
Economists are now admitting that they were wrong about globalization - cbHXBY1D
https://foreignpolicy.com/2019/10/22/economists-globalization-trade-paul-krugman-china/
======
wahern
> But after the Cold War ended, the debate over trade (Krugman’s Nobel-winning
> specialty) became a proxy for a larger intellectual struggle over free
> markets versus government intervention.

This is the crux of it. The notion that economics, as a field, was blindsided
by the rapidity and extent of economic dislocation doesn't match the history.
Such a narrative is a whitewashing of a particular clique of superstar
economists, which explains why Krugman is so committed to it despite his
current policy views.

I was studying International Affairs as an undergraduate in Washington, D.C.
in the late 1990s. These issues were well known and heavily discussed,
domestically and internationally. By the late 1990s the notion of controlled,
incremental trade expansion as espoused by people like Prime Minister Mahathir
of Malaysia was already on the upswing in the international community and
cemented after the 1997 Asian financial crisis. That is, while mainstream
economists were highly skeptical about the efficacy and unintended
consequences of such industrial strategies, not to mention of the leaders like
Mahathir who espoused them, it was impossible to deny the fundamental premise
that the existential risks of too-rapid global trade expansion were very real.

The problem in the U.S. was much the same problem we've always had: free trade
became synonymous to opposition to government intervention. All the free trade
bills in the U.S. invariably included funding for re-education and R&D to help
manage dislocation and build competitive advantages, but they were meager
financially and suffocated by neglect. And that's because these measures were
considered "government intervention" and hedges to preserve "big government",
which as we all know as Americans (and, to a slightly lesser extent, everybody
else in the Anglosphere) meant naivety, ineffectiveness, and corruption. So
it's no surprise that the American public and politicians drifted toward a
fundamentally broken policy situation.

This is no less true today even as we've soured on the notion of free trade.
We'll put up trade barriers, but we _still_ refuse to heavily invest in re-
education and R&D, and not even our most liberal policymakers have proposed an
industrial policy aimed at _managing_ globalization. Just the same 20-30 years
ago, these things are synonymous with big government, corporate subsidies,
etc. Instead, we limit free trade presuming that the domestic industrial
economy will naturally restore more equitable employment and wealth
distribution.

Nothing about free markets guarantees "equitable" distribution; indeed,
history has proven that they often tend to distributions that are untenable
democratically. But we're even less prepared to effectively manage this stuff
for our domestic economy than we are for international trade. Anybody
expecting our social equities to substantially improve simply because we're
limiting free trade is delusional, though they're in good company.

The thing is, we can never put the free trade genie back in the bottle. And
the truth is, on balance free trade _is_ better for the world and for every
nation in it; just as with free markets more generally. The problem as always
is managing dislocation and wealth distribution. We need to learn, as a
society and as economists (armchair or otherwise--I'm not an economist), to
stop equivocating industrial policy with government control. Until we do that,
we'll never be able to discover and identify the levers and strategies
available for mitigating the disruptive aspects of free markets while
minimizing the risks of corruption.

~~~
codingslave
"The problem in the U.S. was much the same problem we've always had: free
trade became synonymous to opposition to government intervention. All the free
trade bills in the U.S. invariably included funding for re-education and R&D
to help manage dislocation and build competitive advantages, but they were
meager financially and suffocated by neglect. And that's because these
measures were considered "government intervention" and hedges to preserve "big
government", which as well know as Americans (and, to a slightly lesser
extent, everybody else in the Anglosphere) meant naivety, ineffectiveness, and
corruption. So it's no surprise that the American public and politicians
drifted toward a fundamentally broken policy situation."

But this hinges on the premise that employers are receptive to older retrained
workers. In my life time I have never seen this, and I have long considered it
to be one of the biggest lies in economics. This has never happened on a large
scale, and is an academic theory. Whats more, this would only be possible with
a some kind of glut of jobs. Starting at the bottom of another career
hierarchy at the age of 40 is a complete disaster, you will be out-competed by
22 year olds who cost alot less, are easier to train, have less grievances
about a low salary, are okay with the bottom rung, and do not have huge
expectations. Even more than that, shifting X00,000 people from one career to
another would flood the labor market and destroy wages. The whole thing makes
literally no sense.

~~~
ep103
I read an article once, that claimed when a Scandinavian country joined the
EU, they expected significant job distortion as a result of free trade. So
they literally moved government agencies from their current locations, to
locations that they expected would be hardest hit. The end result was the
shifting of thousands of government jobs from one location to another. Highly
trained people in the old government centers were still in really competitive
markets with significant government opportunities. But those communities that
were about to be devastated by free trade (usually smaller backwater
communities) suddenly saw federal agencies appear that required thousands of
jobs overnight, and whom had a mandate to hire those affected by free trade,
thereby saving the economy for those workers in the area.

My point is that creative solutions are possible, if we dispense with the
notion that the only solution possible is the free market.

~~~
bryanlarsen
Such a strategy failed utterly in Canada. They moved a government department
from Ottawa to Miramichi, New Brunswick for similar reasons. All the skilled
bureaucrats used their reputations to get transfers to a different department
so they wouldn't have to uproot their family, and the department was rebuilt
around a core of incompetents. I'm sure the locals they hired weren't so
incompetent, but rot starts from the top. That move caused the failure of the
long-gun registry and a waste of $2B. After the long gun registry was
cancelled they used the same department to rewrite the pay system (code name
Phoenix) and have managed to waste about $5B so far, and growing.

That's about $50 million wasted per job.

