
Populism and the Economics of Globalization [pdf] - sukruh
https://drodrik.scholar.harvard.edu/files/dani-rodrik/files/populism_and_the_economics_of_globalization.pdf
======
candiodari
It is too easy to forget that when a person is employed at $100k-$200k per
year in the Bay Area, you want things like stopping climate change, more
parks, more air, fair treatment, and above all, peace and prosperity.

When making $30k with absolutely zero hope of real increases in Atlanta being
a warehouse worker for an industry that's disappearing, the same person would
burn all those things down, I would have said to get $10k more per year. Today
I would say, getting an extra year at $30k is enough to justify the burnings.

We should think a bit more about Maslow's hierarchy. If you can't give people
a decent living first, they will revolt if you try to "make them matter" or
try to reach these lofty goals. You might think that wage improvements don't
matter if we don't fix the climate, but the exact opposite is true.

I'm not making the point that the climate isn't worth saving, racism doesn't
need solving if we can't fix poverty and "underemployment". I'm saying that we
won't succeed unless we fix that ... first.

Globalism produces beautiful iPads. But global average wage is $2k ... not per
month. Per year. If you're average, working in a non-booming industry, and of
course most people are exactly that, that is a terrifying prospect. The sad
part is ... yes killing globalization will make us all worse off, in terms of
the country's GDP. But it will lessen the gap between the 1% and the 99% (note
that 2% is $97k per year, and as such anyone working in the Bay Area in IT is
likely at least in the top 2%). Of course, mostly by making the 0.1% - 50% a
LOT worse off (that's anyone making less than about 2.6 million per year and
more than $56k. Even in the Bay Area, that's probably C-level wages).

~~~
api
I've started thinking of it this way:

"It's better to reign in hell."

Poverty is worse than most natural disasters and worse than most of the
predicted consequences of climate change. I'm willing to bet that the infant
mortality rate in Miami is lower _during a category five hurricane_ than it is
in a crushingly poor society in perfect weather.

People will burn the world to escape poverty. It's better to reign in hell.

Poverty is also relative due not only to the hedonic treadmill effect but to
relative differences in cost of living. An American cannot even eat on
$2k/year and in many places you need a minimum of $40k+ per year to afford
basic housing. We have an inflationary economy, which means that anything not
increasing is decreasing. You can plunge a first world person into poverty by
just not inflating their wages for a while. Now add a ridiculous debt load and
high unemployment.

This is why we need to drop what I call "abstinence based environmentalism."
The _only hope_ that we have of evading a global environmental catastrophe is
paradoxically to increase wealth and standard of living as much as possible.
Not only does this make people open to conservation but it also reduces birth
rates. Trying to deny wealth to conserve resources will have the paradoxical
effect of promoting short term greed and increasing birth rates. It will also
lead to conflict and destabilize the international political order, making
large scale cooperation on global environmental challenges impossible.

First world morons who romanticize poverty drive me nuts. These folks are
either hopelessly naive, delusional, or crypto-elitist. I heard it put this
way once: "Rap music comes mostly from poor inner city neighborhoods. That's
why it's full of references to money and getting rich. Poor people know that
money actually does matter. Only rich people can afford the luxury of not
caring about money." I forget where I read that (years ago) but it's spot on.

~~~
keenerd
> An American cannot even eat on $2k/year

Baloney. It is easy to stay under $1.5K/year per person and that includes a
pound of fresh fruit/veg each day. I've never even tried to save money either;
no coupon clipping, no buying in bulk. Learn to cook. With a small amount of
practice you'll be "fast enough" too, where it'll take less time for you to
cook/clean than to eat out.

~~~
api
Where do you live? Even in little towns and with shared housing the rent is
going to be >$10k/year. In larger cities you can forget about it. Detroit is
probably the best real estate bargain in America, and you can't live there on
$2k/year.

~~~
keenerd
Um what? We are talking about _eating._ You know, just food expenses. No one
eats real estate unless you are Godzilla.

