The Soapbox

BonsackHoo

Joined: 11/17/2011 Posts: 3039
Likes: 5546


Finally had some time to sit down. There is a lot here.


"For example, you suggest (seemingly somewhat begrudgingly) that trade it isn't a zero-sum game, but that "the few winners are outweighed by the many losers". That is a pretty sweeping statement. I don't think that is an accurate way to look at the picture of what has truly developed in this country over the past several decades. "

I actually agree with you 100%. I don't begrudgingly say that trade isn't a zero-sum game. I totally agree that it grows the whole pie immensely. My position in one sentence: International trade system with a more progressive domestic economic policy. Grow the whole pie, but make sure that people share in that growth.

"We have some very wealthy people in this country - certainly including SF and NY - but I don't think it is anything close to "most others" being worse off by any number of ways to measure, nor is trade really just some kind of transfer from the poor to the rich. Putting aside many additional benefits of trade that flow to individuals (that you don't mention at all), just the activity of trade creates economic activity and stimulus across the spectrum in so many ways that unless you actually think about the flow of individual products, you may not recognize but absolutely exists. I would be happy to go into further detail. You state pretty clearly you think it is really more of a wealth transfer from places like Ohio to California. There are many across the labor spectrum in Ohio who have have done very well in their companies due to trade. However, there are also some key players in Ohio due to certain industries there who have been hurt -- some by changing trade landscapes, some more by automation (a big factor in steel, albeit not the only one) -- but regardless, some are hurt and they are very very vocal. Things can be very area and industry specific. One often doesn't get a full picture without diving into things literally industry-by-industry -- something that very few take the time to do. "

My original post was simplistic. It was a forum post rather than a PhD dissertation. You are completely right about it being much more complicated and that there are plenty of winners in the Rust Belt and plenty of losers on the coasts. But my main point is that the economic pain of globalization was not randomly distributed nor was it spread evenly across the country. There are specific locations that have been hit very hard. Wealth transfer has occurred from those places to places that have gained from globalization. Drive through the small furniture towns in North Carolina and tell me that wealth transfer did not occur.

In terms of the other benefits of globalization, I assume you mean lower consumer good prices? I am a millennial so I have always lived in a cheap consumer-goods world so that might affect my analysis, but cheap consumer goods honestly don't seem so great to me.

"I agree that one always has to be cognizant about a capitalist race to the bottom for anything that stands in the way of profits. Human nature is such that examples will always exist. We have seen that in individual company cases in the U.S. that may have nothing to do with trade. However, things have come a long way in so many parts of the world -- 2018 is very different than 1978 and 1988. I'd (strongly) argue that in the long run, things have changed for the better precisely because of trade and engagement, not in spite of it. We talk the most about China and I will never argue that environmental and other issues haven't existed or don't continue to exist today. But China has changed in significant ways over the past 20 years including on these specific issues There is a plethora of evidence behind this. Many people sincerely just do not want to see this. I assume you really don't believe this at all with the comment that production even today really just goes to where you "can pay people almost nothing and pollute while you are at it." Those who truly believe everything is essentially based on slave labor with a complete disdain for anything remotely environmentally acceptable -- they are ignoring the realities of 2018. A lower cost of labor and/or a higher availability of labor is not the same thing as "slave labor and a complete lack of regulation". "

I do think that it is a complete race to the bottom. Now having said that, it is more complicated than just labor cost and environmental conditions. Companies also have to look at logistical capacity, workforce education, political stability, etc. It is a complex world. But I have no doubts that all things else being equal, companies will choose the location with the lowest labor cost and environmental regulation cost.

And you say bad actors and tragedies are a thing in the past. I answer with the Dhaka factory fires in the early 2010s and the building collapse in Bangladesh that killed over a 1000 workers. Those things were less than five years ago.

"Trade and improving conditions in countries like China and Vietnam has helped transform the lives of many across the economic spectrum there, including those in the labor/working class. It has led to significant growth of exports now from the U.S. back to those countries -- still developing, but the growth is unmistakable due to rising economic conditions in those countries. That is evidence of their improving conditions and how trade can and does develop in new ways between countries over time (if allowed!). Do you sincerely not believe this? Where you see a "race to the bottom" with seemingly no standards, I see a "rising tide" economically including efforts to ensure meaningful standards are implemented. It is not perfect, there are bad examples, there are bad actors. Things do not always move at light speed and with economic and political issues along the way that cannot be ignored. However, the progress and rising tide is real. "

I do agree with you that this is the weakest point of my argument. Globalization is, in theory, supposed to cause an equalizing of world incomes over time. But why is this equalization going to be at a higher income level the developed world currently enjoys? Can't that equalization rate be at a lower point? This seems likely to me because a world-wide supply of labor is much bigger than the labor of any one country, and I have doubts whether the demand for labor will be as great in the future.

So your rising tides argument and my sinking ship argument can both be equally valid. It just depends on where it is happening.

But again, I do agree that this is the weakest part of my argument because my policies would hurt the developing world. That is why my top preference would be free trade with more progressive policies domestically. But if those progressive policies cannot happen, I would prefer to keep wages high in the United States.

"You reference setting up a system that ensures "basic labor and environmental standards". This is not a novel or ignored concept. It has always been a delicate balance of how much to demand in certain trade agreements regarding issues like exact in-country environmental requirements. In fact, this is done in many ways people don't realize - some attempts in trade agreements, some other ways where we can impose a host of things to interrupt trade based on assertions we can make on these issues. So many things are tricky to be able theoretically or fairly enforce as politics can be deeply ingrained in some of these issues. However, we try and walk that balance, and there has absolutely been more engagement and real progress on all of these fronts. Yet, it sounds like you really don't believe this -- that it is some truly pure "laissez-faire" system and in effect, a full and continuing race to the bottom for all standards -- environmental, labor, etc... This is simply not in my opinion the reality of what exists in many places today. I would really urge you to dig more on this subject or at least engage in some different directions to get a sense of what really exists out there in many places today. It may not change your mind, but you may feel a little more optimistic about the future. It isn't perfection. We should always strive to do better and not be afraid to put down the hammer when truly warranted. But it isn't the full out race to the bottom as you describe."

I think I addressed that my race to the bottom argument in my first post was an exaggeration, but that I still do think it applies.

I know that there are labor and enviromental safeguards in trade agreements...that is why I was not totally against the TPP.

In terms of reading, do you have any suggestions? I really am interested in the subject and would welcome any suggestions.

(In response to this post by fishhoo)

Posted: 07/15/2018 at 7:52PM



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Current Thread:
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  Globalization isn't the grand design of liberal economists. -- hoolstoptheheels 07/12/2018 7:46PM
  Respectfully disagree with some of your key -- fishhoo 07/13/2018 12:36AM
  I actually don’t think we disagree too much -- BonsackHoo 07/13/2018 08:26AM
  I think we are talking past each other to a degree -- BonsackHoo 07/12/2018 10:06PM
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