the problem is capitalism and the rest of this is just rearranging the deck chairs on the titanic.
The Economics Thread
- Thread starter ManUtd1999
- Start date
Actually I did reference the fact that after the Hawley-Smoot Tariff was lifted, the trade that ensued was a big part of the most successful period of America's middle class (at least those not suffering from Civil Rights violations but that's another issue) from the 1950s to the 1970s. That is historic fact, you can look that up.
It's actually you that has provided zero economic data (or even historical examples) in favor of protectionism. You haven't offered anything other than your opinion that all these isolationist and protectionist ideas would be good for the middle class. Its also a historic fact how much protectionist policies helped special interests and not the middle class.
"Much has been written about the economic absurdity of such measures. The benefits of free trade have been well known since Adam Smith published The Wealth of Nations in 1776. What is less known is that protectionism is politically dangerous. The United States spent more than a century protecting domestic manufacturers from foreign competition. It was special interests that benefited, often at the expense of the American people.
It was not until the Tariff of 1816 that protecting manufacturers became a major purpose of federal tax policy. Except for a brief revival of free trade sentiment in the decades before the Civil War, the country's industrial policy remained decidedly protectionist.
That's about 100 years of protectionism, and the verdict of history is unequivocal: No single policy ever aided "special interests" more than the sort of tariffs Trump claims will help the little guy.
While protectionism is pitched as a way to guarantee stable employment and living wages, workers don't benefit directly from tariffs. Employers receive the direct benefits in the form of higher prices paid for their products, which make tariffs a massive source of corporate welfare. This creates three political problems: partiality, gamesmanship, and corruption.
First, protectionism is inevitably partial because it favors industries in competition with foreign manufacturers over those that are not. For most of its history, federal tariffs were hard on farmers, especially in the South and the West. The nation's overabundance of agricultural products meant that, with a few exceptions (among them, sugar), the country could grow its own food, with plenty left over to export. So tariffs mostly harmed farmers, raising the price of goods they had to buy, while provoking foreign governments to slap retaliatory tariffs on American agriculture. A 21st-century tariff would likewise favor producers of manufactured goods over, for instance, services and intellectual properties. Workers in the latter fields would pay higher costs to subsidize the wages of workers in manufacturing sectors. How is that fair?
Second, protectionism lends itself to political gamesmanship. The benefits of protection are concentrated in the favored industries, but its costs are diffused across society. That makes it a useful tool for politicians to secure political support. For instance, if the government slaps a tariff on foreign clothing, the domestic textile industry will notice the benefit right away while the rest of the country will barely perceive that they are paying a few more cents per shirt. This is bad policy, but it gets substantially worse when virtually every industry pleads with Congress to offer them similar morsels. That's how tariff logrolls get set in motion—as happened with the "Tariff of Abominations" of 1828 and the Smoot-Hawley Tariff of 1930."
---
Now, you misunderstand my point about the Smoot Hawley. I never said the Great Depression was "caused" by protectionism. I said the letter economists wrote against tariffs as a way to help the country get out of the Great Depression was ignored and the economy still stagnated. Read the letter from 1930 that I linked please before misinterpreting statements. In other words, the Crash of '29 was caused by a number of factors (wild speculation, income inequality, lack of social safety net, debt structure of farm equipment + dust bowl, etc). But the economists in 1930 were saying the tariffs and protectionism was a horrible idea that would not help get out of the Depression. They were right. The protectionism just compounded the problems.
That article explains it also:
"What ultimately destroyed this rotten regime was the Great Depression. In response to the initial economic crisis, a Republican Congress in 1930 passed Smoot-Hawley, the most aggressively protectionist measure in a century. The Depression only worsened, and protectionism got its fair share of the blame. After World War II, U.S. industry had less need for protection"
And here is another article that reflects the point I was making
"In fact, few economists think the Smoot-Hawley tariff (as it is most often known) was one of the principal causes of the Depression. Worse mistakes were made, largely out of a misplaced faith in the gold standard and balanced budgets. America's tariffs were already high, and some other countries were already increasing their own.
Nevertheless, the act added poison to the emptying well of global trade (see chart). The worldwide protection of the 1930s took decades to dismantle. And bad monetary and fiscal policies were at least based on the economic orthodoxy of the day: economists would tear each other apart over the heresies of John Maynard Keynes. On protection, there was no such division. More than a thousand economists petitioned Hoover not to sign the Smoot-Hawley bill. Bankers like Lamont sided with them; so did editorialists by the score."
