Reducing inequality: put the brakes on globalization?

by lane on April 15, 2009

Trade, outward foreign investment (movement of plants and services abroad), and immigration very likely have contributed to the growth of U.S. earnings inequality over the past several decades. Reducing any or all of them might well help to boost wages among Americans in the lower half of the distribution.

But in my view this shouldn’t be even a minor part of a strategy for inequality reduction, much less its chief focus. Trade, investment abroad, and immigration tend to benefit citizens in and from poor countries, which includes the bulk of the world’s population. Most of these people are substantially poorer than even the poorest Americans.

Yes, globalization enriches some rapacious corporations and despotic rulers, and vulnerable workers are exploited. But access to the American market and to employment by U.S.-based transnational firms has helped improve the lives of hundreds of millions of Chinese, Indians, and others in recent decades. And moving to the United States almost invariably enhances the living standards of immigrants from poor nations. It would be a bitter irony if American progressives succeeded in making a real dent in our inequality problem at the expense of the world’s poorest and most needy. We can, and should, look elsewhere for solutions.

I’m not suggesting we should sit idly by and let globalization have its way with the Americans who lose their jobs or experience falling wages. But rather than try to slow or block globalization, we should instead do what we can to enhance their flexibility and adaptability and to provide adequate cushions and supports. Among the things we Americans can learn from the Danes, Swedes, and Dutch, one of the most valuable is that it’s possible to embrace globalization (and other sources of economic change and disruption) and still have a high-opportunity, low-inequality, low-poverty society. The following chart offers one indication of this. It shows earnings inequality by imports as of the mid-2000s. Import-heavy countries are by no means doomed to high inequality.

Most of us want policies like wage insurance, better unemployment compensation, portable health insurance and pensions, support for retraining, and assistance with job placement not just because they can help to blunt the adverse consequences of globalization, but because they do so for economic change in general—whether it’s a product of technological progress, geographical shifts of industries and firms within the United States, or what have you. Arguing for limits on globalization directs attention away from these policies, making their adoption less likely. Paradoxically, then, we end up with the worst of both worlds: marginal trade limits, half-hearted steps to curtail investment abroad, confused and ineffective immigration policy, and too little of the supports and cushions needed for successful adjustment.

If you don’t like my take on this, consider what the following have to say before you make up your mind: Alan Blinder, Paul Collier (ch. 10), Brad DeLong, James Galbraith, Nicholas Kristof, Paul Krugman, Dani Rodrik (ch. 9), Amartya Sen (ch. 4), Gene Sperling, Joseph Stiglitz (ch. 3).

{ 69 comments }

1

anonymous 04.15.09 at 4:53 pm

Anti-globalization is so 2000.

2

Henri Vieuxtemps 04.15.09 at 5:05 pm

Wait a second, what’s with this “imports % of GDP”? Most (if not all) of those states have a positive account balance: Sweden, Germany, France, certainly Norway… They may sacrifice some industries, but they certainly do protect a lot of other industries. This is not ‘globalization’.

3

David Weman 04.15.09 at 5:31 pm

What do you mean by sacrifice and protect? Which industries are protected in Germany? Which industries are protected in Sweden?

4

StevenAttewell 04.15.09 at 5:59 pm

See, I don’t like anti-trade arguments, because I generally consider it to be a losing strategy in any case. But I think the reason I’m not fully down with the pro-globalization people is that their remedies don’t seem to be at the same scale as the problem – take “wage insurance, better unemployment compensation, portable health insurance and pensions, support for retraining, and assistance with job placement,” for example.

Wage insurance generally only covers part of the difference between your previous and current wages, and I’m generally skeptical about how workable this policy would be in practice, given the overall trend towards declining wages across most of the labor market. UI likewise doesn’t really solve the problem of employment insecurity – it cushions the blow to incomes, but it doesn’t do anything for the psychological costs, the lost production, the impact on skill and training, and so forth . Likewise, the portability of pensions and health care are designed to make job loss less painful, but they don’t really prevent the job loss. And retraining and placement assumes that there are enough living wage jobs out there, and I don’t think there are – especially when you consider problems of spatial mismatch, competition for jobs, employer preferences, and so forth.

Ultimately, at some point, we’re going to have to recognize that if we can’t rely on the private sector for full employment, that something needs to be done to ensure that people who want to work can find a job.

5

Henri Vieuxtemps 04.15.09 at 6:06 pm

Why, whatever they happen to be exporting is what their governments are protecting: precision tools, machinery, whatever. Airbus stuff. Otherwise, why not move all those factories to China, hire workers for two bits/hour and dump all the toxic waste right out of the furnace? I can’t imagine a purely economic reason to produce anything in Europe, anything that can be imported.

6

Mitchell Rowe 04.15.09 at 6:12 pm

Lane, holders of elected office are not voted in to raise the living standards of people living in other countries. They were elected to protect and raise the living standards of people living here. If a politician wants to run on a platform of decreasing in equality abroad at the expense of increased inequality at home let them do that.

7

Mitchell Rowe 04.15.09 at 6:14 pm

decreasing inequality not decreasing in equaility. Damn.

8

MarkUp 04.15.09 at 6:17 pm

”Ultimately, at some point, we’re going to have to recognize that if we can’t rely on the private sector for full employment, that something needs to be done to ensure that people who want to work can find a job.”

Ron Paul is looking for a few good pirate hunters … err, free traders without a cause.

9

Matt Kuzma 04.15.09 at 6:21 pm

One of the biggest problems with globalization is the attendant loss of consumer, worker and environmental protections. I don’t think we need to be protectionist or try to stop globalization, but lower labor costs aren’t the only source of savings for a company moving its plant overseas. The term “level playing field” is tossed around too much, but I think we need to work harder to make sure the goods we get from China aren’t destroying habitat or poisoning the air any more than local goods would, and that Chinese workers aren’t substantially more likely to lose a finger than their American counterparts. And of course there’s the whole consumer protection issue. I don’t think we should be trading reduced global income inequality for poisonous production processes and worker injuries.

10

james 04.15.09 at 7:16 pm

Being both completely selfish and free market, it seems reasonable to put a tariff on Chinese imports to offset the cost of Chinese air pollution on California agricultural products.

11

John Quiggin 04.15.09 at 8:31 pm

It’s important to note that most of those you cite draw a sharp distinction between liberalisation of trade in goods and services on the one hand and global financial deregulation on the other. It’s the latter that has been the most spectactular and damaging manifestation of globalisation.

12

JulesLt 04.15.09 at 10:06 pm

From a Left/Liberal point of view, you’ve got a tough time selling a policy that purely benefits people abroad, no matter how poor, at the cost of the local working class.

More to the point, the historical rhetoric on Free Trade has been that every dollar moved abroad = $1.36 for the American economy – that figure isn’t accurate but the argument was ‘trade grows the economy QED everyone is better off’ (rather than the reality that the extra riches flowed towards the top of the economy).

The argument was never presented as ‘you should let your job be done in China because that’s good for the Chinese’.

In fact, when working class voters complained about their work being moved elsewhere, and their governments not defending them, you’d usually find someone on hand to explain that painful as it might be, Free Trade would really benefit them in the long term, citing good historical precedents.

But if the moral argument is wrong – if in fact it benefits the merchant classes and foreign workers, at the cost of domestic workers, then in fact they are entirely rational to oppose it. Given a choice of cheaper goods, or a well paying job for life, a significant number of people would actually choose the latter.

(Apart from, of course, when they’re starving and want cheap imported corn)

13

gordon 04.15.09 at 10:44 pm

This series is what a teacher would call a “progressive reveal”. Is anybody making book on what Prof. Kenworthy will finally announce (one minute before the end of the lecture) as “the answer”? I’m prepared to bet on “all the above”, with the Prof. saying that elements of unionisation, education, regulation of globalisation and (insert next topic here) are all required in some proportion.

14

Perezoso 04.15.09 at 11:20 pm

Reform vis a vis Aggregation: the bureaucrat’s revenge

15

salient 04.16.09 at 12:05 am

I’m prepared to bet on “all the above”, with the Prof. saying that elements of unionisation, education, regulation of globalisation and (insert next topic here) are all required in some proportion.

No fair peeking in the text in the middle of class! :)

16

J. Michael Neal 04.16.09 at 2:12 am

One problem I see with this chart is that the high percentage of import countries are almost all in the EU. More, they are the small EU countries. I would think that that would distort any trade data.

17

Keith M Ellis 04.16.09 at 3:13 am

The argument was never presented as ‘you should let your job be done in China because that’s good for the Chinese’.

Yeah, but it should be. For me, increasing income in the developing world is by far the most important rationale for trade liberalization. I feel very, very strongly about this and react very negatively to protectionist arguments defending developed world jobs. Especially because I believe that Europe and the US both developed their collective economies by stealing wealth from and generally exploiting the developing world. We have both a general moral imperative to help and a specific reparations-based moral imperative. I quite definitely support large amounts of aid; but actually developing these economies is the only long-term solution and, besides, it also benefits us in the long-term, as well.

I’m very concerned about environmental and human rights exploitation, as well as the more general problem of globalized mega-corporations. And, of course, displacement and other uncomfortable effects of international trade in developed economies are problems that must be addressed.

But all these issues can be addressed if there’s the political will. Part of the difficulty lies in the barriers of ideology and simplistic thinking. Liberalized trade policy on the right is unfortunately associated with perversely excessive pro-business and pro-corporate deregulatory policies which collectively do little to address or even exacerbate the short-term ills of trade. On the left, support for organized labor results in protectionism and labor rigidity that resists the structural adjustments that are necessary for evolving economic conditions associated with trade.

A deeper problem is simple ignorance. It seems to me that the vast majority of people simply don’t believe and/or comprehend the principles involved in explaining how trade generally increases the wealth of both parties. On the left, one often hears the assertion of the opposing, generally false, principle of “race to the bottom”. The chain of reasoning for the “race to the bottom” theory of trade is more intuitive and directly comprehensible than the variety of economic mechanisms which, in reality, collectively increase wealth as a result of trade, rather than the opposite.

Because a) my support of trade is primarily and strongly motivated by humanitarian concerns with regard to the developing world, in conjunction with the fact that b) I believe that ills such as pollution and worker exploitation on the developing world side, and displacement on the developed world side can be successfully addressed by pragmatic progressive policy, I feel and think that my support of trade liberalization is strongly progressive and not at all contrary to leftist principles. Nevertheless, I generally find my progressive “credentials” challenged because of my support for trade, as well as having to endure finding myself in bed with libertarian ideologues and big-business friendly fat-cats and their cronies.

It’s important to note that most of those you cite draw a sharp distinction between liberalisation of trade in goods and services on the one hand and global financial deregulation on the other. It’s the latter that has been the most spectacular and damaging manifestation of globalisation.

Yes, Paul Krugman is a good example of this. He’s extremely supportive of trade liberalization and globalization in general (which, incidentally, has amused me during the last eight years as the left has held him up to be an admirable leftist firebrand), but there’s numerous problems associated with financial deregulation and especially capital outflows.

18

gordon 04.16.09 at 3:52 am

Salient, I didn’t peek, I swear! I don’t even have a copy of the book (though I guess some readers will go and buy one after the lecture!).

19

StevenAttewell 04.16.09 at 5:07 am

Keith Ellis:

Hang on a second, I think you’re mixing two arguments here.

