In that interview he also said that the jobs weren't coming back.
This is one of the most powerful statements uttered on American labor and employment trends in recent memory.
I have shared this quote with every middle/lower-middle class person I know who voted for Trump and their responses have all been the same, horror.
Financial interests convinced liberals and conservatives alike that globalism was a good thing (for altruistic or selfish reasons respectively). Instead it just gave Capital access to cheap labor and totally fucked the American worker.
That's the thing I don't get, so many people will advocate "fewer regulations", yet are perfectly content with prohibitive tariffs from the place that allows people living in section 8 to afford iPhones.
You're 100% right, but i just don't see a good answer other than coming to terms with the fact that cheap labour overseas and automation WILL back us into UBI in the very near future. It's the cost of doing business. No different than the argument that it's more economical to work an extra 30 minutes and pay someone else to cook for you.
Why such a large percentage of the middle class thinks that THEIR livelihoods are threatened by having the rich pay up, I don't know.
I can vote for all the environmental protections that I want, but what good does that do if it just forces companies to manufacture goods in places that have worse environmental protections than we do?
I ask this as someone who believes in both movements, and don't have a great answer to resolve this internal conflict.
As China becomes richer they will go threw the same stuff that Britain and later the US did.
Maybe I don't fit the bill as 'envoirmentalist' but I like to live in a place and country with a clean envoirment.
China will have to fix its own problems, and Im sure they eventually will.
Unemployment in the US.
Globalism sounds great.
People keep trying to either spin globalism as evil or good, but it's neither. It's just something that was going to happen no matter what. The US does not have a say in whether it happens. If the US doesn't figure out a way to make it work for them, then they'll be replaced by whichever country does.
The answer is not passing laws for tariffs or thinking the US can race to the bottom with low wages and manufacturing. The world desperately needs advanced technology and medicine, and the US should be focused on that, not stupidly trying to compete with literally every other single country on Earth on things any country can produce.
You are also misunderstanding by conflating globalism with free trade. The two are related, but not the same. You can be for free trade of goods and services, but not for unelected central powers (i.e. an EU, a central bank).
Mainstream academic economists are typically free trade, but we have no science to test this theory so just br careful about drinking too much of the kool aid. LarGe corps, banks, and US gov generally want globalism. Keep in mind why they want that (profit and power). We still have a lot of people suffering in 2017 and no longer a good excuse for it (i.e. resources scarcity cant explain malnutrition anymore).
The ECB is nominated by the EC.
The U.S. Federal Reserve commissioners and chairman are appointed by the President and confirmed by the Senate.
Hell, by your logic, the U.S. Senate before the 20th Century wasn't elected because they were elected by state legislatures instead of popular elections.
It's worked pretty well here for doctors and pharma.
There are different levels of scale at play that make very different tactics work in Shanghai vs Vancouver; in the former there's enough difficulty ensuring that all the logistics work to ensure the populace is not starving that other considerations will necessarily have to go by the wayside.
We also have to consider history and cultural forces, which have inertia, whenever we consider social change over time. The western world is becoming cleaner largely by virtue of each succeeding generation encouraging its children to take stewardship of the environment seriously. Even with this tendency, we still pollute terribly.
I'm not convinced that there is much of an environmental shift in Mainland Chinese culture presently, at the very least in the city cores; and if there is, I suspect it will be generations before it's taken as seriously as it is here, which is still insufficient to actually stop bad things - and still undereducated as to what risks are reasonable vs. simply protesting whatever has the right virtue-signalling associations in the current year.
When you say:
> As China becomes richer
...there's an implicit assumption that "becoming richer" is just a natural, unavoidable, guaranteed outcome of the modern world. This is another assumption, and one I fear would be even harder to justify than Chinese culture becoming environmentally focused in a short enough time to matter.
There's no guarantee that resource extraction at the current rate needed for wealth to outgrow population growth is a guarantee. This means there's no reason to assume that the per-capita average GDP or standard of living is going to rise forever, to the point where environmentalism (in the sense that it's often more expensive) is going to become not only feasible, but fashionable. Frugality may overcome the natural human desire to display wealthiness, if the threshold is too high for the average person.
While your solution may very well become the case in the long term, and again, I hope you're right because it's truly the best outcome, we still have to deal with environmental ramifications today, both of past decisions and of decision being made right now. It's probably better to stem the tide earlier rather than waiting for it to just naturally stem itself.
This might mean "environmental protectionism", in the form of heavy tariffs against goods from countries with lower environmental standards and/or poor enforcement.
Their governments are going to work to improve their standards of living one way or another. If they do it with our cooperation, with our more efficient technology, and with our more efficient production practices they will be able to grow in a way that is less environmentally damaging than the Industrial revolution was.
Enriching them and giving them access to education and giving women reproductive choice is also the only way we are going to foster the necessary reduction in birth-rates we will need to live on Earth sustainably.
Much like how London dealt with 'Killer Fogs' hundreds of years ago when not enough wind was clearing the air; China can't completely ignore the environment because the costs are simply getting to high. However, it's going to be a long time before they embrace western style pollution controls, because there is a big gap between killing people today and killing them in 40 years.
Anyone who thinks the environment is even remotely a reason for China's success in manufacturing is frankly ignorant.
Perhaps I could give them more credit for real progress, but the root cause is still a disconnect from what's on the books being a long way from what's enforced.
Their smog problems largely relate to cars that would not pass US annual emissions standards from 20 years ago. Similarly coal is never 'clean' but it's not that expensive to dramatically reduce particulate emissions.
And yes, cheap labor etc plays a huge role in some types of manufacturing. But, by subsidizing the inputs and lax enforcement of regulations you see dramatic shifts in many types of production well past their less harmful competitive advantages.
But that's for later society (ones with people with stable livelihoods) to figure out, not currently on the table. If you allow yourself to be paralyzed by one issue tapping into the next, you'll deadlock yourself. One issue at a time. The environment is the least of the american worker's immediate concerns anyways, you might as well save your breath in that context.