---
Now you keep talking about the middle class. But the way you bring it up makes me think you don't quite understand the difference between correlation and causation.
You keep making this red herring that the weaker prospects of the middle class in 2018 compared to 1978 is all due to manufacturing and free trade. That really doesn't stand up to any analysis. The real reason for the lack of progress of the middle class is far more complicated than this overly-simplistic manufacturing red herring. This topic is much more complicated as I mentioned. First, biggest factor is universal healthcare since that would free up 2 trillion. That would be a massive difference for US companies that would bring a tonne of benefits, including the potential window for a true livable wage proposition to replace current minimum wage. This article is a good start
The entire premise that all America needs to do is re-create all these old protectionist policies and somehow this will magically aid the middle class is without any supporting evidence. Feel free to link any supporting evidence to your claims about tariffs and protectionist policies being inherently good for the middle because I have linked a lot of sources while you haven't supplied any but your opinion. What are your credentials btw to imply without evidence that you are right and dozens of Nobel Laureates are not as smart as you on the economy for the middle class?
You might be right considering the bolded part. Considering the rest it will be subsidies and protectionism that will make them less innovative, less competitive.
I'm not entirely sure why he won Ohio but for Michigan I know from conversations with my cousins, aunt's, uncles and grandmother that for those that did vote for him it was largely either a) lies or b) empty promises. A lot of them (and i have over 25 cousins in Michigan so obviously not all) tune into the propaganda channel for hours everyday. None of them will get the work my granddad did for 40 years at Chrysler... because it doesn't exist anymore, not in Detroit, not in Mexico and not in Shanghai. Tariffs will do nothing for them other than exacerbate the situation for those already struggling now (they simply won't be able to afford a lot of the stuff they can afford now).
Good point I meant to actually post my first reply in the Economics thread but I forgot. @Raoul @Damien @Carolina Red can move some posts to Economics thread if necessary please
Not everyone who works in Hollywood is a multi-millionaire actor, producer, director or studio executive. There are thousands of jobs that are firmly in the middle class. As an example: a friend of mine works as a production assistant after graduating from NYU Tisch (with student debt of more than $200K). She currently makes between $16 - $18 per hour, working on films for few months at a time, after which she becomes unemployed and has to find a new gig.
The US economy accounts for less than 1/4 of the world, if you make it painful enough, they are more likely to just move the entire operation away.
Thanks for that economics debate folks. @Danny I can't let that accusation stand that there's been no economic data provided when @oneniltothearsenal and @sglowrider have provided loads of articles, examples and historical facts which are all, guess what, based on data and research. If you're choosing not to read what they've posted, that's you're problem, because they're clearly providing the background you keep asking for to justify their position. Isolationism will be a disaster for the US.
I work in health care also and know a lot about it. So, don't post anything if you aren't prepared to back up your claims. People over 50 and people under 50 are obese because fast food in this country is cheap along with sodas. So the poor, naturally, tend to buy this as they can't afford to buy healthier stuff that isn't as cheap. The western diet causes inflated rates of diabetes and cancer. Thank you for pointing out that information (sarcasm). And as for restructuring the whole system, we just tried that with Obamacare. Did you notice the massive backlash on the right?
I have actually addressed everything they said and am not getting that time I wasted back now. Posting articles that you have googled and half understand is not data and research.
I would love to see this - I can just imagine what would happen to their stock price.
The picture was taken when he met a crowd of supporters. So it may well be true.Is this real?
Is this real?
Bit of a cnut move by the media only spreading the two first pics if it is.
By preventative medicine you mean giving patients the latest thing that big pharm is pushing right?
Because I'll tell you right now that my dr has changed my medicine (even though the other was working) 3 times now and each one has made me sick (by sick I mean throwing up too the point my stomach lining was coming from my mouth) and there's only one reason. He makes more money giving me the new meds.
In response to you wanting to go back to 1975 with coal mines and textile factories, or to you wanting the US to make Iphones and get Detroit back on track.
How about we give kids free education and make them educated enough to get the jobs that would allow them to be middle class now?
Universal health care would put money back in the middle classes pockets too.
Last edited:
Last edited:
Once again: you are looking at it from a pinhole perspective. Not seeing the big picture at all. Its about financial sustainability and a pivotal change in the care continuum.