The moral case, “hat Europe and the US both developed their collective economies by stealing wealth from and generally exploiting the developing world. We have both a general moral imperative to help and a specific reparations-based moral imperative,” runs into two problems. First is that it wasn’t the working class who chose to steal from and exploit the developing world – it was the corporate class who were calling the shots. Second, given that the corporate class are in fact profiting hugely from the shift of production overseas, it hardly counts as reparations to begin with (reparations generally requires you to make restitution, not profit), and it’s reparations essentially with resources stolen from the working class.

I think it’s highly disingenuous to claim that the issue is one of political will, ideology, and simplistic thinking when you yourself recognize that “displacement and other uncomfortable effects of international trade in developed economies are problems that must be addressed.” The labor movement and the Left as the party of the broader working class have legitimate economic interests in objecting to the transferring of production overseas, and to insinuate otherwise when your own analysis points to the interest existing is deeply unfair to the labor movement, the left, and the working class.

The economic case should be considered separately from the moral case. This, at least, could be considered as an exercise in empirical investigation, but I don’t think you’re being fair here either. First, you claim that those who oppose trade and see negative side effects are ignorant. and wrong to claim that trade liberalization will cause a “race to the bottom.” Second, you claim that those who oppose trade are ignoring that “trade generally increases the wealth of both parties” and “collectively increase[s] wealth as a result of trade, rather than the opposite.” Third, you claim that “support for organized labor results in protectionism and labor rigidity that resists the structural adjustments that are necessary for evolving economic conditions associated with trade.”

To me, this is a strawman argument that avoids the real objections raised by those who challenge the beneficence of trade – namely the distributional case that the sacrifices of globalization are being made by those least able to make them and the rewards are going to those who already have much, and the argument that there are significant side-effects of trade in regards to labor and environmental standards. In regards to the distributional case, your own argument implicitly concedes – “structural adjustments” have to be made (you don’t describe what they are), and “displacement and other uncomfortable effects of international trade in developed economies are problems that must be addressed.” Likewise, on the side-effects case, you concede also that “environmental and human rights exploitation” and “globalized mega-corporations” are real side effects that need to be met with pragmatic progressive policy (although you don’t describe what those would be). Nonetheless, you ascribe ignorance and falsehood to your opponents, as well as moral selfishness.

So, let’s get down to the crux of the matter: why should the working class of the developed world pay the costs of the economic development of the developing world? If one takes the position that “my support of trade is primarily and strongly motivated by humanitarian concerns,” why is it a moral imperative for them to volunteer for unemployment, declining wages, a massive loss in bargaining power vis-a-vis the employers? Isn’t it fair to argue that, if exploitation and theft of wealth are moral crimes, the working class are morally correct in resisting their own exploitation and the theft of their livelihood and the sweat equity they’ve built up over the years?

If one takes the position that trade empirically beneficial, why is it the case that so many negative side-effects and qualifiers have to be acknowledged? Doesn’t this suggest that the situation is less a question of empirically true principles and universal economic mechanisms that can be obviously seen, and more an ambiguous situation with advantages and disadvantages to either course? Even if one accepts for the sake of argument that you’re right about the empirical effects of trade, wouldn’t it be fair for the working class to argue that they aren’t seeing any of the benefits and are inf fact incurring significant losses from trade, that they aren’t therefore a part of the “us” and in fact have opposing economics interests? If we’re going to accept economics as the test of empirical truth here, why shouldn’t the working class turn around and say that they are self-interested, profit-maximizing individuals like economics assume, and therefore are engaging in rational economic activity?

20

Henri Vieuxtemps 04.16.09 at 6:23 am

The problem with the idea that people in the development world benefit from globalization is that they don’t. They don’t benefit from globalization as it’s advertised, they benefit from a combination of protectionism of their own governments and multinational corporations’ race to the bottom.

21

Keith M Ellis 04.16.09 at 6:24 am

why should the working class of the developed world pay the costs of the economic development of the developing world?

Because the working class of the developed world is obscenely wealthy in comparison to the vast poor of the developing world and a portion of the resources upon which that wealth was built was stolen from the developing world in the past.

More generally, your deep concern for the developed world’s working class in a context where you actually manage to write a comment longer than mine without once mentioning the (relative) horror of the lives of the developing world’s poor is…deeply disturbing. Put into a more local context, it’s like the US’s GOP crying over the unfairness of taxing inheritances over a million dollars to pay for things like, say, food stamps. Oh, the humanity!

The labor movement and the Left as the party of the broader working class have legitimate economic interests in objecting to the transferring of production overseas, and to insinuate otherwise when your own analysis points to the interest existing is deeply unfair to the labor movement, the left, and the working class.

No, they don’t have a “legitimate economic interest” in objecting to the transferring of production overseas. First, the working class in general benefits economically from shifting production overseas (presumably because it’s less expensive) because they, in turn, purchase these same goods more cheaply. The typical American consumer has benefited tremendously from the shifting of much manufacturing to China. Second, the direct economic interest of income security is a public policy problem that can be solved and thus it is not necessarily in the interest of labor to protect specific jobs. Greatly increasing unemployment benefits, and vastly increasing re-training opportunities along with other labor reform that protects economic security while increasing labor liquidity would mean that labor wouldn’t need to protect a steelworker’s job, but rather protect a worker’s right or opportunity for a job.

To me, this is a strawman argument that avoids the real objections raised by those who challenge the beneficence of trade – namely the distributional case that the sacrifices of globalization are being made by those least able to make them and the rewards are going to those who already have much, and the argument that there are significant side-effects of trade in regards to labor and environmental standards.

Again, you demonstrate a strange blindness. I’d say that the “least able to make” sacrifices are the developing world’s poor, not the developed world’s working class—and yet the labor response to off-shoring is “I don’t care if the loss of this one American job means the tripling of income for ten Chinese families, we’re protecting our own and it’s their responsibility to protect theirs”.

Nonetheless, you ascribe ignorance and falsehood to your opponents, as well as moral selfishness.

Yes, because it has never been the case, in the long term, that increasing trade has failed to increase the overall wealth of both trading partners. It is not the case that, despite the inequality of the US income distribution, that all Americans, including the poorest and the working class, have failed to become more wealthy as a result of increasing international trade in the 20th century. When I was young, Americans worried that jobs were being exported to Japan and we’d all get poorer. We didn’t. We got richer. Trade always makes everyone richer in the long run. Claiming that it doesn’t, that it most likely will make both parties poorer is either deeply ignorant or an outright lie.

Yes, trade forces structural changes, which include the temporary loss of jobs. This is a problem solvable by public policy. Yes, trade often results in, at least in the short-term, large inequalities of income distribution. This is also a problem solvable by public policy. Furthermore, the solutions are better for everyone, anyway. Very good social safety nets lessen or even eliminate the economic pain caused by unemployment. Ubiquitous and free training and re-training opportunities allow workers more choices and improve quality of life. Income security and education improve economic productivity, in general. We should be doing these things anyway. There’s no good reason we should be tolerating the short-term ill effects of trade in the first place, except that we don’t have sufficiently progressive economic and social policy.

And, yes, it’s moral selfishness to argue, implicitly, for the status quo with regard to developing world poverty. I’m not happy about twelve year old children working full time jobs. But I’m even less happy about them starving to death. (Or working full time in more informal, yet typical, occupations like begging, trash collecting, farming, prostitution, etc.) I’d be thrilled if we could directly create developed world labor and environmental standards in the developing world in conjunction with raising income and living standards, but to do so would require, quite simply, a huge direct transfer of wealth from the developed world to the developing world—which would create far more loss of income and displacement to everyone in the developed world, including the working class, than increased trade causes. Obviously, that is not politically possible. No one but me would advocate this—the political left and right together would oppose it with every means possible.

The only realistic means to increase wealth and standard of living in the developing world is through trade. Anything else is accepting the status quo of intense poverty that is, frankly, criminal in the context of the sort of wealth that even the developed world’s poor enjoys. So, yes, opposing trade is selfish. It’s worse than selfish.

If one takes the position that trade empirically beneficial, why is it the case that so many negative side-effects and qualifiers have to be acknowledged? Doesn’t this suggest that the situation is less a question of empirically true principles and universal economic mechanisms that can be obviously seen, and more an ambiguous situation with advantages and disadvantages to either course?

Please. Do you have any idea how exactly equivalent your argument there is to the arguments used by creationists? I mean, really. It is not ambiguous at all that trade creates wealth for both parties participating in trade. It’s both theoretically obvious and empirically proven.

The “negative side-effects” and “qualifiers” are not inherent to trade, anyway. They’re contingent upon the social and political conditions in which trade exists. Few people are opposed to intra-national regional trade, for example, because the negatives are greatly reduced and the benefits well-recognized.

Even if one accepts for the sake of argument that you’re right about the empirical effects of trade, wouldn’t it be fair for the working class to argue that they aren’t seeing any of the benefits and are inf fact incurring significant losses from trade, that they aren’t therefore a part of the “us” and in fact have opposing economics interests?

No, because they are, in fact, seeing the benefits of trade more than the costs; they aren’t incurring significant losses from trade; and they emphatically are part of the “us”.

Over the last twenty years as globalization has increased, unemployment hasn’t risen (which would be the case if trade permanently destroyed jobs) , GDP hasn’t fallen (which would be the case if trade results in less wealth rather than more), and median income hasn’t fallen (which would be the case if trade results in lower income).

Furthermore, it’s not as if international trade is something new. There has been increasing international trade in the US and Europe for a century now, and industries have moved, and many local jobs “lost”. Yet income and total wealth has indisputably risen quite dramatically. We’ve all benefited greatly from trade.

What has happened is that a particular, historically-contingent situation with regard to the quality of heavy manufacturing, low-skill jobs has not been replicated with regard to service industry, low-skill jobs. The former were fairly well-paying with good benefits. The latter, not so much. That’s mostly the failure of the labor movement in combination with the increased political power of wealthy and business interests that have ensured that service industry jobs are relatively low-paying and with low security. This isn’t trade’s fault. This is a political, not an economic failure. It doesn’t have to be the case that off-shored well-paying and secure manufacturing jobs are replaced with low-paying and insecure service industry jobs. Service industry jobs are not inherently either low-paying or insecure any more than manufacturing jobs are inherently high-paying and secure.

Maybe the labor movement should be asking itself why it’s so jealously protecting a relative handful of manufacturing jobs while almost completely ignoring the vast numbers of workers slaving away at low-paying, insecure service industry jobs with no benefits.

22

gordon 04.16.09 at 7:33 am

Well, perhaps stimulated by Salient’s comment above, I did peek, at least as far as I could without buying the book. I looked at the introductory chapter here at Prof. Kenworthy’s website.

I wouldn’t have won my bet. The answer is…

(cue drumroll…..)

Subsidised employment!

Apparently Prof. Kenworthy arrives at this solution by first showing that the “employment rate” (employment to population ratio) is important in determining inequality: “…a country with a low or moderate employment rate now is more likely to have many households with two earners and many with no earners …. This increases inequality of earnings and incomes between households …. To the extent it reduces the number of zero-earner households, high employment should help to counteract this development and thereby reduce market inequality.” But this isn’t going to happen without generous Govt. benefits, of which Prof. Kenworthy thinks “employment-conditional earnings subsidies” are key. And that means subsidised employment.

Australians won’t be surprised at this conclusion, reminiscent as it is of the old Jobstart program, albeit with the apparent indefinite extension of the Govt. subsidy (Jobstart subsidies for long-term unemployed were temporary).

Obviously, much more to be said. We might wait until Prof. K. finishes his series.

I guess I’m just too old to find the “progressive reveal” exciting any more.