------
clavalle
The trouble with economic globalization is that we assumed that markets work
and work well all over the world. That there would be an inevitable stable
middle class built from the sheer power of market forces.

It turns out that those in power around the world have every incentive to keep
the gains to themselves and keep their population desperate -- desperate
people have to weigh their economic decisions against their physical well-
being and continued existence and play the game not to gain power but not to
lose everything. And our answer in the US seemed to be that the market is
always right; if parity can't be achieved by lifting the poor around the world
up to a near-US level of middle class, then it must be reached by pushing the
middle class in the US down to desperation level and reducing our overhead to
compete on a world stage where other leaders in power can more easily ignore
the negative externalities that they push on their population.

It was, in a word, stupid.

It is too easy for the wealthy of the greater world to ignore the problems
they create at home by being 'citizens of the world'.

I don't agree with Trump on much but I do agree that relying upon the market
to fix all ills hasn't worked. We need to flex the economic muscle we have and
tie trade to political reforms or find a way to bypass the powers that be and
pull up the people directly. Otherwise, we are stuck in a race to the bottom.

~~~
Brakenshire
> I don't agree with Trump on much but I do agree that relying upon the market
> to fix all ills hasn't worked. We need to flex the economic muscle we have
> and tie trade to political reforms or find a way to bypass the powers that
> be and pull up the people directly. Otherwise, we are stuck in a race to the
> bottom.

Yes, you have to have some common standards which undercut a race to the
bottom, otherwise countries will compete by undermining each others protection
and welfare systems.

But you're implying that Trump believes this? Trump has always struck me as a
'cut regulation at all costs' candidate. And the real deal which must make
this work will have to be international - perhaps to build these common
standards into the trade deals. But Trump again stands directly opposed to
that, he wants a 'my country first, beggar thy neighbour' solution, which
cannot be sustained.

~~~
clavalle
Fair points. I don't know what Trump's actual policy is when it comes to trade
deals I was making (bad) assumptions on the fact that he backed out of or
signaled backing out of some trade deals that relied too much on market forces
doing the reform work for us.

~~~
smpetrey
Trump (err well, The Whitehouse and his staff) don't have a policy on trade
deals at the moment officially.

But the GOP do. Some notables include:

"International trade is crucial for our economy." [1]

"Negotiate reductions in tariffs on U.S. industrial goods and the elimination
of other trade barriers so that our autos, heavy machinery, textiles, and
other products will no longer be shut out of foreign markets." [2]

"Advance a Free Trade Area of the Americas to take advantage of burgeoning new
markets at our doorstep." [3]

Interesting to see how GOP ideals are forced to evolve at the helm of a madman
president because the quoted text above around a decade old.

[1]
[http://www.ontheissues.org/celeb/Republican_Party_Free_Trade...](http://www.ontheissues.org/celeb/Republican_Party_Free_Trade.htm)
[2][3] Ibid.

------
rayiner
The discussion on 4-9 is worth looking at. Among policymakers on both sides of
the aisle, there is this reflexive recitation that trade increases economic
efficiency. While that's true, that assumes the purpose of national policy is
to increase economic efficiency. To the contrary, the mandate of politicians
in a Democracy is to improve the welfare of the majority of voters.

Likewise, the discussion on 13-15 is important. People don't like the idea of
valued social progress being undermined by unfair competition. There is an
intuitive appeal to the idea that workers in America or Germany shouldn't have
to compete with workers in countries where child labor is accepted and
environmental standards are non-existent.

People wonder why boring trade policy becomes such an emotional thing, and the
article does a great job of explaining why. The reason is not just
scapegoating, as apologists of globalism assume. Rather, there is a deep-
seated belief that citizens of the world types simply don't share our most
basic values: that the government exists not to advance ideals, but the
welfare of the polity; that social advances that are widely celebrated in the
western world are worth more than economic efficiency, etc.[1]

[1] There is a reason even Trump campaigned on cleaning up the air and water.
Even Americans who think the EPA or OSHA or DOL are out of control wouldn't
tolerate the labor and environmental standards that exist in Bangladesh or
China.