~~~
BenoitEssiambre
I don't think the good people of Miramichi are to blame for this. It's the
people in Ottawa who wrote a blank check to Oracle/IBM for attempting to
migrate a large part of the government software infrastructure to their
incompatible system. Somehow, the contract was that billions would be
disbursed to IBM/Oracle whether their system worked or not (it didn't).

Also I don't think Oracle should be allowed to hide behind the Phoenix name.
This was Oracle PeopleSoft. Why would you pay billions for a piece of software
when the maker isn't even willing to put it's name on it?

~~~
repolfx
The Phoenix failure wasn't really a software failure, if I recall correctly.
It was more that when everything moved to Miramichi the people who understood
the byzantine government pay systems basically didn't follow and the result
was people with no clue of what they wanted or how to do it being heavily
involved. No software firm can succeed in those conditions.

~~~
generatorguy
Oracle / IBM had an existing working payroll system to copy. All they had to
do was reimplement it in modern hardware and software. Some government
employee in Miramichi might not have been happy because oracle didn’t listen
to what they thought they wanted but if the contract has been to deliver a
system that produced the exact same output as the old one oracle/ibm would
have no excuse for not having a successful project.

It is astounding nobody was fired for this.

~~~
jeffdavis
I'm not so sure it's easy to represent the exact behavior of a complex system.

What would your estimate be to: "rewrite facebook in language L, with the same
behavior, bugs and all".

~~~
pas
Doing an incremental approximation is very much possible. And it's up to the
customer to say when to stop. And also to judge the sufficiency of the speed
of convergence.

~~~
nradov
An incremental approximation is unacceptable for payroll. It legally has to be
100% accurate.

~~~
pas
No, you misunderstood. It means you have two systems, Old and New. You use Old
and start development of New. And you do the payroll on both, and if there's a
difference you debug that and modify New. After a while it's good enough. And
you stop using Old.

------
methodover
The big question I’ve been struggling with in regards to the free trade debate
is this:

Is cheap labor a legitimate source of comparative advantage?

I increasingly don’t think that it is. Yes, we get products more cheaply. But
those products are made in countries with fewer labor restrictions, often in
places that are not democratic, where workers cannot vote for changing laws.
We’re effectively saying we want democracy where we live, for our own white
collar professions, but we don’t want to be shackled by those restrictions for
how we get rich, or how we enjoy our wealth. We’re effectively telling local
blue collar workers that we’re okay with their level of work being taken over
by people with less rights than themselves.

That increasingly doesn’t feel just. Comparative advantage makes sense for
natural differences between countries, such as availability of natural
resources or favorable weather for certain types of crops. But not for
fundamental human rights.

~~~
beagle3
Let me play the devil’s advocate: you buying those products is measurably
better for those disadvantaged blue collar workers, than you not buying it (on
a 10 year horizon IIRC - There are some UN studies on this, on phone and can’t
find them right now).

So you are damned if you don’t enjoy them, damned if you do (but a bit less).
Obviously, it is better if you could improve their situation to the point
where their labor stops being cheap.... but how can you do that?

~~~
shkkmo
> Let me play the devil’s advocate: you buying those products is measurably
> better for those disadvantaged blue collar workers, than you not buying it
> (on a 10 year horizon IIRC - There are some UN studies on this, on phone and
> can’t find them right now).

Maybe in some cases.

However, you then have labor in those countries trying to struggle for the
same protections and advances in wages that workers in the US struggled for,
but they are struggling against a far more powerful corporate entity that has
the backing of a more corrupt/disfunctional government while also having
diversified options to break and weather strikes.

Then you have to add to that all the non blue collar workers who have had
their subsistence livelihoods destroyed through land seizures for resource
extraction.

Most of the benefits of globalization roll uphill (richer citizens, especially
in richer countries extract most of the benefits) the trickle down is
minuscule to non-existent.

~~~
cactus2093
Yes people still have challenges and problems. But at the end of day, there
are hundreds of millions fewer people in poverty than there were just a few
decades ago. None of what you're saying justifies that the alternative would
have been better, where most of these people remained poor subsistance
farmers.

~~~
shkkmo
> , there are hundreds of millions fewer people in poverty than there were
> just a few decades ago.

And how much of that is due to globalization and how much of that is due to
the growth of local economies? How much faster would those local economies
have grown if wealth was not being siphoned out by multi-nationals? (These are
not honest inquiries, not rhetorical questions.)

> None of what you're saying justifies that the alternative would have been
> better, where most of these people remained poor subsistance farmers.