Like I said, you are not seeing anything in its totality but cherry-picking you information and piecing it together dispute it not being logical nor reflective of whats going on in our current economic framework or healthcare environment.
But you are typical of a Trump supporter. 99% of the folks will tell you that your logic is incorrect but then you focus on how much the system is detrimental to you -- then fit the narrative accordingly.
That's why he loves the uneducated -- more easily fooled.
It's you who has to go back to read up on your history.
@oneniltothearsenal Just want to say thanks for taking the time, he's been getting away with posting some right shit in this thread.
I would love to see this - I can just imagine what would happen to their stock price.
If they moved to a place where there is less tax then it would likely go up.
Cheers. It can get time consuming trying to debate economics. Glad my posts are not ignored as long text
No, not having this. Don't be making accusations about "half-understand" when you haven't addressed any issue. I have a degree in economics. I have sat in seminars from some of the Nobel Laureates on that list. What is your economics background to make you question the credentials of 1000 economists (which includes labour economists that specifically study the working class and middle class despite your claim otherwise)?
Not sure what you're claim is on data and research when 1) you have posted exactly zero data and research supporting your position 2) you have not addressed the historical facts from the bad effects of 19th protectionism to why income inequality is rising since the Goldwater/Reagan push 3) you aren't addressing the economic arguments from multiple schools and disciplines 4) Never addressed practical examples about why companies from 3M to WB to Google would have any interest in engaging in some regressive experiment into isolationism based purely on faith and no data (again show us your data supporting isolationism). No company is going to risk profits based on faith.
And there are a half-dozen relevant factors I haven't even mentioned. The value of the USD would go down in an isolationist US. Just because US wants to be isolationist doesn't stop the rest of the world from integrating. Europe and Asia would integrate further and the USD value would be hurt in currency markets (the petro relationship is another massive hurdle). Another factor is the US military. An isolationist US would drastically reduce military spending. How protectionism relates to climate change and energy a topic very relevant to Californian citizens and companies and so on.
So this would all just increase the incentive for the USA's economic powerhouse regions in the global economy to just secede and not bother with this experimental idea. There is no incentive for California, Texas, etc and their economies to engage in this experiment.
I think someone poked the bear
Ohhhhh, can you feel that BURRRNNNN?
I admire your patience, and I find your posts on the topic interesting. Also, he's falsely accused you of not providing any facts, of not understanding what you're talking about, and he's been very dismissive of economists in general. I think you've earned the privilege of calling him a cnut and telling him to feck off with his dumbass ideas.
The guy clearly has some half-baked thoughts and ideas that he's pieced together from a mish-mash of sources, probably mostly of the conservative and nationalist variety, and refuses to entertain the notion that it's in fact he who might have gotten it wrong. Nope, gotta be all the economists and experts. Plus, they're probably dumb, as you don't need to be intelligent to be an economist. That's why he isn't one, because he's too intelligent.
Just words. You need to post some credible sources.
You do realize there are other stock markets in the world like the Nikkei, FTSE and HSI?I would love to see this - I can just imagine what would happen to their stock price.
This is like watching a crazy guy in his garden shed trying to use a loose stick of his own shit to defend himself against an incoming nuclear bomb.
Seriously, I have to provide data to back up my claim that there has been wage stagnation over the last 40 years for the middle class and it is shrinking. Is that what you people are saying? Why don't we
I don't know if you are being disingenuous or if you sincerely believe the things you are saying. First of all, do I need to provide data that the middle class in the US has had wage stagnation for the last 50 years? I thought that was obvious but some people are complaining that I don't provide links to support my assertions. Here you go:
https://www.nytimes.com/2018/07/18/opinion/wage-stagnation-unemployment-economic-growth.html
https://hbr.org/2017/10/why-wages-arent-growing-in-america
Do I need to provide 'evidence' that the middle class has been shrinking or have you not been living on a rock in the middle of no where with no access to news from the rest of the world? I am going to assume you agree that both of these points are facts.
Where we disagree is on whether the tariffs will help this situation or not. So lets address what you said.
1. 'Actually I did reference the fact that after the Hawley-Smoot Tariff was lifted, the trade that ensued was a big part of the most successful period of America's middle class (at least those not suffering from Civil Rights violations but that's another issue) from the 1950s to the 1970s. That is historic fact, you can look that up.'
This is dishonest. Lifting the tariff did not cause the boom. What caused it was WWII. That's the historical fact that is relevant here. On top of this, you are not comparing like with like. Putting a tariff on a 1940s economy is quite different to putting a tariff on the economy today. Do you agree?