23

Tracy W 04.16.09 at 8:38 am

Henri Vieuxtemps I can’t imagine a purely economic reason to produce anything in Europe, anything that can be imported.

Reliable infrastructure, less corrupt governments, skilled staff, more effective management systems (not perfect management systems, just more effective). I’ve heard plenty of nightmare stories coming out of China about quality control standards there or failure to meet orders at all.

Matt Kuzma: The term “level playing field” is tossed around too much, but I think we need to work harder to make sure the goods we get from China aren’t destroying habitat or poisoning the air any more than local goods would, and that Chinese workers aren’t substantially more likely to lose a finger than their American counterparts.

I am always puzzled why so many on the left link trade to local standards. I don’t think you really mean to imply that the only problem with the Chinese destroying habitat or poisoning the air or losing fingers just as long as no rich citizen benefits from the process. Global warming from greenhouse gases produced by sources like coal plants strikes me as equally a problem whether or not the goods produced are traded and I can’t see how losing a finger is nicer if you’ve lost it in the cause of home production.

I don’t think we should be trading reduced global income inequality for poisonous production processes and worker injuries.

How many worker injuries do you think there are in countries that are cut-off from trade like North Korea?
I don’t have any comprehensive figures, but I’ve read accounts of workers’ lives in medieval times in Europe, or coal-mining in Britain during the early stages of its industrial revolution, and those all imply that poisonous production processes and worker injuries were common even without international trade (Admittedly there was international trade in Europe during medieval times and Britain’s industrial revolution, just at a lower scale than now). Do you have any statistics that provides evidence that worker injuries go up as trade increases?
Increased GDP may of course be associated with increased use of poisonous production processes as GDP is increased by using said processes, for example the growth in GDP fuelled by railways in Britain was in turn fuelled by increased coal production. Increased cancer treatment may increase GDP and also increase the use of poisonous production processes. But generally people are willing to tolerate some, or a lot of, poisonous production processes rather than deal with the lack of goods produced that way. This strikes me as an economic growth issue, not a trade one. If we want to reduce the use of poisonous production processes we need to either come up with economic alternatives for producing goods like electricity and transport or try to convince people to remain poor.

24

mpowell 04.16.09 at 9:03 am

Keith,

I have to object to your empirical claim that trade always makes everyone better off in the long run. It may be true that Americans have been getting wealthier in the 20th century while trade has been increasing, but I don’t think this proves the casual relationship. Taking the example of Americans losing their jobs in the 70s, I believe the evidence is even mixed as to whether they have gotten any more wealthy over the last 25 years at all. Additionally, I think you could make the strong case that inadequate real purchasing power of American consumers has been the primary contributor to our current economic collapse. I think that it is really quite critical that you distribute the net wealth generated by trade in order to see long term benefits.

Also, I don’t want to take a strong stand against free trade here. But I will point out that worker circumstances can be quite problematic in some foreign countries. I assume that you would not find that free trade with countries that employ slave labor was in the best interests of the slaves. But then what about Dubai? They take worker passports and imprison debtors, creating a state of virtual slavery. There is a range of worker conditions from pure chattel slavery to mere worker/employer power imbalance exploitation and at some point along that axis, I think free trade loses its appeal.

25

Barry 04.16.09 at 12:44 pm

Adding on to StevenAtwell’s reply to Keith:

Keith: ” We have both a general moral imperative to help and a specific reparations-based moral imperative. “

“Because the working class of the developed world is obscenely wealthy in comparison to the vast poor of the developing world and a portion of the resources upon which that wealth was built was stolen from the developing world in the past.”

The second statement applies at least as well to the top 1% of the US population, as well. In addition, globalization results in them getting far richer.

Do you or don’t you support raising their tax rates by a large amount? Not just to Clinton-era rates, but to pre-Reagan levels?

That’s really the test of your alleged morality.

26

Mitchell Rowe 04.16.09 at 1:46 pm

Keith.
If a politician wants to run on the platform you recommend let them go ahead and do it. What I object to is the selling out of the developed world’d working class without ever putting it to an honest vote. I see no reason why a 40 year old autoworker in Oshawa should be forced to compete on with a sweatshop labour in China working in a plant with know labour or environmental standards. Yet here we are.

27

Trevor 04.16.09 at 2:21 pm

This post is pure class propaganda. You are just exacerbating the conditions to come with more globalization chatter.

Want a world of Maoists and insurrectionary anarchists in 10-20 years? Keep up the free market, yumyum time for the rich apologetics.

/Dialectics’d

28

mpowell 04.16.09 at 2:31 pm

25: Based on previous comments by Keith, I’m pretty sure he would have no problem with this. But he can also answer for himself.

29

Tracy W 04.16.09 at 3:10 pm

I see no reason why a 40 year old autoworker in Oshawa should be forced to compete on with a sweatshop labour in China working in a plant with know labour or environmental standards.

Well in that case the morally respectable option strikes me as being to lobby to open your country’s borders to whoever wants to come there and share in your country’s labour and environmental standards.

30

Mitchell Rowe 04.16.09 at 3:48 pm

Tracy
Or perhaps lobby my government to cease trading with countries that don’t have respectable environmental or labour standards? Or maybe slap an import duty on products from such countries? All I know is this question should be honestly put to the people to decide. Let there be an election fough over it.

31

StevenAttewell 04.16.09 at 3:54 pm

Because the working class of the developed world is obscenely wealthy in comparison to the vast poor of the developing world and a portion of the resources upon which that wealth was built was stolen from the developing world in the past.
More generally, your deep concern for the developed world’s working class in a context where you actually manage to write a comment longer than mine without once mentioning the (relative) horror of the lives of the developing world’s poor is…deeply disturbing. Put into a more local context, it’s like the US’s GOP crying over the unfairness of taxing inheritances over a million dollars to pay for things like, say, food stamps. Oh, the humanity!

First, the working class’ current economic position is based on a century of struggle to get out from under a burden of poverty and exploitation. Go back to the 1930s, and I can show you poverty no different from anything you see in the developing world today – and I don’t want the working class to fall back into that. Second, my concern for the developed world’s working class stems from the fact that I’m a union activist and the son, grandson, and great-grandson of union activists. My first commitment must be to the working class of my own community; international solidarity can only be carried out successfully if the labor movement here has power to exercise on behalf of those elsewhere. Cutting our own throats first doesn’t help anyone.

However, I find the commitment of pro-globalization advocates to the poor, benighted developing world to be just as disturbing. In addition from uncritically associating capitalist development with progress, it tends to come with handwaving away larger questions as to what share of the gains are grabbed by working class of the developing world as opposed to their employers, to the health and environmental costs inflicted upon them. It’s moral absolution purchased on the cheap.

No, they don’t have a “legitimate economic interest” in objecting to the transferring of production overseas. First, the working class in general benefits economically from shifting production overseas (presumably because it’s less expensive) because they, in turn, purchase these same goods more cheaply. The typical American consumer has benefited tremendously from the shifting of much manufacturing to China. Second, the direct economic interest of income security is a public policy problem that can be solved and thus it is not necessarily in the interest of labor to protect specific jobs. Greatly increasing unemployment benefits, and vastly increasing re-training opportunities along with other labor reform that protects economic security while increasing labor liquidity would mean that labor wouldn’t need to protect a steelworker’s job, but rather protect a worker’s right or opportunity for a job.

As mpowell has already noted, if your wages are stagnant and declining and your likelihood of losing your job increasing, lower prices on goods doesn’t help – you’re still in the position of trying to bail out a gradually sinking boat. Second, I would argue that your analysis of the public policy program is missing the fact that the “specific jobs” are well-paying, unionized, and have benefits, and that new jobs tend to be lower-paid, non-union, and offer no benefits. Thus, public policy of increasing UI and training does nothing more than just smooth the transition – the worker is still facing a declining standard of income. Moreover, public policy is forced to work against huge countervailing pressures of declining purchasing power, increased demands on UI and retraining, and fewer living wage jobs available.

Again, you demonstrate a strange blindness. I’d say that the “least able to make” sacrifices are the developing world’s poor, not the developed world’s working class—and yet the labor response to off-shoring is “I don’t care if the loss of this one American job means the tripling of income for ten Chinese families, we’re protecting our own and it’s their responsibility to protect theirs”.

Again, as Barry has pointed out, this doesn’t answer the question of why the working class should have to pay the cost rather than the corporate class. Surely they are even better able to make sacrifices than the working class, and the loss of one American CEO could mean the tripling of income for hundreds if not thousands of Chinese families. Ultimately, you are asking for a saint-like level of sacrifice from the working class here – not only are they expected to give up their livelihoods, but they’re expected to do so cheerfully.

Yes, because it has never been the case, in the long term, that increasing trade has failed to increase the overall wealth of both trading partners. It is not the case that, despite the inequality of the US income distribution, that all Americans, including the poorest and the working class, have failed to become more wealthy as a result of increasing international trade in the 20th century. When I was young, Americans worried that jobs were being exported to Japan and we’d all get poorer. We didn’t. We got richer. Trade always makes everyone richer in the long run. Claiming that it doesn’t, that it most likely will make both parties poorer is either deeply ignorant or an outright lie.

As mpowell has noted, the the evidence for the universal benificence of trade is not that strong. However, you are STILL ignoring the distributional case. America has gotten richer due to trade, but it’s not the working class who are getting the benefits – rather, it’s the upper class and the upper middle class who have been able to enjoy lower prices and increasing incomes. Your missing the fact that there is no “we” – there’s a bunch of different “we’s,” and they are experiencing the economy differently, and have different economic interests.

Yes, trade forces structural changes, which include the temporary loss of jobs. This is a problem solvable by public policy. Yes, trade often results in, at least in the short-term, large inequalities of income distribution. This is also a problem solvable by public policy. Furthermore, the solutions are better for everyone, anyway. Very good social safety nets lessen or even eliminate the economic pain caused by unemployment. Ubiquitous and free training and re-training opportunities allow workers more choices and improve quality of life. Income security and education improve economic productivity, in general. We should be doing these things anyway. There’s no good reason we should be tolerating the short-term ill effects of trade in the first place, except that we don’t have sufficiently progressive economic and social policy.

Let’s see now – temporary loss of jobs, large inequalities of income distribution. Doesn’t sound like a minor problem to me, sounds like the working class might have real reasons not to favor this happening, especially if “income security and education” should be happening anyway. However, your solutions aren’t up to the task – social safety nets almost never eliminate the economic pain of unemployment, unless benefits are set at 100% of salary and benefits, which they’re not, and unless you completely compensate for the fact that future employment is going to be of much poorer quality, which wage insurance generally doesn’t. Training and re-training are not fixes if the economy is not producing a sufficient number of living wage jobs – (see Gordon Lafer 2002). Moreover, you also have to face up to the fact that such progressive policies generally havening been done in the U.S, and part of the reason is that the only constituency that would benefit from them – organized labor – is in the process of losing jobs and income, and therefore doesn’t have the clout. U.S corporations have certainly been happy to get the benefits of globalization without paying the costs, and neoliberals have been remarkably cavalier about “getting around to” providing those (limited) benefits, especially when the political cost for not doing so is so low.