~~~
pcwalton
> There is a reason even Trump campaigned on cleaning up the air and water.
> Even Americans who think the EPA or OSHA or DOL are out of control wouldn't
> tolerate the labor and environmental standards that exist in Bangladesh or
> China.

Trump says anything and everything, and his words effectively have no meaning
at this point. To name one example out of thousands, Trump also campaigned on
making more people insured, which is clearly not something he has any interest
in actually doing.

Rather than looking at Trump for an example of the rightmost side of the
"Overton window" (much as I dislike that term) on environment, I would look at
politicians like Ted Cruz. Cruz has effectively never said anything about
cleaning up the air or water. I think that doing absolutely nothing about the
environment is much more popular of a position than you imply. Anti-
environmentalism is even a religious concern for many Americans.

~~~
rayiner
I'm not talking about the Overton window, but what sorts of policies you can
get significant support for among actual Americans. There are certain issues
like climate change that have become lightning rods, but there is broad
consensus on other issues. For example, 52% of Republicans polled stated that
the country "should do whatever it takes to protect the environment." Pew:
[http://www.pewresearch.org/fact-tank/2017/04/20/for-earth-
da...](http://www.pewresearch.org/fact-tank/2017/04/20/for-earth-day-heres-
how-americans-view-environmental-issues) (down from ~67-70% in 2005). A
majority even of republicans want stricter air quality standards for many
pollutants: [http://grist.org/climate-policy/2011-02-16-public-trusts-
epa...](http://grist.org/climate-policy/2011-02-16-public-trusts-epa-loves-
clean-air-act-wants-congress-to-butt-out).

------
notadoc
You mean exporting the middle class and then undercutting upward mobility was
doomed to face a political backlash? What a surprise.

~~~
justicezyx
Agree 100%

No matter how many ways to justify, the wealth and power enjoyed by a few are
simply irrational.

Edit: the wording is difficult, but all replies below have the same idea. Or I
should rephrase it to: the absurdity of the wealth and power enjoyed by people
grows exponentially with their rank in the social ladder. The ideal probably
should quadratically.

~~~
candiodari
You do realize that while the 1% doesn't include all IT workers in the bay
area, the 2% does (I believe 1.6% is 100k per year before tax).

It's easy to complain about the 1%, but most people on this site ... are the
1%. Median household income in the US is $55,775. That means, about half of
all US households have less than that. [1]

By and large, it's not the wealth enjoyed by the few. It's the comfortable,
but probably not excessive wealth enjoyed by millions.

[1]
[https://en.wikipedia.org/wiki/Household_income_in_the_United...](https://en.wikipedia.org/wiki/Household_income_in_the_United_States)

~~~
deepnotderp
It's not even the "1%", it's the "1% of the 1%", Zuckerberg is great no doubt,
but does he really deserve 2000X as much as a high level machine learning
researcher?

The issue is that ~6-8 people in the world own the same amount of wealth as
the bottom 40% of the world, that's not because of eight software engineers
making $100K.

~~~
Brakenshire
> The issue is that ~6-8 people in the world own the same amount of wealth as
> the bottom 40% of the world,

Broadly speaking, isn't this because the bottom 40% of the world don't have
savings? The statistic seems misleading. You could have 1 dollar, and you'd
have greater wealth than more or less everyone in the world with a mortgage.

~~~
claudiulodro
A mortgage generally comes with a house (an illiquid asset).

