement, its standard of living would increase, hence they would buy more goods from the more affluent country. In the case of NAFTA and since many trade agreements were already in place between Canada and the U.S. long before NAFTA was even thought of, ie. the autopact and others, and since Canada and the U.S. have similar standards of living, this agreement was aimed primarily at Mexico.
Although it has brought considerably more manufacturing activity to Mexico, a considerable amount of that has been done at the expense of the auto manufacturers, in particular, from BOTH Canada and the U.S. where plants have closed and several have been built in Mexico where plant workers are still paid the equivalent of 4.00 US/hr. There are many other examples including the recent Carrier announcement at its Indianapolis plant which will close and eliminate 1500 jobs if for no other purpose than to be able to pay a fraction in Mexico of what their workers earn in America, profitability was not an issue.
This is where the whole concept of free trade collapses since if it is done so legally in an agreement whereby plants move for the sole purpose of driving down wages, any wonder why so many workers are against any trade agreement at all?
Although it has brought considerably more manufacturing activity to Mexico, a considerable amount of that has been done at the expense of the auto manufacturers, in particular, from BOTH Canada and the U.S. where plants have closed and several have been built in Mexico where plant workers are still paid the equivalent of 4.00 US/hr. There are many other examples including the recent Carrier announcement at its Indianapolis plant which will close and eliminate 1500 jobs if for no other purpose than to be able to pay a fraction in Mexico of what their workers earn in America, profitability was not an issue.
This is where the whole concept of free trade collapses since if it is done so legally in an agreement whereby plants move for the sole purpose of driving down wages, any wonder why so many workers are against any trade agreement at all?
16
The benefits of free trade is based on the theory of relative advantage. Desert countries grow dates; wet countries grow rice. They trade and both come out ahead. What happens wen the relative advantage is cheap unskilled labor. All the unskilled jobs go to and the one country (China) other country losses its consumer base.
What will happen when China and India have highly educated, highly skilled but still cheap labor?
What will happen when China and India have highly educated, highly skilled but still cheap labor?
9
The phrase "most top economists agree that “past major trade deals have benefited most Americans” and that “trade with China makes most Americans better off.”" is misleading.
If we could combine trade with regulations that protect workers and environment, and a more progressive tax code, then trade would work for everyone. But we can't. The U.S. can't regulate wall street, energy, healthcare, internet services or anything else, and we can't tax the ultra rich -- because lawless multinationals buy congress and the regulators.
If you remove the income from the top 1% and run the numbers again, you will see that trade has not been good for the average American.
One last thing. Isn't Joe Stieglitz a "top economist"?
If we could combine trade with regulations that protect workers and environment, and a more progressive tax code, then trade would work for everyone. But we can't. The U.S. can't regulate wall street, energy, healthcare, internet services or anything else, and we can't tax the ultra rich -- because lawless multinationals buy congress and the regulators.
If you remove the income from the top 1% and run the numbers again, you will see that trade has not been good for the average American.
One last thing. Isn't Joe Stieglitz a "top economist"?
21
Dr. Mankiw comes close to alluding to the problem many folks have with global trade, but doesn't quite name it outright.
Of course there are winners and losers in the globalized economy, but we have to ask ourselves if the numbers in each category add up. And no, it's not enough to look at the sector an individual works in to try to predict their level of support for global trade. You have to look at an individual's role in their respective company.
The push to break down trade barriers has been carried out at the same time that unions have been destroyed and taxes on the rich have fallen. These two factors have greatly exacerbated a problem that is endemic to "free trade" policies that privilege owners and managers over mere workers in the first place.
If a worker sees (1) his or her skills demoted to the level of "commodity labor" such that he or she has to compete with uneducated workers in foreign countries, (2) has no political institutional resources for staking a claim to the increased profits companies are earning from exploiting cheap foreign commodity labor (3) at the same time that wealthy owners and managers reap huge gains from global trade without (4) having to pay tax to support the social position of disenfranchised workers, of course ordinary folks will see global trade as a loss.
Dr. Mankiw and certain other economists are not taking these crucial factors into account. Hence their work lacks logical rigor and a true empirical basis.
Of course there are winners and losers in the globalized economy, but we have to ask ourselves if the numbers in each category add up. And no, it's not enough to look at the sector an individual works in to try to predict their level of support for global trade. You have to look at an individual's role in their respective company.
The push to break down trade barriers has been carried out at the same time that unions have been destroyed and taxes on the rich have fallen. These two factors have greatly exacerbated a problem that is endemic to "free trade" policies that privilege owners and managers over mere workers in the first place.
If a worker sees (1) his or her skills demoted to the level of "commodity labor" such that he or she has to compete with uneducated workers in foreign countries, (2) has no political institutional resources for staking a claim to the increased profits companies are earning from exploiting cheap foreign commodity labor (3) at the same time that wealthy owners and managers reap huge gains from global trade without (4) having to pay tax to support the social position of disenfranchised workers, of course ordinary folks will see global trade as a loss.
Dr. Mankiw and certain other economists are not taking these crucial factors into account. Hence their work lacks logical rigor and a true empirical basis.
27
Furthermore, economists like to pretend that they are scientists, but they are not. They like to pretend that hard-core, religiously followed free-trade orthodoxy is the result of 'scientific' consensus, but it's not. It's actually just a few billionaire-financed econ departments churning out the vast majority of our nation's professors of economics and condemning any apostasy. Economists like to pretend that they can predict the future, but their track record is worse than chance.
20
It's almost like people don't trust economists.... So strange, when they have always given us such great advice about how Chilean juntas and Walmarts and outsourcing would be great for us commoners, if we just had the sense to see it, and unions and environmental regulations would be bad. I personally hope to live unemployed, under a brutal military dictatorship in a squalid, poisoned favela overlooking a nice gated community. Economists tell me that it's good for me, and for my country! And hey, so do the kind people who fund most economics departments. Neat!
27
Mr. Mankiw obfuscates (probably unintentionally).
The benefits of "trade" (free global trade) are real and good only if we assume, first, that "trade" means reducing nationalistic tariffs - fees imposed solely to protect businesses and jobs within a country, without regard to any further reasons. Second, we must assume that what is "good" is reliably measured by prices. Accordingly, reducing nationalist tariffs may reduce the amount people are paid for various jobs, but that is offset by a greater net reduction in the prices of what people can buy. That's the case for global ("free") trade in a nutshell.
But prices do not measure the quality of life or the environment, the increases or decreases in autonomy, nor the net opportunities for living a meaningful life where one is respected, rather than treated as a "factor" of production, with no more value to one's employer than that.
Most people don't trust economists, because they myopically rest their case on the former, while what really matters to most people is the latter. And with regard to trade itself, the tariffs that have been reduced are not simple nationalistic ones, but ones that protect values that matter a lot more than the prices of consumer goods: workplace safety, environmental protection, human rights, workers' rights to respect, security, and their due proportion of the pie, social safety nets, the power of labor to offset the gatekeeping power of owners over social resources, and a lot more.
The benefits of "trade" (free global trade) are real and good only if we assume, first, that "trade" means reducing nationalistic tariffs - fees imposed solely to protect businesses and jobs within a country, without regard to any further reasons. Second, we must assume that what is "good" is reliably measured by prices. Accordingly, reducing nationalist tariffs may reduce the amount people are paid for various jobs, but that is offset by a greater net reduction in the prices of what people can buy. That's the case for global ("free") trade in a nutshell.
But prices do not measure the quality of life or the environment, the increases or decreases in autonomy, nor the net opportunities for living a meaningful life where one is respected, rather than treated as a "factor" of production, with no more value to one's employer than that.
Most people don't trust economists, because they myopically rest their case on the former, while what really matters to most people is the latter. And with regard to trade itself, the tariffs that have been reduced are not simple nationalistic ones, but ones that protect values that matter a lot more than the prices of consumer goods: workplace safety, environmental protection, human rights, workers' rights to respect, security, and their due proportion of the pie, social safety nets, the power of labor to offset the gatekeeping power of owners over social resources, and a lot more.
15
Unbelievable!
Dr Mankiw's essay concludes on the positive note that with increasing education, attitudes towards globalization will mitigate.
Please open your eyes Professor. Quality of Education at all levels has been in serious decline in the United States for decades. Corporate interests, politicians and fundamentalist religious zealots have progressively weakened the intellectual content of the educational system and the nurturing of critical thinking because a smart polity ignores the idiotic marketing so pervasive in our culture. Popular culture impugns any sign of intellectual development. Kids who make an effort at school are bullied and called nerds. If these observations were false, would Trump be the Republican candidate? Being angry is no excuse for being stupid. The majority of Trump's supporters are in trouble because they have been led to believe education is NOT an answer to their predicament. Bring on the bread and circuses (i.e, fast food and the Olympics)!
Dr Mankiw's essay concludes on the positive note that with increasing education, attitudes towards globalization will mitigate.
Please open your eyes Professor. Quality of Education at all levels has been in serious decline in the United States for decades. Corporate interests, politicians and fundamentalist religious zealots have progressively weakened the intellectual content of the educational system and the nurturing of critical thinking because a smart polity ignores the idiotic marketing so pervasive in our culture. Popular culture impugns any sign of intellectual development. Kids who make an effort at school are bullied and called nerds. If these observations were false, would Trump be the Republican candidate? Being angry is no excuse for being stupid. The majority of Trump's supporters are in trouble because they have been led to believe education is NOT an answer to their predicament. Bring on the bread and circuses (i.e, fast food and the Olympics)!
6
Interesting that economists still want to sell the general population on "free trade" based on some lofty ideas about isolationism, nationalism, ethnocentrism, and misguided self-interest. "Free trade" is some supposed collective good that individuals just don't understand and economists want to cluck their tongues at the provincialism that leads to these misapprehensions of the benefits from such policy.
Rather odd to think that these collective goods receive little faith from the masses. Why?
Few economists worry much at all about the distribution of the collective gains of the population from "free trade" because it's all about maximizing the gains of those who already benefit from the privatization of collective goods domestically and extending those gains through its institutionalization of benefits of the many hands who make light work for the profits of a few.
Why should the average American support a system that unfairly distributes capital and profit from it simply because it extends this illusory and steeply canted result internationally?
Or, alternatively, where are the good jobs that are the supposed result?
Shrinking away just like they have been for decades already. Collectivized gains that are privatized to the accounts of the few are a hard sell for international trade because they are yet another example of a system that can't be relied on to fairly distribute jobs, profits, & gov't resources domestically.
People aren't buying illusory gains anymore.
Rather odd to think that these collective goods receive little faith from the masses. Why?
Few economists worry much at all about the distribution of the collective gains of the population from "free trade" because it's all about maximizing the gains of those who already benefit from the privatization of collective goods domestically and extending those gains through its institutionalization of benefits of the many hands who make light work for the profits of a few.
Why should the average American support a system that unfairly distributes capital and profit from it simply because it extends this illusory and steeply canted result internationally?
Or, alternatively, where are the good jobs that are the supposed result?
Shrinking away just like they have been for decades already. Collectivized gains that are privatized to the accounts of the few are a hard sell for international trade because they are yet another example of a system that can't be relied on to fairly distribute jobs, profits, & gov't resources domestically.
People aren't buying illusory gains anymore.
27
Supposedly, the one benefit that ordinary people will always see with global trade is cheaper prices for certain technology goods - iPhones, computers, etc.
What I'm seeing, however, is how tech companies, largely due to their cartel- or near-monopoly positions, are able to enjoy the economic benefits of cheap foreign commodity labor without passing on the benefits to their customers, often using sophisticated profit-recuperation strategies. Either retail vendors of technology goods or middle-men suppliers are reaping the profit benefits of reduced labor costs, not end-user consumers. This effect is masked by hiding real inflation figures behind statistical smokescreens, using goofy functionality-based price measures, claiming, for instance, that because their new iPhone has more GB and a few extra apps it's actually cheaper than their old one, despite the fact that it costs more.
And these sophisticated statistical fictions, recuperating profits in the supply chain and hiding real inflation, are taking place at the same time that the costs, both real and nominal, of important social goods, such as health care and housing, are driven upwards by an increasingly unequal economy where the wealthy can bid up prices using their outsize market influence.
Globalization and inequality feed off each other, and that's the phenomenon economists should be studying, not speculations on why dumb, racist non-economists aren't getting behind "free trade."
What I'm seeing, however, is how tech companies, largely due to their cartel- or near-monopoly positions, are able to enjoy the economic benefits of cheap foreign commodity labor without passing on the benefits to their customers, often using sophisticated profit-recuperation strategies. Either retail vendors of technology goods or middle-men suppliers are reaping the profit benefits of reduced labor costs, not end-user consumers. This effect is masked by hiding real inflation figures behind statistical smokescreens, using goofy functionality-based price measures, claiming, for instance, that because their new iPhone has more GB and a few extra apps it's actually cheaper than their old one, despite the fact that it costs more.
And these sophisticated statistical fictions, recuperating profits in the supply chain and hiding real inflation, are taking place at the same time that the costs, both real and nominal, of important social goods, such as health care and housing, are driven upwards by an increasingly unequal economy where the wealthy can bid up prices using their outsize market influence.
Globalization and inequality feed off each other, and that's the phenomenon economists should be studying, not speculations on why dumb, racist non-economists aren't getting behind "free trade."
7
I am opposed to secretly-negotiated trade agreements because I don't trust my country's negotiators any more that I trust the politicians that appointed them.
In 1991, the residents of Hudson, a well-off commuter town outside of Montreal, voted to restrict the use of pesticides by property-owners as a health-protection measure. Dow Chemical challenged the town in court, claiming that the law infringed their rights under the North American Free Trade Agreement (NAFTA). The residents took the case all the way to the Quebec Supreme Court, where they finally won.
In theory I'm in favor of free trade. I have lived and worked in both Canada and the United States. I'm in a profession that benefits from the free movement of talent. I have an advanced degree and I'm doing well financially. I used to own a house with a large lawn.
But I'm opposed to TPP. My health is more important to me than a few dollars on the polluter's bottom line.
In 1991, the residents of Hudson, a well-off commuter town outside of Montreal, voted to restrict the use of pesticides by property-owners as a health-protection measure. Dow Chemical challenged the town in court, claiming that the law infringed their rights under the North American Free Trade Agreement (NAFTA). The residents took the case all the way to the Quebec Supreme Court, where they finally won.
In theory I'm in favor of free trade. I have lived and worked in both Canada and the United States. I'm in a profession that benefits from the free movement of talent. I have an advanced degree and I'm doing well financially. I used to own a house with a large lawn.
But I'm opposed to TPP. My health is more important to me than a few dollars on the polluter's bottom line.
15
So everyone who disagrees with "expert" economists is stupid and bigoted? That is some rigorous academic work right there.
I have an alternative theory. The US has the largest market in the world, negotiating unfettered access to smaller markets for us, and larger markets for others is always going to favor the smaller market. particularly when external markets never really open the same way as the us. I have worked in Japan, and no matter what economists say or think, American companies don't have an equal shot at being successful there. All other Asian countries follow a similar path, the people and businesses are far more nationalistic in their buying choices than Americans are, and there are numerous unspoken rules that impede success.
Why should anyone think it is fair that China requires companies to transfer technology, and teach a local partner how to do the work. Technology often paid for by us taxpayers through subsidized schools or outright government funding. I applaud them for looking out for there people. I want our gov to do the same.
free trade is very lumpy. I am sure it is true that all Americans pay a couple dollars less on each shopping trip because of free trade. But the consequence is thousands of people losing jobs and hundreds of towns shattered. Even if the numbers add up to show a net savings, most people realize that it is morally wrong for so many to sacrifice so much for a couple bucks a day. It's the distribution, stupid.
I have an alternative theory. The US has the largest market in the world, negotiating unfettered access to smaller markets for us, and larger markets for others is always going to favor the smaller market. particularly when external markets never really open the same way as the us. I have worked in Japan, and no matter what economists say or think, American companies don't have an equal shot at being successful there. All other Asian countries follow a similar path, the people and businesses are far more nationalistic in their buying choices than Americans are, and there are numerous unspoken rules that impede success.
Why should anyone think it is fair that China requires companies to transfer technology, and teach a local partner how to do the work. Technology often paid for by us taxpayers through subsidized schools or outright government funding. I applaud them for looking out for there people. I want our gov to do the same.
free trade is very lumpy. I am sure it is true that all Americans pay a couple dollars less on each shopping trip because of free trade. But the consequence is thousands of people losing jobs and hundreds of towns shattered. Even if the numbers add up to show a net savings, most people realize that it is morally wrong for so many to sacrifice so much for a couple bucks a day. It's the distribution, stupid.
42
Economists are people who, until quite recently, maintained that people were "rational actors" who always behaved in their best interests. They gave a nobel prize to someone for pointing out the obvious and creating a new field of behavioral economics which, when described to most people, sounds more like common sense.
Economists are wrong, regularly and often. Why are they surprised that people don't believe them?
Economists are wrong, regularly and often. Why are they surprised that people don't believe them?
14
People have never been rational actors in the first place. They may, after experiencing significant pain, come to some realization of the situation and react rationally.
