Obamanomics
- Posted by ryan on August 25th, 2008 filed in Economics, Policy/Politics
I was going to do this in multiple, long posts, but the time keeps vanishing so I’m just going to take one crack at the New York Times piece on Obama’s economic thought by David Leonhardt.
In the beginning, trade and the deficit:
It would make me incredibly happy if the Democrats would take trade restrictions off the table, once and forever. We can talk about how trade may have hurt some segments of the population and what ought to be done to make American workers better able to handle a dynamic economy, but it’s really beyond time that the party acknowledge that whatever the ups and downs of trade, backtracking is sure to make America and its trade partners worse off. All of which is to say I’m glad Obama has quickly left that portion of his primary campaign far, far behind.
I’m also glad that he’s not saying the deficit is a top priority. I actually think that Bill Clinton’s decision to eliminate the deficit was a good one, because he purchased fiscal credibility for the Democrats. Like so much in politics, it’s stupid that this was necessary, but Dems can credibly say they’re better on the economy, and that should give Obama a freer hand in the Oval Office. And look, there is nothing wrong with borrowing to make public investments–individuals and companies do this all the time for very good reason. If we need to spend to secure future economic growth, then by all means, we should do it.
Chicago and Reagan
Leonhardt presents Obama’s developing worldview–that markets are great but occasionally need government help, and that government programs ought to have as much of a market structure as possible–as something new and revolutionary, but it strikes me as straight-forward, non-ideological economics. Economics professors aren’t going to be like, “now listen, this is heresy in some quarters, but occasionally market failures will require regulation or appropriate taxes or subsidies, but shhhh.” They’re just going to teach market failures and efficient responses. Still, I’m glad this is where Obama is, because it’s where everyone ought to be (in my opinion).
The message is important though, and Obama continues to struggle with it. But more on that later. By the way, James Heckman’s praise of Obama is pretty sweet. Heckman has been doing amazing work on educational policy, inequality, and immobility. If you have an hour or two to kill at some point, go read all of this stuff.
Since Leonhardt next goes into a cap and trade discussion, let me say one quick thing here. This piece is (or should be) incredibly damning to conservatives who are, as the author notes, basically refusing to think or talk seriously about most of the nation’s economic issues. In a just world, the candidate trying to get it right would always beat the candidate who didn’t appear to give a flying flip. Sadly, to even suggest that is to be branded an elitist.
Taxes
A few preliminaries. The Republican tax-cut message is an incredibly pernicious force in American politics, and I hope that Obama doesn’t merely disrupt it but destroys the ethos behind it–that nothing is as good for an economy as a cut in tax rates. Also, I think it’s clear that Obama’s tax rate changes will not be damaging to the economy on net. Not at all. As Leonhardt notes, the gains among the rich in recent decades are such that after his policies take effect, the gap between rich and poor will remain far wider than it was, say, 15 years ago.
But I get nervous about taxing people simply to make them less rich. Government should be as agnostic as possible on how much wealth the rich deserve to keep. It should be focused on efficiency. If a program is needed to boost economic mobility among the poor, and the best way to finance it is by bumping up taxes on the rich, then that’s fine. I am of the opinion, however, that the government needs a better reason to take an individual’s income than “he doesn’t appear to deserve it.” We certainly need to do better by middle and lower income families. But many on the left are far too quick to assume a right to the wealth of the rich.
Grand New Party
I haven’t read it; definitely should have. Leonhardt writes:
There is, however, a more philosophical critique of Obama’s tax policies. It’s one that Douthat and Salam make in “Grand New Party.” The book doesn’t mention Obama by name, but it contains one of the best summaries of his economic policy that I have read. The authors describe a new-model liberal consensus that weds “the free-market centrism of the Clinton years to a revived push for European-style social democracy.” This neoliberalism, as they call it, wouldn’t involve the big-government programs of the postwar years, but the government would come to play a larger role in the economy and would redistribute much more income from the rich to everyone else. “This is, in many respects, a deeply un-American solution to the problems facing our country,” the authors write, “one that would emphasize dependence over self-sufficiency and bureaucratic condescension over self-help.”