And, yes, it’s moral selfishness to argue, implicitly, for the status quo with regard to developing world poverty. I’m not happy about twelve year old children working full time jobs. But I’m even less happy about them starving to death. (Or working full time in more informal, yet typical, occupations like begging, trash collecting, farming, prostitution, etc.) I’d be thrilled if we could directly create developed world labor and environmental standards in the developing world in conjunction with raising income and living standards, but to do so would require, quite simply, a huge direct transfer of wealth from the developed world to the developing world—which would create far more loss of income and displacement to everyone in the developed world, including the working class, than increased trade causes. Obviously, that is not politically possible. No one but me would advocate this—the political left and right together would oppose it with every means possible.
The only realistic means to increase wealth and standard of living in the developing world is through trade. Anything else is accepting the status quo of intense poverty that is, frankly, criminal in the context of the sort of wealth that even the developed world’s poor enjoys. So, yes, opposing trade is selfish. It’s worse than selfish.

And what’s the moral selfishness of those who call for others to sacrifice on their behalf? Why shouldn’t corporations have to lose money if they had previously exploited the third world? Why shouldn’t the comfortable upper, upper-middle and middle-classes pay some share of the burden? Why is it more realistic and more moral to turn around to one segment of developed society and tell them that they’re stuck with the check?

32

StevenAttewell 04.16.09 at 3:55 pm

*”Havening been done” = “haven’t been done.”

33

lane 04.16.09 at 4:35 pm

Mitchell (#6): The fact that our policy makers aren’t voted in to worry about the well-being of the poor elsewhere doesn’t mean they shouldn’t.

John (#11) and Keith (#17) on globalization of finance: Yes, agreed.

Steven (#19): Quite right that moral and economic considerations need to be distinguished.

Henri (#20): The conclusion in your first sentence doesn’t follow from what you say in your second.

34

Mitchell Rowe 04.16.09 at 4:53 pm

lane,
Let them run on that then.
I would also like to add that it is very easy to talk about selling out the domestic working class when you yourself are not one of them. Those of us with graduate degrees will probably be able to find some sort of work that supports a middle class lifestyle whatever the outcome of this debate. This is not true of many members of the working class.

35

Henri Vieuxtemps 04.16.09 at 5:09 pm

Right. It’s all in the definitions, semantics: globalization, trade…

It is quite possible that everyone benefits from trade in the long term. What we have, however, is not trade, but the focus of exploitation of labor shifting to more powerless segments of the world’s population; and whatever gains, power that has been accumulated by the workers in the developed world being slowly eroded and taken away. Some certainly do benefit from that, but it’s a very small minority.

36

Keith M Ellis 04.16.09 at 5:25 pm

Do you or don’t you support raising their tax rates by a large amount? Not just to Clinton-era rates, but to pre-Reagan levels?

That’s really the test of your alleged morality.

This is typical of the prejudice with which my arguments have been received. Why are you assuming that I oppose raising tax rates on the wealthy by a large amount? It’s not as if mpowell, for example, was unable to discern my point of view.

However, your solutions aren’t up to the task – social safety nets almost never eliminate the economic pain of unemployment, unless benefits are set at 100% of salary and benefits, which they’re not…

Why do you assume I don’t want benefits to be at 100%?

Even though you and others haven’t paid attention to how serious I am about truly progressive labor policies in the developed world (which, collectively, solve all of the attendant current problems caused by job dislocation due to trade), I am guessing from other comments you’ve made that your response, if you were to take me seriously, would be that I’m being unrealistic, that I’m hand-waving them away.

But here’s how I see it: the choice here is between advocating for real progressive policies that address the problems associated with trade—which are problems which exist independent of trade and should be solved anyway—and thus allow for a mostly pain-free mutually beneficial situation which lifts the developing world out of poverty, or accept the stauts quo with regard to these things because they’re supposedly politically unrealistic, reduce the problems directly attributable to trade via protectionism, and let the developing world fend for themselves.

The latter just doesn’t sound like progressivism to me. Rather, it seems a lot closer to the weak tea centrism that is impotent to answer continuing injustice and makes do with mostly cosmetic changes.

And what’s the moral selfishness of those who call for others to sacrifice on their behalf?

Well, firstly, that’s how arguments strike me which favor putting up protectionist barriers which will quite directly cause thousands or millions of people in the developing world lose their jobs and send many of them into starvation. But, secondly, I’m not asking for “others” to sacrifice on “my” behalf. You think I’m some wealthy corporate shareholder? I’m not. Far from it.

More importantly, the changes I’m advocating would require significant increases in taxation on the wealthy, whom I presume you are not so eager to defend. Also, I’m advocating these changes primarily on behalf of the developing world’s poor, not myself. Indeed, I earlier made it clear that, were it politically feasible, I’d support large direct transfers of wealth from the developed world to the developing world which would certainly impoverish myself and everyone else in the developed world.

Trade, at all levels of economic activity, is the primary creator of wealth. All the resources in the world are almost worthless without trade. Cut off your city from the rest of the world and you will immediately and irrevocably be reduced to deep relative poverty. Larger units are proportionately hurt less…because of internal trade. Economic integration, which includes trade, is what has brought the impoverished regions of the US and Europe up to rough parity. Economic integration, including trade, will do the same for the developing world. Political/legal integration, too, is and will be an important part of this process. If it weren’t a violation of the US Constitution for states to be protectionist, then surely they would have been, and all US citizens would be much the poorer for it.

It’s not as if all the working class problems attributable to trade don’t exist without trade. Trade worsens them, but they exist anyway. They should be solved anyway. Meanwhile, trade is literally the difference between having a job and starvation for many in the developing world.

How anyone could argue that trade doesn’t create wealth baffles me. I’m not pointing to the US in the last fifty years, I’m pointing to Japan, South Korea, Taiwan, and more recently China, India, Ireland, and Spain. Just to name a few.

And while the conditions in the US in the 30s and before were very bad, it’s not true to say that it equaled anything you can find in the developing world today. Poverty in the developing world has gotten worse, mostly, in the last hundred years (though arguably is getting better more recently), due primarily to overpopulation. Putting aside the issues of European colonialism, its US equivalent, and its implied moral responsibility, that the developed world is so obscenely, wastefully, ostentatiously wealthy while the developing world starves and suffers is absolutely astonishing to me. Assuming things get better, future generations will not judge us kindly.

A truly radical redistribution of wealth is, truly, unrealistic. I’d advocate it because of its immediate efficacy if I thought it were even remotely possible. But it’s not. The alternatives are to do essentially nothing (or worse than nothing by limiting trade further), or to increase trade and attempt to solve the problems it (temporarily) exacerbates. The latter isn’t politically unrealistic—it may take awhile, but I believe we’ll do these things sooner or later. I’d prefer sooner, and not just because they make trade easier for the developed world.

37

Barry 04.16.09 at 6:05 pm

Keith M Ellis 04.16.09 at 5:25 pm

Me, concerning Keith’s policy statements: “Do you or don’t you support raising their tax rates by a large amount? Not just to Clinton-era rates, but to pre-Reagan levels?”

Keith: “That’s really the test of your alleged morality.”

Yes, because we see you going from :Because the working class of the developed world is obscenely wealthy in comparison to the vast poor of the developing world and a portion of the resources upon which that wealth was built was stolen from the developing world in the past.”, but somehow the richest few percent in the developed world are now *not* included in that. They gain.

Keith: “This is typical of the prejudice with which my arguments have been received. Why are you assuming that I oppose raising tax rates on the wealthy by a large amount? It’s not as if mpowell, for example, was unable to discern my point of view.”

Keith, your stated morality and situation, IMHO, lead inevitably to higher taxation on the rich in developed countries. And it’s not ‘prejudice’, it’s Bayesian – we’re not arguing from a blank slate. Frankly, you flunked in the less likely manner – I expected you to dis taxing the rich

38

Mitchell Rowe 04.16.09 at 6:05 pm

Keith what do you do? I mean what is your career? Are you a member of the working class that you are so eager to sell down the river? It is all to easy to advocate for someone else’s job to be shipped overseas.

39

Henri Vieuxtemps 04.16.09 at 6:20 pm

Keith, I don’t understand why producing nike shoes and walmart crap for Americans is the way to avoid starvation in poor countries. Why can’t they instead produce walmart-like crap and shoes for themselves, avoid starvation and wear flashy shoes and consume walmart-like crap too? Why can’t you agitate for building factories in poor countries, without dismantling them in the rich countries? Aren’t there enough feet in the world for the shoes produced in China and Brazil and the US?

40

Barry 04.16.09 at 6:38 pm

Mitchel, it’s not even that – the GOP is full of middle-class people intent on helping a party which has demonstrated that f*cking the middle class is a core party plank.

41

Barry 04.16.09 at 6:39 pm

Sorry – ‘Mitchell’

42

Mitchell Rowe 04.16.09 at 7:23 pm

Barry,
No worries.
:-)

43

Keith M Ellis 04.16.09 at 8:14 pm

Barry, regarding your comment #37, it seems somewhat incoherent and so I’m not sure what your point is. (Note that you originally wrote the “test of your alleged morality” line and because there was a paragraph break, it was mistakenly not included in my blockquote section.)

Yes, most people who support trade are centrists or rightists who are anti-labor and all that. But I made it clear in my very first comment that I’m not one of them and when I mentioned that I’d support a large direct transfer of wealth from the developed world to the developing world if it were politically realistic, that should have been a pretty strong clue that I generally support very progressive economic policies. So I’m not sure how I “flunked your test” at all.

Keith what do you do? I mean what is your career? Are you a member of the working class that you are so eager to sell down the river? It is all to easy to advocate for someone else’s job to be shipped overseas.

At present I am disabled and live on disability benefits of less than $900 a month and have no assets. Truly. I am very poor.

I also went through a short period where I had a lot of dotcom money and I gladly paid the highest marginal tax rates on low-to-mid-six figure income. I have no sympathy for Americans who complain about paying too much in taxation. I think the highest marginal rate should be doubled. So, I’ve been on the high-end, too, and was happy to pay my taxes and would have been happy to pay more for more programs increasing social justice.

Furthermore, as you might guess, I worked in IT. Lots of IT jobs are moving overseas and I supported that and still do. You can bet your ass that had my company laid me and ten others off so that they could outsource and hire forty Indians, I wouldn’t have complained.

Mitchel, it’s not even that – the GOP is full of middle-class people intent on helping a party which has demonstrated that f*cking the middle class is a core party plank.

It astonishes me that anyone could read my comments in this thread and conclude that I’m a Republican. You’re just not paying attention.

Keith, I don’t understand why producing nike shoes and walmart crap for Americans is the way to avoid starvation in poor countries. Why can’t they instead produce walmart-like crap and shoes for themselves, avoid starvation and wear flashy shoes and consume walmart-like crap too? Why can’t you agitate for building factories in poor countries, without dismantling them in the rich countries? Aren’t there enough feet in the world for the shoes produced in China and Brazil and the US?

Because the Chinese and Brazilians and Indians can’t afford to buy those flashy shoes and consume Walmart-like crap. They’re not going to alleviate their poverty on their own (not unless you assume some Malthusian-like depopulation) in the foreseeable future, if ever.

A distressingly large number of the developing world’s countries are very resource poor and are overpopulated. The only resource they have is labor. Things will never get better for them without international trade. The others, like China and Brazil, have resources but large populations and, on their own without trade, would take many decades to develop their economies to developed-world standards (assuming this is even possible without international trade).

Because of specialization, economies of scale, comparative advantage, and more obscure reasons, trade creates wealth inherently and immediately and accrues to all parties involved. Even if it didn’t, or even if the wealth directly created flowed only to the wealthier country, it still will create wealth in the less wealthy country by virtue of circulating money through its economy and spurring more economic activity. In the very short-term, the jobs lost in the developed world represent investment in the developing world—investments that otherwise wouldn’t exist. This is seed money, in effect. And that’s all without the (true) assumption that trade itself directly generates wealth.