3
The discussion of the attitude towards free trade reminds me of the research performed concerning attitudes towards losing and gaining in general. People tend to find loses more painful than gains are pleasurable. Perhaps in our personal calculus on trade we place a higher value on job loss with its pernicious effects on individual and community over things like being able to buy cheaper clothes and electronic goods in our department stores. The former certainly makes the news more than the later does anyway. Furthermore as regards the price and availability of imported items, what do we have to compare to as opposed to what we see in a community when the largest employer shutters the door and moves operations to China and Mexico. Is it any surprise that the good and bad effects of trade look so asymmetrical?
14
Two sentences make clear why economists fail,
1. "For an economist, ... people’s attitudes.. are based on their self-interest.
2. "political scientists conclude that voters embrace policies based on the broader national interest."
For an economist, self-interest is money. And only money . Cause that is the only motivation they can measure.
And thus, they will never be able to explain why Pat Tillman dropped his multi million NFL contract to enlist in the US Army, to serve in Afghanistan, where he was killed.
People are motivated by far more than money.
1. "For an economist, ... people’s attitudes.. are based on their self-interest.
2. "political scientists conclude that voters embrace policies based on the broader national interest."
For an economist, self-interest is money. And only money . Cause that is the only motivation they can measure.
And thus, they will never be able to explain why Pat Tillman dropped his multi million NFL contract to enlist in the US Army, to serve in Afghanistan, where he was killed.
People are motivated by far more than money.
21
The problem here is the political scientists went into this with the idea that economists are right and the people are wrong and tried to find ways to explain people's beliefs by putting it on them, that it is xenophobia and racism and such.
Okay, let's challenge something, the idea that free trade has 'helped almost everyone'. With China, what typically comes out of that is that it has flooded the market with goods that are cheaper than if made here..and that is true. However, it doesn't look at the consequences, for example that the goods being made in China, the ones most commonly bought, are of poor quality. Sure, you can buy a cheap toaster made in China, but it likely will die within a year; buy other products, and you likely will face something that doesn't last.
But more than that, how has that new wealth been spread, something the economics don't talk about. The working class has benefitted from cheaper prices, the walmart effect, but what they leave out is their income has declined further. The reality of free trade is it benefits some more than others, it benefits the top 1% the most, and for whatever benefits it does for the general public, it caused them a lot more harm.
The other problem is that the government, especially thanks to the GOP, has let those benefits accrue with the top, and has done little or nothing to help those hurt.
Okay, let's challenge something, the idea that free trade has 'helped almost everyone'. With China, what typically comes out of that is that it has flooded the market with goods that are cheaper than if made here..and that is true. However, it doesn't look at the consequences, for example that the goods being made in China, the ones most commonly bought, are of poor quality. Sure, you can buy a cheap toaster made in China, but it likely will die within a year; buy other products, and you likely will face something that doesn't last.
But more than that, how has that new wealth been spread, something the economics don't talk about. The working class has benefitted from cheaper prices, the walmart effect, but what they leave out is their income has declined further. The reality of free trade is it benefits some more than others, it benefits the top 1% the most, and for whatever benefits it does for the general public, it caused them a lot more harm.
The other problem is that the government, especially thanks to the GOP, has let those benefits accrue with the top, and has done little or nothing to help those hurt.
17
Don't care if it dies in an year. The cheap toaster is SO cheap that you can afford to buy a new one every year for the rest of your life and it still won't cost as much as one made in America, if such a thing existed.
1
The Great Unmentioned reason most people I know reject global trade is its proven and anticipated negative effect on the quality of the environment that sustains our lives.
7
Let's establish that the term "free trade" is a canard. Every trade agreement is a"managed trade' agreement and not meant to maximize some altruistic goal. People have caught on to this misrepresentation where agreements are hammered out in secret to maximize particular parties, principally corporate elites for some collateral strategic consideration which can be implemented by governments.
12
The problem with your argument is that I very much doubt you can point to where the TPP does this. I'm sure you haven't read the thing--I haven't--and unless you have, and can demonstrate that what you claim about elites is true...
By the way, most negotiation is conducted in camera. Mainly because it's impossible to get anything settled, with everybody breathing down your neck and making demands.
You pick negotiators you trust, you lay out the general parameters of what you want and what you'll give, and you let them get on with it.
Then they bring back the results, and THEN you take a hack at it.
By the way, most negotiation is conducted in camera. Mainly because it's impossible to get anything settled, with everybody breathing down your neck and making demands.
You pick negotiators you trust, you lay out the general parameters of what you want and what you'll give, and you let them get on with it.
Then they bring back the results, and THEN you take a hack at it.
Economists look at things from 30,000 feet. People are on the ground. Economists see free trade associated with low inflation and an increase in national GDP. People on the ground see the Walmart economy; stagnating incomes, closed factories, worsening inequality. "Who are you going to believe, me or your lying eyes?”
28
The problem is that people see all sorts of things, and they're wrong: their "lived experience of the world," is really their lived experience of the world, but that doesn't mean their experience matches reality.
For one thing, we're awfully good at explaining away anything we don't want to cope with--for example, maybe my job probs have to do with my tenth-grade education.
For one thing, we're awfully good at explaining away anything we don't want to cope with--for example, maybe my job probs have to do with my tenth-grade education.
Yes, most top economists do "agree that" past major trade deals have benefited most Americans. But let's look at the comments a couple of the economists make:
Richard Schmalensee of MIT: "Positive aggregate benefits does not imply that most Americans benefit, but it seems likely in this case."
Christopher Udry of Yale: "The problem is that those who have been hurt have typically not been compensated."
Anyone with a computer can look at a graph of this country's GDP, per capita, adjusted for inflation, over the last 50 years. Just Google it. What will you see? A steady increase. So yes, there have been "positive aggregate benefits." The country is getting richer, but we are leaving people behind.
So I'd like these economists to do a little better job defining "most people." If our nation's per capita income increases, NOBODY should be left behind. Period. This is what Americans are finally figuring out.
So please don't let the political scientists complicate the issue. I don't care how many questionnaires people fill out, the problem is very simple. There's no question: trade is profitable for America. We just need to work on the "profit sharing" part.
Richard Schmalensee of MIT: "Positive aggregate benefits does not imply that most Americans benefit, but it seems likely in this case."
Christopher Udry of Yale: "The problem is that those who have been hurt have typically not been compensated."
Anyone with a computer can look at a graph of this country's GDP, per capita, adjusted for inflation, over the last 50 years. Just Google it. What will you see? A steady increase. So yes, there have been "positive aggregate benefits." The country is getting richer, but we are leaving people behind.
So I'd like these economists to do a little better job defining "most people." If our nation's per capita income increases, NOBODY should be left behind. Period. This is what Americans are finally figuring out.
So please don't let the political scientists complicate the issue. I don't care how many questionnaires people fill out, the problem is very simple. There's no question: trade is profitable for America. We just need to work on the "profit sharing" part.
13
Take out the 1% and run those numbers again.
2
Perhaps because it is not good for those individuals who don't believe economists. That depends on what you think of as good. For myself it would be good for our country to be independent and have almost no trade. We would have jobs, we would not be dependent on other countries. The bad side would be more expensive stuff and therefore less of it. That would be good.
5
You should check out what really happens when states try to be autarkic (as you suggest would be "good" for the US). Just for to get you started, look up: Romania and Albania in the 70s and 80s; North Korea; Cambodia under the Khmer Rouge; Afghanistan under the Taliban. Then let's discuss again.
The problem is only partly with the implementation of trade policy. The real problem is that those who were so in favor of this trade policy were either ignorant or didn't care about the consequences of their actions What should have been done is to understand the disruptions and then counter those disruptions with domestic policy to cushion the blows that would certainly come. Neither the Republicans, who are the free trade party, or the Clintons who are actually GOP Lite, knew enough or cared enough to make those adjustments. They should have tweaked unemployment insurance, food stamps and other federal programs to increase benefits to those affected. They should have built in an education plank to retrain and re-educate affected workers. This could have been done with a law similar to the G.I. Bill after WWII which paid the higher education costs for those who lost jobs.
6
The fact that the profits from offshoring American jobs went to the owner/investor/banker class and were not distributed more broadly across the economy might have something to do with the revulsion we feel to globalization. The real problem facing the American economy is that technological progress in robotics, artificial intelligence and miniaturization will be even more devastating in the long run than globalization. When a computer can read your MRI scan more accurately than a radiologist, and when a surgical robot can achieve better results than a heart or neurosurgeon, we will have to rethink what it means to find meaning and purpose and social value in our work.
20
Mr Mankiw explains right wing opposition to globalization, but not left wing opposition. The anti-globalization movement that protested in Seattle and other cities was a global justice movement. Protesters understood globalization was strongly linked with neoliberalism and austerity, and were motivated by solidarity and internationalism. That's the difference between Trump and Sanders.
14
i wish that were true. But if you listen, a great deal of the leftish hatred of TPP et al is animated by the same ugly strains of willful ignorance (ever heard Sanders et al talk about a SPECIFIC provision?), America Firstism, and disdain for what happens to people overseas.
Not saying that everything's peachey, pass TPP now. Saying that I very much mistrust these simple explanations and solutions.
Not saying that everything's peachey, pass TPP now. Saying that I very much mistrust these simple explanations and solutions.
An " isolationist, nationalist, ethnocentric worldview" does not explain why Hillary Clinton opposes TPP. She has stated clearly, even at the recent convention, she opposes it because there is noting in it to protect workers who lose their jobs as a result of opening our economy to imports.
9
Education to overcome sociotropic attitudes towards global trade with their complementary worldviews of isolationism, nationalism and ethnocentrism is important, but even more important is the type of education that can entails an integrated perspective of the global social and ecological challenges.
A crucial part of such education is a focus on monetary education that addresses the present unjust, unsustainable and, therefore, unstable international monetary system.
One approach to transform, not only reform, that monetary system is to base it on a monetary standard that would push nations to deal with this century’s preeminent challenge of a looming climate catastrophe. The conceptual, institutional, ethical and strategic dimensions of that carbon-based international monetary system with its standard of a specific tonnage of CO2e per person are presented in Verhagen 2012 "The Tierra Solution: Resolving the climate crisis through monetary transformation" and updated at www.timun.net.
A crucial part of such education is a focus on monetary education that addresses the present unjust, unsustainable and, therefore, unstable international monetary system.
One approach to transform, not only reform, that monetary system is to base it on a monetary standard that would push nations to deal with this century’s preeminent challenge of a looming climate catastrophe. The conceptual, institutional, ethical and strategic dimensions of that carbon-based international monetary system with its standard of a specific tonnage of CO2e per person are presented in Verhagen 2012 "The Tierra Solution: Resolving the climate crisis through monetary transformation" and updated at www.timun.net.
This study typifies what is wrong with so much liberal social science. I'd love to see the data, and the questions they asked. Did anyone ask, for example, questions about security when supply chains and labor are out-sourced, global adequacy of commodities and supply chains, ethical implications of out-sourcing pollution and bad working conditions and the 800 pound gorilla: the loss of union bargaining power and increase in financial equality that we have all watched our country go through in the last 25 years? I am liberal myself but I have never acquired the knack of ignoring obvious reality right in front of me; and it was obvious from the first moment that what upper class Americans liked about globalization was its ability to break the wages of lower middle class and lower employees. Obvious. It is not just isolationist ignoramuses that figured this out ...
42
Mankiw is no liberal.
Nellmezza--Show us the evidence/data that global trade is a benefit to most Americans, not just some. All we can see, right now, is lost jobs, failing education, stagnant wages, and the importation of already trained foreign workers. What have YOU got?
2
Mankiw totally misses the point here. The benefits to trade are dependent on who participates and how the derived wealth is distributed. There is nothing intrinsic to international trade that guarantees there will be more winners than losers, it all depends on the specific terms which are negotiated in an agreement, and the extent to which all parties abide by those terms. Global trade agreements are usually negotiated with fairly narrow goals in mind that are aligned with the special interest groups with the greatest access to political power. People understand this is the reality today and that ordinary citizens do not have a seat at the table when the trade deals are negotiated. Most people also understand that large net trade deficits are in the long run unsustainable and that the asymmetry must eventually have consequences. This is the actual basis behind the so-called 'trade skepticism', and not those silly scapegoat reasons hypothesized by Mansfield and Mutz.
19
It's truly amazing then that non college educated people understand the complex reality of trade benefits better than college educated people. Ah, the benefits of ignorance.
Yes the government has dropped the ball on retraining individuals who have been victims of globalization but I would suggest that the solution is not to provide them with free tuition for getting degrees in majors like sociology & women studies. These folks need to be trained/educated in fields where there's a demand for their training/knowledge even if that might mean learning a trade skill instead of obtaining a liberal arts education.
7
"These folks need to be trained/educated in fields where there's a demand for their training/knowledge even if that might mean learning a trade skill instead of obtaining a liberal arts education"
I have a newsflash for you. there are hordes of illegal immigrants coming into the nation with "trade " skills. 30 years ago when you had aluminum sidings or wood panel floors installed, US citizens would do the work. Today illegal immigrants do. I can tell you from personal experience. The company I recently hired to install my wood panel floors sent a half dozen folks none of whom could speak a word of English. THis is the reality.
I have a newsflash for you. there are hordes of illegal immigrants coming into the nation with "trade " skills. 30 years ago when you had aluminum sidings or wood panel floors installed, US citizens would do the work. Today illegal immigrants do. I can tell you from personal experience. The company I recently hired to install my wood panel floors sent a half dozen folks none of whom could speak a word of English. THis is the reality.
14
Response to comment by Don Max: Many Americans understand that the adaptation of new technologies can make their job redundant and there are benefits to globalization. Taking that in stride, what recourse does a citizen have when they've been retrained, learned a new profession and find themselves out of a job a second or third time because of trade agreements, globalization or the adaptation of new technologies. There has to a recognition by the government that this type of situation does happen. Our most important assets our our citizens and workers. We need to show them the respect they deserve. If they have lost their jobs due to outsourcing, globalization, new technologies, etc. they should be given government benefits and retraining. Not shown disrespect and forgotten. Especially in industries that are in severe decline like coal mining and steel.
12
I'm not talking about work as a rough framer or hod carrier, I'm talking about a skilled trade like as a machinist.
But anyway how would a 4-year liberal arts degree help secure one employment ? These kids are mired in thousands of dollars of debt with no way to payoff the loans because their training/education is worthless in the economy. Where were their parents, the rest of their family & friends, their instructors and councilors when this was happening ?
But anyway how would a 4-year liberal arts degree help secure one employment ? These kids are mired in thousands of dollars of debt with no way to payoff the loans because their training/education is worthless in the economy. Where were their parents, the rest of their family & friends, their instructors and councilors when this was happening ?
Since the 1970s a large contingent of citizens have opposed and complained about trade deals that enabled offshoring to lower cost countries. Corporate leaders and the investment community were convinced and preached that globalization was better for everyone and lobbied government leaders to negotiate trade deals. Now, perhaps, the populace will force their views into policy and undo globalization. Private industry, our exalted instrument of efficiency and effectiveness, ignored significant popular opinion for so long in order to maximize profits. That was causal and obvious to anybody. What to do with workers displaced by those policies was left to the magic of the economic system - not causal, effective, or efficient to those displaced. But we investors made some pretty good money, no?
9
If wondering why workers do not seem to know that free trade is in their best interest, the author of this article might like to try working in a factory, in particular one of the many locally owned parts of the manufacturing sector that still exist here in flyover country. These small factories are mostly autocratically run, from paternalistic to downright feudal. The workers have no connection to or knowledge of how international trade benefits them; only that, in general, the owners would like to replace them with cheaper, quieter immigrants. So even if the boss and stockholders are doing well, what's in it for them?
14
Voters don't buy what economists say about trade because it is obvious that they are not getting a net benefit from it. Clearly overall GDP growth has not been increased much or economists would not be talking about "secular stagnation", and anyway most growth which has occurred has gone to upper income people. It is very obvious that jobs are going to other countries, not to robots - this is something that people can't be fooled about. The oversimplified textbook models of trade neglected its effects on wage-earners in the US, or were just wrong:
http://washingtonmonthly.com/magazine/junejulyaug-2016/free-trade-is-dead/
To arrive at trade practices that actually benefit workers in the US it will probably be necessary to have new models and new economists, but the Times and other media continue to publish people like Mankiw who just assume that the old dogmas are correct.
http://washingtonmonthly.com/magazine/junejulyaug-2016/free-trade-is-dead/
To arrive at trade practices that actually benefit workers in the US it will probably be necessary to have new models and new economists, but the Times and other media continue to publish people like Mankiw who just assume that the old dogmas are correct.
13
Most Americans intuitively understand that the distributional effects of trade agreements favor the big corporations and the very rich, not the average citizen. That, I believe, undermines the argument of net benefit by economists, and trumps any nationalistic or isolationist sentiment.
What's more, the actual effects of trade agreements, whether positive or negative, are hard to fathom, even for trained economists. Where there are benefits, they may be hard to see in the face of massive job losses.
For example, Eduardo Porter argued in a Times column that the much-maligned NAFTA created a North-America-wide auto industry able to compete on price, thereby staving off competition from China. In so doing, it may have saved the 800,000 jobs still remaining in the U.S. auto sector. But that is small comfort to the 350,000 auto workers who lost their jobs. http://tinyurl.com/h962tl9
What's more, the actual effects of trade agreements, whether positive or negative, are hard to fathom, even for trained economists. Where there are benefits, they may be hard to see in the face of massive job losses.