(Yes, the environment is fucked, "sooner the better" etc - but that's idealism, not pragmatism, and guess which by which one the world actually turns. Bringing up noise just impairs yourself to communicating with the public.)
I don't get this mentality at all. The more we put off curbing environmental change, the more expensive it becomes to fix.
I feel like it's analogous to credit card debt – what you're saying is, don't worry about that mountain of credit debt, with it's 14% interest rate; pay the minimum and contribute to a mutual fund instead. But the credit interest overruns the fund interest, so you lose money. Similarly, I think the costs of climate change are going to overrun any other economic issue we decide to focus on.
They have a number of initiatives related to the environment . They are trying to reduce their carbon footprint, and are close to get 100% of their power from renewable sources. They also announced their intention of a closed-loop supply chain (no new mining).
Of course, they are not perfect. The Washington Post documented the horrifying exploitation of cobalt miners in Congo . Some of that cobalt ended up in Apple batteries. Apple said it was addressing the issue .
The biggest contribution you yourself can make at this moment is to simply consume less.
Why not? It works for so many other countries. Is it not a fundamental characteristic of government to prioritize its citizens over others? Without that, we've got a de facto world government with dissolved borders but that only benefits the rich and powerful. If we truly want to give equal rights and privileges to everyone on Earth we should make global governance explicit to make sure the poor and disenfranchised get fair representation.
If we were to enact a tariff on foreign-made smartphones that was so high that they couldn't compete with domestically-made smartphones, the smartphone manufacturers in China and the rest of the far east would just sell their phones across the rest of the world, where they would out-compete our phones on price (initially). Our domestic manufacturers would have a smaller market and less access to materials and technical advancements, causing our phones to become inferior in quality as well as overpriced. And that would eventually hurt our people and our entire economy as well, because we won't be able to enjoy the technological advancements and lower-cost goods that the rest of the world is benefiting from.
The Soviet Union used to have a pretty self-contained, very protectionist economy, and the low-quality of their goods was a standing joke in the US for decades. That's what protectionism gets you if you're not the sole manufacturer or sole market for a product.
Manufacture IPhones in China to sell to the rest of the world.
I bet that whats Apple is going to do.
Even with the tariff incentives, the demand within the country wasn't enough to cover the economies of scale to keep manufacturing costs effective.
It even worked for the United States. Protectionism was a major component of our policy approach toward industrialization.
Protectionism as a mechanism for supporting the development of domestic capabilities is, historically, a well-justified policy position.
And if you look to highly protectionist economies today, you'll find mostly developing economies.
> Why not?
1. Most importantly, protectionism as a mechanism for inflating wages and/or spurring job growth in an already developed economy isn't nearly as well-tested an approach as examples of protectionism in America's past. Historic examples of US protectionism had the end goal of boosting domestic labor productivity. Modern protectionism risks doing exactly the opposite.
2. The diffuse benefits of free trade must be weighed against the more localized costs of free trade. It's a difficult calculus, but it shouldn't be ignored. Cheap stuff at Walmart and Amazon benefits a whole ton of people. Perhaps more importantly, access to foreign markets and capital creates a lot of jobs and wealth domstically. A lot of Americans are employed doing high-paying, high-quality work that is exported globally. (Including a lot of software engineers.)
3. The benefits to labor may be short lived if automation wipes out a lot of manufacturing jobs. In which case we've traded access to foreign markets and capital for maybe 10 years of jobs and a false sense of non-urgency in job re-training.
I don't see any reason todays America would be any different.
So you take less (percentage-wise) from the mega rich than you do from the middle class because large capital doesn't spend a large percent of its capital on consumer goods. That's regressive.
Why don't you go take the money from the rich instead of coming after the middle class? You want the guy who's making $50k a year to pay $200 more for his iPhone and you want the guy making a million a year to do the same. Both of them are only going to own the one iPhone. Straight up regressive.
Your big export industries will be hit, especially those that run at huge economies of scale and are able to dump the produce on other countries devastating their local industry (think big corp farms).
The answer is never as simple as it seems
If you have the means, invest with the wealth makers. I'd buy into SPY or FANG and let these CEOs do the work for me while I relocate to a low CoL location.
Does it scale? Probably not. I honestly can't think of any other way to make ends meet one my skills become moot.
My only truly innate talent is my ability to cogently communicate with my local peers better than someone who lives elsewhere. Even that is becoming irrelevant because global companies are homogenizing business communication styles.
How do you figure that 30+ years of outsourcing has not yet proven your point?
Fairness. If some major corporation can go somewhere where they pay people $.80 a day for their labor, let me hire people for that amount to do what ever I want. Or we enforce our current laws onto the entire supply chain. Every single person whose labor went to making some product had to be treated a certain legal bare minimum standard.
At least with automation it does largely become available to more people (granted we have to ensure the legal system isn't used to shut it down, such as with the DMCA or the patent system).
anything that is completely unregulated or loosely regulated is prone to abuse.
tariffs/additional taxation levels the playing field.
also - reciprocity. try importing a US-made vehicle in Japan for example...
Something like all manufacturers would be required to be certified and routinely inspected by 3rd party companies that have been approved by the government to do said certifying and inspecting. Would need to have unscheduled inspections and heavy fines against the involved companies to work but we could do it if we wanted.
That's literally what China does, and it seems to be working for them. YMMV.
In China, they are racing to match and surpass western standards. I would say, they have already matched in some cases. But unlike the west where companies export out to save costs. Companies in China do everything in-house.
There will be a time where these 6 figure jobs that some HN users have, will go down by 50%. Why? Better coders outside of the US, UK, EUR, etc.
A major shift is coming. As developers, we need to prepare.
Cue the cries for UBI.
One of my clients is one of the largest multinational corp. in the world. They're excellent at getting things done, above average at remote work, and obviously have offices around the world. Their primary industry has a drastically changing demographic in the US which is prompting a hiring wave of younger people. They would love nothing more than to hire most of them outside of the US. The schools in several countries in Asia outperform the US in the necessary areas of study and they speak fine English. I'm not talking about India. My client is working very hard to make this a reality. They will eventually pull it off. These jobs are all very good paying white collar jobs. I'm telling you the middle class in the US hasn't seen the beginning of the devastation they are about to endure.