Without trade, the developing world would have to painstakingly develop its economies incrementally, essentially recapitulating the developed world’s industrial 200 year history, except without the benefit of colonialist resource theft or slave labor or the regional international trade the developed world has always had or (in most cases) the abundance of immediately exploitable resource wealth the developed world enjoyed. So, without technology transfer and education, what took us 200 years might take them 400 (or forever). With the tech transfer and education (they will, in fact, have—with or without trade) it might be reduced to 100-200 years (or forever).

With trade, it might take 40, as it has, for example, Japan. Or less. Look at China and India’s growth curves. Both are directly and indisputably driven by international trade. They might reach our level, especially China, in just 20 or 30. With trade. Without it, it’s almost two billion starving people.

I don’t understand how it’s the case that most Europeans recognize the wealth creating affects of EU integration and intra-EU trade while claiming that trading with China will impoverish them. The Irish were never going to build multi-billion dollar microprocessor fabs for themselves. China could, but not while 90% of its population was starving.

One of two things are possible: either eliminating all the ills associated with job dislocation can be solved—via safety nets, ubiquitous publicly financed training and re-training, public investment nurturing new industries—without incurring some permanent economic cost (lowering productivity for various reasons), or it can’t (and it will incur some cost). I think the former is true and that’s what we should aim for. But if the latter is true, I still advocate it because I think we’re obscenely wealthy as it is and we can afford to take the hit.

I want these things and advocate for these things not just because they allow trade to be pain-free for the developed world and thus allow wealth-generating trade which will improve the lives of the developing world’s poor…but also because, obviously, progressives and labor activists should be fighting for these things anyway. That’s what I find very strange about this argument. The changes I advocate which would eliminate the ills the working class suffer from international trade are changes that progressives and labor activists have always wanted—because of course trade isn’t the only reason jobs are eliminated.

So from my perspective, the anti-globalists who are motivated by labor-centric arguments and are concerned about the plight of the developed world’s working class are ignoring the essential problems here and instead are focusing on only slightly avoiding them via protectionism. You could be arguing for changes which result in eliminating the pain and insecurity working people feel about potential or actual job loss in general, but instead are just agitating against something which causes only a moderate portion of those lost jobs.

You might say, well, isn’t it better to stop jobs being lost than stopping the symptoms associated with lost jobs? Isn’t that attacking root causes? My response is that it’s obviously absurd to think about making it so that jobs are never lost…you couldn’t have economic development (or people actually having choices about what they do with their working lives) without jobs being created and eliminated. However, my argument is that it is possible, in a sense, to mostly eliminate job loss if we make “job loss” equivalent to “job change”. When manufacturing jobs are moved from the US to China, then equivalently-paying non-manufacturing jobs should be available to those American manufacturing workers. This could be possible if, on labor’s side, there was real interest in organizing the service industry labor, and on the government’s side, there was retraining benefits and investments in new industries…and when, in the short-term, there aren’t jobs available, there’s a strong safety net that meets the needs of the unemployed.

I guess I can understand that protectionism is a battle that labor thinks it can win and it will, in the short-term at least, definitely protect good working-class jobs. If this didn’t literally come at the price of starving thousands or millions of developing world workers, I’d support it. Even then, however, it seems to me to be remarkably timid or even cowardly. Here we have in the US, especially, a huge sector of the economy essentially without labor protections and no labor organization. It’s the burgeoning sector, and labor just dismisses its importance outright. Instead of fighting for an economy where service employees have collective bargaining, good wages, benefits, and job security, the labor movement dreams of an America where the entire working class has $30 an hour factory jobs. That’s fantasy, it’s not going to happen, and dreaming of it comes at the expense of the millions working in crappy service jobs who could immediately benefit from labor’s enthusiasm for social justice.

Furthermore, long-term working class interests are poorly served by the current US environment where re-training is unavailable or a joke and the safety net is largely non-existent. For manufacturing and service sector and everyone else, labor should be agitating for change in this regard.

From my perspective, the anti-trade arguments above are ignoring the biggest and most urgent essential problems facing labor in the developed world in favor of a relatively trivial, but winnable, battle that, nevertheless, comes at the expense of the world’s poor. Again, this seems to me to be exactly the nature of the typical centrist/moderate do-little-and-mostly-reinforce-the-status quo-while-turning-a-blind-eye-to-injustice-and-atrocity mindset that you probably ascribe to me simply because I support trade.

44

StevenAttewell 04.16.09 at 8:15 pm

Keith Ellis:

Ok, I think we’re getting closer to the crux of this.

I do respect your commitment to “progressive labor policies,” I just think that you need to think more broadly about what kinds of policies would be necessary – at least, I think more than wage insurance, UI, and education/training is necessary to actually ward off real economic hardship. You still have the problem of trying to finance a larger welfare state with less economic production and a smaller wage base – which is why I think in the end, you need a right to a job and public employment programs to capture the loss of labor power. The same applies to the social/psychological ramifications of unemployment that aren’t dealt with through income transfers.

Keep in mind that my position is that I’m not pro-protectionism because I find it an ineffective strategy, and that I’m arguing instead for the right to a job, an expanded labor movement, and the stimulation of new industries- but I still feel it’s important to recognize that globalization isn’t a painless process.

Re the moral case: while I don’t think you’re a “wealthy corporate shareholder,” I doubt that you’re a unionized, blue-collar worker in a manufacturing industry. Now, I’m all down for taxing the rich for paying for this stuff, but you haven’t put down much in the way of plans for capturing the profits of offshoring, let alone the level of taxation that would result in genuine reparations. And don’t you think it’s a little disingenuous to claim that you have no interest in trade liberalization, given your arguments that trade is inherently beneficial? Surely you are benefiting from lower prices, no? So, if it’s not your job getting shipped overseas, the moral question remains.

Also, I think it’s a bit of a dodge to defend trade from an abstract, commerce-is-necessary-for-civilization standpoint, rather than from the actual conditions of trade that includes protectionism for intellectual property and the professions, state subsidization of industries in both developing and developing countries, and the like. After all, those who are anti-globalization are not calling for the abolition of trade and the resumption of autarky – they’re arguing for higher labor and environmental standards and the gradual increase in developing world wage levels to the level of the developed world.

Again, I’m not questioning whether trade creates wealth, but you still haven’t answered the distributional question of who’s getting the wealth and who’s giving it.

In regards to poverty in the 30s, if you’d like me to pull out the photos of child labor in the factories and mines, or the conditions of the tenements, the conditions of tenant farmers in the Appalachians or the Ozarks or the Delta, I can do it. Hell, take these stats for example – in 1938, 27% of American families lived on less than $750 a year ($750 = approximately 50% of the current poverty line), of these, another 37% of American families lived on $750-1,500 a year (50-100% of the current poverty line), that’s 64% of the country in poverty. Even in 1940, nearly a million non-farm families had an income of $0 a year with no other income; another million and a half million families had an income of less than $400 a year – that’s not just poverty, that’s downright destitution. The idea that the developed world’s abundance is permanent misses how historically recent and contingent it is.

45

Barry 04.16.09 at 8:25 pm

Keith M Ellis 04.16.09 at 8:14 pm

“Barry, regarding your comment #37, it seems somewhat incoherent and so I’m not sure what your point is. (Note that you originally wrote the “test of your alleged morality” line and because there was a paragraph break, it was mistakenly not included in my blockquote section.)”

Keith, I really don’t see the difficulty – the internets are full of people who praise globalization for helping the poor, are aghast at the evils of taxing the rich, and really don’t waste too much thought on the effects of a majority of Americans .

“Yes, most people who support trade are centrists or rightists who are anti-labor and all that. But I made it clear in my very first comment that I’m not one of them and when I mentioned that I’d support a large direct transfer of wealth from the developed world to the developing world if it were politically realistic, that should have been a pretty strong clue that I generally support very progressive economic policies. So I’m not sure how I “flunked your test” at all.”

Keith, just because you claim not to be a rightist, doesn’t mean that you are not one. And when it comes to the American working and middle classes being the ones to make amends for our historical grab of wealth, and not the rich, I really don’t believe that you are not a rightist.

46

Henri Vieuxtemps 04.16.09 at 8:33 pm

Because the Chinese and Brazilians and Indians can’t afford to buy those flashy shoes and consume Walmart-like crap.

I still don’t understand. If one Chinese guy produces, say, 10 pairs of shoes in a week, why can’t he wear one pair himself and trade the other 9 pairs for some walmart crap produced by some other Chinese guys?

Why do the Americans need to be somehow involved in this? I understand, of course, that they probably need to provide machinery for the factories, but once that is done and the shoes and crap start being produced – what is the (benign) role of the Americans now? Where is the ‘trade’ thing here, exactly; what is it so valuable that the Chinese worker gets from the US in exchange for the shoes that he has produced?

47

Mitchell Rowe 04.16.09 at 8:50 pm

Keith,
So basically your income is secure, you are in no danger of losing your job if the policies you support are implemented and you have absolutely no skin in this game whatsoever. Interesting how quick you are to sell someone else’s job down the river. These people have families and they work hard for a shot at a better life for themselves and their children. They rightly expect their elected politicians to support them in that. The chinese have their own officials.

48

Righteous Bubba 04.16.09 at 9:12 pm

So basically your income is secure, you are in no danger of losing your job

I’m not sure where I fall in this argument but the idea that the wrong person might be arguing is pretty silly.

I’d like to mention, though, that $10000 a year, while perhaps a wonderful amount elsewhere, puts me on the brink of homelessness where I live now.

49

Keith M Ellis 04.16.09 at 10:57 pm

Keith, just because you claim not to be a rightist, doesn’t mean that you are not one. And when it comes to the American working and middle classes being the ones to make amends for our historical grab of wealth, and not the rich, I really don’t believe that you are not a rightist.

Oh, come on. I’d raise the corporate income tax. I’d double the highest marginal tax rate and I’d tax inheritance over, say, one million at nearly 100%. I’d tax capital gains the same as income. This is not making the rich make amends for past wealth grabs? But I’d like to make it clear that I think that European colonialism and American equivalent theft of resources from the developing world is something that all citizens of these countries have benefited greatly from; and that all of us have a moral debt to the developing world as a result.

Also, I support single-payer health care; universal free higher education; guaranteed gender and sexual orientation equality; affirmative action; reparations to black Americans and Natives; massively increased aid to the developing world; restrictions on pharmaceutical industry profits; steep regulation of large global corporations; extremely comprehensive unemployment insurance; legal guarantees of labor organization and collective bargaining; reduced maximum workweek and increased vacation time; greatly increased taxation on pollution; mandated transition to renewable energy sources; mandated transition to alternative fuel transportation; mandated and funded large increases in mass transportation; sharply limited executive branch powers to engage in war without Congress’s consent; US participation in the International Criminal Court; prosecution of Bush admin officials for war crimes and other crimes; sharp reduction of the US prison population; change to a criminal justice emphasis on rehabilitation instead of punishment; legalize but tax most soft drugs; amend the Constitution to allow comprehensive gun control; greatly increased legal recognition of children’s rights; greatly increased oversight of children’s welfare; limiting law enforcement’s use of deadly force; comprehensive financial sector reform; reducing by two-thirds the US military budget; amnesty for illegal aliens and a greatly expanded allowance for legal immigration, particularly from western hemisphere nations; reduction of US support for authoritarian regimes; establishment of a Palestinian state; animal rights; and many other things besides.

But I guess I’m a rightwing near-fascist pro-business elite because I support international trade. Yeah, whatever. I think it’s impossible that you could discuss this with me in good faith.