Not having read it, I don’t want to inappropriately critique the authors’ arguments. Personally, I couldn’t care a bit if a solution is un-American or not, and I have a difficult time understanding why that’s even relevant. Surely what we want to know is whether an approach is effective in achieving our goals. If our goal is to reduce long-run dependence on the government, then it’s entirely reasonable to think that significant new government investments in things like education, health care, and wage subsidies might (would, really) improve economic mobility and disrupt poverty cycles that increasingly keep the children of the poor poor. If you think that lower taxes are going to fix increasing immobility, then you just aren’t paying attention.
Infrastructure and the Virginia model
One of the problems with our economy is that the idea of making appropriate investments in infrastructure is seen as novel and interesting rather than business as usual. Big investments in rail and transit, smart grids and clean power generation, information technology capacity and so on are absolute no brainers.
But let’s talk about the Virginia model, shall we? Leonhardt writes:
For much of the 20th century, Virginia was a poor state, but after World War II, with the cold war under way and the military growing, well-paying defense contractors began to sprout up around the Pentagon, in northern Virginia. By the 1970s, Darpa, the Pentagon’s research arm, began working on a computer network, which soon spawned a new form of communication: electronic mail. That computer system eventually became the Internet, and Northern Virginia suddenly had the beginnings of a brand-new industry. In recent decades, Virginia has also invested money in the port near Norfolk and has vastly expanded its colleges and universities. Today the state’s per-capita income is 7 percent higher than the national average.
There is one good lesson about the Virginia model and lots of bad ones. First, the bad ones. Virginia is a terrible model on which to base national success. If you take away northern Virginia, for one thing, you have a pretty poor, entirely unexceptional state. And it’s impossible to ascribe Virginia’s success in the north to anything other than blind luck. Virginia and Maryland have very difficult policy priorities and yet the outcomes in the two states have been basically the same. The federal government has increasingly demanded skilled workers and generated skilled off-shoot industries. Any place near the capital would have fared as well.
In fact, the real question is why Virginia hasn’t done better. Richmond, a mere hundred miles from one of the richest metropolitan areas in the country, remains a poor, slow-growth city with a lot of rotting industrial land. The tidewater area, despite all that government money, is very poor. Southside and Appalachia have seen almost no benefit from NoVa’s success. Compare Virginia to its southern neighbor, which notably does not border the national capital. North Carolina has two of the wealthiest, fastest growing metropolitan areas in the nation. The wealth in those cities is increasingly finding its way to the rest of the state, from the old industrial cities of the Triad, to the southern coast around port city Wilmington. North Carolina isn’t perfect, but it seems to have a better model than the Commonwealth. What’s the difference?
The biggest one, as far as I can tell, is how antithetical Virginia’s statehouse is to taxation and reinvestment. Richmond’s failure to fund new transportation projects now threatens growth in NoVa. Virginia is quite possibly dumb enough to kill the golden goose it just happened to wander across.
This isn’t Tim Kaine’s fault, of course, but we should be clear about the lessons involved. Growth takes work. It takes investment. A government nudge is helpful (certainly that’s the lesson of the Research Triangle), but more is necessary.
The good lesson from Virginia, as well as from North Carolina, and most of the country, is that growth is metropolitan in nature. Not every place in a state can be an economic dynamo. When you decide where to spread your resources, you need to keep this in mind. In a well governed state, people will be able to live comfortably just about anywhere, but the big jobs growth and high incomes will concentrate in only a few places. This is unavoidable. So by all means, invest in infrastructure and public services and education in rural areas, but don’t throw one huge incentive package after another at such places. Government nudges work best in cities. We should embrace that.
The Message
Obama:
I think I can tell a pretty simple story. Ronald Reagan ushered in an era that reasserted the marketplace and freedom. He made people aware of the cost involved of government regulation or at least a command-and-control-style regulation regime. Bill Clinton to some extent continued that pattern, although he may have smoothed out the edges of it. And George Bush took Ronald Reagan’s insight and ran it over a cliff. And so I think the simple way of telling the story is that when Bill Clinton said the era of big government is over, he wasn’t arguing for an era of no government. So what we need to bring about is the end of the era of unresponsive and inefficient government and short-term thinking in government, so that the government is laying the groundwork, the framework, the foundation for the market to operate effectively and for every single individual to be able to be connected with that market and to succeed in that market. And it’s now a global marketplace.
Now, that’s the story. Now, telling it elegantly — ‘low taxes, smaller government’ — the way the Republicans have, I think is more of a challenge.