2, "It's actually you that has provided zero economic data (or even historical examples) in favor of protectionism. You haven't offered anything other than your opinion that all these isolationist and protectionist ideas would be good for the middle class."
What we know is that the current situation (with no protection whatsoever) has decimated the middle class for the last 40 years. So, we know what you support doesn't work. Now, what example have we of tariffs working. We don't have to look far: China has massive tariffs on a variety of good. 25 percent on imported cars for example. Their economy has been booming and they have created millions of jobs for their people.
https://www.npr.org/sections/thetwo...dy-to-lower-import-tariffs-and-trade-barriers
3."While protectionism is pitched as a way to guarantee stable employment and living wages, workers don't benefit directly from tariffs. Employers receive the direct benefits in the form of higher prices paid for their products, which make tariffs a massive source of corporate welfare. This creates three political problems: partiality, gamesmanship, and corruption."
Yes, maybe. But what do you think we have right now? Our govt is already bought by corporate lobbyists (who will fight very hard against the tariffs). Nobody has a perfect solution but we have tried your way for the last 50 years and it has been a disaster for the middle class. Lets try something else.
4. "Now you keep talking about the middle class. But the way you bring it up makes me think you don't quite understand the difference between correlation and causation.
You keep making this red herring that the weaker prospects of the middle class in 2018 compared to 1978 is all due to manufacturing and free trade. That really doesn't stand up to any analysis. The real reason for the lack of progress of the middle class is far more complicated than this overly-simplistic manufacturing red herring. This topic is much more complicated as I mentioned. First, biggest factor is universal healthcare since that would free up 2 trillion. That would be a massive difference for US companies that would bring a tonne of benefits, including the potential window for a true livable wage proposition to replace current minimum wage. This article is a good start"
You don't need to link me to articles about universal Healthcare. I already told you I work in that field. Agreed but we will never get it. But, while employer based healthcare is a burden on companies, it is not causing them to be unprofitable. Companies can afford to pay their workers more. They don't because they don't need to. The power of the worker in this country to bargain with his/her employer has been eroded by globalization. That's really obvious and if you disagree on that point, then there is no point continuing this discussion with you. Why do you think so many people are angry?
5. "The entire premise that all America needs to do is re-create all these old protectionist policies and somehow this will magically aid the middle class is without any supporting evidence. Feel free to link any supporting evidence to your claims about tariffs and protectionist policies being inherently good for the middle because I have linked a lot of sources while you haven't supplied any but your opinion. What are your credentials btw to imply without evidence that you are right and dozens of Nobel Laureates are not as smart as you on the economy for the middle class?"
You talk as if economists were authorities on what is good for the middle class. Well, as you say, every economist agrees that free trade is a good thing. And look at what it has done to us over the last 50 years. Economists are not concerned with wealth distribution, just with wealth creation and what best creates that.
I don't know if you are being disingenuous or if you sincerely believe the things you are saying. First of all, do I need to provide data that the middle class in the US has had wage stagnation for the last 50 years? I thought that was obvious but some people are complaining that I don't provide links to support my assertions. Here you go:
https://www.nytimes.com/2018/07/18/opinion/wage-stagnation-unemployment-economic-growth.html
https://hbr.org/2017/10/why-wages-arent-growing-in-america
Do I need to provide 'evidence' that the middle class has been shrinking or have you not been living on a rock in the middle of no where with no access to news from the rest of the world? I am going to assume you agree that both of these points are facts.
Where we disagree is on whether the tariffs will help this situation or not. So lets address what you said.
1. 'Actually I did reference the fact that after the Hawley-Smoot Tariff was lifted, the trade that ensued was a big part of the most successful period of America's middle class (at least those not suffering from Civil Rights violations but that's another issue) from the 1950s to the 1970s. That is historic fact, you can look that up.'
This is dishonest. Lifting the tariff did not cause the boom. What caused it was WWII. That's the historical fact that is relevant here. On top of this, you are not comparing like with like. Putting a tariff on a 1940s economy is quite different to putting a tariff on the economy today. Do you agree?
2, "It's actually you that has provided zero economic data (or even historical examples) in favor of protectionism. You haven't offered anything other than your opinion that all these isolationist and protectionist ideas would be good for the middle class."