So basically your income is secure, you are in no danger of losing your job if the policies you support are implemented and you have absolutely no skin in this game whatsoever. Interesting how quick you are to sell someone else’s job down the river.

Yeah, well, as Righteous Bubba says, you must be a little confused if you think that living on $900 dollars a month is a comfortable life. That aside, you’re completely ignoring the fact that I said that supported these same policies when they did threaten my own particular job. You’re also ignoring that I’ve said that I would support an alternate policy where even my absurdly low income was further reduced because of a wide-scale and huge transfer of wealth from the developed world to the developing world. So, you know, your accusation of hypocrisy and selfishness are false and offensive.

It’s also an unfair or dishonest argument to make. When conservatives make that argument about taxation, saying that it’s easy for liberals to want to tax the wealthy because liberals aren’t wealthy, it’s unfair and dishonest and often untrue. Some liberals are wealthy. But, also, it doesn’t matter whether they are or not. If the only people allowed to support public policy were those particularly adversely affected by it, then no one would support any public policies. Taxation on millionaire inheritances? Only the millionaire inheritors have a say. Going to war? Only the soldiers have a say. Laws against murder? Only the murderers have a say.

This is not a rational or practical way to decide who has a voice in public policy.

Anyway, in fact, I despise people that make exceptions or bend their ideals because of their own self-interest such as NIMBY or benefits-for-me-but-not-taxes or whatever. I do, and always have, decide on my principles and then stick with them, regardless of whether they adversely affect my own self-interests. And I think this sort of accusation is really perverse coming from anyone in the developed world where all of us are obscenely wealthy compared to the developing world’s poor who are dying by the millions of disease, war, and famine and living unspeakably horrifying lives.

Arguably, films like City of God or Slumdog Millionaire are “poverty porn”, but they nevertheless illustrate a reality that certainly is worse than anything the US has seen in eighty years. My mind has long boggled at the world’s complacency concerning two obscenities: the plight of the developing world’s poor, and the plight of at least a third of the world’s women. The former are living, or dying, in lives that are more impoverished, more constrained, and more horrific than they were a hundred years ago. They live in cities that are unimaginably huge and overcrowded, among violence and exploitation, with poor or non-existent housing, with poor or non-existent health care, and with poor or non-existent education. Many are in de facto slavery, as in Dubai. The latter are almost universally oppressed, institutionally sexually exploited, and a large portion are also de facto enslaved. Meanwhile, the one-quarter of the world which is wealthy and privileged is fabulously wealthy and privileged in comparison; and we worry about whether our food is organic, think that the height of virtue is passing on a slice of chocolate cake or driving alone to work each day in a hybrid vehicle. It’s truly obscene and in this context it seems to me that shedding tears for a wealthy nation blue-collar worker who has difficulties when losing a job is morally equivalent to shedding tears for the corporate CEO who lost his jobs. American blue-collar workers don’t starve or prostitute themselves when they lose their jobs; developing world workers do.

And, again, if one were truly committed to improving the lives of American labor, then one would strongly support all those policies which would eliminate the ills of trade without requiring protectionism, without regard to trade because these problems are much bigger than just the portion caused by trade.

50

Mitchell Rowe 04.17.09 at 2:55 am

Keith,
“Yeah, well, as Righteous Bubba says, you must be a little confused if you think that living on $900 dollars a month is a comfortable life”
I never said it was a comfortable life, I said your income is not threatened by the policies you propose. That is true.

“That aside, you’re completely ignoring the fact that I said that supported these same policies when they did threaten my own particular job. “
You say this now but I am not sure I believe you. Like I said it is very easy to be blase about these things without any skin in the game. When you were making more money did you donate every spare cent to people in the developing world?

“You’re also ignoring that I’ve said that I would support an alternate policy where even my absurdly low income was further reduced because of a wide-scale and huge transfer of wealth from the developed world to the developing world. So, you know, your accusation of hypocrisy and selfishness are false and offensive.”
You type this on a computer over the internet. Have the courage of your convictions! Sell your computer, cancel your internet and electricity and send the excess cash over seas. None of these things are essential to life, you seem very eager for working people to “give till it hurts”, why not join them?

“It’s also an unfair or dishonest argument to make. When conservatives make that argument about taxation, saying that it’s easy for liberals to want to tax the wealthy because liberals aren’t wealthy, it’s unfair and dishonest and often untrue. Some liberals are wealthy. But, also, it doesn’t matter whether they are or not. If the only people allowed to support public policy were those particularly adversely affected by it, then no one would support any public policies. Taxation on millionaire inheritances? Only the millionaire inheritors have a say. Going to war? Only the soldiers have a say. Laws against murder? Only the murderers have a say.”
I am not saying you can’t make the argument. I am saying that you, and other people on this blog who propose similar polices aren’t the ones who will lose the most because of them. This is true.

“The former are living, or dying, in lives that are more impoverished, more constrained, and more horrific than they were a hundred years ago.”
That is false. The average person in the developing world is better off today than they were 50 or 100 years ago. They eat, on average, more calories today. They also have access to more material possessions than before and are wealthier. Worldwide, life expectancy has more than doubled, from 31 years in 1900 to 67 years today. India’s and China’s infant mortalities exceeded 190 per 1,000 births in the early 1950s; today they are 62 and 26, respectively. In the developing world, the proportion of the population suffering from chronic hunger declined from 37 percent to 17 percent between 1970 and 2001 despite a 83 percent increase in population. Globally average annual incomes in real dollars have tripled since 1950. Consequently, the proportion of the planet’s developing-world population living in absolute poverty has halved since 1981, from 40 percent to 20 percent. To say people in the developing world are worse off is to misstate the facts. (I got these figures from a book called The Improving State of the World: Why We’re Living Longer, Healthier, More Comfortable Lives on a Cleaner Planet) Also I encourage you to read Gwynne Dyer’s book War: The Lethal Custom if you think that people in the third world live with more violence than in the past. Dr Dyer’s argues very convincingly that this is not the case.

You still have not proved your case the the poverty of the third world is the fault of blue collar union members in the west. I fail to see why they should suffer for someone else’s sins.

“American blue-collar workers don’t starve or prostitute themselves when they lose their jobs; developing world workers do.”
They do however lose their houses, their health care, their hope for a decent retirement, and any chance of providing post secondary education for their children. Adam Smith put his finger on the problem back in 1776. In The Wealth of Nations, he wrote: “A linen shirt, for example, is, strictly speaking, not a necessity of life. The Greeks and Romans lived, I suppose, very comfortably though they had no linen. But in the present times, through the greater part of Europe, a creditable day-labourer would be ashamed to appear in public without a linen shirt…” Suffering is relative.

Additionally I have yet to be convinced of the real benefit that those in the developing world have achieved from trading with us. Some of their own fat cats have gotten rich, but the average person who now breathes polluted air and drinks polluted water, is that person better off? Are those factories really helping?

51

Keith M Ellis 04.17.09 at 7:07 am

The argument that I should be donating my money to starving people in the developed world is just as unfair and dishonest as the rightwing argument that those who advocate higher tax rates should voluntarily be paying the IRS more.

And I’m sure that I could locate things I wrote on the Internet in the late 90s supporting trade when outsourcing IT jobs first began…but I don’t need to because your presumption that my self-reporting here of my motivations and past positions are likely lies is both offensive and deeply in bad-faith. You don’t get to attack my argument on the basis that my motivations are badly-intentioned, in direct denial of my reporting of my motives, in the complete absence of any evidence for your claim any more than I get to claim that your argument is wrong because you’re actually a dog typing out words at random with your nose.

Some blogger, Yglesias, I think, often points out that some of the positions which conservatives clearly think are core and necessary to conservative identity are, in fact, rather arbitrarily linked to conservatism and really have very little, if anything, to do with each other than historical accident. That leftists are currently against globalization in the form of trade is also a historical accident and not inherent to progressivism, not necessary, and has little in common with, say, sex orientation equity and the right to collective bargaining. But just as American conservatism right now seems to wrongly believe that denial of man-made global warming is a necessary conservative position, American leftists seem to wrongly believe that opposition to globalized trade is a necessary progressive position. Therefore, in spite of the fact that I have asserted a large number of views which are, in the American context, collectively far left, the fact that I support globalized trade indicates to you that I must be lying about those views as well as my claims for my motivations for supporting globalized trade. It’s remarkably rigid , unimaginative thinking.

One of Krugman’s recent blog entries, perhaps the one linked in the original post above, makes a similar point about his positions. He generally supports international trade. Therefore, progressives (infrequently lately, but much more often ten years ago) accuse him of being a fake liberal. Meanwhile, because he supports limits on trade and capital flows in certain macroeconomic situations, free trade ideologues accuse him of being a fake supporter of trade. And his response is, wait, the solution to the supposed contradiction is that he’s pragmatic about the methods by which the progressive goals he supports are achieved. He doesn’t support trade because he believes there’s some inherent “natural” right to trade; he supports it as a means to an end. When it doesn’t achieve that end, he doesn’t support it. Similarly, when protectionism doesn’t achieve his progressive end, he doesn’t support protectionism, either.

With certain limited, though very important exceptions, conservatism and progressivism are ideologies about goals, not methods. Yet most people tend to conflate the two because there tends to be much more uniformity of opinion about methods than there rationally ought to be, because of peer pressure and the equation of ideology with social identity. Thus, positions on methods become ideological markers and heresy with regard to methods is not tolerated.

This greatly narrows the possibilities for productive civil discourse and opportunities to discover effective, efficient solutions to problems. I support globalized trade because I believe that it is the most possible, least inefficient solution to a deeply tragic and urgent humanitarian problem. And the solutions I propose to solve the short-term ill consequences of trade lead are the same solutions to wider-context problems obstructing economy-wide progressive goals. The pain of job dislocation, from any cause, for any class of worker, should be reduced or eliminated anyway. Newly created, non-manufacturing jobs should be higher-paying with unionized security anyway. Workers moving from one industry to another, for whatever reason, should have cheap or free opportunities for re-training anyway. The partial band-aid of protecting the jobs of a particular, small class of workers from the dislocation caused by the particular phenomenon of offshoring—not protecting the jobs of all workers, threatened for all reasons—while simultaneously ignoring the depravity or even the worsening of the lives of the developing world’s poor…well, that’s achieving a relatively tiny, tiny progressive victory while not even attempting the much larger and much more urgent victories, both home and abroad. It’s intellectually perverse to be arguing that protectionism is the obvious and natural progressive position on this issue.

A legitimate counter-argument would, given certain preconditions, be that my solution is politically unrealistic; that protectionism, being possible, has the virtue of actually achieving progressive goals as opposed to my much more ambitious plan, which will not. But the preconditions are that there either this has been attempted, and not achieved, or that it’s being attempted and there’s manifest widespread opposition to it, or that widespread opposition to it is self-evident. I don’t believe that any of those preconditions are the case. This seems to me to be a lot like the health care reform debate. I support a single-payer solution to the problem, including a nationalized health care system as the single-payer solution. Now, I agree that it’s quite arguable (though far from certain) that a nationalized system is politically unrealistic. But I don’t agree that a single-payer system, like the Canadian provincial insurance systems and many European systems, is arguably unrealistic. Many politicians and pundits are acting on that assumptions and leaving single-payer off the table; but I think they are quite wrong to do so without even attempting a push for it actually proving that it can’t be done. It’s by far the best solution to the problem; it’s irresponsible to not even put it on the table. Likewise, bank nationalizations. And, likewise, comprehensive labor reform as part of a wide-ranging progressive initiative that also just happens to solve the trade problems. This should be at least on the table; and my fellow progressives who accuse me of ideological betrayal because I advocate it are doing their part to continue the American tradition of just barely adequate governance.