In some ways, this reads like the Republicans got us close to the right balance, Clinton nailed it, and now we’ve overshot. So all we need to do is get back to the right balance. I don’t think that’s correct. And certainly, “Not No Government” isn’t exactly a winner. What Obama should say is that governing is about learning from past mistakes, of which everyone has made plenty. Reagan didn’t have it right, and neither did Clinton. And neither, for that matter, did anyone else.
What Obama wants to say is that government should build the field and set the rules so that Americans can get busy playing the game. Republicans want to fix the game, sell off the field to their buddy, and have the losing team beat up afterwards.
But everybody wants the ideology distilled into something easy. Personally, I don’t see what’s wrong with Pragmatic Economics. That, after all, was the problem with the paleoliberals, the Reaganites, and the Bushies–that they seemed to care more about the means than the ends. Obama sounds like he wants an end to ideologically driven economics, and by god I can get behind that.
August 25th, 2008 at 5:05 pm
We can talk about how trade may have hurt some segments of the population and what ought to be done to make American workers better able to handle a dynamic economy, but it’s really beyond time that the party acknowledge that whatever the ups and downs of trade, backtracking is sure to make America and its trade partners worse off.
We can take a walk around Baltimore, Cleveland, Peoria, Detroit, Flint, or any of dozens of American towns and cities that are dying, and whose citizens have no options, no relief in sight, and no one looking out for them. And we can talk to them about how they may be hurting. Or lecture them about what they need to do to handle a “dynamic” economy (whatever the hell that phrase means).
But I think you’ll have a hard time convincing those folks that backtracking to a time when a high school diploma and a work ethic gave people a shot at jobs that could support their families on single incomes, even if it meant that their purchasing options for tupperware was severely limited by today’s standards, would make them worse off.
But that’s not what this post was about, apologies for interrupting.
August 25th, 2008 at 5:19 pm
I’m not exactly sure what you’re getting at. I certainly don’t think we need to lecture those individuals and I certainly do think quite a bit can be done to help them. Backtracking on trade will NOT help them, but it will make a lot of people a lot poorer. There used to be a lot of middle class clerking jobs that were eliminated by computers. Should we get rid of computers?
Trade isn’t the reason Detroit is like Detroit is, and generations of politicians ought to be ashamed of themselves for telling people it is. Not only are they lying, but by refusing to grapple with the issue honestly, they prolong the rust belt’s pain.
August 25th, 2008 at 6:05 pm
Argh, time’s too short to reply in full, I’d love to come back to this. But as to this:
Should we get rid of computers?
Yes, the sooner the better.
August 25th, 2008 at 6:18 pm
I agree, but do you really think what we’ve got in our budget is $500 billion worth of investments?
Even if you consider that all non-defense discretionary spending ($411B) represents investment, which I don’t, we’re borrowing more than that. So you must believe that either entitlement spending or defense spending represents investment, or that some deficit spending for consumption is acceptable.
Do you know companies that borrow money for current wages or cost of good sold? Do you think it’s wise for a family to continually borrow for consumption?
I think the argument that we can borrow to invest in infrastructure or human capital is a good one, but that’s not really what we’re doing.
August 25th, 2008 at 6:23 pm
I’m explicitly contrasting deficit spending on investments with deficit spending on pure consumption (which the Iraq war, crassly but accurately, can be considered).
I’m saying that if Obama wants to prioritize infrastructure investment over deficit reduction, then that’s fine by me.
August 25th, 2008 at 8:06 pm
Cool, but how do you get there from here? If you eliminate the Iraq war, we’re still going at least $200B in the hole per year. Do we continue to borrow for the other consumption?
If we want to make infrastructure investments, do we raise taxes or cut other spending, or do we increase the deficit even more?
These are tough calls, I know. But I don’t think it’s cool to just wave our hands and say, “When the Iraq war is over, our deficit problems are solved”, or “We’re deficit spending for infrastructure investments.”
August 25th, 2008 at 8:34 pm
Well, I should say that I don’t think the deficit is that big a problem. It isn’t unsustainable at this point, and if the only changes we made were to cut out the Iraq war and add infrastructure investment, then we’d be in good shape–more rapid economic growth would probably erode the deficit over time.