For example, Eduardo Porter argued in a Times column that the much-maligned NAFTA created a North-America-wide auto industry able to compete on price, thereby staving off competition from China. In so doing, it may have saved the 800,000 jobs still remaining in the U.S. auto sector. But that is small comfort to the 350,000 auto workers who lost their jobs. http://tinyurl.com/h962tl9
13
Well you can eliminate competition from China with a stiff import duty. Much easier and better.
2
If the firms that export their factories in the US had to pay for the retraining of the out-of-work former employees, they would hesitate. This is done in Europe but not in the US. The voters need to demand such changes be put into law.
27
This is what I oppose with trade, which doesn't fall under any of those categories. I don't like that big companies are shipping jobs overseas to get the work done for cheap and oftentimes by slave or child labor. They are saving money by manufacturing poorly made products. The products get sold here for cheap at Walmart or another store like that, then they tend to break and have to be purchased again. Having to buy something of higher quality costs too much for a lot of people, even if it lasts longer.
My mother-in-law gave me a sewing machine that was made in the late 50s. It is all metal, made to be repaired and still works great. Stuff today is made from plastic, oftentimes cannot be repaired and breaks. It's a cycle. I hate buying things when I know they are made in countries without labor laws, but what am I going to do? My options for humanely made phones is non-existent. I've bought expensive kitchen appliances only to have them break.
So while I do think what the study said is oftentimes true, there are other reasons to oppose trade.
My mother-in-law gave me a sewing machine that was made in the late 50s. It is all metal, made to be repaired and still works great. Stuff today is made from plastic, oftentimes cannot be repaired and breaks. It's a cycle. I hate buying things when I know they are made in countries without labor laws, but what am I going to do? My options for humanely made phones is non-existent. I've bought expensive kitchen appliances only to have them break.
So while I do think what the study said is oftentimes true, there are other reasons to oppose trade.
11
This is a pretty tired reciting of the mantra that globalization and "free" trade is a tide that raises all ships and if only the masses would be educated enough to realize that their leaders are doing wonderful work to continue this. The TPP as a current example is not about lowering trade barriers. It is about economic rule harmonization over 14 countries. Most analyses indicate it will not increase jobs or increase incomes, except at the top of the food chain. Why would Americans want to endorse that? Particularly when the ISDS mechanisms put environmental and labor laws at high risk. It appears to be an attempt to encircle China, economically and more of a geopolitical gambit dressed up as "free" trade, which it certainly isn't. It restricts drug pricing, endorses currency manipulation, allows for slavery in Malaysia, wow what a great deal And regular Americans, not CEOs get what out of this? Mystical benefits that are even touted by the usual free trade think tanks, like the Peterson Institute. Americans are probably much wiser about this than Mr. Mankiw would like.
17
I disagree with the conclusion that it's simply a matter of education and all will be right in the long-run. It's based on the notion that more education allows for a transition to a less ethnocentric, nationalist view of the world. That may very well be true, but it is also true that it has been the college educated and professional wage earners and capitalists who have benefited most from globalization - their support for it is directly tied to the gains from it. As Dean Baker rightly points out, just ask people in the medical profession in the US if we should allow foreign doctors trained to US standards to practice in the US without need for further licensing requirements - I think it's fair to say you'd get a fairly negative response which would be observationally equivalent to a factory worker in the mid-west.
It may very well be the case that this aspect of globalization and free trade is a feature not a bug. The question for democratic societies is to then figure out what to do with the citizens that are at the losing end - do we put the blame on them as "takers" and "leechers" or do we somehow try to alleviate and soften the impact on them?
The story of this election as far as the republican party is concerned is that the turkeys finally stopped voting for christmas and repudiated the party elites.
It may very well be the case that this aspect of globalization and free trade is a feature not a bug. The question for democratic societies is to then figure out what to do with the citizens that are at the losing end - do we put the blame on them as "takers" and "leechers" or do we somehow try to alleviate and soften the impact on them?
The story of this election as far as the republican party is concerned is that the turkeys finally stopped voting for christmas and repudiated the party elites.
11
It's all about the money. Today's trade agreements lower consumer prices by allowing low wage countries to sell goods into the American economy without tariffs. For the most part, these countries are too poor to afford American made high end goods, producing a trade "deficit".
In the college economics class theory, when two countries trade, each one sells products they are more efficient at producing to the other. What is actually happening is that American production is so expensive that we have nothing to sell to the low wage countries which we buy from. We can export capital (foreign investment) but not goods or services.
American buyers of goods "win", while American workers loose jobs. Everyone wants more stuff for less money. It's why we shop at Wal-Mart instead of small, locally owned retailers. But we also need to earn a living.
College educated people are, for the most part, doing well and thus find low priced goods attractive. The majority of others see difficult job prospects. They can't afford to be buyers and remember an era when jobs were more plentiful. White men especially used to work in well paying manufacturing jobs that no longer exist here and reasonably see free trade agreements as the cause.
Which country is the world's largest manufacturer? It's not China, it is the United States. The manufacturing off-shore shift, is at the margins. Combined with technology advances, it is enough lower wages for most American workers.
In the college economics class theory, when two countries trade, each one sells products they are more efficient at producing to the other. What is actually happening is that American production is so expensive that we have nothing to sell to the low wage countries which we buy from. We can export capital (foreign investment) but not goods or services.
American buyers of goods "win", while American workers loose jobs. Everyone wants more stuff for less money. It's why we shop at Wal-Mart instead of small, locally owned retailers. But we also need to earn a living.
College educated people are, for the most part, doing well and thus find low priced goods attractive. The majority of others see difficult job prospects. They can't afford to be buyers and remember an era when jobs were more plentiful. White men especially used to work in well paying manufacturing jobs that no longer exist here and reasonably see free trade agreements as the cause.
Which country is the world's largest manufacturer? It's not China, it is the United States. The manufacturing off-shore shift, is at the margins. Combined with technology advances, it is enough lower wages for most American workers.
3
The 'shipping of jobs abroad' argument isn't great. Current unemployment is 5%, the average in the XX century, during most of which we didn't have trade agreements.
Have we lost manufacturing jobs due to free trade? Yes. But has free trade created jobs in other areas? Obviously, otherwise unemployment would be around 30%, not 5%.
Restricting trade would most likely not create more jobs overall - yes, more manufacturing jobs, but not more jobs overall, as companies in other sectors (high tech and finance specially) would start laying off workers due to a decrease in demand.
Let's assume, then, that the unemployment rate would be the same in a free trade and restricted trade economy. Which one is better?
Salary-wise, the jobs created by the high tech and other internationally competitive industries are just as well-paid as the manufacturing ones. The average real incomes of the bottom 5% and 10% have increased steadily for the past 50 years. Sure, the average salaries of the top 5% have increased more sharply, but this inequality isn't an inevitable consequence of free trade, and with a more progressive tax system, and higher minimum wage, the benefits of free trade will be felt everywhere.
Last, free trade enables first world countries to create more rewarding jobs.This isn't been fully exploited, but the possibility is there.
Would you rather do work that a machine could perfectly do, or something that only human creativity could accomplish?
Have we lost manufacturing jobs due to free trade? Yes. But has free trade created jobs in other areas? Obviously, otherwise unemployment would be around 30%, not 5%.
Restricting trade would most likely not create more jobs overall - yes, more manufacturing jobs, but not more jobs overall, as companies in other sectors (high tech and finance specially) would start laying off workers due to a decrease in demand.
Let's assume, then, that the unemployment rate would be the same in a free trade and restricted trade economy. Which one is better?
Salary-wise, the jobs created by the high tech and other internationally competitive industries are just as well-paid as the manufacturing ones. The average real incomes of the bottom 5% and 10% have increased steadily for the past 50 years. Sure, the average salaries of the top 5% have increased more sharply, but this inequality isn't an inevitable consequence of free trade, and with a more progressive tax system, and higher minimum wage, the benefits of free trade will be felt everywhere.
Last, free trade enables first world countries to create more rewarding jobs.This isn't been fully exploited, but the possibility is there.
Would you rather do work that a machine could perfectly do, or something that only human creativity could accomplish?
6
While I completely agree with this comment , these are the problems I notice: lower wage earners at Walmart while earning similar wages to lower wage earners of a factory doesn't seem to feel the same job satisfaction leading to unhappiness and seemed to
agree with anti trade sentiments. It seems globalization has brought less overall earthwide less environmental benefits and this also doesn't satisfy people like Sanders supporters . Lastly the growth of inequality has definitely affected perceived happiness (exasperated by growth of social networks showing a lot happy "Jones"). So economic facts are unfortunately not just enough for a satisfied citizen!
agree with anti trade sentiments. It seems globalization has brought less overall earthwide less environmental benefits and this also doesn't satisfy people like Sanders supporters . Lastly the growth of inequality has definitely affected perceived happiness (exasperated by growth of social networks showing a lot happy "Jones"). So economic facts are unfortunately not just enough for a satisfied citizen!
1
The problem with the unemployment rate is that it doesn't measure the reality of jobs. First of all, how many people have given up looking for work? How many people who could be in the workplace are not? That 5% number reflects only people out of a job actively looking.
More importantly of the 95% that are working, how many of them are underemployed? How many of them, who once earned a living wage, now are working low wage jobs like Walmart and such to survive? A lot of those displaced by outsourcing jobs to third world countries and lost to automation have gone from having a solid middle class lifestyle to being on the edges of poverty, and that is a reality. Sure, the well educated have gained, especially those who jobs are predicated on stock prices, but the numbers on wages tell the real tale, that most people, especially the people in the bottom 95% of the income ranges, have seen their incomes fall, often dramatically. And as has been noted, the politicians, especially the Republicans, claim that free trade brings great benefits but refuse to use any of those benefits to those hurt by it, instead we have the Paul Ryans and their Ayn Rand view of things, that those who are hurt are losers of this world and don't deserve any kind of help, that if they were 'good people' they would be like those who benefit from free trade and find a way to become one of the elite.
More importantly of the 95% that are working, how many of them are underemployed? How many of them, who once earned a living wage, now are working low wage jobs like Walmart and such to survive? A lot of those displaced by outsourcing jobs to third world countries and lost to automation have gone from having a solid middle class lifestyle to being on the edges of poverty, and that is a reality. Sure, the well educated have gained, especially those who jobs are predicated on stock prices, but the numbers on wages tell the real tale, that most people, especially the people in the bottom 95% of the income ranges, have seen their incomes fall, often dramatically. And as has been noted, the politicians, especially the Republicans, claim that free trade brings great benefits but refuse to use any of those benefits to those hurt by it, instead we have the Paul Ryans and their Ayn Rand view of things, that those who are hurt are losers of this world and don't deserve any kind of help, that if they were 'good people' they would be like those who benefit from free trade and find a way to become one of the elite.
8
Without any data to back me up, i think the "Great Recession" and people's perception of the players who caused it has contributed to the anti-globalism attitudes. Stories about London bankers gaming the system, Goldman Sachs playing both sides of mortgages, "tranches" and other practices of the players have led to greater mistrust of the global economic community.
9
It is sloppy thinking like this that keeps America from growing. Virtually nothing Mankiw says is true. The balance of trade is what matters, not the volume of trade. The US has the largest persistent trade deficit in the history of the world. Trade deficits mean net job losses, overall wage losses and net GDP reduction. The "gains from trade" liberalization are a myth on the US side. Mankiw needs to try telling China and Germany that they will win if they become massive net importers instead of net exporters. He can throw in accusations of xenophobia and uncouth nationalism as part of his argument. Then he can see if he retains his tenured position after they laugh him out of the room.
38
The arguments do not seem to make sense entirely: perceived cultural superiority or tribal superiority and priority were most likely present for many years when globalization was a widely accepted as beneficial. If anything, concepts and feelings of cultural superiority would be expected to be especially strong when the US was perceived to be much more dominant than it is now. A more likely explanation is that globalization is blamed for both automation and the effects of domestic policies that did not enough to help the losers caused by these processes, as well as tax and social safety net policies geared more towards the upper income echelons.
8
The bigger trend is automation, not outsourcing. At some point it becomes less expensive to use automation instead of human labor. Taken to it's end game, under the present system, you end up with a few machine owners creating vast wealth for themselves and a population with no means to make a living.
At some point, society will decide the benefits of super-high productivity belong to everyone and must be shared. It's really not as radical as it seems and will even be supported by the machine owners, once they realize their wealth will be even greater with a healthy base of consumers.
At some point, society will decide the benefits of super-high productivity belong to everyone and must be shared. It's really not as radical as it seems and will even be supported by the machine owners, once they realize their wealth will be even greater with a healthy base of consumers.
3
There's no way to "share" such wealth without resorting to communism.
Interestingly, this article failed to consider the possibility that the people have it right and the experts have gotten it wrong. Maybe the electorate really understands that if we turn our prosperous workers into struggling fry cooks and our industrial heartland into derelict cities, while enriching those who own and finance this transformation, we have not increased the wealth of the nation, even if the result is a higher average number of dollars per person. Income and wealth inequality is not just an American problem, it is happening throughout the world and the correlation with increased global trade is intriguing. Maybe the "uneducated" masses are not ethnocentric or nationalistic, but wise. Perhaps the "experts" need to "ask the audience." Oh wait, that is what an election is.
72
Mankiw, as usual, avoids the basic ethical question and the obvious solution.
Is it ethical to adopt a policy that does severe damage to a small number of people if it provides a small benefit to a much large number of people?
Of course in each individual case the number, the size of the damage and the benefit, the numbers of people affected matter, but in this case there is an obvious solution.
The damage in free trade agreements is that some people will lose their jobs. The federal government could simply provide jobs for that small number of people. I believe this is one of the reasons Hillary has changed her position on TPP. She originally thought that such legislation would accompany the passage of TPP. Also at the time of her original support, the provisions that favored corporations had not been finalized.
BTW, it does appear to be true that because of free trade agreements, the GDP has been raised a bit thus supplying a benefit to many. For NAFTA see https://www.fas.org/sgp/crs/row/R42965.pdf.
Also a job guarantee program like the one proposed by good old Tom Paine in 1797 would solve the problem once and for all. The federal gov would become the employer of last resort. It would guarantee a decent job or paid training for such a job to everyone able to work. As with unemployment benefits today, you could require each worker to show that he had applied for a comparable private sector job periodically.
See http://www.levyinstitute.org/topics/job-guarantee
Is it ethical to adopt a policy that does severe damage to a small number of people if it provides a small benefit to a much large number of people?
Of course in each individual case the number, the size of the damage and the benefit, the numbers of people affected matter, but in this case there is an obvious solution.
The damage in free trade agreements is that some people will lose their jobs. The federal government could simply provide jobs for that small number of people. I believe this is one of the reasons Hillary has changed her position on TPP. She originally thought that such legislation would accompany the passage of TPP. Also at the time of her original support, the provisions that favored corporations had not been finalized.
BTW, it does appear to be true that because of free trade agreements, the GDP has been raised a bit thus supplying a benefit to many. For NAFTA see https://www.fas.org/sgp/crs/row/R42965.pdf.
Also a job guarantee program like the one proposed by good old Tom Paine in 1797 would solve the problem once and for all. The federal gov would become the employer of last resort. It would guarantee a decent job or paid training for such a job to everyone able to work. As with unemployment benefits today, you could require each worker to show that he had applied for a comparable private sector job periodically.
See http://www.levyinstitute.org/topics/job-guarantee
6
The question should be: Is it ethical to adopt a policy that does severe damage to a large number of people if it provides a large benefit to a much smaller number of people?
According to the 1%, the answer is 'Yes'.
According to the 1%, the answer is 'Yes'.
1
Maybe, just maybe, there is more to life than economics. Maybe we like to deal with, and support, our neighbors. Oh, sorry, that is now considered racist.
Maybe we are tired of the global consolidations where the only avenue of problem resolution is in trying to explain your issue to someone on the other side on the planet who doesn't understand our language, or our problem. Oh sorry, that is now is considered xenophobic.
Maybe we do appreciate economic principles but we also know that when you have a dramatically unbalanced partners (Ex. the standard of living in the US vs China in the 1980's) the greater benefits of trade are going to flow in one direction. We have built China on the backs of our neighbors. When we push back on that we are met with condescension - or are called greedy nationalists.
We cannot stay isolated and eventually trade, communication and technology levels things out across the world. However the rush to make it all happen right now has been too crushing on the average working person, and has benefited only those positioned to take advantage.
Maybe we are tired of the global consolidations where the only avenue of problem resolution is in trying to explain your issue to someone on the other side on the planet who doesn't understand our language, or our problem. Oh sorry, that is now is considered xenophobic.
Maybe we do appreciate economic principles but we also know that when you have a dramatically unbalanced partners (Ex. the standard of living in the US vs China in the 1980's) the greater benefits of trade are going to flow in one direction. We have built China on the backs of our neighbors. When we push back on that we are met with condescension - or are called greedy nationalists.
We cannot stay isolated and eventually trade, communication and technology levels things out across the world. However the rush to make it all happen right now has been too crushing on the average working person, and has benefited only those positioned to take advantage.
7
This article illustrates a classic pattern of argument that we currently see arising a certain type of prevailing ideology.