52

Henri Vieuxtemps 04.17.09 at 8:13 am

So, why should helping people in poor countries to avoid starvation require taking most of what they produce and shipping it to the US without giving them anything in return. What does a US person wearing a shirt made in China produce for the Chinese person who made this shirt?

53

Tracy W 04.17.09 at 9:15 am

Mitchell Rowe,
It’s quite easy to get a poor government to sign up to environmental standards and labour protection, it’s a lot harder to get them to enforce it. There are a lot of laws on books that aren’t enforced around the world and generally the poorer the goverment is the more incompetent it is at enforcing said laws (there are some exceptions, some totalitarian states have managed remarkable levels of control but not in a good way). If you want people to have the protection of a rich country’s government, I don’t see a better way than letting them into that rich country.
Also, another issue with reasonable environmental and labour policies – who decides what is reasonable? I remember while the Lord of the Rings movies were being made an American stunts rider was complaining about the low pay of the NZ riders undercutting the Americans – they were only being paid $500 a day. I’ve also encountered Americans criticising NZ companies for using 1080 poison – not knowing that the NZ Department of Conservation uses 1080 poison to to control possums and there is a shortage of native mammals in NZ and a lot of very rough remote landscape that makes 108o the best option anyone has discovered yet. Local knowledge is important.

All I know is this question should be honestly put to the people to decide. Let there be an election fough over it.

Difficult. When casting your vote in an election you’re choosing one government to deal with a vast range of topics, some of which you don’t even know will happen yet (quick question, in the election in your country that occurred before 11 September 2001 did you know what the main parties’ policies were if there was a major terorist attack in the USA? ). To pick one issue as the most important is tough. And to be blunt, most voters are focused on personal issues like the economy and healthcare.

Henri Vieuxtemps – yes, the poor probably could get themselves out of poverty by producing walmart-like goods and shoes for themselves. For example, China’s current population is around a billion, which is what the entire world’s population was in about 1800 when Britain was having its Industrial Revolution, so at a least first approximation there’s enough local demand in China to do the same. But it’s a far slower process than when you get the gains from trade. We admittedly don’t have reliable GDP growth rates for Britain, but it’s generally thought that it was far slower than the growth in Japan and South Korea, who had access, albeit with limitations, to the large Western markets when they started developing. (All this is subject to normal caveats, we can’t do controlled studies on what causes growth).

What does a US person wearing a shirt made in China produce for the Chinese person who made this shirt?

It depends. Wheat, corn, education, scientific research, IT goods, etc. There are also complicated loops, eg the Chinese spend the money they get from sellling the t-shirts to Americans on milk from New Zealand and the NZ citizens buy IT goods.

There’s also a complicated thing going on where for political reasons the Chinese government is accumulating US treasury bonds.

Mitchell Rowe:
Additionally I have yet to be convinced of the real benefit that those in the developing world have achieved from trading with us. Some of their own fat cats have gotten rich, but the average person who now breathes polluted air and drinks polluted water, is that person better off?

See http://www.wilsoncenter.org/events/docs/JEL%20McCulloch%20Trade%20Poverty.pdf for a summary of some evidence that the poor probably gain along with the rich in poor countries. (This is not up to the standard of a controlled experiment, as the authors take pains to point out).
Also please note that lack of development does not mean that the average person breathes non-polluted air and non-polluted water. Water supplies can be contaminated by a dead pig as well as by a factory. Cooking over a fire instead of turning on your electric oven exposes you to indoor air pollution. See http://www.scielosp.org/scielo.php?pid=S0042-96862000000900004&script=sci_arttext&tlng=en

Keith Ellis – how would Malthusian style depopulation improve the chances of economic growth? If anything I thought the relationship was opposite – more people = more money. The Pacific Island nations have very small populations but don’t appear to be bursting with success, and empty Australia has from memory a slightly lower GDP per capita than the crowded Netherlands. (This is just anecdotal evidence of course, my mere failure to think of some evidence in favour of your hypothesis doesn’t prove that there is no such evidence).

54

Henri Vieuxtemps 04.17.09 at 9:40 am

Chinese factory workers consume IT goods and scientific research? I don’t think so. And why would they switch from rice to corn?

I bet the average Chinese worker (who is likely to be a factory worker) doesn’t consume anything produced outside of China. And the average American worker (who is likely to be a salesperson of some sort) doesn’t exactly consume a lot of stuff produced outside of China either. Some trade. The moral high ground, indeed.

55

bad Jim 04.17.09 at 10:05 am

Ellis stakes out the most radical position available and is assailed as a rightist or a neoliberal, like a bird whose plumage is only visible in ultraviolet, to which we trichromatic primates are blind. We’re so bound to our usual quarrels that we can’t even recognize such an audaciously generous strategy.

It’s hard to see how to get from here to a world remolded to our hearts’ desire, but globalization is the path we’re already taking, so we ought to proceed willingly, with our eyes wide open.

The developed countries seem to be doing pretty well so far, even if there is a larger volume of finished goods in the incoming than the outgoing freighters. We’re better off reducing inequality at home than isolating ourselves from the rest of the world.

56

bad Jim 04.17.09 at 10:14 am

Vieuxtemps: the average American worker (who is likely to be a salesperson of some sort) doesn’t exactly consume a lot of stuff produced outside of China either.

Eat much? Watch TV, listen to music? Got computer? Got car or bus or train, water, electricity? Look at some of the later posts. The U.S. isn’t as import-dependent as many, and not all of our exports travel in containers.

57

Keith M Ellis 04.17.09 at 10:50 am

I bet the average Chinese worker (who is likely to be a factory worker) doesn’t consume anything produced outside of China. And the average American worker (who is likely to be a salesperson of some sort) doesn’t exactly consume a lot of stuff produced outside of China either. Some trade. The moral high ground, indeed.

Stop asking these sorts of questions and just making up answers that satisfy obviously entirely unexamined moral predispositions. Many of the questions you’ve asked can be reasoned out from a few, obvious assumptions. Others can be answered by Googling. And if you know global economic history of the last eighty years, you already know that in the long term trade rapidly generates wealth in the developing world and leads to better labor conditions and stronger environmental protection, huge reductions in the numbers of the starving poor, and more modest but significant gains in the developed world. Japan didn’t get wealthy by manufacturing and selling transistor radios and cars to themselves. Japan is a net exporter, but it has always imported to make up gaps in its economy, both with regard to resources and with regard to labor. South Korea is a much more recent example. And China and India even more recent. Actually look at the numbers for trade, GDP, and median household income for these countries during the relevant periods. Look at the corresponding numbers for countries that have grown or remained protectionist. Look at these numbers for Ireland, Spain, Portugal, and Poland during EU economic integration. Imagine if England ended trade with the rest of the UK and Europe and elsewhere, or if the Netherlands did the same sort of thing, or Belgium. Or Canada. Or Quebec. In fact, Quebec of the 70s and 80s is a good example of something like this actually happening, but on a limited, though devastating, scale.

Your questions about trade are as uninformed, your answers as driven by prejudicial assumptions, as rightwing arguments that decreased taxation increases tax revenue or that stimulus spending can’t work because one person’s saving is another person’s spending, and vice-versa. These are not hugely complicated matters; those who assert the factually untrue answers are doing so because of an extraordinarily deep ideologically-driven selective blindness or delusion.

For example, it is utterly irrational to assert that tax cuts “always” produce revenue increases. Yet conservatives claim this everyday. If it were true, then eliminating taxation would produce infinite tax revenue. And you could look at historical data and see that past tax cuts have produced revenue increases (they haven’t) and past tax hikes have produced revenue decreases (they haven’t). This is not a difficult question to answer correctly, both theoretically and empirically. Nevertheless, many conservatives continually assert something economically equivalent to “the Earth is flat”.

Similarly, conservatives, even some economists (the Chicago school) have been asserting that stimulus cannot work because it works out to be essentially an accounting identity. Well, you only have to think about economic activity from first principles for a short while before you come up with the idea of the velocity of money. It’s theoretically inevitable. Stimulus spending is not essentially an accounting identity that merely moves money from one column to another. Furthermore, on this point anyway, the empirical evidence is clear. It’s a form of either selective insanity or egregious ignorance for, especially, trained economists to assert the conservative argument. And it’s not difficult for the non-economist to work it out and look it up, either.

And just so with trade. People like you and other here assert that trade reduces rather than increases wealth via the commonsensical notion of “race to the bottom”. But you can figure out from first principles that this isn’t the case if you think about it for awhile. I understood many of the benefits of trade (but not comparative advantage) long before I ever read a single authoritative word asserting it. I just figured it out. It’s not hard. And the empirical data is ubiquitous available proving that trade increases wealth. It’s not an open question, either theoretically or empirically. Yes, in the complex real world, there are exceptions to the rule and certainly in the short term all sorts of perverse and unjust things can, and do, occur. But the left-wing anti-globalist arguments against trade asserting wealth destruction are just as flat-earthist as the two conservative economic arguments I presented before it. You can’t be going around asserting these things confidently without being either ignorant or deluded; and one doesn’t go around confidently asserting these things unless one has a strong partisan allegiance to a certain variety of ideology that requires the answer to these questions be a certain way, regardless of truth. Yeah, the American right in recent years has made this into an art form, creating their own alternate realities, sound reasoning and empirical evidence be damned. Global warming, evolution, Iraqi WMDs, torture, taxation and revenue, recession economics and stimulus spending, FEMA re-education camps, Obama’s citizenship, Democratic reinstatement of the Fairness Doctrine, Supertrains from LA to Las Vegas, Government panels to control physicians’ choices of treatment, executive orders disallowing any religious activities at any facility that has received federal funding…the list goes on and on and on. These people just create a false reality out of whole cloth. They “know” it. Everyone one they know also “knows” these things are true. It’s only propagandists who claim otherwise.

Arguments of this nature are much more rare on the left. But the broad claims asserting that trade destroys rather than creates wealth are one of the few examples. If you are even remotely interested in the truth, you actually have to work at believing this lie. You’ve no less a responsibility to intellectual integrity and truth in this matter than are conservatives who claim that the financial crisis was caused by Feddie and Fanny being forced to give poor people bad loans. The truth is easily comprehensible and attainable.

Anyway, I think I’ve said all that I can say on this subject.

58

Mitchell Rowe 04.17.09 at 11:45 am

Keith you failed to respond at all to me calling you out on you incorrect statements. You said “the former are living, or dying, in lives that are more impoverished, more constrained, and more horrific than they were a hundred years ago.” This in not true. Why won’t you admit this?

59

Henri Vieuxtemps 04.17.09 at 12:41 pm

Keith, you failed to respond to my question as well. Nitpicking at (admittedly rough) illustrations won’t do.

Once again, the point I am making is that the phenomenon you describe in moralistic terms as “reparations-based moral imperative” is nothing of the sort. It’s exploitation and robbery of the developing world, with a side-effect of destroying the industrial base and many socio-economic achievements in the developed world.

Yes, it’s true, another (and certainly unintended) side-effect is a minor improvement in the standard of living in poor countries (some of them). But if you want to turn this accidental phenomenon into the centerpiece of your argument, then you could as well argue (and in moral terms also) for the transatlantic slave trade (trade! can’t be bad!), as it’s quite possible that for many of the slaves a North American cotton plantation was a standard-of-living improvement over their war-ridden homeland.