What we know is that the current situation (with no protection whatsoever) has decimated the middle class for the last 40 years. So, we know what you support doesn't work. Now, what example have we of tariffs working. We don't have to look far: China has massive tariffs on a variety of good. 25 percent on imported cars for example. Their economy has been booming and they have created millions of jobs for their people.
https://www.npr.org/sections/thetwo...dy-to-lower-import-tariffs-and-trade-barriers
3."While protectionism is pitched as a way to guarantee stable employment and living wages, workers don't benefit directly from tariffs. Employers receive the direct benefits in the form of higher prices paid for their products, which make tariffs a massive source of corporate welfare. This creates three political problems: partiality, gamesmanship, and corruption."
Yes, maybe. But what do you think we have right now? Our govt is already bought by corporate lobbyists (who will fight very hard against the tariffs). Nobody has a perfect solution but we have tried your way for the last 50 years and it has been a disaster for the middle class. Lets try something else.
4. "Now you keep talking about the middle class. But the way you bring it up makes me think you don't quite understand the difference between correlation and causation.
You keep making this red herring that the weaker prospects of the middle class in 2018 compared to 1978 is all due to manufacturing and free trade. That really doesn't stand up to any analysis. The real reason for the lack of progress of the middle class is far more complicated than this overly-simplistic manufacturing red herring. This topic is much more complicated as I mentioned. First, biggest factor is universal healthcare since that would free up 2 trillion. That would be a massive difference for US companies that would bring a tonne of benefits, including the potential window for a true livable wage proposition to replace current minimum wage. This article is a good start"
You don't need to link me to articles about universal Healthcare. I already told you I work in that field. Agreed but we will never get it. But, while employer based healthcare is a burden on companies, it is not causing them to be unprofitable. Companies can afford to pay their workers more. They don't because they don't need to. The power of the worker in this country to bargain with his/her employer has been eroded by globalization. That's really obvious and if you disagree on that point, then there is no point continuing this discussion with you. Why do you think so many people are angry?
5. "The entire premise that all America needs to do is re-create all these old protectionist policies and somehow this will magically aid the middle class is without any supporting evidence. Feel free to link any supporting evidence to your claims about tariffs and protectionist policies being inherently good for the middle because I have linked a lot of sources while you haven't supplied any but your opinion. What are your credentials btw to imply without evidence that you are right and dozens of Nobel Laureates are not as smart as you on the economy for the middle class?"
You talk as if economists were authorities on what is good for the middle class. Well, as you say, every economist agrees that free trade is a good thing. And look at what it has done to us over the last 50 years. Economists are not concerned with wealth distribution, just with wealth creation and what best creates that.
I could not care less about what the economists are saying. They have touted the benefits of free trade for the last 50 years while we have sat on our hands and done nothing to stop our economy being stripped away from us. Your experiment has failed. People are now that angry that they are beginning to question whether capitalism is the best system for us or not. Meanwhile, people like you sit in your ivory tower and jerk yourselves off (probably) to pictures of John Maynard Keynes. Personally, I can't stand economists and don't even think they are about average intelligence. Of all the disciplines out there, they have to be the most obnoxious or at least in the top 3.
The US dollar goes down and our goods are easier to export. Why is that a bad thing again? That's what China does on a regular basis and their economy is always booming. If you had paid attention, you would know that I don't advocate complete isolation, just isolation where our partners are refusing to play by the same rules as us.
Enjoy another 6 years of Trump as he is getting in again unless we find an alternative that isn't - lets just keep things as they are since free trade is wonderful
Last edited:
Bang on. It’s a toss up between them, bankers and whatever it is you do.
Just ban me and get it over with. I am looking forward to voting in 2020
Last edited:
This is a good debate. Just keep it constructive and civil so it stays on track.
You are the GOAT of inference from microscopic input. A bonfide virtuouso of straw. You quote people and jump on tangents that are circumspect to what they actually said. The fact you pseudo-quote them just makes it even worse.
And before you leap on me for lack of input, I don't want to jump in here with content because there's actual economists and historians pulling you up on your skewed narrative.
The recipe here is populism+anachronistic industrial scenario+"the middle classes"=every economist is wrong.
"People are sick of experts"
Last edited:
I dislike the style of chopping up replies because all too often that leads to losing track of the main points and getting caught up on inconsequential details, but I'll try it here once in the hope it helps breaking all this down.
Again this is a red herring. No one ever questioned whether there has been wage stagnation. It's how you just assume the cause of it as one thing that is the problem.