Why do some people insist on disagreeing with us about immigration and trade? They are defying their "elected leader". They are scorning the acknowledged "experts". They are ignoring all those articles published in professional journals. There must be some rational explanation.
It lies, as it so often does, in their personal inadequacies. There are cognitive deficiencies (such as isolationism) moral deficiencies (such as nationalism), personality deficiencies (such as ethnocentrism). And of course, they are unenlightened due to their inadequate education.
And this is true not just of many Americans, but also the Brexit supporters in Britain, a country which we have long ignored but about which we became experts in a matter of weeks.
But we can hope that things may improve as society "becomes more educated". Meanwhile, the soundness of the individual is reflected in the soundness of the ideology.
Why do some people insist on disagreeing with us about immigration and trade? They are defying their "elected leader". They are scorning the acknowledged "experts". They are ignoring all those articles published in professional journals. There must be some rational explanation.
It lies, as it so often does, in their personal inadequacies. There are cognitive deficiencies (such as isolationism) moral deficiencies (such as nationalism), personality deficiencies (such as ethnocentrism). And of course, they are unenlightened due to their inadequate education.
And this is true not just of many Americans, but also the Brexit supporters in Britain, a country which we have long ignored but about which we became experts in a matter of weeks.
But we can hope that things may improve as society "becomes more educated". Meanwhile, the soundness of the individual is reflected in the soundness of the ideology.
5
Historically, we had a benign relationship with globalization: it worked and its effects on the composition of our workforce were not discernible. In industries where we competed head to head, like textiles, the displaced began to concentrate in certain locales driving economic malaise (e.g., the South, Michigan). Car companies came back a bit, maybe due to the supply chain and costs of shipping finished products around the globe, but the total employed drops.
Today, with the Internet, we can "offshore" 2 or 3 full-time equivalents (FTEs) for each job that remains. This results in a reduction of roles that survive and leaves many workers out of work. It is becoming noticeable as radiologists, accountants, and software developers are located offshore. This maintains output in medicine, finance, and banking while reducing the number of employed here in America, concentrating the labor base. When CEOs put a job in Mumbai, and every one in the industry follows suit to remain cost competitive, things like service no longer remain competitive assets, labor costs go down, Americans are let go, and the cycle continues...at least until wages rise significantly in the offshore location. Few fight it, consumers love it.
Trade is meant to reward relative strength, not pillage a labor market. When it does, the population revolts.
This time it IS different. We are talking about huge wage disparities and benefit expectations from US workers. Look at our labor participation rate.
Today, with the Internet, we can "offshore" 2 or 3 full-time equivalents (FTEs) for each job that remains. This results in a reduction of roles that survive and leaves many workers out of work. It is becoming noticeable as radiologists, accountants, and software developers are located offshore. This maintains output in medicine, finance, and banking while reducing the number of employed here in America, concentrating the labor base. When CEOs put a job in Mumbai, and every one in the industry follows suit to remain cost competitive, things like service no longer remain competitive assets, labor costs go down, Americans are let go, and the cycle continues...at least until wages rise significantly in the offshore location. Few fight it, consumers love it.
Trade is meant to reward relative strength, not pillage a labor market. When it does, the population revolts.
This time it IS different. We are talking about huge wage disparities and benefit expectations from US workers. Look at our labor participation rate.
8
I think there is a completely different dynamic at work. I think that people have a hard time quantifying the "savings" that they see in their personal balance sheet due to globalization and comparing to possible lost wages or increased wages due to increased exports.
Each of us saves with the increased trade (and specialization) on the goods that we buy. However, its in small amounts per transaction, in each transaction: $2 on a pair of sneakers, $1 on a jacket, $3 on a lamp, $30 on a television, and on and on. This is in comparison to the view that they have of a "layoff" of 600 people that they read about in the newspaper.
To me, this idea that small recurring events have less of a sociological effect on people is no different than how people (incorrectly) view travel by plane as more dangerous than travel by car. Car crashes don't kill 300 people at a time.
Each of us saves with the increased trade (and specialization) on the goods that we buy. However, its in small amounts per transaction, in each transaction: $2 on a pair of sneakers, $1 on a jacket, $3 on a lamp, $30 on a television, and on and on. This is in comparison to the view that they have of a "layoff" of 600 people that they read about in the newspaper.
To me, this idea that small recurring events have less of a sociological effect on people is no different than how people (incorrectly) view travel by plane as more dangerous than travel by car. Car crashes don't kill 300 people at a time.
6
I think there are other, equally valid, explanations. For one thing, people tend to believe the politicians and opinion makers with whom they identify more than they believe economists. If the narrative of a person's identified "Team" is that global trade is bad for them, then they are likely to believe it. Education is correlated but not causal, or only partially so. Also, economists may not be measuring all the factors (especially important ones that are hard to measure). Also, the way that economists define "better off" may be different than other people's way of doing so. "My wages are higher, my employment possibilities are higher, but I feel insecure about my job disappearing tomorrow, or having to move across the country for employment, or my children (supposedly) being more subject to violence, etc.
The USA cannot bury its head in the sand and expect global trade to stop affecting workers. If steel for example is made somewhere else for half the price, then companies will buy it from that location. Even if the US restricts the import of foreign steel with a large tariff, then those workers in Buffalo will suddenly have only a US market (smaller) for their steel, and US consumers ultimately have to pay higher prices for products. Not saying what the answer is.......
1
Two reasons people do not believe in the benefits of trade agreements:
1. Trade agreements are negotiated for the sole benefit of private corporations to allow them to skirt environmental, labor & financial laws of the countries which enter these agreements. The countries & their citizens are then powerless to protect their land & their citizens due to the rules of international arbitration. International arbitration of trade disputes are secret. Considering our global economy it is easy to see the devastation these trade agreements have on the environment & people across the globe. It can no longer be hidden.
2. Our Republican controlled Congress does not believe in using fiscal policy except benefit corporations. They completely ignore the needs of the citizenes & tell them to take personal responsibility for their circumstance. While corporations receive substantial government assistance, individual citizens receive nothing. This is due to conservative economic philosophy.
Result - people can buy loads of poorly made products from China in Walmart, but they cannot afford decent food, a decent home, transportation, medical costs, child care & education when they are earning minimum wage.
1. Trade agreements are negotiated for the sole benefit of private corporations to allow them to skirt environmental, labor & financial laws of the countries which enter these agreements. The countries & their citizens are then powerless to protect their land & their citizens due to the rules of international arbitration. International arbitration of trade disputes are secret. Considering our global economy it is easy to see the devastation these trade agreements have on the environment & people across the globe. It can no longer be hidden.
2. Our Republican controlled Congress does not believe in using fiscal policy except benefit corporations. They completely ignore the needs of the citizenes & tell them to take personal responsibility for their circumstance. While corporations receive substantial government assistance, individual citizens receive nothing. This is due to conservative economic philosophy.
Result - people can buy loads of poorly made products from China in Walmart, but they cannot afford decent food, a decent home, transportation, medical costs, child care & education when they are earning minimum wage.
37
I think the economists and social scientists don't get it. I live in the Buffalo area. All you have to do is drive through Buffalo and Lackawana, and see all those abandoned red-brick buildings that were once factories. In high school my class at Brooklyn Tech visited the Bethlehem steel plant, in Bethlehem, PA. Today, that plant is the site of a casino. The jobs from those factories were replaced by service jobs that paid a lot less and with fewer benefits. Wages have stagnated for the middle class. And, even if this is creative destruction, as some economists and historians might want to call it, the displaced workers from those red brick factories, and their offspring. don't believe that international trade has helped them. They just see their loss of high-paying manufacturing jobs and pensions.
38
The basic principle of all trade is to allow goods from the low cost producer to move into broader markets. The United States is a high cost producer of most goods. A fifth grader could tell you that NAFTA et al would result in job losses in the US even though consumers would have access to new low cost products. Economists are always looking for complicated answers when a simple observation would do. Since the big move to globalization began, wages for workers have stagnated, and many well paying jobs have disappeared forever. That's all you need to know about trade deals.
14
Post WW 2 history clearly shows, we experienced a major economic expansion. Having witnessed that expansion, and like millions, prospered from it, it is also obvious economist charts and graphs have been chasing the data, to re-visit the GDP growth. With WW 2 behind us we turned to consumerism, and now are 70% dependent on main street buying stuff, while most multinational corporations legally pay not taxes on foreign revenue. The trap we are in is serious as while depending on consumption those required to buy are making less and less so called middle class income especially after taxes. The adjustment to a reduced standard of living is cause for great anxiety by main street. Our so called inter connected world is in place and benefits a few at the top while creating a world wide consumer like Indians and Chinese. Apple is my best example. They need China and India to keep their gadget sales going, while some staggering amount of their assets are in Ireland tax free to Uncle Sam. The Clintons are no vehicle for revision they are part of the system. Very very experienced career politicians. Trump knows of the anxiety but has no chance of legislation to change anything if he were in office. That beltway, the media especially this paper, and Wall Street manage the country , not voters who elect insiders. I call them the ruling class and they absolutely have it made, why would they want revision or even some fundamental changes. Obama's intellect got him carried away.
5
From Hillary's WEB Site:
"Close corporate and Wall Street tax loopholes and invest in America. Hillary will close tax loopholes like inversions that reward companies for shifting profits and jobs overseas. She will charge an “exit tax” for companies leaving the U.S. to settle up on their untaxed foreign earnings. She will close tax loopholes that let Wall Street money managers pay lower rates than some middle-class families. And she’ll reward businesses that invest in good-paying jobs here in the United States."
"Close corporate and Wall Street tax loopholes and invest in America. Hillary will close tax loopholes like inversions that reward companies for shifting profits and jobs overseas. She will charge an “exit tax” for companies leaving the U.S. to settle up on their untaxed foreign earnings. She will close tax loopholes that let Wall Street money managers pay lower rates than some middle-class families. And she’ll reward businesses that invest in good-paying jobs here in the United States."
The Mansfield/Mutz theorem strikes one as entirely plausible. American industrial output is actually higher than it was 40 years because of productivity improvements even if furniture is no longer made in NC. Americans have also been enormous beneficiaries of globalization. What would they do without Wal-Mart and all those other big box stores. Messages of outrage are poured out at venues like this on cheap computers brought to Americans by world trade. There are of course winners and losers and it's all enormously complicated. This enables the opponents of world trade which has enormously enriched the world since WW 2 to obscure much larger truths by focusing on over simplifications, anecdote or trivia.
7
Some trade agreements are better for us in the U.S. than are others. We become angry when trade displaces entire factories or industries and their U.S. workers. We probably wouldn't become so angry if our government made significant and effective efforts to retrain displaced workers. There is far more media coverage of the anger emanating from displaced workers than there is publicity about all the "good" that comes from trade agreements. And I wouldn't discount the legitimate anger many Brits felt about having to kowtow to faceless bureaucrats in Brussels plus the surge of refugees into Britain and also other places which made the Brits feel "the worst was yet to come."
6
Go ahead, be zenophobic.
The United States relies on other countries throughout the world for various elements, metals, industrial minerals and agricultural products. Collectively, these products are known as Strategic Minerals. A common definition of a strategic mineral is a mineral that would be needed to supply the military, industrial, and essential civilian needs of the United States during a national emergency. Furthermore, they are not found or produced in the United States in sufficient quantities to meet this need.
In 1982, the Federal Emergency Management Agency (FEMA) reported to Congress on sixty-one items were strategic or critical, which brought the total number of strategic minerals to be ninety-three (Mangone, 1984, p. 30). Two areas the U.S. heavily depends upon for resources are Afghanistan and many countries on the African continent.
The United States currently relies on many other countries for various strategic minerals, two major areas that will be discussed are Afghanistan in Asia and several African nations. It is important to consider the resources within these regions because of the internal political and economic problems and conflicts the United States has with many of these countries. Any one of these countries could create a cartel against free trade and thus these countries have the ability to effect supply by restricting the United States access by military or political actions (Bollyn, 1999).
The United States relies on other countries throughout the world for various elements, metals, industrial minerals and agricultural products. Collectively, these products are known as Strategic Minerals. A common definition of a strategic mineral is a mineral that would be needed to supply the military, industrial, and essential civilian needs of the United States during a national emergency. Furthermore, they are not found or produced in the United States in sufficient quantities to meet this need.
In 1982, the Federal Emergency Management Agency (FEMA) reported to Congress on sixty-one items were strategic or critical, which brought the total number of strategic minerals to be ninety-three (Mangone, 1984, p. 30). Two areas the U.S. heavily depends upon for resources are Afghanistan and many countries on the African continent.
The United States currently relies on many other countries for various strategic minerals, two major areas that will be discussed are Afghanistan in Asia and several African nations. It is important to consider the resources within these regions because of the internal political and economic problems and conflicts the United States has with many of these countries. Any one of these countries could create a cartel against free trade and thus these countries have the ability to effect supply by restricting the United States access by military or political actions (Bollyn, 1999).
Most voters don't understand macroeconomics. What they understand is their own financial situation, which is dire for most Americans. 75% make less than $50k and 50% less than 25k. Unlike in the UK, taxes don't buy ordinary Americans universal healthcare and a good public education, which is why the overwhelming majority of them is under enormous financial stress. Two thirds of Americans couldn't cover an unexpected expense of $1000 and half couldn't even find $400 without borrowing from a friend or selling something. In terms of real income, most of the bottom 75% are worse off than they were before 2008 and, unsurprisingly, have lost their sense of economic security and personal dignity. Enter Trump who promises to restore national greatness and finds convenient scapegoats for the travails of working people.
Free trade is great for bankers who globally sell financial instruments and robot operators in export-oriented industries. This is why Wall Street, the City, and German, South Korean and Japanese workers love free trade and almost none else does, no matter what it does for GDP.
Free trade is great for bankers who globally sell financial instruments and robot operators in export-oriented industries. This is why Wall Street, the City, and German, South Korean and Japanese workers love free trade and almost none else does, no matter what it does for GDP.
26
It's far from just voters who don't understand macroeconomics. Mainstream economists, all politicians and nearly everyone in the media are also ignorant. The real picture is that exports are costs and imports are benefits, not the other way round.
So it should follow that there is a solid benefit to outsourcing production as they then become imports, but it does have a downside. Outsourcing means less jobs in the nation. The job losses are created at home. And there is little being done to address it. Hence the anger
So it should follow that there is a solid benefit to outsourcing production as they then become imports, but it does have a downside. Outsourcing means less jobs in the nation. The job losses are created at home. And there is little being done to address it. Hence the anger
5
@ John,
I agree when it comes to much of the English speaking world, but I would like to point out that the good people of Germany, Singapore, South Korea and Japan perfectly understand the need for an intelligent industrial policy. These countries have moved their manufacturing up the value chain and built up their service industries around it, which is why they haven't suffered job losses.
But according to the likes of Mankiw and Krugman, these countries are run by idiotic austerians and are in economic decline, even though they are at full employment and have contented workers, who value the kind of economic and social security that doesn't show up in the statistics used by mainstream Anglo-American economists.
I agree when it comes to much of the English speaking world, but I would like to point out that the good people of Germany, Singapore, South Korea and Japan perfectly understand the need for an intelligent industrial policy. These countries have moved their manufacturing up the value chain and built up their service industries around it, which is why they haven't suffered job losses.
But according to the likes of Mankiw and Krugman, these countries are run by idiotic austerians and are in economic decline, even though they are at full employment and have contented workers, who value the kind of economic and social security that doesn't show up in the statistics used by mainstream Anglo-American economists.
7
You point to nations that benefited from outsourcing [not entirely of course] They have all gone through their ups and downs over the last thirty years or so.
I wouldn't put too much store in Mankiw and Krugman, mainstream economists like I mentioned above. You'd be wiser to consult Kelton, Wray, Mitchell, Mosler. Keen, et al.
I wouldn't put too much store in Mankiw and Krugman, mainstream economists like I mentioned above. You'd be wiser to consult Kelton, Wray, Mitchell, Mosler. Keen, et al.
1
Sinclair Lewis pointed out how difficult it is to understand simple truths that might threaten to lower one's income. Economists show us how easy it is to "understand" things that aren't true at all, if they promise to raise one's income.
How does raising the country's aggregate income benefit us if we're required to actually give up part of our own incomes to further enrich the financial/medical/educational/distributional elites? How does it benefit us to gut our large midlands cities and virtually all of our mid-sized manufacturing towns, even in otherwise prosperous coastal states? How does it benefit us to reduce so many of us to precariousness that we fall into the trap of dividing ourselves by race, religion and culture as we anxiously compete to hold our own?
I am not the isolationist, xenophobic, half-literate know-nothing G. Mankiw assures us all I must be to feel this way. I don't feel threatened by Mexicans or Chinese. I feel threatened by Goldman-Sachs, Walmart, and the vast majority of "expert" economists who serve THEIR interests (but not mine) so faithfully.
How does raising the country's aggregate income benefit us if we're required to actually give up part of our own incomes to further enrich the financial/medical/educational/distributional elites? How does it benefit us to gut our large midlands cities and virtually all of our mid-sized manufacturing towns, even in otherwise prosperous coastal states? How does it benefit us to reduce so many of us to precariousness that we fall into the trap of dividing ourselves by race, religion and culture as we anxiously compete to hold our own?