This is a trend that will continue until all labor is (as) equal (as an imperfect market will allow) no matter the geography. I see no trends (other than nationalism) that will make this stop.
Devastation of the middle class is about equivalent to devastation of the entire US economy. After we've willingly and successfully transferred all our manufacturing and engineering knowledge and processes to other countries... The only playing chip the US will have left is food exports.
Movie and music industry is in the "Information" labor category, which accounts for a whopping 1.8% of total employment... Oh, and Bollywood is already bigger than Hollywood. I don't see such trends reversing as we continue outsourcing CGI and other movie-making magic. There's nothing special about Hollywood that isn't able to be duplicated somewhere else.
> And reputation via ivy league education? Also a legal landscape conducive to doing business?
These both almost solely benefit upper-class, and no one is arguing that they'll be just fine -- at least, for a longer period of time than everyone else.
When money is generally cheap and easy to come by, save instead of spend. When money is tight and hard to come by, spend. It's "buy low, sell high" applied to personal savings.
I don't think people realize how extremely true this is and how drastically different it will make the west look.
The smart people with money that come here can hoard all the good talent easy.
I think this is true, and I think it will result in massive civil unrest. Economic landscape is not the only thing that will change.
The true outrage comes from the super-rich, who are beginning to sense that their racket is about to be...disrupted. This is the roaring 20s all over again, except multiplied a thousandfold by technology.
Interesting times, indeed.
Can you elaborate on this? What sorts of investments are referring to?
I'll be more concerned once leading technologies that are used by the rest of the world come out of China and not from the US.
Sounds a lot like Feynman decrying the Brazilian education system in Surely You're Joking Mr. Feynman.
I'm not surprised such comment came out from someone in Hong Kong but the truth is the education system in Hong Kong is even more "comes down to repeating book knowledge, so just memorization".
Actually, most East Asian education systems have a heavy focus on "book knowledge, so just memorization". Lack of innovation? Just look at Japan.
Disclaimer: I'm from Mainland.
I don't think most of readers on HN can get and care about mainlanders' feeling of being somewhat offended in this case. So I just chuckled originally. But I hope my comment can supply some context.
To be clear, I'm not saying that globalization is the cause of big-ticket items like healthcare getting more expensive. I am saying that globalization has not depressed big-ticket expenses along with the prices of manufactured goods and middle-class American wages. Many middle-class Americans are experiencing a real decline in material standard of living concomitant with globalization. If equilibration toward a happy new equilibrium takes decades, I don't think that political realities will permit the equilibration to take its own sweet time. Something will rupture first. Maybe it already has ruptured with the election of Trump.
The greater effect on non ultra wealthy people now is the distribution of the wealth at the top for what is currently the outsourcing class, but is quickly becoming the machine/AI owner class.
It's hard to do creative things when you have to work the gig economy all day to barely afford a cardboard box to sleep in at night.
Then there will be less wage discrepancy compared to China and co and jobs start coming back.
I don't think food is a problem though, western EU food prices are not smaller.
tldr; people don't like pay cuts, whether it benefits someone else or not.
I'm not interested in relative to global. I'm interested in relative to where I live. Cause, you know, that's where I have to pay rent and buy food.
$12k is the cited number that you see a lot in basic income discussions. That's just over the poverty level. That's not enough to live on and it's practically a bonus for some members of this site. It's not enough to do anything with. Even with that, people would still work massive hours to obtain the best house on the block.
But just to do that in the US you are talking about 3 trillion dollars (300 million x $10k for easy math) that you have to find in the budget. Now basic income advocates will say you can make up some if not most of that by cutting welfare programs, but given the nature of welfare programs - good luck. That stipend is also not enough to pay for healthcare, so you can't cut that.
How exactly do you convince a nation which already isn't willing to pay for healthcare to pay for basic income, too?
I'd love to be wrong, but I've never seen any numbers that are workable, especially in a political climate anything like today. There could be a complete paradigm shift in the future, where machines literally take care of all needs in an automated way, but that's such a strange reality that welfare is honestly about the last problem we'd need to discuss.
I think the thing that folks keep missing is that technology isn't a zero sum game. So what if there are a shitload of people in the east doing programming cheaper? 9/10 of the 'type' of programming they're doing is grunt work that no one really wants to do anyway.
Will some people feel the 'crunch' from this? probably, in the short term. But technical acumen doesn't sit still. We're not all languishing on our laurels with technology from the 90s while the Chinese are gearing up for total war.
A much BIGGER problem, IMO, is our social policies tending towards overt xenophobia. THAT is what will kill the US and the Western European countries if we don't get off of this nationalist bandwagon that we find ourselves on.
Why is the US and Europe the only places that have to sacrifice themselves for the greater good of globalism?
Why do China and Japan get free passes while anything done in the west to protect citizens interests is decried as xenophobic?
And it will -- as it already ate lots of service and call center jobs. But these things take time, and India's schools are not exactly best of class.
I sometimes believe it lacks a bit of socialism.
I would wager the front end developer will continue to be a high paying job longer than the backend developer. You can outsource API creation but any product company can't risk not having a UX friendly and well designed front end.
If a job is as easy to outsource as so many on here are saying, it is already being done or has been done.
It's been done in my industry. The low level grunt work and basic administration is all outsourced. Has been for decades.
Here's a libertarian making this point: http://econlog.econlib.org/archives/2017/04/does_trade_with....
"Using novel data on firms from the US Census Bureau, I show that the data support this view: US firms expanded manufacturing employment as reorganization toward less exposed industries in response to increased Chinese imports in US output and input markets allowed them to reduce the cost of production."
Or Paul Krugman talking about the same, if you prefer that angle: https://krugman.blogs.nytimes.com/2016/07/03/trade-and-jobs-...
Sure, there are arguments on each side. But it's not as cut and dried as your last paragraph suggests.
Globalism also quite literally lifted hundreds of millions of non-western (mostly, not exclusively chinese) workers out of destitution and into the middle class.