But those aren’t the only changes we can expect, and so there are eventually going to be some real budget issues. Personally, my preference would be to adopt a VAT which would, in the short term, facilitate investments in infrastructure and education as well as the added costs of government health insurance, and which would ultimately be used to supplant the income tax (as we resolve budget issues).
August 26th, 2008 at 10:11 am
OK, I get your point now. After all, even though we borrowed 109% of one years’ GDP during WWII to pay for the war effort, we never “paid it back” through running a surplus. Instead, we made it so that all the money we borrowed was less than 20% of GDP. We were fine by the time Reagan was elected.
It’s a matter of what level of interest costs you’re willing to bear. With debt of 50% of GDP and interest rates of 5%, then we have to devote 2.5% of GDP, or about 13% of federal revenues (around 19% of GDP) to interest. I don’t know where the line is for where that gets to be a problem.
August 26th, 2008 at 12:22 pm
Before I respond, just wanna apologize for the quick (and unclear) reaction, I realize your post wasn’t about this. Trade’s not the focus of the post, or the blog, and I don’t even think it’s necessarily fair to expect a response.
That said, here’s my problem with this:
We can talk about how trade may have hurt some segments of the population and what ought to be done to make American workers better able to handle a dynamic economy
Let’s talk specifically about Baltimore. We’re not talking about a few clerking jobs that were made redundant by computers. There was shipping, a shipwright industry, a Bic lighter plant, and a Chevy plant where Astro vans were made (among other major employers).
Those jobs didn’t require a college degree, and the wages they paid could support a family, as well as supporting other businesses in the community. Those jobs are gone, they’re not coming back, and the cashier jobs at the shiny new Inner Harbor aren’t going provide living wages to those families.
So what to do, retrain everyone as software engineers, copy editors, graphic designers and PC techs to support our new, high tech economy? That won’t work, those all require a level of education that’s not there. My pop’s done some work at a couple tech-oriented adult-education organizations, one that mostly took folks using their unemployment retraining benefits to learn how to repair PC’s. Not everyone, or even a majority of folks, in those programs are prepared to understand how a file gets saved on a hard drive. And even if they did, how many PC techs can Baltimore really support?
So, thing is, whenever I hear free traders talking about how things are much better, there’s usually a small nod to the fact that there will be some “pain”, which is a bloodless, abstract way to say that people and communities will suffer a long, slow death spiral and families will bear the brunt of this economic realignment.
And then there’s a minor mention of a vague notion of how the winners should be obligated to use some of those winnings to mitigate this pain, but it’s rarely more than a footnote and the actual effects on actual people are never made the focus of the problem.
How many times have you heard economists say something like, “Ya know, free trade is going pretty well and lots of people are studying various aspects of that. What I really want to do now is focus on what we’re gonna do for the folks that got screwed on the deal.” Maybe it happens a lot and those folks just aren’t getting enough press.
(In the interest of disclosure, my family’s from Peoria, I have a lot of Caterpillar on both sides, and I admit to being biased, but I’m open to having those biases shattered.)
So that’s the kernel of it, but like I said, it’s not what this post is about so please don’t feel obligated to respond to it if this isn’t a discussion you wanna engage.
Cheers.
August 26th, 2008 at 1:04 pm
A few points. One is this is an important subject to economists, who spend a lot of time with the numbers and have a very good idea of the stakes involved. They often forget that regular folks pay a lot of attention to the visible pain of trade shifts and largely ignore the many invisible gains from trade.
Second, economists are constantly frustrated and mystified by the extent to which trade is treated as a special economic force. Computers weren’t some small labor market phenomenon. The effect of IT on mid-level, mid-skilled positions has been incredibly dramatic. And well before the great migration of industry to China, there was a great migration of industry to the rural south. Should we have prevented firms from leaving New York for South Carolina?
The seeming anti-foreign bias, especially among liberals, is especially disheartening. Sure, China has a lot of bad stuff going on. All the same, export led growth in China has pulled hundreds of millions of people up from $1 a day positions to something resembling a first-world life. That’s a huge amount of reduced suffering. And that’s relevant.
Next, economists talk about this stuff to the public in a particular way, because public opinion is often hostile to trade. Many economists acknowledge the costs of trade shifts, but there is pressure in the field not to mention these things because laypeople will hear “there are costs” and think “trade is bad and should be rolled back.” Which is false. But many economists recognize the political failure to provide appropriate transition assistance where it’s needed, and they try to get those policies improved.