I am not the isolationist, xenophobic, half-literate know-nothing G. Mankiw assures us all I must be to feel this way. I don't feel threatened by Mexicans or Chinese. I feel threatened by Goldman-Sachs, Walmart, and the vast majority of "expert" economists who serve THEIR interests (but not mine) so faithfully.
163
Global free trade is a national security issue since much of our critical manufacturing pipeline is dependent on foreign partners, and some in totalitarian countries such as China. If we prize America's independence and it's power to pursue just and fair world policies such as protecting the freedom of navigation in the South China Sea, then there is reason to be suspect of "free" trade agreements, even if some Harvard economists endorse it.
6
Economists know the price of everything and the value of nothing. As the prime example, look at the "benefits" realized from free trade with China: We got cheap plastic junk that destroys the planet; they got our industrial and military secrets, which our supine government, in thrall to the "free traders" feeding at the trough, refused to put an end to. Our cash flowing in one direction built up a military that brutally oppressed their own people (see Tienanmen Square and Tibet) and now terrorize all of Asia (see claims for the South China Sea). Meanwhile, our middle class, a prerequisite for a stable society, has been hollowed out to the point that many see heroin as the solution to their pain. And the plutocrats press for MORE free trade, MORE immigration, while record numbers of citizens have just dropped out of the workforce and off the radar screen. The current election cycle may horrify the "establishment," but it was preordained by their selfish, entitled, bought-and-paid-for politics.
27
I totally agree with this article, as some of of the opposition is tribalism, especially with Republicans.
It omits an important perspective from the left, which is income inequality.
The winners from trade in recent years have been poor people in developing countries like China and the TPP will certainly benefit Vietnamese workers. I believe this is a very good thing.
The other winners are the owners of capital - rich people mostly in developed countries.
The losers have been working and middle class workers in developed or rich countries.
I once posted an ethical question over at Economists View: is a trade agreement ethical if a Bangladeshi gains 300 percent in income and an American loses 5 percent (relative to inflation). But I omitted one thing from the equation: is it ethical if a CEO of a multinational gains 1000 percent in income and shields himself from tax liability?
I think it is wonderful for the Bangladeshi to gain income. I think what must be balanced is the middle income worker and the CEO; otherwise, even worse demagogues than Trump might come along.
It omits an important perspective from the left, which is income inequality.
The winners from trade in recent years have been poor people in developing countries like China and the TPP will certainly benefit Vietnamese workers. I believe this is a very good thing.
The other winners are the owners of capital - rich people mostly in developed countries.
The losers have been working and middle class workers in developed or rich countries.
I once posted an ethical question over at Economists View: is a trade agreement ethical if a Bangladeshi gains 300 percent in income and an American loses 5 percent (relative to inflation). But I omitted one thing from the equation: is it ethical if a CEO of a multinational gains 1000 percent in income and shields himself from tax liability?
I think it is wonderful for the Bangladeshi to gain income. I think what must be balanced is the middle income worker and the CEO; otherwise, even worse demagogues than Trump might come along.
13
I think you have hit upon an outstanding point. While the article elucidates some of the reasons why voters are behaving as they are, all of us should hold "economists" responsible for defining fair trade. This definition should include a detailed exposition of who the winners and losers are. As you wisely point out, most Americans would be inclined to think that reducing their income by 5% in order to raise the minimal standard of living of a Bangladeshi worker is fair trade and thus a worthwhile objective. But I doubt that they would be willing to include the greedy CEO in that equation.
At least part of the problem is that economists and politicians have not trusted American voters to be able to listen to and absorb the level of granular detail that is really needed to determine if a given trade deal is really "fair" or not. An educated and involved electorate is the key to avoiding demagogues.
At least part of the problem is that economists and politicians have not trusted American voters to be able to listen to and absorb the level of granular detail that is really needed to determine if a given trade deal is really "fair" or not. An educated and involved electorate is the key to avoiding demagogues.
6
Very well put Mr. Blum and Mr. Barrett, but I would add two points.
These treaties are not strictly about trade. My understanding is that TPP treads somewhat on national sovereignty. I prefer what protections we in the US have agreed to about water and air and nature over some corporations' perceived loss of profit.
And, Those who craft these treaties are often the only direct beneficiaries of them. Mr. Blum's CEO example above underscores that. And where there are protections for labor, the terms that are cast are either not enforced or not funded, acting only as lip service to domestic labor. Those who make the rules always win.
So it should be no surprise the public doesn't like the treaties almost as much as they dislike Congress itself. The public is always short changed. The public should hire some lobbyists.
These treaties are not strictly about trade. My understanding is that TPP treads somewhat on national sovereignty. I prefer what protections we in the US have agreed to about water and air and nature over some corporations' perceived loss of profit.
And, Those who craft these treaties are often the only direct beneficiaries of them. Mr. Blum's CEO example above underscores that. And where there are protections for labor, the terms that are cast are either not enforced or not funded, acting only as lip service to domestic labor. Those who make the rules always win.
So it should be no surprise the public doesn't like the treaties almost as much as they dislike Congress itself. The public is always short changed. The public should hire some lobbyists.
4
@ Brian
Wrong: Most Americans would be inclined to think that reducing their *CEOs* income by 5% in order to raise the minimal standard of living of a Bangladeshi worker is fair trade and thus a worthwhile objective.
Wrong: Most Americans would be inclined to think that reducing their *CEOs* income by 5% in order to raise the minimal standard of living of a Bangladeshi worker is fair trade and thus a worthwhile objective.
1
Since Copernicus much of what science including the social sciences say seem to be counter intuitive. If you send jobs over seas even while getting less expensive goods back how can that be good? Second from academics to the Media to politicians there has been very little effort to really explain why trade is good. Third as globalization is occurring so too is technological change such as reading newspapers on computers. What effort has there been to distinguish economic losses from technology as opposed to trade? Finally, thanks to the Right in general and Republicans in particular there has been very little effort to help the acknowledge losers from trade. If there was a fairer distribution of the benefits from trade there would be less opposition.
8
If only it was just the Right in general and Republicans in particular, there would be some hope.
2
All of the reasons given for opposition to trade in this article are negatives (ethnocentrism, nationalism, isolationism) and, if you take this perspective, it is easy to brand opponents as ignorant chauvinistic pinheads from the cultural wastelands in between America's global cities.
This conceited attitude is part of what is driving Trump's appeal to a broad group of Americans. Over the past fifty years as the world's economies have become more specialized, broad swaths of industries have become less local. The locally owned and controlled banks, factories, and farms are gone. Main Street retailers in all but the most expensive towns have been replaced first by the big box and now the Internet. Local and state politics were once forums for strong and visible local leaders whose activities were discussed debated and monitored by a vibrant local press. Now people will without shame admit that they have no idea who there councilmen or state representatives are and don't subscribe to a local paper. Just as businesses have become more centralized so too has political power in Washington.
Trump's nationalism (and Brexit) may appeal to some very base and ugly instincts but it also reflects a yearning for the loss of something good. Advocates for global trade and liberal ideals such as the European Union and the free movement of people across boarders need to open their eyes to the insensitivity of the attitudes that support some of their very rationale ideals.
This conceited attitude is part of what is driving Trump's appeal to a broad group of Americans. Over the past fifty years as the world's economies have become more specialized, broad swaths of industries have become less local. The locally owned and controlled banks, factories, and farms are gone. Main Street retailers in all but the most expensive towns have been replaced first by the big box and now the Internet. Local and state politics were once forums for strong and visible local leaders whose activities were discussed debated and monitored by a vibrant local press. Now people will without shame admit that they have no idea who there councilmen or state representatives are and don't subscribe to a local paper. Just as businesses have become more centralized so too has political power in Washington.
Trump's nationalism (and Brexit) may appeal to some very base and ugly instincts but it also reflects a yearning for the loss of something good. Advocates for global trade and liberal ideals such as the European Union and the free movement of people across boarders need to open their eyes to the insensitivity of the attitudes that support some of their very rationale ideals.
14
The professors' heads are conveniently and firmly shoved in the sands of privilege, bias and groupthink unrelated to reality. Those poor, dumb, uneducated masses - like PhD physicist/engineer me - who are the few loser souls in this rush to global greatness. I guess they just refuse education and readjustment to their loser lot. I read a lot and observe what is happening in my political and economic environment. Of course, "trade" deals like the TPP are shielded from access by non-corporate losers like me (and likely you, and even those who are supposed to vote to ratify them in Congress), so I have to rely on Wikileaks for my information. Much more than any actual trade component in these deals, I fear and reject them on the basis of their true intention: the transfer of sovereign power of my allegedly democratically elected state to global corporate interests and a tribunal of corporate lawyers for enactment. If we rubes don't want fracking in our backyards, for example, and getting a President and Congress in place to override local laws is taking too long, let the "trade" laws step in to force we citizens to pay for our crime of limiting the potential profits of some foreign or domestic corporation. Yeah, right. Trade deals that benefit the entire world, as long as you're on the right side of the divides between rich and not-so-rich or corporate versus mere human.
116
People want agency, a degree of control over their own lives. Democracy was adopted specifically to bring agency to individuals. The free trade agreements are usually designed to remove agency from people and move it to companies. It is no surprise that the people resent this usurpation of their agency.
The economic analysis misses things that people value deeply, such as environmental protection, self-determination and human rights. Economists still have a great deal of trouble acknowledging these qualities that humans have value more than money. It is Mankiw who is being irrational in this article.
The economic analysis misses things that people value deeply, such as environmental protection, self-determination and human rights. Economists still have a great deal of trouble acknowledging these qualities that humans have value more than money. It is Mankiw who is being irrational in this article.
21
The division in this country is not just red vs. blue. It is being replaced by pro or con globalization. The last time this happened in the world was early in the 20th century; the result was World War 1.
Economist think that the solution to globalization is for those impacted to re-train for a new profession or move.
The problem is that Billy Bob may not have the capability of learning a new skill and he's not going to get a U-Haul and leave his extended family. They are all he's got.
Economist think that the solution to globalization is for those impacted to re-train for a new profession or move.
The problem is that Billy Bob may not have the capability of learning a new skill and he's not going to get a U-Haul and leave his extended family. They are all he's got.
20
Gregory, even if the gains are Pareto (and they were NOT), the enormous benefits gained by some combined with Wall St. avarice at the public's expense results in rejection of further trade liberalization. Particularly when the excess compensation of the beneficiaries is self-characterized as having been "made" while the uncompensated losers are said only to want to "take".
11
Economists overwhelmingly predicted that free trade would lead to rampant prosperity for all. Instead, we have a decade of stagnation throughout the developed world, accompanied by widespread worker displacement and hitherto unimaginable levels of inequality, and immune to both fiscal and monetary intervention. The real head-scratcher is why voters listen to economists at all when they have been so spectacularly wrong for such a long time.
48
I think it's much more basic. Within the US, the positive greatest impact of freer trade is felt in lower prices for goods, and in service economy on the supply side. But the downside is that as a result we have largely outsourced our previously vibrant manufacturing base. And lower prices for goods is felt unevenly - look at prices for building materials and the impact of Chinese growth here.
Giving away a productive manufacturing base for the benefit of a relative few working in finance and services has affected more of us than we think. And it has forced up the prices of service businesses like medical care.
It's easy to see how the downside has a personal, visceral impact, while the upside disproportionately helps a limited slice of workers, if you aren't one of the lucky beneficiaries. Especially when we keep hearing about how our former growth engines like tech and computers are part of what keeps disappearing overseas. It becomes whack-a-mole.
Giving away a productive manufacturing base for the benefit of a relative few working in finance and services has affected more of us than we think. And it has forced up the prices of service businesses like medical care.
It's easy to see how the downside has a personal, visceral impact, while the upside disproportionately helps a limited slice of workers, if you aren't one of the lucky beneficiaries. Especially when we keep hearing about how our former growth engines like tech and computers are part of what keeps disappearing overseas. It becomes whack-a-mole.
31
All considered, open global trading benefits our economy, on the average, and in the long run. The problem is that the average includes the winners and the losers, and the long run might be someone's entire life time. I think that if the correct equations were written, ones that truly includes all the impacts of global trade, and on a time-discounted gain and loss basis, something less than 100% free trade would be shown to be optimal. There is a great deal of information contained in the price we pay for a pair of sneakers, for example, including a favorable vote for the factory being in China, and all that goes with it.
7
Being anti-trade is basically saying all Americans have to pay more for goods and generally suffer economically to protect low-paying, low skilled jobs. Those jobs are on deathwatch even without trade.
Trade enforces an economic discipline that has kept the US in a leadership position for decades.
Another side of it is xenophobia and/or racism. People would be outraged if California refused to trade with the rest of the states, yet doing the same to "foreigners" is seen as positive, even though trade builds friendly links and understanding between countries. We all live on one small planet, we'd better find a way to get on or we're all finished.
Trade enforces an economic discipline that has kept the US in a leadership position for decades.
Another side of it is xenophobia and/or racism. People would be outraged if California refused to trade with the rest of the states, yet doing the same to "foreigners" is seen as positive, even though trade builds friendly links and understanding between countries. We all live on one small planet, we'd better find a way to get on or we're all finished.
3
Most people have a hard time believing economists because most of them including the author of this article didn't predict the recession that happened around 2008. The argument made by some (many?) economists was that economics did not have prediction power. Further, economists were divided into two camps about what the best way to revive the economy was - one side wanted stimulus while the other didn't (and the two sides traded insults in this august publication).
1
Most people have a hard time believing economists because most of them including the author of this article didn't predict the recession that happened around 2008. The argument made by some (many?) economists was that economics did not have prediction power. Further, economists were divided into two camps about what the best way to revive the economy was - one side wanted stimulus while the other didn't (and the two sides traded insults in this august publication).
12
There were economists that predicted 2008 and their argument is easy to understand. The first thing to realize is that the federal deficit measures the flow of money FROM the federal government TO the private sector.
The first chart at http://www.slideshare. net/MitchGreen/mmt-basics-you- cannot-consider-the- ... shows what happened.
In the 1990's spending and the deficit were reduced. The flow of money out of the federal sector was reduced.
Simultaneously the flow of money into the private sector was reduced. Then in about 1996 money began to flow out of the private sector, out of the country in fact. In about 1998, Money started flowing into the federal sector. This is the Clinton surplus. Money was rapidly flowing out of the private sector.
In 2001, the Bush administration started, and we had deficits again, but our trade deficit was really large. Except for a brief period in 2003, the Bush deficits were not large enough to compensate for the money going out of the country. Money still flowed out of the private sector.
People then turned to banks to get money. Private debt exploded. But the banks could create only so much money.
Finally in 2008, the economy crashes. Now there certainly were other factors which contributed to the 2008 crash. e.g. high inequality meant the Rich had excess money to speculate with, but the cumulative effect of money leaving the private sector from about 1996 to 2008 and the resultant huge increase in private debt was the main cause.
The first chart at http://www.slideshare. net/MitchGreen/mmt-basics-you- cannot-consider-the- ... shows what happened.
In the 1990's spending and the deficit were reduced. The flow of money out of the federal sector was reduced.
Simultaneously the flow of money into the private sector was reduced. Then in about 1996 money began to flow out of the private sector, out of the country in fact. In about 1998, Money started flowing into the federal sector. This is the Clinton surplus. Money was rapidly flowing out of the private sector.
In 2001, the Bush administration started, and we had deficits again, but our trade deficit was really large. Except for a brief period in 2003, the Bush deficits were not large enough to compensate for the money going out of the country. Money still flowed out of the private sector.
People then turned to banks to get money. Private debt exploded. But the banks could create only so much money.
Finally in 2008, the economy crashes. Now there certainly were other factors which contributed to the 2008 crash. e.g. high inequality meant the Rich had excess money to speculate with, but the cumulative effect of money leaving the private sector from about 1996 to 2008 and the resultant huge increase in private debt was the main cause.
Prof. Mankiw's survey of the possible causes for hostility toward globalization seems awfully thin.
While on balance I likely have benefited from globalization through lower consumer costs, I'm deeply skeptical of the facile sloganeering its proponents have used to justify it. My concern isn't with its visible benefits, but rather with its invisible costs. If my neighbor's employer fires him to move his job overseas, that affects me: he's my neighbor and we have a responsibility to look out for each other. Our country doesn't do enough to ameliorate job losses due to globalization, in part because to do so would challenge the gospel of the unfettered market.
Globalization may be good for the national economy, but its effects are too unevenly distributed to be good for the nation's populace. This partially altruistic and partially self-interested outlook doesn't seem to have occurred to Prof. Mankiw and his fellow economists.
While on balance I likely have benefited from globalization through lower consumer costs, I'm deeply skeptical of the facile sloganeering its proponents have used to justify it. My concern isn't with its visible benefits, but rather with its invisible costs. If my neighbor's employer fires him to move his job overseas, that affects me: he's my neighbor and we have a responsibility to look out for each other. Our country doesn't do enough to ameliorate job losses due to globalization, in part because to do so would challenge the gospel of the unfettered market.
Globalization may be good for the national economy, but its effects are too unevenly distributed to be good for the nation's populace. This partially altruistic and partially self-interested outlook doesn't seem to have occurred to Prof. Mankiw and his fellow economists.
37
Globalization effects are not 'unevenly distributed', they are distributed to the 1%, who continues to chide the rest of us for being so 'cheap'.