Let's keep some perspective on this, please. We can certainly do better with equality of opportunity here in the US, but let's check that privilege a little before demanding to unwind all the gains made elsewhere. To the rest of the world, the 1960's were a nightmare, not a golden age.
If a globalization measure pushes a large number of Americans out of jobs temporarily, it could be the basis of such a "populist uprise", but couldn't it be better for the country as a whole if it opens up new areas for economic growth, even on a purely self-interested level?
And couldn't part of the gain for America be in building up a prosperous nation with trading ties? Not to mention the lower risk of conflict with another nation with whom America has such ties?
True. You've pretty much identified the nature of special interest groups and why they have so much power.
We must ride the train of pathological altruism to the very end!
Ironically, this religion of globalism is a crude form of Christianity, with none of the pretty prose. The original sin of success must be paid for by eternal self-flagellation.
Even more interestingly, this new religion has only taken root in the west, which has mostly abandoned traditional religious dogma. Perhaps pathological altruism is inherent in those of western genetic origin? The non-western world appears to have none of these hangups regarding their past successes. I don't see Japanese and Chinese leaders flooding their nation with immigrant labor to atone for their recent economic gains while demonizing their own people for past sins.
It was the libertarians and liberal economic establishment who claimed it was cut and dried that unrestricted free trade was better for all Americans. Anyone who objected (Buchanan, Perot, now Trump) was obviously stupid, and probably racist.
Economist have studid the problem for a long time and the wastly overwhelming majority still support it. They have actually fought about the problem quite a bit.
You would do well to actually understand the argument instead of mischaracterising it.
Capitalism breathes credit, credit is a function of belief in the future. I'm curious how much protectionism is necessary at home to maintain necessary levels of belief in the future.
> they (or their children) need to acquire those skills that make them employable in the 21st century
How? What skills are necessary and where do they get them? As far as I can tell the education ecosystem in the US is wholly unsuited for this task.
I think that's the real change that needs to be addressed...self directed learning should be the future, and the need for formal education is dying
For the people who are actually issuing credit I would say very little is necessary.
Now Machine Learning or AI or even potentially low-level programming. Those are some areas where knowledge could be _extremely_ lucrative in the near (10-15 years) future.
Longer answer: programming isn't necessarily a job where you build things. I'd argue it's more generally about communicating with and controlling computers. And computers are increasingly where our lives are spent and/or tracked.
I learned to program when I was relatively young, and I've spent my whole life witnessing people doing mundane tasks that a script could have easily automated away. It's everywhere: doctors' secretaries copying forms, grocery clerks scanning through shelves, office workers manually editing excel documents, etc. The reason these tasks remain un-automated is because programmers don't do these jobs; programming is considered a profession rather than a basic skill. I showed my friend's secretary how to easily automate a task she spent hours a week on, but she felt like the solution was foreign and rejected it. That one script could have made freed up 100s of hours a year to do other things, but she didn't get it.
In a world where business people are looking to "disrupt" a lot of jobs through automation and consolidation, I think there's room for people to help automate away parts of their own jobs and share in the wealth (with more free or recreational time). I believe this is how a lot of people will keep jobs in the next 20+ years.
This is an important and underrated idea that so often gets lost thanks to politics. Much like the drug war, people think that market trends and phenomenons can be controlled somehow, that they are simply choices that people make, and those choices can be controlled - people can simply just choose not to make that choice or face consequences from the state. Rather than a whole new paradigm, something that generates real value that taps into a raw supply/demand, even if it means taking big risks, and that will exist whether or not we ignore it. This is how many ineffective government policies get made.
America needs to embrace globalism as an unhappy reality. The problem is that they have been operating for two decades as if it didn't come with a big downside - that globalism is this great new thing that will make everyone richer. Trump and Bernie have been feeding off this ignored reality without addressing the real consequence. Rather globalism being sold as something that is all good, it should have been sold as a tough new evolution of the marketplace, much like a recession correcting an imbalanced investment bubble. It doesn't need to be rejected by an outsider strongman politician but embraced by an outsider who is willing to face the reality that the consequences extend well beyond the influential class in Washington and they aren't all good.
You can't force your way back to the old reality as if the market phenomenon didn't exist, but you can minimize the downside as you transition to the new reality and do what you can to stay on top of it.
Sadly, hard medicine and politics don't go together. Even if it's the best (and only) medicine.
To continue the drug war analogy, the goal should be minimizing the harms of peoples addictions rather than trying to pretend the addictions won't happen. Likewise the economy needs to either a) compete with the globe in manufacturing and/or b) develop new industries.
I'm not as convinced as many people are that a) is not possible, Apple clearly thinks there's plenty of potential there and so do I. But I'm quite confident that that US is failing to do b) properly. In my business class they called it a new "service-based economy" but clearly that has been insufficient to keep employment and wages high. To develop new industries in place of manufacturing they need to rekindle entrepreneurship and small businesses to give life to new industries. I get the impression the US government is obsessed with appeasing existing BigCos (just look at TPP or Obama's policies during the financial crisis) rather than developing the next generation of industry that functions well in a global marketplace. Silicon Valley is a big piece of the puzzle, but even then it's treated as a sideshow in Washington (even more so now, which is a big fault of Trump) but in the same vein it can't be the only one moving forward.
I really hope Trump's liberal tax and regulatory policy helps boost b). The risk of course is that the usual Washington backroom dealings by legacy BigCos and special interests will guide policy even further towards tired old ideas (like making Wall St even more money) over helping develop new business. At a minimum we know that Trump is motivated to help with a)... so that's something.
(I purposefully ignored social policy consequences here as this comment is getting long enough)
This double standard galls me. If a trend is detrimental to American workers, it's market trends, like the hand of God, irresistible. If it's beneficial, it's a historical fluke (post-WWII boom).