The people who were poor subsistence farm who had their lands given away are
generally not those who have been lifted out of poverty.

~~~
barry-cotter
In China it’s almost all due to globalization. Multinationals doing siphon out
wealth. They invest huge amounts of money in foreign direct investment,
enabling faster growth than if all capital had to be domestically sourced and
they take some of those profits and repatriate them, but the wages they pay
and the capital investment they make stay in country.

In China the people who were poor subsistence farmers absolutely are those
lifted out of poverty. The numbers are just too great for it to work any other
way, with urbanization going from ~20% in 1980 to 70 or 80% now. Similarly in
Korea.

------
Animats
What really made globalization work was containers and faxes. Before
containerization, shipping was kind of an iffy business. Sometimes it showed
up, sometimes it got lost or stolen, and sometimes it got broken. After
containers, if you ordered a container load, it usually showed up intact.

The importance of faxes to trade is underestimated. Not only was it faster,
faxes work well across language barriers. An invoice still looks like an
invoice, a purchase order still looks like a purchase order, and a bill of
lading still looks like a bill of lading. For the normal cases, the info in
the blanks, the info that matters, matches up, and that's all you need most of
the time. Especially since everybody uses the same number symbols. Business
forms became an international language. You've almost certainly received some
package that came with a bill of lading in a foreign language, recognized it
as a bill of lading, and could probably make out the list of items. Even if
the descriptions were unreadable, the part numbers matched.

Economists did not get that these rather banal mechanical improvements had a
far bigger effect than their economic theory. This is embarrassing, since
everybody in shipping, and then everyone in business, had figured out how to
deal across borders thirty years ago.

~~~
marshray
These things are so fundamental that you don't see economists writing articles
about them. Macroeconomics generally lumps those things under "productivity".

Container ships were almost the poster child of globalization.

Faxes (and telex, etc) had been around for decades. We have the alphabet we
use today because international Phonecian traders (phonetics, see?) used it
for exactly the type of documents you're talking about.

~~~
Animats
_Macroeconomics generally lumps those things under "productivity"._

Which is the problem. Those things were bigger than Government economic
policy, as we can see them having affected trade across a large number of
countries with varied policies.

It's not "productivity", anyway. It's "relative cost advantage" and "reduction
of trade friction".

The giant mistake of macroeconomics is claiming that free markets are a self-
perpetuating condition. In the absence of trade friction and the presence of
network effects, consolidation tends to occur. It continues to the point of
monopoly or oligopoly. The end state, for now, seems to be having three or
less providers who don't compete very hard on price.

There's an EU study that indicates prices drop from competition only with four
or more players. "Free markets" seem to have a minimum size in practice.

The US has three big banks, three big drugstore chains, and will soon have
three big cellular providers. Two big agriculture companies. Five big film
studios, though.

------
amadeuspagel
Like most articles referring to economists as a group, now admitting whatever
you, dear wise reader, have always known, this one does not contain any kind
of survey, but simply quotes a few economists, as if they spoke for the entire
economics profession.

~~~
joshdick
When some of the economists mentioned are the president of the International
Economic Association, a a chair of the Council of Economic Advisers, and a
Nobel Prize winner who also happens to be the economics columnist for one of
the largest U.S. newspapers -- I think it's fair to say that these are
representative of mainstream economic thought.

------
ZeroGravitas
> globalization would lead to “hyperglobalization” and huge economic and
> social upheaval, particularly of the industrial middle class in America.

This line reminded me of the joke that the worst part of the US invading your
country is that 20 years later they'll return to make films about how killing
your civilians made their soldiers really sad.

~~~
thewileyone
Hyperglobalization is happening right now as manufacturers move out of China
and into Vietnam and Indonesia to circumvent the US-China trade war.

We will see this continuing, rolling from one low-cost country to the next as
companies try to maximize profits.

Unless some controls are put into place, this will continue for the next 300
years.

------
rb808
To be clear this article isn't whether globalization is good or bad but about
how it affects "American workers". Its pretty clear it has been on average
very good for America and the world, but bad for say factory workers or coal
miners. The response should have been to tax the wider benefits and subsidize
the people who lost out, but that money got lost somewhere en-route...

Most of the world is far better off in nearly every measure than 20 years ago.

~~~
ngold
It's been fantastic for the 400 people that own more wealth then the entire
country.

~~~
adventured
An extreme exaggeration that ignores the extraordinary wealth holdings of the
US middle class, which is wealthier than their peers in Germany or Sweden.
That is despite heavy middle class demographic change from Latin America
immigration the past ~45 years, they're still wealthier than those elite
nations.

The 50% to 90% bracket in the US for example holds $31-$35 trillion in
household wealth. The 90% to 99% bracket holds another $39-$44 trillion. So
50-99% holds $80+ trillion.

The Forbes 400 is worth $3 trillion.

~~~
andrekandre
> The 50% to 90% bracket

what percentage of the u.s population fits into that bracket?

~~~
subject117
90%-50%=40%

------
mips_avatar
Can we please get Paul Krugman off the New York Times editorial board? Or at
least include a disclaimer that he doesn't know much about most of the things
he writes about. He got his Nobel prize from a career working in a pretty
specific scope. I am tired of people taking his articles as works of a god.