2
People wised up to the fact that government at all levels led the way in eliminating jobs that are still necessary today, just to save money. For proof, just try to deal with any government department to witness the result of serious shortages of personnel.
People know as fact that higher level specialists are now wastefully doing those relatively menial tasks in place of the multitudes of receptionists, typists, file clerks, auditors, case workers, etc.
We have not become more efficient and productive across the board, but we have successfully pushed people down into lower paying classifications so that there is still someone else for supervisors to push around. Government has no one who is responsible for customer service, and the public pays the price when they make contact.
People know as fact that higher level specialists are now wastefully doing those relatively menial tasks in place of the multitudes of receptionists, typists, file clerks, auditors, case workers, etc.
We have not become more efficient and productive across the board, but we have successfully pushed people down into lower paying classifications so that there is still someone else for supervisors to push around. Government has no one who is responsible for customer service, and the public pays the price when they make contact.
9
"As society slowly becomes more educated from generation to generation, the general public’s attitudes toward globalization should move toward the experts’."
I'm not optimistic at all considering the lack of critical thinking I see in 'college graduates', correlation or no.
What I see, however, are the following. One, Americans see that manufacturing and the 'good paying jobs' have shrunk in this country, unwittingly comparing to the 1950s/60s, see or hear about the global trade deals over and over (which were much later) and believe that is the reason, when in reality, the early erosion (70s) is due to the change from the U.S. being the only game in town after WWII, to the recovery of Europe and Japan, development of underdeveloped countries, and labor replacing technology. Two, economists, of which I am one, when talking about global trade as good, ignore the different market power between large and small economies, and the importance of differences in labor, environmental and other regulations/laws, exchange rate manipulations. Three, consumers don't have perfect information - e.g., a Chinese firm exported colorful blankets to Namibia, which drove the less colorful and more expensive local blanket firm out of business; however, the blankets fell apart and the local manufacturer was going to start up again, but sometimes the consumer is stuck once the local firms have gone belly up, no choice but the inferior product.
I'm not optimistic at all considering the lack of critical thinking I see in 'college graduates', correlation or no.
What I see, however, are the following. One, Americans see that manufacturing and the 'good paying jobs' have shrunk in this country, unwittingly comparing to the 1950s/60s, see or hear about the global trade deals over and over (which were much later) and believe that is the reason, when in reality, the early erosion (70s) is due to the change from the U.S. being the only game in town after WWII, to the recovery of Europe and Japan, development of underdeveloped countries, and labor replacing technology. Two, economists, of which I am one, when talking about global trade as good, ignore the different market power between large and small economies, and the importance of differences in labor, environmental and other regulations/laws, exchange rate manipulations. Three, consumers don't have perfect information - e.g., a Chinese firm exported colorful blankets to Namibia, which drove the less colorful and more expensive local blanket firm out of business; however, the blankets fell apart and the local manufacturer was going to start up again, but sometimes the consumer is stuck once the local firms have gone belly up, no choice but the inferior product.
3
I think trade with China is a bad idea for Strategic reasons.
China is not our friend.
China is a world wide trouble maker.
China does not respect the rule of law or human rights.
China does not respect copy right or patent laws.
China ignores environmental laws, they are so big that this effects global weather,
China has no quality control on their products. We are paying billions for cheap junk.
China has horrific working conditions in many of their factories.
China has ambitions of being a global player and many of their areas of interest conflict with ours.
China is using our money to fund their military build up.
To sum up: We pay China billions, they ship us cheap junk. Our trade has no effect on their foreign policy, they do what they want. They take our billions and build or buy aircraft carriers and subs which we will be facing in the South China Sea, soon.
Let's stop being stupid. Give our business to those countries who are our friends or who want to be our friends. Stop rewarding countries that work against us.
China is not our friend.
China is a world wide trouble maker.
China does not respect the rule of law or human rights.
China does not respect copy right or patent laws.
China ignores environmental laws, they are so big that this effects global weather,
China has no quality control on their products. We are paying billions for cheap junk.
China has horrific working conditions in many of their factories.
China has ambitions of being a global player and many of their areas of interest conflict with ours.
China is using our money to fund their military build up.
To sum up: We pay China billions, they ship us cheap junk. Our trade has no effect on their foreign policy, they do what they want. They take our billions and build or buy aircraft carriers and subs which we will be facing in the South China Sea, soon.
Let's stop being stupid. Give our business to those countries who are our friends or who want to be our friends. Stop rewarding countries that work against us.
40
“We pay China billions, they ship us cheap junk.”
Of course the problem with this Bruce, why buy it if it is not worth the price? Think about that for a while and what comes to mind? At a simple level you are back at the Economists' reasoning price levels are down standard of living up and if it any comfort to you China is moving up the value change and the cheapest products are now coming from elsewhere. On military expenditures China sees itself being surrounded by US Military Bases as the ‘Pivot to Asia’ occurs so buys used Aircraft carrier from Ukraine and now building its first, but still investing in US property and businesses – good for US GDP. What a complex world.
Of course the problem with this Bruce, why buy it if it is not worth the price? Think about that for a while and what comes to mind? At a simple level you are back at the Economists' reasoning price levels are down standard of living up and if it any comfort to you China is moving up the value change and the cheapest products are now coming from elsewhere. On military expenditures China sees itself being surrounded by US Military Bases as the ‘Pivot to Asia’ occurs so buys used Aircraft carrier from Ukraine and now building its first, but still investing in US property and businesses – good for US GDP. What a complex world.
2
You are free to buy or not buy products from China. It is the US companies who choose to produce goods there. Good luck trying to find many goods that are NOT from China.
We are buying China's cheap junk because we each have lost our good paying manufacturing job and can no longer afford anything better
Globalization is a choice not a natural force. It is a choice made by international elites with little connection to or empathy with those who will be negatively affected by it.
Globalization is buttressed by an economic ideology and a priesthood that serves to pacify the unwashed. Thankfully there are in fact a number of reputable economists who when looking at the books realize that maybe not is all right with these accounts of the benefits of global trade (you can find them yourselves).
In the real political world there will never be a redistribution to those made poorer by global trade as they have no political power.
Globalization is buttressed by an economic ideology and a priesthood that serves to pacify the unwashed. Thankfully there are in fact a number of reputable economists who when looking at the books realize that maybe not is all right with these accounts of the benefits of global trade (you can find them yourselves).
In the real political world there will never be a redistribution to those made poorer by global trade as they have no political power.
100
So free trade within the US is a joyous miracle but without it's a dark, evil force.
Got it.
Got it.
Economists look at the standard-of-living benefit from the lower cost of imported products ("the Walmart effect") as the flip side of the job-loss coin, but voters don't recognize it. The additional societal cost of the $300 flat screen TV, $25 DVD player, $5 T-shirts, etc. is the often severe dislocation of thousands of factory (and increasingly white collar) workers - often in rural small towns.
54
There is a further iterative factor - cheaper products are cheap relative to the old higher paying job; higher paying job goes because of Walmart competition and Walmart goods are not so cheap anymore with the lower paying or no job.
1
Even Trump acknowledges the difference between global trade and what "trade" deals like the TPP are about. Global trade is good, the TPP is an act written by and for corporations in order to weaken environmental and health regulations, enact rentier economics, and to socialize business costs.
82
When an American goes to a store and finds a manufactured product at a low price, he doesn't raise his hands to heaven and thanks God for globalization, which enabled that low price. But when his cousin loses his job to foreign competition, he does see the connection, and deplores it.
Maybe that such people concern themselves less with the first connection shows they have less understanding than Harvard economists. Or maybe they have better understanding of what makes life good.
Perhaps reliable employment and the stable life it provides our families is more important than whether we can stuff 15 cheap electronic devices into our lives, as opposed to the only 5 devices we could afford if we had to pay made-in-America prices.
Maybe that such people concern themselves less with the first connection shows they have less understanding than Harvard economists. Or maybe they have better understanding of what makes life good.
Perhaps reliable employment and the stable life it provides our families is more important than whether we can stuff 15 cheap electronic devices into our lives, as opposed to the only 5 devices we could afford if we had to pay made-in-America prices.
197
And the worker in a developing country who assembled the TV and can now have meat more often because of the job is not part of the Americans reconciliation .
Then, they need to resist buying the cheaper good, especially if it was made with little if any regulatory standards for labor, the environment etc.
People know that most countries cheat on trade. Places like Japan, France, and Taiwan, although they pay lip service to free-trade principles, make sure that their citizens are not the losers in practice.
What countries don't cheat? Places like the UK and the US, where the rule of law is taken seriously. Those are the countries with the greatest number of voters who are opposed to trade.
As long as theory is different from practice, greater 'education' will not help. An examination of what is really going on will confirm that the honest countries are getting the short end of the stick.
What countries don't cheat? Places like the UK and the US, where the rule of law is taken seriously. Those are the countries with the greatest number of voters who are opposed to trade.
As long as theory is different from practice, greater 'education' will not help. An examination of what is really going on will confirm that the honest countries are getting the short end of the stick.
29
No, the U.S. and Europe also 'cheat'.
What countries don't cheat? Places like the UK and the US...
Well, that pretty much proves the author's point about ethnocentrism.
Well, that pretty much proves the author's point about ethnocentrism.
1
Voters don't feel free trade benefits them because they don't think about what a pair of shoes or jeans made in the USA would cost them. They don't think about how competition among automakers worldwide has improved all autos while keeping prices lower. Voters think about the people who lose jobs, whose jobs go overseas, but they aren't reminded by the same political candidates of the people who gain jobs with foreign companies local offices, factories, and sales outlets. Voters don't think the economy is doing well because, while the economy is "in aggregate" doing quite well, 95% of the gains of that economy are going to the top 1%. The voters in the other 99% have not seen things improve, even though "on average" incomes are up greatly in the last 30 years or so. That whole "trickle down" thing never happened. That the voters angry about the disparities in the benefits of economic improvement are in many cases voting *for* the very party that has done what it could to reinforce the current situation is ironic, but irony seems lost on these voters. Perhaps it comes from where they get their "facts" and which politicians they are listening to. Trump and the Republicans have been proving for 35 years that Barnum was right - there really -is- one born every minute...
25
Once again, this is both a self serving, smug, self satisfied biased opinion and superior attitude. The bottom line is globalisation is just another method of trickle down economics. It grows the pie but concentrates it more closely toward the top. Nationalism produces less pie but spreads it more evenly. Even globalisation with massive redistribution would be worse for the bottom end than have a well paid job ie distribution via job than high tax and public services.The only national interest people care about is the intimidation of them being next to lose income or job.Period. I"ve loved globalisation because I've creamed it but I'm now a little aghast at the trail of destruction it's left in its wake. I didn't really need the greed but other needed basic opportunity. I want Trump to maybe disrupt the system, not maybe pay losers a little bit of tax compensation to pacify them.
14
This is nothing like a full picture of what is going on. The Democrats are down on trade deals because many of the business job losses in the US are union jobs, and unions are major Democratic Party money and manpower supporters. Clinton's views on TPP per her quote and per her current view are driven 100% by her desire for political support from the unions; a typical politician's reaction to constituent demands. However, we can also expect that her current views are not actually her views, and she will in fact support some version of TPP once she is in office; amazingly, politicians often act differently once in office vis a vis when they are merely lusting after the office.
7
Oh so smug! Intelligent and well educated people must agree with "top economists" like Mr. Mankiw and everyone else must just be dumb. We don't understand how wonderful it is for CEOs and major shareholders to siphon off their profits from international trade and stash them in tax havens, so that they can avoid paying for worker retraining or relocation. We don't appreciate the fact that Big Pharma and Monsanto absolutely must be allowed to renew their patents for decade after decade after decade with minute tweaks, otherwise they would take all their research marbles and go home and we'd all drop dead. We don't fathom the need for copyright durations to be extended from 50 years to 70 years throughout the world, otherwise no one will have sufficient incentive to create anything new. And worse of all, we don't embrace the brilliant notion that foreign investors must be protected from the possibility that future environmental or health regulations might dent their future expected profits, and must be able to stack the decks of an arbitrary, unaccountable international tribunal to ensure that such rights be upheld. We're too dumb to understand that the God of the Market revels in the increasing inequality and we're too ungrateful to bow our heads in thanks at the wonders of efficiency that deprive us of job security or benefits or even a living wage. Yup, we're just too stupid. Gee, it must be frustrating that we just won't listen to him and learn.
263
Not only is all of Mau Van Duren's comment right on the mark, but even the theoretical case for trade is highly questionable. The argument for free trade advanced by the "top economists" uses an evaluation criterion where an extra dollar to a billionaire provides the same increase in welfare as an extra dollar to a minimum wage worker. For you that don't know international trade theory that is a fundamental assumption of the trade models used to derive the free trade is best argument. By simply eliminating this assumption and using a much more realistic assumption that an extra dollar to the minimum wage worker increases welfare more, the free trade argument COMPLETELY breaks down (when the losers are poorer than the winners). Thus it is entirely possible that the public is using a much more reasonable criterion in evaluating trade than the supposedly "top economists" who have built all kinds of fancy and impressive mathematical models using ridiculous assumptions. For professional economists, let me plug my work, check out my UN working paper titled A Utilitarian Welfare Analysis of Trade, freely available on the web.
4
More jobs have been displaced by robotics and other technologies than by out sourcing jobs overseas. Even if we grow manufacturing jobs you still need someplace other than the US to sell the goods produced. This means free global trade. People need to understand you may need to change careers several times in a lifetime and be willing to move where the jobs are.
The government need to introduce more training programs without having student incurring more debt. The world is no longer flat.
The government need to introduce more training programs without having student incurring more debt. The world is no longer flat.
8
I think it also has to do with trust issues, specially trust between employee and CEO. There seems to be 2 totally separate economies. One that maintains the lifestyle of common Americans through jobs and upward mobility, and one that supports only the elite and investor class. Normal working Americans don't trust their CEO to make decisions for the benefit of the workers, and we have seen that mistrust justified by giant corporations moving to the lowest labor-cost areas and effectively abandoning the people who made them wealthy in the first place.
44
It's worst than that. Workers who pay attention know for a fact that their CEO and board privilege "shareholder value" above everything else. Workers can actually trust that their interests will not be taken into account.
According to the WSJ and the GOP and the right's think tank industry, funded by the ultra-wealthy, workers are "takers" and employers are "creators". Romney made the mistake of being explicit about this in a national campaign, though he thought he was talking only to his donors.
The language flips on its head the actual facts, which are that workers create the thing that is sold. Truly Orwellian.
According to the WSJ and the GOP and the right's think tank industry, funded by the ultra-wealthy, workers are "takers" and employers are "creators". Romney made the mistake of being explicit about this in a national campaign, though he thought he was talking only to his donors.
The language flips on its head the actual facts, which are that workers create the thing that is sold. Truly Orwellian.
2
Because economists measure what is measurable, and use it to substitute for things they don't have any good way to measure. Take for example, growth rates and cumulative measures of employment and productivity are abstractions far removed from the ground realities.
13
"Why Voters Don’t Buy It When Economists Say Global Trade Is Good"
They don't buy it because they have seen how it contributes to unemployment, underemployment, and stagnant wages for everyone but the top one percent the past 30 years. If free trade was so great people would see and feel the benefits. When that happens politicians, economists, and the media don't have to desperately try and convince the public of one thing when they are seeing something completely different in their own lives. Instead we get article after article from the corporate controlled big media companies telling us how great free trade is and what is best for us. Finally, after getting the short end of the stick for decades people are finally starting to wake up.
I challenge the author of this article or anyone else to explain why congress needs to stack the deck in favor of the wealthy interests pushing these free trade agreements by creating a process that allows the president to negotiate these deals in secret, only allows members of congress to view it in a private room with armed guards on the outside and without recording devices or notes, doesn't allow them to discuss what's in it with their constituents, has to be voted up or down without amendments, only requires a simple majority vote that can't be filibustered, and circumvents the treaty clause of the constitution if they are so great. Good luck with that!
They don't buy it because they have seen how it contributes to unemployment, underemployment, and stagnant wages for everyone but the top one percent the past 30 years. If free trade was so great people would see and feel the benefits. When that happens politicians, economists, and the media don't have to desperately try and convince the public of one thing when they are seeing something completely different in their own lives. Instead we get article after article from the corporate controlled big media companies telling us how great free trade is and what is best for us. Finally, after getting the short end of the stick for decades people are finally starting to wake up.
I challenge the author of this article or anyone else to explain why congress needs to stack the deck in favor of the wealthy interests pushing these free trade agreements by creating a process that allows the president to negotiate these deals in secret, only allows members of congress to view it in a private room with armed guards on the outside and without recording devices or notes, doesn't allow them to discuss what's in it with their constituents, has to be voted up or down without amendments, only requires a simple majority vote that can't be filibustered, and circumvents the treaty clause of the constitution if they are so great. Good luck with that!
172
"only 35 percent of registered voters thought the United States gained from globalization, while 55 percent thought it lost."....Silly question. It hardly matters whether you think globilization is go or bad......because it is, whether you like it or not. Trade agreements or no trade agreements, globilization is a fact not a choice.You either learn how to function with globilization or you disappear like the dinosaurs.