60

Mitchell Rowe 04.17.09 at 1:08 pm

“Anyway, I think I’ve said all that I can say on this subject.”
Of course you have Keith, of course you have.

61

Barry 04.17.09 at 1:29 pm

Keith: “Anyway, I think I’ve said all that I can say on this subject.”
Mitchell Rowe: “Of course you have Keith, of course you have.”

Nope. Serious logorrhea.

62

Mitchell Rowe 04.17.09 at 2:18 pm

Tracy W
“Difficult. When casting your vote in an election you’re choosing one government to deal with a vast range of topics, some of which you don’t even know will happen yet (quick question, in the election in your country that occurred before 11 September 2001 did you know what the main parties’ policies were if there was a major terorist attack in the USA? ). To pick one issue as the most important is tough.”
Not that difficult. Here in Canada we had an election in the late 80s fought almost entirely over the issue of NAFTA. At the very least parties that support tearing down trade barriers should make their postion clear so voters can take them into account when casting their ballot.

63

StevenAttewell 04.18.09 at 5:55 am

Keith:
“People like you and other here assert that trade reduces rather than increases wealth via the commonsensical notion of “race to the bottom”…But the left-wing anti-globalist arguments against trade asserting wealth destruction are just as flat-earthist as the two conservative economic arguments I presented before it.”

This is a strawman, and you are deriving accusations of ignorance, insanity, and mendacity from it. Most people on this thread are in fact arguing not that trade is causing net wealth destruction, but that the benefits and losses of trade are not equally distributed – the working class is economically losing, even as the middle and upper classes benefit; it might be a net benefit, but that doesn’t mean everyone gets a net benefit.

The volume of trade (and U.S imports especially) has expanded dramatically since the 1970s, but we haven’t seen a broad distribution of income increases; instead, the ultra-rich have gotten richer, and everyone else has either stagnated or lost income. It may be the case that public policy could theoretically compensate, but it is not accurate to say that expanded trade is a universally beneficial phenomenon.

64

Keith M Ellis 04.18.09 at 4:05 pm

This in not true. Why won’t you admit this?

It is true. Today, the poor in the developing world primarily live in huge, overcrowded cities in contrast to, a hundred years, they lived in rural areas. In these “modern” cities, they are incredibly overcrowded, in slums with poor sanitation, disease, and intense crime. Their lives are much worse.

Most of you who are arguing with me are just making shit up.

It’s exploitation and robbery of the developing world, with a side-effect of destroying the industrial base and many socio-economic achievements in the developed world.

It isn’t “robbery” of the developing world. Wherever there are exporting industries, there are improving standards of living and capital inflows. Look at the history of China’s special development zones, India’s call centers, and of course the last forty years in Japan, South Korea, and elsewhere. And, yes, the working conditions are “exploitative” compared to developed world condition, but this is in contrast to the alternative with no jobs and, often, even more exploitative conditions.

This is a strawman, and you are deriving accusations of ignorance, insanity, and mendacity from it. Most people on this thread are in fact arguing not that trade is causing net wealth destruction…

Some are; it was those to whom I was responding. It’s not a strawman if someone has been actually arguing this position, and someone has.

The volume of trade (and U.S imports especially) has expanded dramatically since the 1970s, but we haven’t seen a broad distribution of income increases; instead, the ultra-rich have gotten richer, and everyone else has either stagnated or lost income. It may be the case that public policy could theoretically compensate, but it is not accurate to say that expanded trade is a universally beneficial phenomenon.

This is like saying that falling sixty feet isn’t a universally injurious phenomenon because stuntmen in Hollywood do it frequently. All other things equal, trade is a universally beneficial phenomenon.

It’s misleading to say that public policy might compensate for the problems you are associating with trade. They would compensate. But more to the point, the status quo that such changes would change is the real problem. Europeans have more equally enjoyed the benefits of trade because their economic policy isn’t as skewed toward benefiting the wealthy, and they have a much more expansive safety net, financed by taxation on the wealthy and, for example, corporations that benefit from trade.

Your argument is like a dissident in a corrupt country protesting against the existence of prisons instead of protesting against the corruption. The anti-trade argument is blinkered and upside-down. That international trade is allowed to cause injustice is the problem, not that international trade is allowed to exist.

Or, to use a more generous analogy, it’s as if you were the victim of corrupt officials finding a new way to screw you by, for example, building new schools but vastly inflating construction costs and pocketing the difference, and you are protesting this new method of screwing you while tacitly accepting the culture of corruption which makes it possible. Furthermore, in protesting school construction directly, you’re directly hurting the interests of those most benefiting from them, the students.

As should be very clear from every comment I’ve made here, from the first to the last, I’m very sympathetic to the concerns of the developed world’s working class who lose jobs because of trade. I understand and agree with your protests against this injustice. The difference is that I don’t feel constrained to accept the culture of corruption that makes these things possible and, instead, single out one relatively small, means of alleviating them…a small solution which, I believe, has extreme collateral costs to those least able to endure them.

There is absolutely no reason why the problems associated with trade on the developed world side cannot be easily and completely solved with public policy. Public policy which progressives should be working for, anyway.

The much more intractable problems are those associated with trade on the developing world side. Yes, in the long term the developing world benefits enormously from trade. Yes, many or most of those with new jobs are much better off than they would be without them. Nevertheless, it’s often the case that their working conditions are far worse than that of developed world workers, and are very exploitative from our point of view. Furthermore, developing world nations have universally poor or non-existent environmental protections—which decreases manufacturing costs—and increased manufacturing comes with greatly increased environmental cost…and it’s often the most poor who shoulder the worst of it.

Solving the pollution problem is difficult because environmental protection is very economically costly and developing worlds probably cannot—they, themselves claim they simply can’t—shoulder. And they also point out to us that the developing world developed its economies without having to shoulder these costs. Frankly, I think that the developed world should be providing large amounts of aid which directly funds environmental protection.

The alternative, limiting trade, leaves us with Henri’s pollyanna-ish vision of developing world economies building factories and whatnot for themselves. But, of course, in that vision of the future, it would be a long time before they would implement serious environmental protections. So it’s not as if restricting trade solves that problem. Arguably, with aid and other means, with the lever of increasing trade, the developing world can both encourage and partly fund environmental protections in the developing world that otherwise wouldn’t exist.

As for the working conditions and human rights problem, it is similar in that as these economies would develop in the lack of trade, there’s absolutely no reason to think these same human rights problems wouldn’t exist. With trade, the developing world has a lever with which to influence the developing world in this regard. I think it’s unrealistic and counter-productive to expect working conditions to be close to those of the developed world, but I certainly think that through various means we could essentially insist on better conditions than that they otherwise would be. But turning our backs to them, saying we won’t trade with them and they’re on their own, is the most irresponsible of all courses of action.

Steven, you’re skeptical about whether all these various problems can be solved as I claim they can. That’s fair. I disagree, but it’s a valid argument. Mitchell, Henri, and others are more nearly (or entirely) taking the position that all the problems we’ve discussed are somehow inherent to trade. Some have argued that trade destroys rather than creates wealth, contrary to both theory and empirical fact. They have also claimed various things which are also contrary to fact, such as asserting the the developing world’s poor are not living in extremely horrific conditions, in both the geographical and historical contexts. If we cannot agree on simple matters of fact, there’s no basis for discourse. I think it’s very revealing that these folks have assumed, completely contrary to all indications of my comments, that I’m opposed to taxing the wealthy, that I’m a Republican, etc. It’s sort of like if a small government libertarian-oriented conservative were arguing for leaglization of marijuana and some other conservatives reacted with “drugs ARE BAD” and “of course you’re some unemployed, drug-addled hippie who hates the police”. It’s ideological blindness and prejudice. There’s no way to have reasonable discourse with people like that. You agree with them or you’re both wrong and evil. It’s tiresome.

At any rate, it’s not as if I’m the only progressive who favors trade. It’s clear that the author of this post feels the same. Though a distinct minority, there are progressives who favor trade but don’t favor the interests of big-business or the wealthy. Like Lane—and Steven and Henri and Mitchell and Barry and everyone else here—I strongly oppose the increasing inequality in the US. This is the real problem here, not trade. That the segment of the US economy which has most grown in the last forty years, services, is largely not-unionized, poorly paid, has low job security, and low benefits—that’s the problem, not trade. That the US has some of the worst unemployment benefits in the developed world—that’s the problem, not trade. That the US has the highest education costs with little vocational education—that’s the problem, not trade. That the US is the most economically unjust nation among the large, modern economies—that’s the problem, not trade. I don’t understand why progressives are obsessed with trade when the elephant in the room is public policy which tolerates, in general, the problems that trade exacerbates.

65

Mitchell Rowe 04.18.09 at 8:05 pm

“It is true. Today, the poor in the developing world primarily live in huge, overcrowded cities in contrast to, a hundred years, they lived in rural areas. In these “modern” cities, they are incredibly overcrowded, in slums with poor sanitation, disease, and intense crime. Their lives are much worse.”
Keith it is not true. Did you even read my comment? I said ” Worldwide, life expectancy has more than doubled, from 31 years in 1900 to 67 years today. India’s and China’s infant mortalities exceeded 190 per 1,000 births in the early 1950s; today they are 62 and 26, respectively. In the developing world, the proportion of the population suffering from chronic hunger declined from 37 percent to 17 percent between 1970 and 2001 despite a 83 percent increase in population. Globally average annual incomes in real dollars have tripled since 1950. Consequently, the proportion of the planet’s developing-world population living in absolute poverty has halved since 1981, from 40 percent to 20 percent”
I am not making these stats up. Either respond to them or admit you were incorrect. If you can’t do either on of those things than you are not worth the time it takes to respond to your ridiculously verbose comments. Finally your comment about how people are living in urban areas now does not fit in with the rest of your argument. Why are these people living more in urban areas? Because of the sweatshops created because of global free trade. You also state that I am against global trade. I want to make it clear that this is not the case. I am for trade, but it has to be fair trade with provisions to protect labour and the environment.

66

Keith M Ellis 04.18.09 at 8:19 pm

Apparently, you confuse the number “100” with “30” and “average” with “median”. Also, people began moving to the cities long before there were sweat shops related to multinationals—not to mention that the vast majority of those living in these mega-cities are not working at sweatshops associated with multinationals. There is a great deal of literature about the worsening and appalling poverty associated with the transition from rural to urban populations in the developing world; please take time from your busy schedule to read some of it. Quality of life has little to do with infant mortality and life expectancy in the developing world. Furthermore, the very statistic that you cite about absolute poverty runs counter to your argument: the number increased from the beginning of the twentieth century until later in the second half…the period associated with increasing international trade.

<blockquoteI am for trade, but it has to be fair trade with provisions to protect labour and the environment.

In that case, we don’t disagree. I’m glad we settled this.

67

Keith M Ellis 04.18.09 at 8:20 pm

(end italics)

68

Mitchell Rowe 04.18.09 at 10:13 pm

Keith no one here is fooled by your snark. You said ““The former are living, or dying, in lives that are more impoverished, more constrained, and more horrific than they were a hundred years ago” If that is true why are infant mortality rates and life expectancies up and chronic hunger and absolute poverty down? I would argue that most of the these increases are the result of technological improvements, like the green revolution, not just trade. Finally I am going to reiterate that I never said I was against trade. I am for fair trade that puts in place rules that protect working class jobs here and helps protect labour rights and the environment overseas.

69

Mitchell Rowe 04.18.09 at 10:18 pm

hmm
not sure why that is all in italics… Sorry

Comments on this entry are closed.