~~~
blfr
_at least include a disclaimer that he doesn 't know much about most of the
things he writes about_

This is true of most journalists.

~~~
mips_avatar
And I do think Krugman is qualified to write about the economy (less so about
other things). I just don't like him (or people quoting him) using his Nobel
Prize as some kind of ethos cudgel to hit me over the head with.

------
Merrill
I doubt that there was ever any illusion that if financiers could arbitrage
labor rates between nations that they would. Hence the expectation always was
that living standards among nations would tend to equalize.

Post WW II the US had about 50% of the global GDP. The situation was huge
inequality between nations. That was politically untenable and the solution
was seen to be development of other nations' economies. Some of this was
accomplished with things like the Marshall Plan and some with programs of
foreign aid to underdeveloped countries.

However, the US taxpayer would never support a large enough foreign aid budget
to really solve the problem. On the other hand, free trade could be sold
politically, companies would export capital and know how to lesser developed
countries, and the problem of inequality between nations could be ameliorated.
Of course, it was at the expense of the US worker whose standard of living
stagnated from the '70s onward. But the bet was that other nations would
develop slowly enough, US consumers would enjoy cheap goods, business would
make lots of money, and that US standard of living wouldn't actually decrease
significantly for a politically potent group.

Of course, there aren't enough resources in the world for all 7.5 billion
people to enjoy US standard of living. Therefore, the implication of greater
equality of standards of living between nations is less equality of standards
of living within nations. Less inequality internationally implies greater
inequality intra-nationally.

And that is exactly what has happened. The world, including the US, will tend
towards the situation in India where there is extreme wealth and extreme
poverty side by side.

~~~
shantly
It was sold as "rising tide lifts all boats" (implication: boat = person, and
"all" = "nearly all, at least") and "everyone benefits under free trade, trade
barriers always make people worse off, it's just a fact, what don't you even
know Ricardo?"

Never mind that "all boats" was, in the best case, "all GDPs", not individual
incomes, and "everyone" was... well, the average of all GDPs, actually, so
also not actually every individual, and _still_ with a pile of caveats for
even that to be true. In point of fact nothing about all this said that even
_most_ people would benefit, if you either 1) applied common sense, or 2)
actually looked at their sources.

source: figured out the common sense reasons this was BS when I was in like
4th or 5th grade watching the China-MFN debate & vote on CSPAN (god I was a
nerd); later did the reading and learned that yes, my elementary school
intuition mapped closer to reality than the crap they sold us.

------
huffmsa
Of course they were bláse about it, it didn't affect their livelihood one way
or the other.

Do you get paid for saying fancy sounding things, or do you get paid because
you did fancy sounding things?

Economists are all talk and no stones and they should be ignored unless they
can demonstrate that their portfolio represents the ideas that they espouse.

------
Mikeb85
They knew the effects of globalization. It's going exactly as intended,
exactly the effects I learned about during my econ studies, they just didn't
think there'd be as much political blowback. It's easier for them to claim
ignorance than to admit they willfully deceived the public.

------
TazeTSchnitzel
Plenty of economists always knew. But economics is not the clean
uncontroversial hard science it would like to present itself as. It's a
political battleground shaped by wealth, influence, trends. And so it should
be no shock there was neoliberal economics to go along with neoliberal
politics.

------
WheelsAtLarge
I remember that in my Econ class, so many years, the idea that we could close
manufacturing plants and transfer them to low cost labor countries and not
have a replacement job in the US was a very big discussion that my professor
could never answer with clarity. He would always say that the US economy would
develop other ways to employ the people that lost their jobs. So even then
there was a lot of dought on the idea of globalization.

Ok fine, there was a mistake in thinking but there's no one that has a
satisfactory answer on what to do to fix the problem.

I for one think that we can't go back to the way things were so we need to
start by separating benefits, health care ins. and such, from employment. Once
that's done people will be freer to take on jobs that are not high paying but
are being created by the gig economy. We also need to cut the workweek to
fewer hours lets say 30hrs vs 40hrs now.

The last part is automation. As a country we need to embrace it. They say that
automation brings on more jobs than it destroys but nothing says that those
jobs will be in the US. Whether we like it or not it's coming so we need to be
the country that controls it.

~~~
christophilus
I agree completely.

One other aspect that often gets lost in these conversations is that
manufacturing capacity is a huge part of what wins wars. The US won World War
II largely because we could produce planes and ships faster than our enemies
could destroy them. When we shipped our manufacturing capabilities overseas,
we also undermined a key wartime advantage.

It is within our national interest to have a strong industrial base. The only
way I can see that happening from here is automation.

------
mr_toad
The article cherry picks a few words from the original Krugman essay in a way
that would make Maximilien Robespierre proud.

So while we’re at it:

> major disruptions now would be more likely to come from an attempt to
> reverse globalization than from leaving the current trade regime in place.
> At this point, millions of decisions about where to put plants, and where to
> move and take jobs, have been made on the assumption that the open world
> trading system will continue. Making that assumption false, by raising
> tariffs and forcing a contraction of world trade, would set off a whole new
> wave of disruption along with a whole new set of winners and losers.

------
cmrdporcupine
Mobility of capital without mobility of labour. Surprise, it's not just.

------
chiefalchemist
To be fair, it elected BHO as well. But the tone, culture and mainstream media
then was different. When "Yes we can" and "Hope you can believe in" didn't pan
out those emotions took a u-turn.

It's easier to see the direct line to DJT, but that historic line passes
through eight years of BHO.

------
eznoonze
Free market only works when everyone follows the same rules. When you have a
player like China who is dead set on taking advantages of the rules but never
taking the responsibility, you create an one-sided situation.

Trade is not just an economic issue. It's a political issue when you have
China in the game.

~~~
themagician
The “free market”, as it’s often portrayed, is a magical idea that exists only
in text books. It’s not real. The real market is a mess of information
asymmetry, unpriced negative externalities and govern emend subsidies.