7
Except when you have entities such as the SBOE in Texas who guarantee to provide maximum ignorance about the real world by assuring the curricula matches their supposedly "Christian" belief system which, when examined, provides evidence of nothing less than xenophobia. Along with their champion, the Donald, who has openly declared how much he likes "stupid people", they represent the Republican attitude that an education to promote an open mind is some kind of evil plot. Just look at what has happened to education in Kansas since Brownback's miracle in Wichita which has parents of young children who depend on public schools fearing for their family's future. The idea that, over time, an increasingly educated public will come to understand the benefits of being involved with the world rather then isolated from it runs right into the promotion of ignorance by the political party currently in control of Congress and the majority of State legislatures. They want stupid, or, at least control of the education system so they can remain in control by keeping the voting public stupid.
7
There is a lot of talk about 'good manufacturing jobs' being replaced by low paying service jobs. There is nothing inherent to manufacturing jobs that makes them high paying. They were high paying because the sector was highly unionized. Maybe the issue is not globalization but the fact that the share of the workforce that is unionized has gone down due to public policy and also the difficulty of organizing are more diffuse workforce.
26
Unionization has not declined because of public policy. Unionization has declined because there are more workers than jobs. The only way workers will regain economic leverage is when the number of jobs exceed the number of available workers. The solution is to support jobs - like rebuilding our infrastructure - everybody benefits.
10
Sorry, W.A, Spitzer, but history doesn't support your thesis about unionization and the job/worker ratio. Industrial unions made notable progress during the Great Depression, when the ratio was much lower than it's been since the Ronald Reagan associated swing in government policy and people's attitudes towards unions. Back in the 1930s, those political and attitudinal trends were much more pro-union. That provides a much better explanation of the facts.
13
Nations have expanded trade and immigration from the beginning of civilization and it has allowed all nations to prosper.
Yet, the prosperity it brings to the nation is not well distributed, hence the push back.
It is true that with every trade deal there are net winners and losers, and the losers tend to speak louder than the winners. Winners include every American who benefits from better quality products at lower prices.
But free trade is not responsible for the loss of jobs with decent wages, and immigrants founded eBay, Google, Yahoo, AT&T, Kraft Foods, Proctor & Gamble, DuPont and Comcast amongst others.
Jobs are lost due to technology, automation and a highly regressive tax policy that gives preferences to capital over income earned from wages.
Even low wage jobs are being replaced by technology and automation at McDonalds, because it costs more to pay employees than buy machinery at ultra low interest rates.
There are real solutions that will create and protect good paying jobs.
They include ending the deferral of taxation before repatriation for multinationals, replacing employer sponsored health care with Medicare for all, and ending preferential tax treatment of income from capital over wages.
Finally, put payroll taxes in the general budget where it belongs and make taxation for such progressive as with income taxes, in combination with the Buffett Rule.
Yet, the prosperity it brings to the nation is not well distributed, hence the push back.
It is true that with every trade deal there are net winners and losers, and the losers tend to speak louder than the winners. Winners include every American who benefits from better quality products at lower prices.
But free trade is not responsible for the loss of jobs with decent wages, and immigrants founded eBay, Google, Yahoo, AT&T, Kraft Foods, Proctor & Gamble, DuPont and Comcast amongst others.
Jobs are lost due to technology, automation and a highly regressive tax policy that gives preferences to capital over income earned from wages.
Even low wage jobs are being replaced by technology and automation at McDonalds, because it costs more to pay employees than buy machinery at ultra low interest rates.
There are real solutions that will create and protect good paying jobs.
They include ending the deferral of taxation before repatriation for multinationals, replacing employer sponsored health care with Medicare for all, and ending preferential tax treatment of income from capital over wages.
Finally, put payroll taxes in the general budget where it belongs and make taxation for such progressive as with income taxes, in combination with the Buffett Rule.
28
So nothing about the oversupply of labor, especially low skilled labor?
2
My multi-national employer with sales in excess of 7 billion in the US is sending all the IT jobs off shore. That's not automation
5
The right question is whether a nation with 5% of the world's population has more to gain or lose from free trade with the other 95%. Given stiff competition from other G-7 countries, US S&P 500 companies still generated 47.8% of their revenues outside the US and typically employ a similar % of workers outside the country. The jobs in the US tend to be highly paid and highly skilled, while the opposite is true elsewhere.
Today we have a tendency to romanticize the Golden Age of US manufacturing but there was widespread dissatisfaction with monotonous assembly line work and up to 10% absenteeism, racism, gender bias, poor quality and low productivity. Today's auto factories focus on lean manufacturing, worker collaboration, automation, supply chains and other process improvements driven by global competition.
When it takes as little as 15 total labor hours to build a car today, labor costs are less important than trade agreements. Auto factories are being moved to Mexico from Asia, Europe and North American because of the free trade agreements Mexico has aggressively pursued throughout Latin America, while the US lags behind in this respect.
A US President who wants to maximize US jobs could negotiate not with the Chinese or Mexican governments but with US companies, offering better trade agreements in return for corporate tax reform that prevents evasion and inversion and pays for education and skilled job training.
Today we have a tendency to romanticize the Golden Age of US manufacturing but there was widespread dissatisfaction with monotonous assembly line work and up to 10% absenteeism, racism, gender bias, poor quality and low productivity. Today's auto factories focus on lean manufacturing, worker collaboration, automation, supply chains and other process improvements driven by global competition.
When it takes as little as 15 total labor hours to build a car today, labor costs are less important than trade agreements. Auto factories are being moved to Mexico from Asia, Europe and North American because of the free trade agreements Mexico has aggressively pursued throughout Latin America, while the US lags behind in this respect.
A US President who wants to maximize US jobs could negotiate not with the Chinese or Mexican governments but with US companies, offering better trade agreements in return for corporate tax reform that prevents evasion and inversion and pays for education and skilled job training.
9
The only thing proponents have to do, to get our support, is show us the undeniable evidence that global trade benefits most Americans, gives us higher quality goods, and does not cost us jobs, where corporations move to other countries for cheaper labor, and tax avoidance. I don't think that's possible.
25
We are not afraid of foreigners; rather that costs for drugs, software and other goods will rise to the benefit of the one %. The TPP is not about free trade, but of copyright and patent protections.
21
This article omits a fourth motivation for skepticism about global trade deals -- compassion for the individuals, families and communities that have been hurt so badly.
44
I think the elites are getting richer because they figured out how to leverage the one billion low paid workers in India, and the one billion low paid workers in China, against the billion higher paid workers in Europe, Japan and N. America. The free trade deals are the vehicles for this type of wage "arbitrage."
The European and American populations are just waking up now to how the politicians sold out, i.e. slowly stangled the middle class to get donations from the elites.
When economics departments at major universities are funded by the same elite corporations who benefit most from free trade deals-- then the "science" they produce has been bought and paid for--- and much resembles lobbying efforts.
The European and American populations are just waking up now to how the politicians sold out, i.e. slowly stangled the middle class to get donations from the elites.
When economics departments at major universities are funded by the same elite corporations who benefit most from free trade deals-- then the "science" they produce has been bought and paid for--- and much resembles lobbying efforts.
225
But, is globalization good for everyone. Has the pot grown or has it gotten redistributed. Have the nations of the world gotten any freer, have people gotten greater rights? Is globalization at the root of income inequality, suggesting that labor is the loser while capital has laughed it's way to the bank. Is an unequal world a better world for long term growth or does it just insure a long period of stagnation.
The last peak in globalization was before WWI. Then it seems everyone turned inward. It could and may happen again. All the undercurrents are there.
The last peak in globalization was before WWI. Then it seems everyone turned inward. It could and may happen again. All the undercurrents are there.
13
What about all the good paying jobs that have gone overseas where wages are lower and working conditions less safe? Globalization has been good for the top 1% or point zero one percent, but not so much for the average worker. Unions have been crippled, giving workers less say. Labor in fact has become a commodity, as has money become speech and corporations become persons. This has not been good for the working class. There seems no patriotism in business today, as there was or certainly seemed to be after WWII; there were two decades of high taxes on the weathiest, 90% or more except for one year in the 80s. And more regulation of Wall Street.
It should come as no surprise these is some backlash, some strong questioning of globalization, of profits for a few over national concerns and over concerns for workers.
It should come as no surprise these is some backlash, some strong questioning of globalization, of profits for a few over national concerns and over concerns for workers.
69
All other things being equal, trade is a net plus for the countries involved. But all things are never equal.
I know that trade deals are extremely complex and the devil is in the details. While I am a Bernie supporter, I wish that Bernie had spoken of some of the details of TPP that he believes are harmful (like the benefits it gave to corporations over people) and had come out for good trade deals that puts people's interests ahead of corporate ones instead of leaving the impression (though he never said it) that all trade is bad.
Also, I never learned if trade without TPP (trade isn't going to stop) is any better than trade with it.
Benefits should go to the workers, environmental provisions should be strong, the right to organize for all partners should be enshrined. Globalization in itself is not bad. Globalization designed by oligarchs is.
I know that trade deals are extremely complex and the devil is in the details. While I am a Bernie supporter, I wish that Bernie had spoken of some of the details of TPP that he believes are harmful (like the benefits it gave to corporations over people) and had come out for good trade deals that puts people's interests ahead of corporate ones instead of leaving the impression (though he never said it) that all trade is bad.
Also, I never learned if trade without TPP (trade isn't going to stop) is any better than trade with it.
Benefits should go to the workers, environmental provisions should be strong, the right to organize for all partners should be enshrined. Globalization in itself is not bad. Globalization designed by oligarchs is.
29
I'm glad the article answered a question I had wondered about: Why don't most Americans support free trade when economists mainly support it?
8
Two things:
First, maybe people just have a more long term view than you think. So while they are in a "safe" industry now that could very well change. Or maybe it won't change, but as more and more jobs leave labors leverage in all occupations decrease due to more competition for the remaining good jobs.
Second, the whole idea behind trade being good is based on the assumption that the benefits are broadly shared to offset the losses and with the current level of income inequality that isn't happening. Yet economist still trot it out every time this issue comes up. Maybe if they were pushing for UBI along with free trade to ensure it's benefits are actually shared people would get on board.
First, maybe people just have a more long term view than you think. So while they are in a "safe" industry now that could very well change. Or maybe it won't change, but as more and more jobs leave labors leverage in all occupations decrease due to more competition for the remaining good jobs.
Second, the whole idea behind trade being good is based on the assumption that the benefits are broadly shared to offset the losses and with the current level of income inequality that isn't happening. Yet economist still trot it out every time this issue comes up. Maybe if they were pushing for UBI along with free trade to ensure it's benefits are actually shared people would get on board.
13
My thanks to Profs. Mankiw, Mansfield and Mutz for pointing out that anyone who questions free trade is a bigot, xenophobe and isolationist. I had thought that this heresy might spring from the life experience of Americans, unhappily not tenured at Ivy League schools, who have lost their jobs to trade or out-sourcing, or who have see their towns and cities devastated by these economic tsunamis, or who suspect that the benefits of unrestricted markets have bypassed them on the way to the 1%. Clearly, I was wrong. With so much else to worry about these days, I'm relieved that I no longer have to fret about these unwashed, unenlightened and uneducated losers who, in their ignorance and narrow-mindedness, deserve what they get. Unfortunately, as Mankiw points out, they have been left with nothing but their votes, and may get the last word.
345
Is your entire argument that free trade is bad because some jobs are lost? I am trying to understand what logic you are using to evaluate the impact of free trade. Are you doing any sort of cost/benefit analysis or have you just decided that losing any number of jobs is too much? Should we use your same logic when evaluating technologies that automate jobs? Should we stop trying to develop self-driving cars to protect the truck drivers? Just trying to understand where you are coming from.
1
Its very simple. Opening our borders has (in today's world) severely depressed the market for labor. That may not always be the case (say post WWII), but it is now. The economists are missing that supply/demand curves don't always have the same shape, and the shape of now is nasty for workers.
45
The economists are not missing that supply/demand curves don't always have the same shape, they just don't care because it is not their jobs that have been insourced for decades upon decades.
If, as has happened to American STEM workers, there had been 650,000 college-educated English-speaking immigrants allowed into the country under an H1B visa program created specifically to take their jobs?
All these economists and tenured professors would be the first to scream 'Foul!'.
If, as has happened to American STEM workers, there had been 650,000 college-educated English-speaking immigrants allowed into the country under an H1B visa program created specifically to take their jobs?
All these economists and tenured professors would be the first to scream 'Foul!'.
5
I don't believe a word of what I just read in Professor Mankiw's column about why Americans are against free trade. The study he refers to by several University of Pennsylvania professors is based on ivory tower hog wash. I may be a rube from the hinterland, but I don't fit any of the three categories put forth in the study.
Let's talk about an anecdotal example from the real world. In 2010 I bought a Carrier air conditioner made near Indianapolis. It was not cheap, but it is a good unit. Recently, the company moved the plant to Mexico, and they told the workers the move was just a business decision. That sounds cruel and insensitive to me.
What happens if we let China sell cars in our market? I'll tell you what happens. Our manufacturers will be driven out of business. China and other such countries don't play by the same rules. It's not a level playing field and it's not fair.
Now Professor Mankiw teaches at Harvard. What if the Harvard football players had to play Yale with their right arms tied behind their backs? It's the same thing.
Let's talk about an anecdotal example from the real world. In 2010 I bought a Carrier air conditioner made near Indianapolis. It was not cheap, but it is a good unit. Recently, the company moved the plant to Mexico, and they told the workers the move was just a business decision. That sounds cruel and insensitive to me.
What happens if we let China sell cars in our market? I'll tell you what happens. Our manufacturers will be driven out of business. China and other such countries don't play by the same rules. It's not a level playing field and it's not fair.
Now Professor Mankiw teaches at Harvard. What if the Harvard football players had to play Yale with their right arms tied behind their backs? It's the same thing.
127
"... I don't fit any of the three categories put forth in the study."
"In 2010 I bought a Carrier air conditioner made near Indianapolis. It was not cheap, but it is a good unit."
You know that your air conditioner was "made near Indianapolis", so you would seem to fall into category two, which includes people who value "nationalism". Did the fact that the air conditioner was made in the US influence your buying decision in 2010?
NB: The description of category two[1] is offensive, so I can understand why you might want to avoid including yourself in it. A more neutral description would have simply said that the category includes people who prefer to buy American-made products.
[1] From the article: "The second is nationalism. Trade skeptics tend to think that the United States is culturally superior to other nations. They say the world would be better if people elsewhere were more like Americans."
"In 2010 I bought a Carrier air conditioner made near Indianapolis. It was not cheap, but it is a good unit."
You know that your air conditioner was "made near Indianapolis", so you would seem to fall into category two, which includes people who value "nationalism". Did the fact that the air conditioner was made in the US influence your buying decision in 2010?
NB: The description of category two[1] is offensive, so I can understand why you might want to avoid including yourself in it. A more neutral description would have simply said that the category includes people who prefer to buy American-made products.
[1] From the article: "The second is nationalism. Trade skeptics tend to think that the United States is culturally superior to other nations. They say the world would be better if people elsewhere were more like Americans."
It's always helpful to see crunched numbers. If jobs are lost in the US while price of imported goods drop and exports rise due to trade policies, it's difficult to analyze who the winners and losers are. If a factory closes due to jobs being outsourced to a foreign country, do the unemployed workers care if what they buy at Walmart costs less? If exporting sugar increases the domestic price of sugar, who wins besides the sugar producer? Always a tough call. Clearly manufacturing assembly moving to Mexico and China and other countries has not benefited US displaced and essentially abandoned assembly workers.
49
Mankiw has been relentless in his defense of the interests of the .1% and this column is another in the same mold. If the gains from trade were shared widely that would be one thing. But in the world we actually live in the income of the middle class has been flat or even dropping over the span of the past 30+ years. There are indeed gains to trade, and they are used by the elite friends of Mankiw to eliminate costly workers here in the US, crank up profits, and add to their holdings in the Hamptons. Yet Mankiw professes puzzlement why the masses don't think this is a great idea like he does.
281
I'm a big supporter of free trade and certainly subscribe to the net economic benefits of these agreements. My reading of these agreements is that there are mechanisms for resolving unfair trade practices but there needs to be the political willpower for the gov't to bring a dispute forward for settlement and think often unfair trade practices go undisputed due to larger geopoltical reasons. Anyway, the benefits of free trade are certainly less discernable to individual who has lost a job, who's skill set is in lower demand due to trade and hasn't seen wage growth, et cetera. Again, smart policy and better execution should/can alleviate these problems.
10
When NAFTA was passed, there was a prior acknowledgement that some industries and workers would be impacted. The legislation had some programs earmarked for retraining workers losing jobs as a result.
Once it was passed both business and government ignored this "promise". Once again we "privatized the profits, and socialized the risks". Except that there was no attempt on the part of government to help the displaced workers. The reasons given were that we needed to shrink the deficit, and avoid becoming like socialist Europe.
Only half of NAFTA was implemented. A promise to American workers was broken. The Grover Norquist's in Congress and in the Bush years, the White House, expected Business to take on the responsibility, and Business took the position that they were only responsible to their shareholders to be profitable.
Trade agreements are favorable to national GDP's and corporate bottom lines. NAFTA did exactly what it supposed to do, but US Business and the American government did nothing to make sure the benefits were shared.