I might buy this if the U.S. government had been a neutral bystander in this process of globalization and the hollowing out of the middle class. In that case, we could say that it was just economics. But, in reality, the government:
- Incentivizes and fails to do anything about offshore tax havens
- Doesn't bust trusts
- Has low tax rates on capital
- Sets immigration and trade laws favorable to corporations
- Spends tons of money on pork, including the porkiest pork of them all, the military
and so on, ad infinitum. Would this process have happened anyway? Maybe. But our government, and the companies running it, actively accelerated it in every way they could. If these trends can't be controlled to some extent, why have so many lobbying dollars been spent to accelerate them?
Most of the things you mention, poor enforcement of tax havens, immigration policy, low taxes on capital, massive military spending, coincided with the development of globalism or were a reaction to it.
But regardless I disagree with your thesis, as I hardly see globalism as something that's detrimental to America as a whole. That may be the mainstream narrative but it's largely inaccurate. The thing about capitalism is that it goes throw booms/busts and it evolves. This is just another phase and we've all been pretending we're in control but the reality of the situation has become apparent recently.
So the dichotomy between historical fluke and market trends doesn't really exist. Historical flukes are market trends.
On further thought, you're right about this. I was rather inarticulately trying to remark on the fact that the supposed "inevitability" of market trends is always used as an excuse to avoid pro-labor legislation, but never pro-business legislation.
> I hardly see globalism as something that's detrimental to America as a whole
Well, we're increasingly seeing that there's no such thing as America "as a whole". There's capital, who it's good for, and labor, who it may be good and bad for in various ways, but a net bad, I'd say. Good for your 401K and the cost of your iPhone, not so much for your salary or employment prospects.
If you take "good for GDP" to mean "good for America as a whole", then yeah, it's probably good. Problem is where that GDP growth is going.
> you think the US government has been highly influential in developing 'globalism'
Yes and no. I think the gov't has been highly influential in ensuring the gains from it go to capital and that its negative effects on labor are not reined in. Globalization would have happened anyway but the govt's approach to it has resulted in more inequality and dislocation than was necessary.
As for whether the government could have slowed or did hasten the process, hard to say, but I think so.
This is most certainly true. And I think dmix hit on a very important point when he mentioned that its hard for politicians to sell a future thats not all rosy and prosperous for everyone.
Off the bat, one of the things the US Govt. could most certainly have done is provide Universal Healthcare and some kind of funding for expanding basic education. I think about all that money earned by US corporations lying abroad...if you think about it, if we had a better taxation system, the strength of US corporations, their ability to generate such profits from around the globe could have been deployed to make all (or most) Americans have better healthcare and education.
I couldn't find where he made that exact point, if he did, I would reply to it by saying that what politicians sell and what they actually do are two completely different things. Both sides of the aisle have been selling rosy futures and working towards the exact opposite for decades. I'd say that Bernie & Trump were evidence that the message "your future isn't all that rosy unless we change substantially" resonated this election.
dmix and I agree globalization is here to stay. I was just a little irritated by his implication that the way we need to respond is by "developing new industries" and "adapting to the global marketplace" and all that jargon. I'd say the S&P has adapted just fine to the global marketplace. The problem is that the median American is worse off anyway. Your second paragraph is apt about some potential solutions.
Who's going to pay for that? Who's going to pay the mortgage while they go back to school? This is, of course, not even getting into the rampant agism in a lot of industries, and that many of these people are over 40.
Globalism didn't "accelerate" trends that would have happened anyhow, it created those trends. American labor is fucked because of globalism.
You might argue the standard of living might have ended up the same under protectionist policies (e.g. poor because of high prices rather than low wages), but I doubt we'd see the same level of inequality under protectionism.
The inequality that you see today wasn't caused by globalism, but by tax cuts on the very rich, which incentivized and legitimized overblown executive pay. All that wealth was then funneled into influencing the govt. to fuck American labor (i.e. ridiculously low minimum wage, further tax cuts for rich, less benefits for the needy etc.).
Globalism is an easy straw man to blame for inequality, but its actually allowed people with stagnant incomes to maintain a certain standard of living (or not let it deteriorate too fast) via cheaper goods and services.
Only a minority of companies in the US even have executives that get the much maligned high pay and bonuses in the last decade or so. What about the massive percentage of wealth that didn't fall into this category? They may have gain significantly from globalism but that was hardly the result of US tax policy alone.
Lets not forget that democrats were in power for the last 8yrs and the state has only grown exponentially since the 1990s under both republican and democrat governments. Just because tax rates weren't the extremes of pre-1980/1970s doesn't make them low. They've been relatively consistent while the middle class income dropped.
The complexity of the tax code and lack of competitiveness with international countries may have heavily influenced inequality. But it was hardly the result of explicit tax reduction for the rich...
The idea that tax havens are something that were merely a matter of weak policy is naive. Even worse than the drug war hawks.
Just because the middle class didn't keep pace with the wealthy doesn't mean only the wealthy were at fault. The fact the middle class lost wealth is hardly singularly the fault of the wealthy. I know this narrative sells well in politics but it's very short sighted.
Even if the US adjusted tax policy to redistribute a larger chunk of taxes towards the middle class it would hardly make a dent in the new reality in the fact there is hardly a middle class economy like there used to be. So you must either develop a new middle class economy or you get temporary perks of taking it from the wealthy. This is the big whale in the room that the Bernie bro guys are ignoring. The likely scenario is that the wealthy would become continually less competitive over the years, shift way more money over seas, and the middle class would be in the same situation with a little bit more money for a short period.
Gov spending under any administration that enacts those policies would largely offset most of the gains going directly to the people regardless (which is good if it results in universal health care, but little else if it's not sustainable).
I would recommend Krugman's Conscience of a Liberal for an entertaining read. He referenced another book, aptly called Inequality, which I'm currently going through. Its a little more academic prose so its not something I can finish quickly (in short, its not an entertaining read...not that all books have to be of course).
Both of these books examine historical precedents for income inequality and attempt to analyze the current situation as well. I think they did a fair job, although I am open to change my mind if there is a better explanation. But these and other books, such as Dark Money, and just general news about the scummy activities of people like the Koch brothers have made me more convinced of this viewpoint.
Now to address your comment...