Economic theory is great for determining the direction of economic policy but
not defining policy itself.

~~~
Merrill
There are only a limited number of markets where large numbers of buyers and
sellers transact for commodities of well understood characteristics.

The fundamental transaction of capitalistic societies is the "deal", where
sellers vary the benefits of their products and conceal their deficits and
where buyers conceal their willingness to pay as well as the exact thing they
want to buy. Typically there are no more than two or three sellers (e.g.
Airbus and Boeing) or two or three buyers (e.g. the market for very advanced
fighter aircraft).

The first thing you learn in business school is that you must have product
differentiation and must at all costs avoid being in a commodity business..

------
jayd16
For being so critical of those full of themselves this article is taking a
pretty big unfounded victory lap. Just because someone else is wrong that
doesn't make you right...

Just because Krugman thought globalization would turn out better does _not_
mean isolationist policy would have improved things.

------
jokoon
Isn't that common knowledge that China devaluating its currency allows them to
take advantage of their big worker population to develop their economy and
make the entire world dependent on China's industry?

It really sounds like china is being the smartest one here.

~~~
barry-cotter
How? They’re paying more than ten percent of GDP to keep the value of their
currency down in a massive subsidy to their export sector at the expense of
everyone else in China. They’re subsidizing the rest of the world’s
consumption.

~~~
jokoon
Sure, but it's massive advantage for the future of china. It's an investment.

------
api
Well paid workers, OSHA, and the EPA vs countries with dirt cheap labor and no
worker or environmental protections... which do you think will win?

The big question for me is how in the world so many smart people convinced
themselves it would turn out otherwise?

------
namirez
But I thought economists have known this for a long time (at least since
2013). Basically, the Elephant Graph [1] summarizes the effects of
globalization. Most of the economic gains of the past few decades went to the
super-wealthy and the middle class in the developing world. Meanwhile, the
middle class in wealthy countries and the poor in developing countries were
left behind.

[https://www.vox.com/policy-and-
politics/2018/2/2/16868838/el...](https://www.vox.com/policy-and-
politics/2018/2/2/16868838/elephant-graph-chart-global-inequality-economic-
growth)

------
mc32
Perot was right. He knew what the deal was. He warned us. Did we listen? No,
we have good old Bill Clinton to “thank”.

Thanks a lot Bill for selling out blue collar workers in America and those
around the globe who followed your “leadership”.

------
gridlockd
What difference does it make whether globalization hurt "the american worker"
more than some people estimated? What really matters is whether it hurt them
more than it helped.

That may well be the case, but it isn't obvious.

Also, what about "the non-american worker"? Did it hurt _them_ more than it
helped? Is there a comparative _disadvantage_?

Also, why the focus on workers? What about the young, the sick, the elderly?
Could an aging society's welfare be improved by being shielded economically
from younger societies?

------
cwkoss
Paul Krugman is much more of a pundit than he is an economist.

------
systematical
A giant sucking sound

~~~
WillPostForFood
Funny that the article tries to portray Al Gore as the guy that could have
stopped free trade if he won the election in 2000, when he was the figurehead
of free trade, and really helped lock in the free trade policy when he beat up
Ross Perot in the NAFTA debate.

~~~
systematical
We picked the wrong guy in 92.

------
TheOperator
One thing I notice about Trade now is the perverse power we've given to groups
which fundamentally don't have other countries or individuals interests in
minds.

One thing I notice is that left wingers are essentially universally aghast
over what's happening to Hong Kong. They will hold to the idea that a trade
war with China is the stupidest thing ever that causes economic damage to
yourself and incurs great risk. Which is true. However you can't have it both
ways and you have to choose between economic vitality and essentially having
no say in a situation like Hong Kong.

I've seen countries hunger for trade being used as a lever for international
legal reform. A condition of signing trade deals with the united states where
countries essentially have to agree to give multinational corporations more
government enforced rights or not have free trade. Specifically "intellectual
property harmonization". If you want to have trade with the united states you
appearantly need to agree that for every idea a corporation comes up with,
they have an exclusive right to using that idea for more and more years, and
consequently governments need to agree to punish people for not giving
corporations money for those ideas for longer and longer periods of time. This
is effectively a system that redistributes wealth towards corporate interests
in an era of striking wealth inequality, on the reasonable sounding grounds
they need that money to "develop new medications", but then it's ignoring the
reality on the ground of poor health spreading like a contagion due to
economic inequality. As the average person is unable to afford things like
medications more and more... the economic vitality of all society... including
the very companies who lobbied for these laws will suffer. Yet there's no
effective way to push back against these laws without giving up free trade and
shooting yourself in the foot economically.

I think at some point we're going to start realizing how many costs free trade
have that haven't really been accounted for. It's very easy to portray it as a
positive if you don't account for all the externalities.

~~~
sarah180
This is true in a discussion where the relative value you place on
international trade is either infinite or zero.