If you have a buck you do have more wealth than pretty much anyone with
student loans, though.

~~~
Brakenshire
Oh yes, you're right, so not a mortgage, but someone renting, with no savings,
and a credit card debt or as you say, a student loan.

That is a problem - for a lot of people, that will mean little to no leeway
when things go wrong - but that's not the point that most people are making
when they use that statistic.

------
sr2
For those who don't want to click, here's the abstract:

> _Populism may seem like it has come out of nowhere, but it has been on the
> rise for a while. I argue that economic history and economic theory both
> provide ample grounds for anticipating that advanced stages of economic
> globalization would produce a political backlash. While the backlash may
> have been predictable, the specific form it took was less so. I distinguish
> between left-wing and right-wing variants of populism, which differ with
> respect to the societal cleavages that populist politicians highlight. The
> first has been predominant in Latin America, and the second in Europe. I
> argue that these different reactions are related to the relative salience of
> different types of globalization shocks._

~~~
justicezyx
Not sure why quote works like this, but it's very difficult to read on a
phone.

~~~
wtallis
This being Hacker News, the indented block quote is styled appropriately for
code, which you want presented in a monospaced font without extra word
wrapping. Quotes of prose are better off set in italics instead.

------
dragonwriter
It wasn't only predictable, but, in the US, its not even _new_ ; it's been a
significant, powerful feature of the political landscape and since almost
precisely the time the Democratic Party leadership was conquered by the
neoliberal/DLC Third Way movement led by Bill Clinton. (Remember H. Ross Perot
and the campaign that launched the party under whose banner Donald J. Trump
would launch his _first_ Presidential run in 2000?)

It's had limited _policy_ impact because the electoral system limits the scope
of viable alternatives and both major parties have leveraged other divisive
issues to keep the wide opposition to neoliberal policies from being
electorally decisive.

The only real question given the durable and strong opposition in the
electorate (cutting across the usual left/right divide) to neoliberal
globalization, was which major party would, rather than diverting from that,
harness the opposition by nominaing a candidate willing to at least
rhetorically reject the neoliberal globalist elite consensus first.

~~~
sjg007
Bernie vs Trump would've been great.

~~~
Mikeb85
And Bernie would have won. But the Dems shot themselves in the foot by
basically ignoring Bernie's voters, and continuing with the status quo. The
reason Trump won is because whether or not anyone actually believed he could
fix their problems, he was the only candidate left who acknowledged the
existence of their problems.

------
pillowkusis
I don't like the use of the word "predictable".

I would qualify this populist uprising as a Black Swan[0], and as Taleb
describes in his book, one of the common reactions to a black swan is to
rationalize it's obvious predictability after the fact.

Were there logical reasons to believe this populist uprising would occur? Of
course (and this paper does a good job exploring them). Was it predictable? I
don't know. By and large most of us did not predict it, so I'm not so sure.
Only with hindsight is this outcome "obviously" predictable.

0:
[https://en.wikipedia.org/wiki/Black_swan_theory](https://en.wikipedia.org/wiki/Black_swan_theory)

~~~
candiodari
I would argue quite the opposite. It's not a Black Swan at all. It's an
entirely predictable outcome that is caused by the incentives of large groups
of people.

E.g. when people say "software is eating the world", that really means
software engineers, like most people reading this site, are taking away the
means of existence of hundreds millions of people. In the US, but much more so
outside of the US.

Can you really call it a black swan when

1) you see it coming

2) it is perfectly clear what can be done (e.g. killing globalization and
stopping people movement around the globe, as is being advocated, yes it's
racist, yes it's going to kill GDP and in that sense "make us all worse off",
but it's hard to deny that it will help. Not in the way we want it, it'll kill
our access to ipads, and force inferior alternatives in many ways. But it will
help)

3) you will not cooperate with preventing the black swan, even yourself,
because of incentives (you would lose your job)

4) ...

This "populist uprising" is a feedback loop that's just barely getting
started. It is currently absolutely not worth the word "uprising". A few
republicans got elected. Sorry to point this out but that won't be the end of
it. It hasn't even begun.