Offshoring, and expansion of the H1B visa program was a separate phenomenon from NAFTA. It had the same effect in displacing American workers, but it's not a result of NAFTA.
The "cause" of discontent here is once again, income inequality, and the tipping of the playing field, in business, and government, to the benefit of the 1%.
Once it was passed both business and government ignored this "promise". Once again we "privatized the profits, and socialized the risks". Except that there was no attempt on the part of government to help the displaced workers. The reasons given were that we needed to shrink the deficit, and avoid becoming like socialist Europe.
Only half of NAFTA was implemented. A promise to American workers was broken. The Grover Norquist's in Congress and in the Bush years, the White House, expected Business to take on the responsibility, and Business took the position that they were only responsible to their shareholders to be profitable.
Trade agreements are favorable to national GDP's and corporate bottom lines. NAFTA did exactly what it supposed to do, but US Business and the American government did nothing to make sure the benefits were shared.
Offshoring, and expansion of the H1B visa program was a separate phenomenon from NAFTA. It had the same effect in displacing American workers, but it's not a result of NAFTA.
The "cause" of discontent here is once again, income inequality, and the tipping of the playing field, in business, and government, to the benefit of the 1%.
361
If actual data is contradicting most top economists , then I would go with data over most top economists.
Vast majority of models used by economists are based on very simplified view of economy, market and trade. Since thse models do not forecast or match reality well, and "most top economists" still rely on them, one would wonder why should anyone with scientific training trust economists?
Vast majority of models used by economists are based on very simplified view of economy, market and trade. Since thse models do not forecast or match reality well, and "most top economists" still rely on them, one would wonder why should anyone with scientific training trust economists?
21
"... models used by economists are based on very simplified view of economy, market and trade."
Please cite an example of such a "simplified" model.
'... "most top economists" still rely on them ...'
Please name those "top economists".
Please cite an example of such a "simplified" model.
'... "most top economists" still rely on them ...'
Please name those "top economists".
3
DGSE models used for forecasting are examples of such poor models. And these models are used by "top" economists at FED and economic think tanks.
To quote from one of the links below: "These models showed a moderate amount of nowcasting but almost NO forecasting ability beginning with 1-quarter ahead forecasts"
http://users.nber.org/~jwolfers/papers/Comments/Blanchard-fest.pdf
http://www.bloomberg.com/view/articles/2016-06-10/economics-struggles-to...
As Rochelle Edge and Refet Gurkaynak show in their seminal 2010 paper, even the best DSGE models have very low forecasting power.
To quote from one of the links below: "These models showed a moderate amount of nowcasting but almost NO forecasting ability beginning with 1-quarter ahead forecasts"
http://users.nber.org/~jwolfers/papers/Comments/Blanchard-fest.pdf
http://www.bloomberg.com/view/articles/2016-06-10/economics-struggles-to...
As Rochelle Edge and Refet Gurkaynak show in their seminal 2010 paper, even the best DSGE models have very low forecasting power.
4
Sometimes you wonder if the folks at the Upshot are reading the articles of other people in their own section of the newspaper:
http://www.nytimes.com/2016/07/03/upshot/how-a-quest-by-elites-is-drivin...
Maybe voters don't want a bigger piece of the economic pie for their country on the global scale, maybe they just want everyone they know to have a bigger slice of their own. That's both altruistic and nationalistic, and maybe just a bit smarter than what the "economic experts" and highly educated think is a good idea.
http://www.nytimes.com/2016/07/03/upshot/how-a-quest-by-elites-is-drivin...
Maybe voters don't want a bigger piece of the economic pie for their country on the global scale, maybe they just want everyone they know to have a bigger slice of their own. That's both altruistic and nationalistic, and maybe just a bit smarter than what the "economic experts" and highly educated think is a good idea.
78
Another reason is that we don't always look at the benefits to the consumer of the low cost imported goods. I was recently at a Big Box type store on a rainy day. By the check out were umbrellas for $5 made in China. Out of curiosty when I got home I looked to see what made in the USA umbrellas cost, about $45-180, at least 10 times more. We all love american union wages buying chinese products but that just is not sustainable.
19
It is not fair to compare Chinese umbrellas to the ones produced in US. With the invasion of cheap, disposable and low quality Chinese umbrellas the only way for local companies to survive was to increase quality. Hence, the higher price. The same happens with other products.
3
Price out "Made in the USA" shoes sometime...
1
I love Chinese umbrellas! - I buy one almost every week. It would take about 10 to 12 $5 Chinese umbrellas to last as long as one decent American one and at the price quoted, you'd be less likely to lose it also.
1
Unfortunately the American educational systems is deteriorating to the point where most Americans world view is shaped more by prime time TV shows and social media. Increasingly Americans are uneducated, uninformed, and afraid.
10
Am i willing to let my neighbor lose her job in exchange for a ten cent reduction in the cost of sweaters at Walmart? No.
334
Well put! Economists think about averages - people think about people.
9
You didn't tell us whether or not you ever shop by price.
3
The mistake you make is this - When we buy Chinese products and pay for it with U.S. dollars, what is China going to do with the dollars? The U.S. dollars are worthless to China unless they use the dollars to buy something made in America. When you think about it, those U.S. dollars eventually have to come home or China is giving us Chinese products for free.
First, globalization is inevitable. It will come whether we like it or not. We need to become smarter and more skilled, making high-end goods that China (the largest market on earth) needs to buy. Look at the example of Caterpillar and think how we could triumph in the world—with a proviso: no tariffs on their side, no currency manipulation, no theft of intellectual property.
10
This analysis helps explain something that has always been a mystery to me: why trade with China, Mexico, and Japan are so controversial, but no one ever talks about trade with Europe. Our trade deficit with Germany is larger than our trade deficit with Mexico or Japan, yet no one ever talks about how Germans are stealing our jobs. American autoworkers got angry at Toyota, but never at Volkswagen. I think that shows that opposition to free trade is not primarily economic, but is really mostly cultural and racial in origin.
15
Because trade with Europe really is trade while trade with China, Mexico, etc. is not trade at all. We are not trading anything. Tariffs have been lowered to encourage companies to manufacture their products in these low wages countries. The products are then shipped back to market in the United States. The only thing we sell to them is parts to be assembled into products to be shipped back to the U.S. market. What exactly are we trading? It's not like we are buying fortune cookies and they are buying Hershey bars. With Europe the standard of living is comparable. Wages are comparable. This is more true of Japan (which is losing to China, etc.) but certainly not China, India, Vietnam, etc. Would you wan to directly compete with a worker being paid one tenth of your salary?
70
"Because trade with Europe really is trade while trade with China, Mexico, etc. is not trade at all."...You coud not possibly be more wrong. When we buy products from China or Mexico we pay for them in U.S. Dollars. The only thing China or Mexico can do with the U.S. dollars is to buy something made in the U.S.; otherwise all the dollars they are collecting are useless paper. just because you see a trade imbalance today does not mean it always be that way, and in fact, in the end, they have to spend the U.S. dollars in the U.S.
1
The Chinese buy as little as possible from the US or anyone else. The Chinese government ruthlessly suppresses domestic consumption and enforces one of the highest rates of savings in the world. The phrase "high rate of savings" sounds benign, but, in reality, it means that the Chinese government artificially jacks up the price of imported goods, limits their availability, restricts the ability of foreigners to access markets in China, controls foreign travel, and requires every Chinese worker to invest in government bonds. No, the Chinese do not use their dollars to buy American products. Their government will not allow them to do so.
13
Don't just look at the education level of those opposed, look at their geographic distribution. Likewise with brexit. The voters opposed are heavily blue collar workers from parts of the country that are known for manufacturing who have lost good paying jobs when employers move production overseas. They weren't given retraining (budget cuts) and they aren't going to be getting those new top-end service jobs that have in their lifetimes and they know it. Now combine that with accelerating income inequality, flat wages and job insecurity. It's a wonder the backlash is as tame as it's been!
187
A good perspective!
But I think there are other reasons.
One, losers speak up, and it's political incorrect to not supporting them. On the other hand, winners would shut up to avoid angering losers and people doesn't benefit from global trade, or reframe the issue as foreign governments hostile to US. See what happened when Google got investigated by EU and FB got banned in China? Google and FB didn't come out and tell people to support free trade.
Second, people don't really get how they are benefiting from global trade. Cheap Chinese clothing? Nothing to do with trade! People working in agriculture? Nothing to do with trade! Global trade are so common that people don't realize goods from other countries and products exported are global trade. On the other hand, I suspect that even if people who work in trade benefited industry, they don't know it except for the highest level executives.
The last one, very few people know basic economic concept, let alone the complexity of free trade. Let's face it, most people are voting with their feelings, they don't care the truth. See how Donald Trump get nominated? Because he gives people the feelings they want, they wish they are living in a dream which things will only get better. When lives get better they think it's because they are hard working, when things get bad that's because of global trade and corrupted politicians.
Global trade is so easy to blame you know, don't even need to think a second.
But I think there are other reasons.
One, losers speak up, and it's political incorrect to not supporting them. On the other hand, winners would shut up to avoid angering losers and people doesn't benefit from global trade, or reframe the issue as foreign governments hostile to US. See what happened when Google got investigated by EU and FB got banned in China? Google and FB didn't come out and tell people to support free trade.
Second, people don't really get how they are benefiting from global trade. Cheap Chinese clothing? Nothing to do with trade! People working in agriculture? Nothing to do with trade! Global trade are so common that people don't realize goods from other countries and products exported are global trade. On the other hand, I suspect that even if people who work in trade benefited industry, they don't know it except for the highest level executives.
The last one, very few people know basic economic concept, let alone the complexity of free trade. Let's face it, most people are voting with their feelings, they don't care the truth. See how Donald Trump get nominated? Because he gives people the feelings they want, they wish they are living in a dream which things will only get better. When lives get better they think it's because they are hard working, when things get bad that's because of global trade and corrupted politicians.
Global trade is so easy to blame you know, don't even need to think a second.
13
I would like to add that the clothing from China is NOT cheap. I recently went to Lord and Taylors and they were selling jeans for $240 which were Made in China. Somebody is getting gouged.
27
Economists’ thinking notwithstanding, most people prefer some friction in free-market capitalism as a form of “natural” regulation.
8
Dr. Mankiw's articulation of President as "elected follower of public opinion" (paragraph 7) rather than "elected leader" is new to me.
3
But true, nonetheless.
Prof. Mankiw's articulation is also facile and snide. Politicians of all stripes lead at times and follow at other times. Unlike academics, politicians answer to public opinion, for good or ill.
2
More people would be fine with trade improvements if the profits were shared and not just hogged at the top, and also if the impacts were offset more clearly and directly.
this is not ever going to happen.
this is not ever going to happen.
306
There is nothing wrong with trade (assuming some fairness) if we-the-people take care of the "losers" referenced by Mankiw. Ship decent-paying jobs overseas but do nothing to create decent-paying jobs at home? That's what we get with GOP policies of free trade combined with non-governmental interference, and no government taxing or spending, in the domestic economy. Dems since the 1990s have gone along with this but seem to be realizing their mistake.
1
A walmart sweater costing $9 as opposed to an LL Bean $40 (USA made) sweater are the profits being shared with people. Just because you are not getting a check in the mail does not mean they don't exist. Free trade benefits everyone by collectively lowing costs. Including that $4.49 bottle of orange juice made in Brazil.
And iphone costing $550 off contract, instead $1000 is you getting your share of profits. Or you sweater costing $9 dollars at walmart vs $40 at LL. Bean is you sharing in the profits. Just because someone does not hand you a check, does not mean that you are not sharing in the profit(s). Same goes for that $4.49 bottle of orange juice (made in brazil).
1
Trade deals are extremely complex. The details of the TPP were arrived at in secrecy, kept secret from even members of Congress, nor to date clearly explained so its possible negative consequences can be understood by the general public.
Subsequent to NAFTA the US lost hundreds of thousands of good manufacturing jobs that decimated lives, sections of the country and industries. As a result of the Great Recession hundreds of thousands more Americans lost their jobs, many of whom, particularly older workers, have not been able to replace them. There is a pervading sense of vulnerability and anxiety even of many that do have jobs, particularly recent college graduates about their economic future, and with a do nothing Congress, a distrust of government to look out for the interests of other than the very wealthy.
Considering the above, and the great increase in extreme income inequality, why so many people don't embrace the TPP shouldn't even be a question, let alone necessitate academic papers to look for nuances to explain it.
Subsequent to NAFTA the US lost hundreds of thousands of good manufacturing jobs that decimated lives, sections of the country and industries. As a result of the Great Recession hundreds of thousands more Americans lost their jobs, many of whom, particularly older workers, have not been able to replace them. There is a pervading sense of vulnerability and anxiety even of many that do have jobs, particularly recent college graduates about their economic future, and with a do nothing Congress, a distrust of government to look out for the interests of other than the very wealthy.
Considering the above, and the great increase in extreme income inequality, why so many people don't embrace the TPP shouldn't even be a question, let alone necessitate academic papers to look for nuances to explain it.
120
Homelessness is going up everywhere, more people without healhcare insurance, more families in line at the local food banks, increasing competition to secure good-paying jobs with employers stating in their advertisements that they get so many applications that they cannot respond to everyone who applies.
Congress is more interested in keeping their jobs than absolutely anything else. People in Congress spend 30-40% of their time calling the economic elite corporations and individuals asking for money so that they can be re-elected. And, if they lose an election, they become highly-paid lobbyists of Congress or revolving door politicians.
Change that does occur seems to bring about only bad consequences; and, change that clearly should occur does not happen. Corporate monopolies continue on with business as usual. Note the "banks that were too big to fail" and caused the financial disaster in which millions of Americans lost their jobs have only increased in size and the banksters that were running them did not go to prison. Mergers of big corporations continue to take place and the prices of necessities increase without reason.
Congress is more interested in keeping their jobs than absolutely anything else. People in Congress spend 30-40% of their time calling the economic elite corporations and individuals asking for money so that they can be re-elected. And, if they lose an election, they become highly-paid lobbyists of Congress or revolving door politicians.
Change that does occur seems to bring about only bad consequences; and, change that clearly should occur does not happen. Corporate monopolies continue on with business as usual. Note the "banks that were too big to fail" and caused the financial disaster in which millions of Americans lost their jobs have only increased in size and the banksters that were running them did not go to prison. Mergers of big corporations continue to take place and the prices of necessities increase without reason.
88
Globalization exacerbates the root problem. US based workers are being treated unfairly in too many critical dimensions.
The true benefits of globalization and trade agreements have been hurt by: Profit sharing inequities, excess executive compensation, undermining of the power individual workers hold due to continued offshoring. Every industry from white collar to blue collar, from medical to garment has been impacted. Personally, I see it as a security issue as well – US still has great natural resources but is now less independent & more reliant on the actions of other countries. We can’t stop globalization but we can do it right/better. So called ‘leaders’ like Romney have greedily stuffed their pockets while pushing corporate boards toward short term ‘me first and only’ behavior. Workers know that executive to worker wage disparity has increased by wide margins while their jobs/security are continually threatened.
Who is reading your medical test results?
Who is accessing your SSN when running new hire employment checks?
Who is accessing all your personal info and where is it stored when managing your IRA/401k?
Answer: much of this data and these functions are now handled outside of the US….
The true benefits of globalization and trade agreements have been hurt by: Profit sharing inequities, excess executive compensation, undermining of the power individual workers hold due to continued offshoring. Every industry from white collar to blue collar, from medical to garment has been impacted. Personally, I see it as a security issue as well – US still has great natural resources but is now less independent & more reliant on the actions of other countries. We can’t stop globalization but we can do it right/better. So called ‘leaders’ like Romney have greedily stuffed their pockets while pushing corporate boards toward short term ‘me first and only’ behavior. Workers know that executive to worker wage disparity has increased by wide margins while their jobs/security are continually threatened.
Who is reading your medical test results?
Who is accessing your SSN when running new hire employment checks?
Who is accessing all your personal info and where is it stored when managing your IRA/401k?
Answer: much of this data and these functions are now handled outside of the US….
55
Wrong again, Dr. Mankiew, it's that your field lost nearly all credibility around 2008. People put two-and-two together - the Clinton and Bush administrations had sold trade globalization as a great positive for the U.S., then all-of-a-sudden major factories were closing all over the country and moving jobs abroad to our trading partner countries, wages/salaries went down, and important things like college just became more expensive. Just look at the number of products at your local stores which say Made In China, Mexico, or even Canada instead of the U.S. And lost jobs meant people could not weather the 2 major recessions caused (in part) by major miscalculations by economists. Even when economists are correct about globalization, does the average citizen have any reason to believe them anymore?
249
There you go, over-analyzing again. Consider that people's distrust of globalization might be simpler than that. Economists don't speak the language of ordinary people. Better education in words that people understand might show them how international trade helps American businesses if proper protections for American workers are put in place.
10
"wiped out" the labor movement in this country and made unions and collective bargaining a thing of the past, opening the floodgates of "catabolic capitalism" and turning American workers into expendable commodities and relegating them to a life of minimum wage "servitude". Off shoring, downsizing and outsourcing became synonymous with free trade and for all intents and purposes "hollowed out" the American middle class. Screw workers! Hail to the bottom line!!!