You can oppose an ill-considered trade war without opposing all actions that
would impact trade. This is not an either/or proposition. It's not
hypocritical to suggest that, in the real world, sometimes you might have to
weigh competing goods.

~~~
TheOperator
I just see a status quo where Trump would openly abandon HK in a heartbeat for
a good trade deal. Whereas the left can stomach talking about boycotting a
company like Blizzard but they're violently opposed to action with any teeth
because that action will likely have more real negative consequences for
theirselves than not being able to play SOME video games. I'm not saying it's
hypocritical but is sure as shit is weak.

In the end trade is valued higher than democracy by both Trump and his
detractors. It just makes me sad and cynical. I wonder if we will ever have a
"Nixon goes to China" moment in reverse?

P.S. Don't know what you're on about saying how my position is only true if
trade has no or infinite value. My position would be utterly incoherent if I
thought it had infinite value. My position would be coherent if I believed
Trade had no value but it's also coherent if I believe it's overvalued.

------
readams
Of course, the other side of this is billions of people outside the United
States raised out of extreme poverty. Eventually, globalization means that
everyone in the world has access to the same opportunities. The nationalist
argument that workers in the us are better or more deserving of that high
standard of living and those opportunities doesn't really stand up to much
scrutiny here.

~~~
kypro
> The nationalist argument that workers in the us are better or more deserving
> of that high standard of living and those opportunities doesn't really stand
> up to much scrutiny here.

This might be too simplistic of a take on it. If you don't consider your own
interests first then your good will can be exploited. If the whole world
embraced free trade then you might have a point, but as it stands countries
such as China are not playing fair. I'd also have to question wherever the
moral good of Chinese workers being lifted out of poverty is worth the growth
of China as a global superpower. If we're embracing free trade for charitable
reasons don't you think we need to be sure our money isn't ending up in the
hands of governments like the CPC?

I also think that even if you were right from a morally objective point of
view you're employing a kind of "for the greater good" reasoning here that
many would find objectionable.

------
CryptoPunk
Free trade is being scapegoated for the failure of laws violating contract
liberty to empower unions, and social democracy. Giving unions a stranglehold
over industries, and redistributing 30 percent of national output for
formulaic social welfare programs administered by central authorities, is not
conducive to economic development, and guarantees that the country becomes
uncompetitive on the global stage in most industries.

Since the 1960s, social welfare spending has increased on average by over 4
percent per year. The last 50 years have seen a dramatic shift to a more
centrally managed economy that favors social safety nets provided by
governments over market forces based on private property and individual
responsibility.

The labor laws passed in the 1930s and 50s meanwhile guarantee that any
industry that does start to become a significant contributor to national
output, whether it's the Big Three Auto Makers and the big steel manufacturers
in the 1950s, or Tesla, Amazon and Google today, becomes the target of rent-
seeking unions who are impossible to effectively resist thanks to the free-
market undermining labor laws in place.

The decline in productivity growth, particularly in globally competitive
markets like manufacturing, is a predictable consequence of that.

------
sb057
The Council on Foreign Relations (publisher of Foreign Policy) sure is quick
to point the finger at economists.

------
olivermarks
I think the logic here also applies to the challenges and relevance the EU
faces going forward. A useful EU information site I visit often
[https://euobserver.com](https://euobserver.com)

------
didibus
> Yet it has taken an awful long time for economists to admit that their
> profession has been far too sure of itself

I think that's something where diversity in the field could have helped.

------
jeffdavis
It's strange to me how anyone can have such arrogance about a complex system
-- especially a social system -- that they "lacerate" those who question them.

------
tjpnz
Same deal with neo-liberalism actually. It wrecked New Zealand in the 80s and
most politicians will at best admit it was flawed, yet it still continues to
this very day because it's become institutionalised and utterly entrenched in
our political system.

------
mbrodersen
Economics is, and has always been, formalised ideology. In other words,
Economics is not a science and Economists are not scientists.

------
mdpopescu
Wow. Krugman is a free trade economist now... and most people in the comments
seem to agree with that.

The lunatics have taken over the asylum.

------
AzzieElbab
they knew it all along, but kept bs peddling(Taleb's term) anyway because
everyone(even paul krugman) needs to eat

~~~
huffmsa
And it costs them nothing (except maybe a new book deal, so win win) to write
the paper explaining why they were wrong.

------
cryptica
>> The U.S. president has effectively discarded modern economics, reembraced
crude protectionism, and, like the mercantilists of the pre-Adam Smith era,
appears to see trade as a zero-sum game

Trump is right.

Almost all business activity today is a zero-sum game. Americans have all the
abilities and skills to produce everything they need on their own. If
(hypothetically) the US were to start banning foreign companies, new US
companies which are just as good would pop up in their place. This would
create better, high-paying jobs for Americans and more opportunities for
entrepreneurs and technologists.

This is true for pretty much any developed country with respect to foreign
goods and services. For example, if France blocked Facebook, within a matter
of weeks, better alternatives would pop up to cater for the French market.
This is not speculation BTW, it's pretty much what happened in China with
respect to all major US tech companies.

China knows exactly what kind of zero-sum game they're playing. Ability is not
the bottleneck. The bottleneck is human attention. Governments have to
leverage their laws and regulations to maintain control over the attention of
their citizens so that they can focus it to benefit local businesses.

Free markets only make sense at the small scale; for example, I'm a builder
and I want to focus all my time and energy on building houses so that I can
gain more experience to fine-tune my skills and become more efficient over
time - but I have a problem: While I'm busy becoming an expert in
construction, I need to eat bread to survive... The solution to this problem
is a free market; it will allow me to use the money that I earn from building
houses to buy bread from a baker (who is an expert in baking). The efficiency
gains here are obvious.

When you look at the same problem at a global scale, it doesn't make sense
because, taken as a whole, a country (especially one with a large population)
can focus on many things at once whilst being an expert at all of them. Being
really good in one area does not prevent a country from also being really good
in a different area.

Applying a microeconomic solution (in this case, a free market) to a
macroeconomic problem doesn't work. It's like if you were a plumber and your
kitchen sink was leaking and instead of fixing it yourself (which would take 5
minutes and cost you $0), you decide to call another plumber to come to your
house and fix it (which would take 1 hour of travel time extra and cost you
$100). It makes no sense. If you have the skills to do something on your own,
and you have an unlimited ability to multi-task you'd have to be an idiot to
pay someone else to do it.

------
zarro
I don't get why "Equitable rules to play by" is a concept so hard for everyone
to understand.

The free market is about creating a level playing field. Globalization was
shit because because it did not create a level playing field, it created a
subsidy for "developing" countries, at the expense of "developed" ones.

Its hilarious that people think that somehow free markets and libertarians are
responsible