> Only a minority of companies in the US even have executives that get the much maligned high pay and bonuses in the last decade or so. What about the massive percentage of wealth that didn't fall into this category? They may have gain significantly from globalism but that was hardly the result of US tax policy alone.
This is most certainly not true . From  and from Krugman's book, you can see just how much the changes in tax policy has incentivized ballooning executive pay and created a new class of executives, who may not be as rich as the landed/inherited, but are certainly "rich". And this class has grown and become more enriched due to globalism, the opening of foreign markets and plummeting of labor costs, both due to automation and cheap foreign labor. I almost think of it as a weird form of trickle down effect, where most of the wealth goes to the very rich but a little (relatively insignificant but in absolute terms very much so) trickles down to the executive class.
> Lets not forget that democrats were in power for the last 8yrs and the state has only grown exponentially since the 1990s under both republican and democrat governments. Just because tax rates weren't the extremes of pre-1980/1970s doesn't make them low. They've been relatively consistent while the middle class income dropped.
Yes Democrats were in power for 8 years but how many of their policies could not be enacted due to obstructionism? But lets not get into that area here: 8 years is a relatively small time to create/destroy inequality. And I don't see any Democrats pushing for tax cuts on the rich, especially cutting estate taxes, which affect only the very rich.
> The complexity of the tax code and lack of competitiveness with international countries may have heavily influenced inequality. But it was hardly the result of explicit tax reduction for the rich...
Its not the complexity of the tax code but its very nature. The top tax rate for personal income is around 35% in the US whereas it is much higher in other developed economies. And the sources that I've listed point to historical trends that prove the same point: once you have a class of super wealthy, they will inevitably influence the Government to reduce their tax burden no matter how that is achieved.
> The idea that tax havens are something that were merely a matter of weak policy is naive. Even worse than the drug war hawks.
I don't think that comparison achieves anything but hyperbole so I'm not going to comment on it.
> Just because the middle class didn't keep pace with the wealthy doesn't mean only the wealthy were at fault. The fact the middle class lost wealth is hardly singularly the fault of the wealthy. I know this narrative sells well in politics but it's very short sighted.
I think you're conflating wealth with income. The middle class, by their definition, is not wealthy (at least in the same country; middle class in US is most certainly more wealthy than in India, say). The US middle class hasn't lost wealth, its their incomes that have not been growing as fast as the incomes of the wealthy. Its unfortunately not just politics: investments in people reap great benefits for society. If a country fails to invest in the health and education of its citizenry because its unable to raise the revenue to do so by the wealthy, then its most certainly the fault of the rich.
> Even if the US adjusted tax policy to redistribute a larger chunk of taxes towards the middle class it would hardly make a dent in the new reality in the fact there is hardly a middle class economy like there used to be. So you must either develop a new middle class economy or you get temporary perks of taking it from the wealthy. This is the big whale in the room that the Bernie bro guys are ignoring. The likely scenario is that the wealthy would become continually less competitive over the years, shift way more money over seas, and the middle class would be in the same situation with a little bit more money for a short period.
I don't think that is likely. Sure its a changed reality now, and I certainly don't see what other future markets will open up, but this new reality demands a healthy, educated workforce to operate it. Income redistribution is less about taking from wealthy and giving it to the poor as much as taking from the wealthy and investing in institutions/programs that can assist the most vulnerable in society. More taxation by itself won't make the wealthy less competitive... I mean, how does that even happen? On the contrary: educating a kid from Inner City Detroit might give us the next Steve Jobs.
> Gov spending under any administration that enacts those policies would largely offset most of the gains going directly to the people regardless (which is good if it results in universal health care, but little else if it's not sustainable).
You seem to imply that all Govt. spending is wasteful which is most certainly not true. Surely its not perfect, but that's another problem that needs fixing.
Also, you asked for a source but failed to provide a single one for any of the many many assertions that you have made.
The BLS seems to think there are 72,000 tool and die makers in the U.S..
>I have shared this quote with every middle/lower-middle class person I know who voted for Trump and their responses have all been the same, horror.
...which quote, the tool-and-die-maker quote, or the jobs-aren't-coming-back quote?
There are an order of magnitude more people employed as tool and die makers in China anyhow so, even if you do use that as a metric, the broader point still stands.
Do you have a recommendation for a source for employment statistics like that for China? In English? A quick search hasn't turned up much, but there must be something out there like that.
It's probably reasonable to assume a decent company size so... seemed ballpark accurate
I am not anti-capitalism by any means, but I think strong protections against monopolies and protection for workers are probably a good thing for everyone.
This is absolutely a good thing.
Why would you encourage inefficient trade?
Are Americans somehow more deserving of jobs than Chinese ones?
The US middle class had it good for a while now, but it's time they loose some weight, stop buying all the unnecessary garbage they think they need and live a little like the middle class of the rest of the world. In a globalized world you can't have different definitions of middle class depending on where a border gets drawn. The rest of the world is also learning as they mindlessly try to emulate the American middle class, that there is no free lunch. They need their source of exploitable cheap labour too and it's creating all kinds of internal social upheaval across many different country.
A company that does not move to cheaper labour will go bankroupt and a new all China company will simply take over. So you have unemployed anyway.
The typical solution to this is that you start walling of these industries with tarrifs or to subsides.
What you eventually have is a huge sector of the US economy that lives of the higher prices and/or taxes of the rest of the population while everybody has lower standards of living.
Once China started institutional reforms there were only two possibilites, these jobs were payed for by other americans or they go away.
Also, most americans only had these jobs because the US was able to export lots of these manufactures.
Germany and Switzerland have managed to maintain high wages and high standards of living in a globally competitive manufacturing sector.
The idea that all this change is inevitable or impossible to avoid and we can't pay workers properly is just bullshit, it's the messaging of a multi-decade well financed public relations effort by people in the U.S. with a vested interest in making the public believe it.
The Mittelstand doesn't do the sort of manufacturing that the rust belt did 40 years ago. These smaller firms existing today only because of big disparities in quality between their products and cheaper competitors. They benefit enormously from the German government's investment in applied research.
I watch VP's get million dollar bonuses while laying off workers. I watch execs outsource whole departments, watch quality tank, and they get millions.