Finally, it’s not going to be necessary to make every former shipwright a computer programmer. They may have to work in a service trade, which might not seem to suit a lot of people, but the unfortunate truth about life is that no one is owed a particular type of job in a particular setting. Jobs, firms, and industries go bust for a lot of reasons, and we can’t and shouldn’t protect them. Manufacturing employment is declining, just as agricultural employment declined before that, and trade is only one factor of many behind the shift.
But we should do a lot more to invest in people and in cities. That’s the real crime in places like Detroit and Baltimore. Trade didn’t kill those towns, neglect did. Apathy did. An unwillingness to make the necessary investments did. Trade is just a convenient scapegoat, too often used by those who should have been minding the ship.
August 26th, 2008 at 2:24 pm
Thanks for the response. I’d like to respond to some of the points, and they’re from the other side of the argument, but please don’t take it to mean I’m just being obstinate.
They often forget that regular folks pay a lot of attention to the visible pain of trade shifts and largely ignore the many invisible gains from trade.
If by “pay a lot of attention to the visible pain of trade shifts” you mean struggle to provide for their families, living desperate lives that often involve alcoholism, drug dependency, and domestic abuse, and live in perpetual fear that their precarious existence could become a living catastrophe if one of the kids gets pneumonia, then yes, lots of regular folks are “paying a lot of attention”. And it should be noted that those conditions make it difficult to appreciate gains that are abstract.
The standard line on this is that the Winners from free trade didn’t live up to their obligations to take some of those winnings and re-invest in American labor/industry/retraining/etc. I’d say they lived up to exactly what they’ve always been all about, and thinking that it was going to turn out otherwise, especially with most Washington beholden to Wall Street, is unrealistic.
The seeming anti-foreign bias, especially among liberals, is especially disheartening. Sure, China has a lot of bad stuff going on. All the same, export led growth in China has pulled hundreds of millions of people up from $1 a day positions to something resembling a first-world life. That’s a huge amount of reduced suffering. And that’s relevant.
Do you think that it’s nativist or racist? Or do you think it has something to do with the fact that offshoring manufacturing is understood by liberals and labor interests alike as being a convenient way to get around labor and environmental laws, and as a powerful lever for doing wage arbitrage at home? Or perhaps that people aren’t sympathetic to the chummy relationship between Western Capital and the authoritarian Chinese government, and feel that cooperating in making this authoritarian government economically powerful might not be such a great thing?
Also, why is it incumbent on us to save the Chinese exactly? They’re a 5000 year old civilization, we’ve been around for not even 300, whence our responsibility to lift a billion people out of poverty at the cost of our economy and communities? And if that really was our mission, to feed and clothe the world, couldn’t we have done it some other way than sacrificing our manufacturing sector? And why do we have an obligation to be the dumping ground for the 3rd world’s surplus manufacturing capacity?
They may have to work in a service trade, which might not seem to suit a lot of people, but the unfortunate truth about life is that no one is owed a particular type of job in a particular setting.
So those who aren’t smart enough or affluent enough or good looking enough to become academics or tech workers or television personalities should all get in line and be thankful for their McJobs and try not to beat their spouses or children or join paramilitary sects when those service jobs turn out not adequately support their family? We’re all destined for the kitchen or the cubicle or the call center and there’s just nothing that can be done about that?
You do see, I’m sure, how this line of argument isn’t going to go over well, and how some of us might not be as willing to go along with it.
Jobs, firms, and industries go bust for a lot of reasons, and we can’t and shouldn’t protect them.
Except for banks, right? And mortgage lenders. And other investors. And defense contractors. But other than that…
Seriously though, aren’t there dozens of examples of industries that were protected vigorously by the governments of the countries in which they were cultivated, with positive results? Isn’t that the story of the rise of England’s manufacturing base, and then ours?
Trade didn’t kill those towns, neglect did. Apathy did.
No, people did that, Apathy and Neglect are concepts. Capital was never all that into having to cooperate with Labor to get a return on their investment, and when it became possible to do it they sold us out. I mean, ya know, it’s just business, right?