~~~
hn_throwaway_99
Was about to upvote you until your last sentence.

Reason being, yes, I agree that a huge problem with globalization is that,
while developed countries have spent many decades building things like labor
rights, environmental protections, IP protections, etc., globalization
essentially allows an out for companies to undermine all of these base-level
rules.

But there is a very good reason people are blaming "free markets" and
"libertarians" \- lots of the cheerleading behind globalization was based on
people espousing their love for free markets and libertarianism. The fact that
you may disagree with their _definition_ of free markets and libertarianism
doesn't change the fact that their definition is the one that is most widely
acknowledged.

~~~
zarro
Which is why I deliberately left that sentence in there. Its because there is
a profound misunderstanding of the definition "free market". I also disagree
with the contention that what the most number of people mistakenly define to
be true is justification for miscategorizing and dismissing something.

The "cheerleaders" you are talking about clearly did not understand these
concepts, and the result is mis-association, and thereby in effect dismissal
of the idea of freedom as absurd.

Even though "ideally", "In a free market, the laws and forces of supply and
demand are free from any intervention by a government or other authority", In
practice to achieve this end, this means creating a level playing field which
take things into account such as "IP protections, environmental costs, etc."

From a libertarian perspective, in order to eliminate a "government or other
authority from all forms of economic privilege" in the long term, is to in the
short term work to better define property rights and rules to play by to force
more accountability with the individuals involved.

------
ThomPete
_Paul Krugman and other mainstream trade experts are now admitting that they
were wrong about globalization: It hurt American workers far more than they
thought it would. Did America’s free market economists help put a
protectionist demagogue in the White House?_

Even if you didn't vote for Trump or don't like him, Trump has been critiquing
globalization for years before he came to office especially with regards to
China. Yet their conclusion is that he is a demagogue. The very people who
cheered on the very globalization that made some of us rich but left many of
our fellow citizens in the dust.

I assume they agree that the purpose of globalization was to make everyone
better of not just some and that those that would benefit from it most should
be paying back their fair share to the communities.

Today we have a situation where it's impossible to save your way to
retirement, where the cost of living has increased and the middle class
decreased and we did so while increasing the deficit of the country.

~~~
sarah180
I think most economists would say that the purpose of globalization was to
make the _nation_ better off, and that the nation's values, systems and
leadership would be called on to distribute those gains in a way consistent
with that nation's values.

Perhaps the real issue here is not one of trade, but of the collapse of
unions, the dramatic change in the nature of our media, broken leadership
structures, and a lazy mindset that views capital and markets as the goal
rather than the tool.

~~~
ThomPete
Well, nations are part of everyone in globalization no? Not sure I understand
the distinction.

The issue wasn't of trade but of a small group of people who benefitted from
exporting jobs abroad to sell products at home and then still avoid paying the
taxes.

~~~
sarah180
Increasing the wealth of a nation doesn't mean increasing the wealth of
everyone in that nation. A nation can distribute those gains in wealth and
power in a way that provides no utility to many of its citizens.

Trade has made nations richer. Economists were not wrong about this. What many
were wrong about is the thesis that the social & market structures in
developed, "stable" democracies would ensure that those gains eventually
improved the utility of everyone—the proverbial "rising tide that lifts all
boats."

The standard claim is that markets may not immediately fix issues, but over
time they will converge on an efficient distribution of resources.

Yes, this is a late reply.