We'll need to be very lucky to avoid another war.

~~~
geodel
You have made very relevant arguments. I have same opinion about happening in
my country (India) where middle class by media is defined as top 5-8% of
population. Anyone lower survive on most basic food and housing. But with
onslaught on low end tech jobs even the sector which mostly benefited from
globalization is going to get crushed there. We are indeed heading toward
turbulent times in most of the world.

------
justforFranz
1\. Labor has no pricing power.

2\. All the spigots for cheap labor & goods have been on full blast with no
real sign of slowing - at all.

3\. We can't have a mature conversation in this country about adjusting the
pace of change in society. It's basically whatever capital wants, capital
gets.

4\. Since productivity gains were decoupled from labor's wage increases in the
late 1970's, the notion of "getting ahead" by working & providing labor is
ultimately an exercise in irony.

5\. Ameliorating these concerns by replacing them with race antagonism is
deeply stupid.

6\. Fundamentalism of all religious stripes is a conservative reaction against
encroaching modernity, globalization & cosmopolitanism - which upsets local
power hierarchies & is a threat to the status quo.

7\. We need labor power with continued, but this time _measured_ international
engagement. Isolationism won't work and is an over-reaction.

------
Mikeb85
The biggest problem with Globalisation is that it doesn't contribute to global
economic development. It merely outsources manual labour and less
profitable/desirable work from rich countries to less-developed countries
because of the price difference in labour.

Growing up I always imagined a world where the big cities of Africa could be
just as developed as those in Europe, Asia or America. Instead we've been
given a new form of colonialism where developed countries take the best minds
from the developing world, and outsource all the work we don't want to poor
countries.

This of course hurts our working class, as well as contributing nothing to the
actual development of poor countries. So it's really no surprise that our
working class is rebelling, as well as creating unrest in the developing
world.

~~~
haltingthoughts
You sure that globalism has contributed nothing to the development of poor
countries?

The number of people in poverty has decreased drastically over the past half
century. Do you have any other candidates other than trade liberalization?

[https://ourworldindata.org/extreme-
poverty/](https://ourworldindata.org/extreme-poverty/)

~~~
Mikeb85
That's a terrible definition of extreme poverty. Also, inequality matters.
It's nice that the crumbs poor people receive are getting bigger, but things
like social unrest, wars, revolutions, crime, famine are due to inequality and
unequal distribution of resources. Being poor isn't a problem by itself, it's
the other things that come with it which are a problem.

Having cell phones and making more than $1.90 per day didn't prevent the
revolutions in Libya and Syria, and subsequent deaths/displacement of
millions. Actual development and reducing inequality is massively important.

~~~
haltingthoughts
How is that a terrible definition? What do you propose?

What metric do you want? Infant mortality? Life expectancy? Subjective
happiness? Unrest? Hunger? Global inequality? All of them are drastically down
globally.

Within country inequity? Flat.

[https://ourworldindata.org/happiness-and-life-
satisfaction/](https://ourworldindata.org/happiness-and-life-satisfaction/)
[https://ourworldindata.org/income-
inequality/](https://ourworldindata.org/income-inequality/)