Anyway, apologies again for being a cantankerous beyotch about trade generally, clearly I don’t understand it to a sufficient depth to appreciate the positives. My experience of it, from about the 70’s going forward, is that it’s been very good for margins and concentrations of wealth worldwide, not so great for labor here. I’m sure it is better for workers in foreign countries, although it seems like we give a lot of business to manufacturers who treat their workers like we did a hundred years ago.
August 26th, 2008 at 3:03 pm
A great piece in the Times, and a great blogpost. I can’t wait for Obama to be President.
August 26th, 2008 at 3:12 pm
There is a difference in abstract and not necessarily obvious. The gains from trade are not abstract. This is not really in dispute. A shuttered plant is big, obvious. Trillions in savings and increased incomes spread across millions of people and decades isn’t easy to put one’s finger on. But it’s real.
A lot of people struggle to provide for their families for reasons that have nothing to do with trade. Should we guarantee them the job of their choice? No, that would be stupid. Economies are dynamic. They shift. This is the way things work. What we do is provide a safety net and help them to find other work. Otherwise the economy ceases to become dynamic and it doesn’t shift, and we all get a lot poorer.
It’s not incumbent on us to save the Chinese. It’s in our interest to trade with them. It’s lovely to tell them they ought to just develop on their own without trade–nevermind that no one else managed to do it like that, including us. And the Western Capital thing just doesn’t reflect reality. That capital is your savings and your neighbor’s pension, used in industries that manage to provide a lot of quality employment here in America as well as in China. And forget China–what about India? Or what about Ireland, which used to be dirt poor but grew rich in the 1990s by opening its markets and competing based on low wages? Or what, for that matter, about towns in the rural south who’ve attracted jobs from more expensive places elsewhere? To say that because we can’t form a political majority here in America in favor of an adequate social safety net that we have to close our markets to the poorest people on earth is beyond selfish. It’s evil.
You write:
So those who aren’t smart enough or affluent enough or good looking enough to become academics or tech workers or television personalities should all get in line and be thankful for their McJobs and try not to beat their spouses or children or join paramilitary sects when those service jobs turn out not adequately support their family? We’re all destined for the kitchen or the cubicle or the call center and there’s just nothing that can be done about that?
This is a very impoverished view of the economy. There are plenty of jobs out there that don’t require super intelligence and that pay well. With affordable training a lot of people could occupy those positions. Are they in cubicles? Quite possibly! So what? We may romanticize working in some mill, but for a lot of people, that kind of environment is the pits. Jobs is jobs. I hate working indoors, but that’s what I do, because that’s how I pay the bills. No one is owed a job in a factory any more than they’re owed a job in a magic castle.
No, there are not lots of examples of people protecting industries and enjoying ridiculous success. There are some examples of places protecting industries and having it all work out for totally unexpected reasons. And there are an uncountable number of examples of places that protected industries and subsequently enjoyed economic disaster. And there are a lot of dark, dark periods in our history when economic nationalism has produced terrible wars and poverty.
I don’t have much time for class wars and marxism. The truth is we’re all capital and we’re all labor. And the truth is, free exchange of goods and services isn’t the enemy. If someone sells you a shitty car, you don’t say cars suck, you say this happens to be a shitty car. Well, our government hasn’t taken the appropriate steps to make a dynamic economy work for everyone. That doesn’t mean dynamic economies suck, it means our government failed us.
Because of developed nation openness, China and India are growing rapidly. That’s going to be almost half the world’s population that used to be dirt poor and isn’t any longer. The transition isn’t necessarily comfortable, but the outcome is worth it. It’s wonderful for us to have a rich Europe or a rich Japan as trading partners. We love it. A rich China and a rich India will be the same. And this is how we get there.
August 26th, 2008 at 4:55 pm
To say that because we can’t form a political majority here in America in favor of an adequate social safety net that we have to close our markets to the poorest people on earth is beyond selfish. It’s evil.
I disagree, actually I think it’s a reasonable pre-condition. If the world needs our blood to live, that’s fine, but it shouldn’t have to come from our slit throat. If we’re going to open ourselves up to competition from the poorest economies in the world, why shouldn’t that safety net be a requisite part of the deal?
I also disagree with the idea that I’m evil because I care about my family and community. And given the things that have been done in developing countries by Western corporations in the name of business, I think a discussion of what’s “evil” is beyond this scope. Suffice it to say that I don’t think that “lifting people out of poverty” was even on Fruit of the Loom’s top 20 list when they closed their Kentucky plants and moved them out of the country. Saving a dime on each pair of briefs was really what that was about.