The center can not hold. It will come crashing down.
This doesn't make sense to me. That one bad aspect of it does not negate all of the good that has also come from it. I would argue that the people affected by this (a lot of the people Trump appealed to - for example coal workers) weren't let down by globalization but by their government. They should have been retrained, for free, by the government. Instead, they were forgotten about.
Clearly it's not that simple, but globalism does attempt to accommodate for this problem at least in theory.
Maybe I'm missing some context here. Why would their reaction be horror? That quote sounds like something that Trump would have quoted in a commercial or on a debate stage.
That is exactly why middle class people voted for him.
The situation has been rapidly changing because of automation.
Imagine if a clothing company could have new product responding to trends available in a week. Nintendo is currently having difficulty keeping up with the demand for Nintendo Switches, imagine if they could rapidly produce more near their intended markets. Automated small batch production could even make things like ordering the exact same shirt you bought 10 years ago affordable.
Doesn't mean the economics work all the way through. But my point is things change and the advantages of manufacturing overseas in the past are not the same as the advantages today. And that will keep changing.
The future is hard to predict. Anyone that says something will never change is wrong because on a long enough timespan literally everything changes.
Automated production does not imply that setting up the production line is automated. You can't just reconfigure a production line because you don't have machinery on standby (these would be dead assets in the 10 MM range). High precision molds used for Lego, for example, are in the 250000 EUR range. You don't have these laying around and cannot order special tools with a lead time of less that a quarter year.
Intel make most if its dies in US: https://en.wikipedia.org/wiki/List_of_Intel_manufacturing_si...
Wasn't "the jobs aren't coming back" a Steve Jobs quote, not a Cook quote?
Lump of Labour fallacy.
The way both Liberals and Conservatives speak as if USA is marred with some wide scale unemployment. It is as if Americans would love to have sweatshops where pregnant women will be working 14 hours a day.
USA continues to enjoy very good employment, better than most developed countries with comparable scale and diversity. People all across the world are flocking to take those US jobs and you have to close the gates to prevent them from coming.
I find the constant self loathing pretty disgusting on part of a country that is home to such exceptional economy.
All those jobs are not coming back and it is a good thing.
I remember clearly during the 80s and 90s that the pro free trade argument from economists was that there would be winners and losers but since we would be richer overall we could use taxes to help out the losers via unemployment, retraining, relocation help, etc.
But what the economists ignored but is so obvious in hindsight is that this country has a strong anti-tax anti-government strain and we refuse to have any social safety net or government assistance. So what we've ended up with are super-winners and millions of permanent losers. And the super-winners are using their wealth to become more politically powerful, increase their propaganda spending and destabilize democracy.
More importantly a lot of services that were unaffordable 20 years ago are not trivial. This includes smartphones, flat screen TVs, better quality and safer cars etc. In closed economy you would have struggled for all these things. Just like my home country India.
The flood of cheap goods destroyed communities that depended on manufacturing work
There is no evidence to that. Cheap goods helped poor people live a better life and build better communities. American houses today are better than they were 30 years ago. American healthcare is more accessible than it was 30 years ago. More Americans are getting better education than 30 years ago.
They are in such deep doo doo, a charity was started to pay overdue water bills. They have the most $1 properties on auctions sites of any location. They are experiencing horrifying levels of blight.
etc ad nauseum.
There's your evidence.
That is barely any evidence. It is like pointing to a failed Bakery and claiming Bakery industry has sunk. It is a bit like Trump's logic that because Disney replaced some of their staff with H1Bs all programmers are losing their jobs to H1Bs.
Detroit had peak population in 19050s of 1.8M. Today it is half at around 700K. Most of the people have already left Detroit for better future and more will leave.
But guess what? From California to Texas from Washington to Florida not only cities have grown rapidly they have seen unprecedented increase in quality of life of bottom 20% of people. Any protectionist measure aimed at "fixing" Detroit in the Trump's "Make America Great Again" style would have brought a lot of misery to all those people.
People who had well paid manufacturing jobs were not in the bottom 20%. Increases in quality of life of the bottom 20% is irrelevant to the point that manufacturing jobs have seriously declined and this has hurt a large segment of the population.
I don't know nor care what your agenda is, but putting on blinders to obvious and undeniable facts in no way helps your case. People used to be able to get well paid factory jobs in the US without any special education. It isn't the end of the world -- average education needed for entry level work has been trending up for more than a hundred years -- but it absolutely is a hardship for a certain segment of the population.
You are right only if you see things in isolation but society can not be seen that way.
For example my grandpa grew his own organic food and died at the age of 45 by choking on Asthma (no medical care). My father is still alive at 70 despite drinking and eating genetically modified stuff all the time. While in isolation GMO food (might) be horrible, the fact is the lower prices of food have increased human productivity and has ensured my father could afford better health care. I feel things are very interconnected.
Further, you dismissing Detroit as evidence of a large scale trend and comparing it to me saying a single bakery failed while then citing your father and grandfather as evidence for your point of view goes well beyond ironic.
I also see things as interconnected and complicated, yet I am finding you incredibly difficult to engage. Your tactics look an awful lot like bad faith arguments. Maybe you just don't see the conflict inherent in your own maneuvering. Lots of people don't. But you are being incredibly contradictory here.
It is truly staggering to have the right now taking on the mantle of income inequality after decades of obstructing any efforts to tackle it, so they can bring back the kinds of jobs that unions helped to define the middle class with after being instrumental in destroying unions all while blaming the left. I know its not quite that cut and dried but I think the left feels like that globalism is OK as long as you are distributing the wealth made from it. It seems like the republicans right now are willing to make us less wealthy and less well off in many ways, as long as the white middle class can benefit (even if the country suffers in general).
edit - I agree with your point that voter perception matters a lot. But I think the Republicans just lied to exploit that perception. They're not actually changing their ideology and agenda to do any of it though.
Not if you used one of those jobs to feed your family.