------
the_cat_kittles
just a minor gripe: _was_ predictable is lame. you either predict the future
or you dont. you dont say that you could have predicted it. i get the point of
the article, but its lame when people try to act like the "could have
predicted" something, because they are using the fact that it happened.

~~~
nopinsight
To be fair, the paper's author published a book titled "Has globalization gone
too far?" in 1997.

Book description: "Globalization is exposing social fissures between those
with the education, skills, and mobility to flourish in an unfettered world
market—the apparent "winners"—and those without. These apparent "losers" are
increasingly anxious about their standards of living and their precarious
place in an integrated world economy. The result is severe tension between the
market and broad sectors of society, with governments caught in the middle.
Compounding the very real problems that need to be addressed..."

[https://piie.com/bookstore/has-globalization-gone-too-
far](https://piie.com/bookstore/has-globalization-gone-too-far)

------
bradleyjg
The reason it was predictable can be explained by examining two concepts used
in public policy theory:

Pareto Improvement: A change that is an improvement for at least one person
and no worse for any other.

Kaldor-Hicks Improvement: A change such that those that are made better off
could hypothetically compensate those that are made worse off and lead to a
Pareto-improving outcome.

It turns out that people aren't particularly thrilled with hypothetical
compensation. Who could ever have imagined that?

------
jmull
Hm... I guess I would have a lot more respect for this author's claim about
the predictability of the rise of populism if she(?) has predicted it.

Perhaps she did, but this paper is dated this month.

Not to mention, prediction by itself isn't worth much. Seeing it coming isn't
too useful if you can't do something to change course. And being able to
change course isn't useful if you can't find a better alternative to change
course to.

Globalization didn't arise out of policy decisions. It was a natural
consequence of improvements in information technology and transportation
technology (exponential in the case of IT). China isn't some distant land.
It's our next door neighbor and has a view straight into our living room.
Policy can guide or mitigate globalization, but it can't stop it. You would
have to roll back the changes in information and transportation to roll
globalization back and that might be worse than the cure.

IMO, we should be focusing on policy that will prevent the benefits of
globalization accruing only to people at the top, and not on stopping
globalization.

------
Leader2light
People need to realize there is not enough for everyone. Apple just hit 1
billion iphones. Facebook is close to 2 billion. There are 7.5 billion people
on earth. They all want iphones, facebook, AC, food, clean water. You can see
where this is going and it's not good.

I personally think its almost made worse by the internet and people being
connected, they see and feel what they are missing. Most Africans, for
example, would kill to be in Europe / USA.

~~~
TommyBombadil
> Most Africans, for example, would kill to be in Europe / USA.

I hope you meant this figuratively, because it is fair to say that it is a
completely ridiculous statement otherwise.

------
justforFranz
Slavoj Žižek Explains Why He Chose Trump (Jan. 2017)
[https://www.youtube.com/watch?v=03k-NhQ3AKg](https://www.youtube.com/watch?v=03k-NhQ3AKg)

------
wu-ikkyu
"I am convinced that if we are to get on to the right side of the world
revolution, we as a nation must undergo a radical revolution of values. We
must rapidly begin [applause], we must rapidly begin the shift from a thing-
oriented society to a person-oriented society. _When machines and computers,
profit motives and property rights, are considered more important than people,
the giant triplets of racism, extreme materialism, and militarism are
incapable of being conquered._

A true revolution of values will soon cause us to question the fairness and
justice of many of our past and present policies. On the one hand we are
called to play the Good Samaritan on life’s roadside, but that will be only an
initial act. One day we must come to see that the whole Jericho Road must be
transformed so that men and women will not be constantly beaten and robbed as
they make their journey on life’s highway. True compassion is more than
flinging a coin to a beggar. It comes to see than an edifice which produces
beggars needs restructuring. [applause]

A true revolution of values will soon look uneasily on the glaring contrast of
poverty and wealth. With righteous indignation, it will look across the seas
and see individual capitalists of the West investing huge sums of money in
Asia, Africa, and South America, only to take the profits out with no concern
for the social betterment of the countries, and say, “This is not just.” It
will look at our alliance with the landed gentry of South America and say,
“This is not just.” The Western arrogance of feeling that it has everything to
teach others and nothing to learn from them is not just.

A true revolution of values will lay hand on the world order and say of war,
“This way of settling differences is not just.” This business of burning human
beings with napalm, of filling our nation’s homes with orphans and widows, of
injecting poisonous drugs of hate into the veins of peoples normally humane,
of sending men home from dark and bloody battlefields physically handicapped
and psychologically deranged, cannot be reconciled with wisdom, justice, and
love. A nation that continues year after year to spend more money on military
defense than on programs of social uplift is approaching spiritual death.
[sustained applause]"

-Dr. King, Beyond Vietnam (1967)

[http://kingencyclopedia.stanford.edu/encyclopedia/documentse...](http://kingencyclopedia.stanford.edu/encyclopedia/documentsentry/doc_beyond_vietnam/)