There are plenty of jobs out there that don’t require super intelligence and that pay well. With affordable training a lot of people could occupy those positions.
Haven’t seen this demonstrated, yet. Have seen lots of places close American facilities, move them overseas, and leave the communities devastated. But I’m looking forward to seeing this hypothetical retraining-for-the-plenty-of-good-jobs-out-there framework kick in. Flint would be a great place to start.
I hate working indoors, but that’s what I do, because that’s how I pay the bills. No one is owed a job in a factory any more than they’re owed a job in a magic castle.
Ah but you have that choice, don’t you. I’m not saying anyone’s guaranteed anything, but I can say for a fact that a lot more of us, at many levels of wealth and education, had a lot more options for how the bills got paid.
I don’t have much time for class wars and marxism. The truth is we’re all capital and we’re all labor.
That can only be true in the most abstract, academic sense. You can try peddling that ownership-society, everyone-has-a-401k shtick to someone else.
And the truth is, free exchange of goods and services isn’t the enemy.
No, but basing every policy on whether or not it’s good for business, and whether the pie gets bigger or not, without regard for who’s getting the slices, how big they are, and the leverage being exerted on people by the folks controlling them isn’t our friend, either.
Well, our government hasn’t taken the appropriate steps to make a dynamic economy work for everyone. That doesn’t mean dynamic economies suck, it means our government failed us.
And in this country, our government is us, so we did this to ourselves, right?
But wait, “our government”, if it’s us, failing “us” doesn’t make any sense, so it must be that the government favors some interests more than others, and it sure seems like those favors fall, more frequently than not, on those very few who control the vast majority of the wealth.
I’d opine that whether you have time for class wars or not, it doesn’t mean that they aren’t happening. But that’s just the view from down here.
But beside that, your analogy that “cars don’t suck, the one you were sold does” implies that it’s not free trade that’s left us in this lurch, it’s the kind of free trade that’s been practiced so far. I’ve heard this before, but it sounds a lot to me like, “it’s not that conservative doesn’t work, it’s that it just hasn’t been done right yet”, or “I supported the invasion of Iraq, just not the way they did it.” I don’t buy that there’s as much separation between the ideal free trade and the way it’s been done as has been suggested.
The transition isn’t necessarily comfortable, but the outcome is worth it. It’s wonderful for us to have a rich Europe or a rich Japan as trading partners. We love it. A rich China and a rich India will be the same. And this is how we get there.
It’s this kind of phrase that makes me clench. What exactly is “the transition” that Baltimore, or Cleveland, or Peoria is going through? Other than the transition from “vibrant middle class centers of industry” to “permanently poor, wasted shells of cities where Hope comes to die.” What’s at the other end of the transition? “Not necessarily comfortable”? Really?
But that aside, doesn’t the term “trading partner” assume that we’re, ya know, actually trading something? If all we’re trading is wealth for goods, and we’re doing it almost entirely on credit, it sure seems like this is unsustainable, and will shortly ruin us.
Again, I do appreciate the effort to educate someone who must seem like a hopelessly nativist luddite, I hope this isn’t too tedious.
August 26th, 2008 at 5:16 pm
We trade quite a bit. Exports are currently the only thing keeping us out of recession.
Just as you can’t get an accurate picture by only focusing on the positive, you can’t get an accurate picture by only focusing on the negative. Absolutely, Flint is ugly. A lot of other places aren’t. And a lot of places are ugly for reasons that have nothing to do with trade. We shouldn’t point to Flint and say trade is bad, and pretend like everything else in the country doesn’t exist. My hometown, of Raleigh, North Carolina, has performed marvelously in recent decades, generating broad-based economic growth with much of a manufacturing component, in industries that rely heavily on foreign markets. The key is to identify the differences between Raleigh and Flint, learn from them, and invest appropriately.
I strongly suspect that quite a few people in Cleveland and Baltimore would clench their teeth if you told them their cities were hopeless shells. They are not. In many ways, their futures look brighter than they have in years.
Without trade the world is a much different, much worse place. Trade generated the wealth we have today. Some people may argue that it hasn’t been worth it, but Human Development statistics argue otherwise.
There are some very good books on the subject out there. You might try Paul Krugman’s Pop Internationalism, for instance.