Seriously, I am absolutely sick and tired of people saying that not having these jobs is a good thing, and completely ignoring the large amounts of people who did depend on those jobs to provide for their families. In order for it to really be a good thing for those jobs to not be here, there have to be feasible alternatives for those people. Right now, there aren't. That's why Trump's cry of bringing the jobs back was so successful.
Yea, the country can chug along while population gets ever impoverished and averages can continue looking just peachy as the income gap grows.
I'll just throw in an anecdotal email from the local school district about how they will no longer permit elementary students to purchase lunch if their lunchroom balance is negative. Think about that next time you strut out the "exceptional country" argument.
Are you unaware of the steadily declining Labor-force Participation Rate?  
"16 years and older employed or looking for work..."
Shouldn't it be something like 16 years to 66 years old? The boomers are getting older. Or even better, 20 to 70. I'm not really worried if people are delaying entry to work because they're still full time students or stopping work after they become eligible for full Social Security benefits.
That's because millions of people were factory workers living a cozy life back until a few decades ago and now they (and their kids and communities) are struggling to make ends meet.
Millions of people weren't architects.
Not much "glamorizing of factory jobs" is needed to explain their complains. Plain desperation will do.
manufacturing jobs [which] comprise just 10% of all employment in America (in percentage terms, there has been a virtually uninterrupted decline since 1970's 26%) (The economist)
And even those statistics can be and are manipulated in lots of ways from pundits to make a point that "it has never been better" and that everybody migrated happily to services jobs etc. That people used to be able to buy a house and send kids to college (and put some money aside) in the 50-60s with a manufacturing job, and they don't now is rarely mentioned. Or that tons of tricks are used to reduce the unemployment numbers.
re: housing and college costs, I don't think that has much to do with manufacturing jobs in particular.
Because the other major alternatives are
(a) service jobs that are a zero sum game of people inside the same country of circle-servicing one another,
(b) jobs like scientist, software developer, etc, that by their nature require few people so wont be increasing anytime soon either (and eliminate other jobs)
(c) UBI -- good luck with that.
Furthermore, if white collar jobs are "shrinking" means they should be irrelevant, manufacturing jobs are shrinking means they should be lamented?
Lastly, what if increasing automation means that manufacturing jobs will inevitably go away regardless of how anyone feels about it or complains about it? What do you propose to stop that? Manufacturing output of the US has consistently increased despite any variance in the amount of people it employs or the state of the rest of the economy.
I propose a society where mankind DECIDES about what kind of jobs it wants to have (or none if they please so), and they are not dictated to it about the mere availability of some technology.
Measured how? Labor participation rate? Average household income? GDP per capita?
"better than most developed countries..."
Better than the 2000s? Better than the 80s? The 60s?
Not only is labour cheaper in China, everything is. The USA is uncompetitive not because we don't have technological prowress, or enough land, or enough resources; it's because our laws have made US manufacturing too expensive. There is no other answer.
Even if the North Korea problem gets solved, the China problem is still there and it wont be solved anytime soon.
If you have some streamlined manufacturing here, it is easier to fork it in case the main area of supplies goes offline due to regional wars/embargoes/troubles.
Right now relying only on east asian manufacturing is a single point of failure for apple.
Apart from NK, what's the China problem?
edit: I had a hunch you'd be the kind of person who would cite a zerohedge article as a source on this. They have been gleefully predicting the collapse of China's economy since the site's inception. No doubt, they will gleefully take credit for "predicting" its collapse, too (should it actually happen), despite all of the failed predictions year after year.
If you predict in 2016 that an apparently healthy economy will suffer a severe downturn, and it happens in 2017, that's impressive.
If you predict a severe downturn in 2009 and it only happens in 2017, that's significantly less impressive.
If you predict a severe downturn every year since 2009, that's zerohedge.
It reminds me of the peak oil prophets who went from predicting collapse by 2012 to predicting collapse, uh... eventually. Remaining pessimistic in the face of contrary data doesn't make them any smarter than being irrationally optimistic.
I mean, I'm sure it will happen eventually and then all the naysayers will be 'right', but not really (broken clock, twice a day, yadda, yadda, yadda).
'"Someone Is Blowing Up": RBC Warns China-Induced Unwinds Are Escalating'
Just realize it's not all sunshine and rainbows in China.
Amazing what passes for news these days. This sounds no different from what they normally do with their supply chain. Anyone remember GT Advanced Technologies? Apple wanted their sapphire glass for the iPhone 6 and fronted $439m for a factory in Arizona. The deal went south and Apple ended up owning everything and 700+ people were laid off. Apple turned it into a data center.
It wasn't that the deal went south, it was that the company was unable to produce & deliver the product that they said they could, at the price they agreed to. GT bet the company on being able to fulfill their contract with Apple, and failed.
How is that not the deal going south?
Apple is a very secretive company and even with this announcement they conveniently left out where the money is going.
This is business as usual, but there is now an incentive to brag about domestic investment because a simpleton is in the Whitehouse.
+ Advanced manufacturing jobs are done by robots.
+ $1 billion builds one moderately sized manufacturing plant (Tesla's Gigafactory is $5 billion )
+ There's a scene Austin Powers: International Man of Mystery I wish the press would review before reporting so breathlessly.
They are most likely to invest in Foxconn to help them open up shops in the US.
They anticipate $16B of capital expenditure in 2017, where the breakdown there is between US Data Centers, the new campus, and manufacturing equipment requires someone who actually does analysis.
Apple's got enough money to experiment with multiple approaches and pour lots into the ones that work down the line.
I'm not saying it's a good thing or a bad thing, I'm just saying bringing manufacturing back to the US doesn't mean jobs, it couldn't and still be profitable. Any new factory in the US will have to be so heavily automated it couldn't possibly provide any jobs
I would argue it is entirely irrational to perpetuate this bizarre notion that living in a prosperous nation is some sort of original sin that must be atoned for by self-flagellation.
Prosperity is not a finite resource. I believe equilibrium doesn't necessarily have to come at cost to anyone.
whether it's original sin aside (though i do believe it is) where do you see self-flagellation? i'm simply saying i'm okay with china becoming more competitive and market forces taking their natural course.