------
codingslave
The odd part about capitalist based policies on trade and skilled work force
immigration is how much the left has supported them. The right has long held a
"capitalist laissez-faire" approach to economic policy, and has been open
about that. But what I cannot wrap my head around is the paradoxical message
of the left. On the one hand they have long been known for supporting and
using government intervention to protect and bolster the common working man in
the United States, but on the other hand have continuously and audaciously
supported and put forwards free trade and ultra capitalist ideas. The outcome
of which has been a disaster and is only getting started. Even more
paradoxically, the most pro American Worker campaign ever ran, was run by
Donald Trump, a quasi republican, who in turn won the election by stealing
support from democrats in key states (Michigan, Ohio, Florida, etc).

~~~
wahern
1) The American left has always been suspicious of government and comfortable
with the market economy. The range of policies that look acceptable to the
social left skew much more to the right than the social left in other
countries.

2) Beginning with Goldwater and culminating with Reagan, the American public
internalized economic libertarian ideas.[1] (See, e.g.,
[https://www.nytimes.com/1964/10/25/archives/the-case-
against...](https://www.nytimes.com/1964/10/25/archives/the-case-against-
goldwaters-economics.html)) By the 1990s the Democratic Party had lost their
multi-generational primacy, and the only politicians able to stem the loses
were politicians like Bill Clinton (see also Tony Blaire in the U.K.), whose
strategy was to co-opt libertarian economics.

[1] The _reasons_ for this are complex. For example, Southern conservative
politics becoming vociferous advocates for deregulation and free trade
obviously has more than a little to do with Nixon's infamous "Southern
strategy". Republicans promised southern states a larger share of industrial
manufacturing by 1) shifting it from the North and 2) extracting concessions
from foreign manufacturers to build domestic manufacturing plants as part of
trade negotiations.

------
Glyptodon
I think a big reason it hurt so much is not globalization, but globalization
without requiring human rights minimums or guarantees, and without actual open
markets.

Cheap labor that rests on a foundation of abuse only creates a whole world
that depends on there being people to plunder while the abuser accretes an
armor of indispensability.

Allowing the participation of countries who operate by separate rules that are
inherently advantaged or abusive does the same.

If the US hadn't been obsessed with industry and consumer-driven realpolitik
and killing the faintest whiff of "communism" at any cost it might have been
able to use its post-WW2 clout to create a globalization that worked, but to
the surprise of no-one, greed was too good and functional globalization
ultimately wasn't even much of a dream.

------
resters
This is ridiculous. Trump's economic policy is a near exact copy of what
Krugman has been advocating for years. See my previous comment with an
itemized list of op-ed pieces by Krugman linked with major themes of Trump's
economic rhetoric:

[https://news.ycombinator.com/item?id=20647721](https://news.ycombinator.com/item?id=20647721)

~~~
dragonwriter
> Trump's economic policy is a near exact copy of what Krugman has been
> advocating for years:

No, it's not.

Let's start with the major area of economic policy called taxation:

[https://www.nytimes.com/2019/01/05/opinion/alexandria-
ocasio...](https://www.nytimes.com/2019/01/05/opinion/alexandria-ocasio-
cortez-tax-policy-dance.html)

~~~
resters
> Let's start with the major area of economic policy called taxation

How about if we start with the ones I listed in the linked comment. The link
you cite is Krugman aggressively trying to signal something anti-Trump after
it was already too late.

I've been reading Krugman's op eds for years and nearly everything Trump says
about economic policy is practically verbatim Krugman.

Also, one could argue that Trump's massive increase in deficit spending will
likely result in increases to future income tax rates to the levels AOC
advocates, but with the beneficiaries (unfortunately) being defense
contractors rather than the poor and middle class.

Krugman has advocated closed borders for years as well:

 _The New Deal made America a vastly better place, yet it probably wouldn’t
have been possible without the immigration restrictions that went into effect
after World War I. For one thing, absent those restrictions, there would have
been many claims, justified or not, about people flocking to America to take
advantage of welfare programs._

([https://www.nytimes.com/2014/11/21/opinion/paul-krugman-
immi...](https://www.nytimes.com/2014/11/21/opinion/paul-krugman-immigration-
children.html?_r=0))

To be clear, Krugman is a respectable person unlike Trump, but he shares the
same ideology of economic populism and framing of rust belt workers as victims
of modernization, globalization, and trade.

------
cafard
"Paul Krugman has never suffered fools gladly."

Paul Krugman has never suffered disagreement gladly.

------
markmet433
Outside hardline libertarian and establishment wall street circles, no serious
intelectualls fell for the new free trade religion. Seeing Krugman admit as
much in order to preserve a shred of credibility is a good sign. Dont be
confused though, Krugman is stil a hack intellectual for hire.

~~~
tr3ndyBEAR
The establishment of both major US policies have been pretty staunchly
neoliberal and pro free trade up until recently. I don't think it's fair to
say "no one fell for it"

~~~
naravara
That was largely driven by bankers and the finance industry moreso than
academic economists. It's all about incentives.

------
lazyeye
Krugman and his ilk are to the economy are what Ansel Keys was to nutrition.
And they appear to be getting off rather lightly considering the devastation
they've wreaked on peoples lives.

------
jandrese
It seems to me that the big problem with Globalization is that we're only
doing half of it. If we exported work but also exported working conditions
then globalization would be a good thing.

Bringing all of the people of the world up to the first world standards. But
instead we outsource only the work and not the working conditions so there's
an enormous gap between what you can expect in the first world vs. third
world. That gap ends up mostly as profit that is absorbed by the ultra-rich.

Globalization ends up being impossible in practice because there is no central
world government dictating standards for all countries of the world, and opens
up the system to exploit poor countries as they race to the bottom.

~~~
CryptoPunk
>>That gap ends up mostly as profit that is absorbed by the ultra-rich.

The statistics don't bear this pessimistic hypothesis out. Global wages have
increased faster over the last 20 years than at any point in history, and the
global poverty rate has declined at similarly unprecedented rates.

Globally there has been no change in income inequality either.

~~~
jandrese
Interesting premise, but the data doesn't support it very well.

[https://wir2018.wid.world/files/download/wir2018-full-
report...](https://wir2018.wid.world/files/download/wir2018-full-report-
english.pdf)

~~~
CryptoPunk
I don't want to download a pdf from a random website. Do you have source that
I would recognize?