This is why I pointed out that you keep mistaking correlation for causation. You need to provide evidence for your claims:
1) that wage stagnation is the direct result of manufacturing jobs and free trade only as you claimed.
2) that somehow implementing not only tariffs but radical ideas like your requirement make the product to sell it in America would actually help the middle class
There is a lot of supporting evidence that the wealth inequality cannot be reduced to the bogeyman of manufacturing and free trade. So far there is none supporting this protectionist idea.
Your own article from the Harvard Business Review above doesn't even support your claims on protectionism:
"It took many factors — some the result of deliberate policy choices, some the outcome of broad economic processes — to produce decades of wage stagnation for the typical worker. Similarly, it will take many incremental reforms and new policies to reestablish the conditions that support robust, broadly shared wage growth. There is no single wage growth panacea, but many policies would help, including: raising the minimum wage; increasing worker bargaining power (including by reducing noncompete contracts or collusion among firms); ensuring adequate labor demand through looser fiscal or monetary policy; increasing dynamism through pro-mobility or entrepreneurship policies; and making broad improvements to education or productivity policies. Given the longstanding trends and limited improvements in living standards for many workers, taking action to increase wage growth is one of the most important policy imperatives we face."
I never said that removing the Smoot Hawley tariff "caused the boom". I really wish you would read the articles I linked to better understand.
If you read the articles you would see that Smoot Hawley was removed after WWII by Truman. What I did say and the articles I linked also mentioned was that removing the tariffs and protectionism of the 1930s after WWII was an integral factor in why the US Middle Class saw such great fortune in the 50s-70s after WWII. To put this another way: the era you harkened back to (1970s) where people could 'get good jobs', that era was created without protectionism where international trade was integral to the growing economy. The other take away is that the move towards protectionism (again I already linked these articles so no need to link again) did absolutely nothing to help anyone in the 1930s and everyone who has studied this era recognizes that protectionism contributed to the long depression rather than helping anything.
To answer your question, your ideas of higher tariffs and even stronger protectionism are just as bad ideas today as they were in the 1930s and 1830s.
This is yet again a problem with mistaking correlation for causation. You are also conflating a whole lot of issues here and trying to reduce everything to a simple proposition: that free trade and manufacturing job loss is mostly responsible for the "decimated" middle class. I have already highlight other aspects that disprove this. That long article from The Atlantic on the New American Aristocracy
Here is a video on the topic:
You have to understand the process is far more complicated than just "free trade and manufacturing loss". Other factors that increase intergenerational wealth transfer (attacks on inheritance tax), Elite schools increasing influential at the executive levels and how legacy looks this in (see Jerome Karabel's The Chosen: The Hidden History of Admission and Exclusion at Harvard, Yale, and Princeton), Bailout Nation policies for companies (see Barry Ritholtz), tax cuts and the lies of trickle down 'Voodoo Economics', the massive deregulation cash grabs from Savings and Loan in 80s to California Energy De-Regulation to Mortgage Back Security financial crisis of 2008 (see Nouriel Roubini among others), the push for the HMO system in the 1980s/90s that emphasized the effects of privatization of health care and more.
There is a grocery list of factors in how the gains of the last 40 years have gone to the elite and it goes far beyond the reductionist mantra of "free trade sucks, bring back manufacturing jobs".
You are basically claiming here that because China has some high tariffs, therefore all the good things in China's economy are because of the high tariffs while ignoring every other factor. This is just a logical and statistical error in reasoning. It's just not valid reasoning here.
For a long time China also benefited from far looser laws on pollution , changing labor laws that allowed/still allow labor conditions that would be completely unacceptable in modern US or Europe, and other factors. China has been shifting from an old school planned economy to implementing market solutions. Its a unique situation that is not comparable to the US that never had a planned economy.
In doing so they have benefited from conditions that the US has already decided are not morally preferable - bad labor conditions, not paying attention to pollution or climate change while industrializing, etc. These are aspects we need to consistently nudge China to improve upon of course but analytically we can't ignore pure economic benefits (at a human cost unfortunately): You can't just reduce any comparable advantage that China has to tariffs and call it a day, that's just not an accurate way to look at China regarding the big picture.
This is an important concept to highlight there and that is comparative advantage. This is why David Ricardo is one of most influential economists even after 200 years:
"The key idea behind comparative advantage is that every country, no matter how advanced or behind it might be in the productivity of its labour compared to other countries, would be able to engage in beneficial trade with others. A country with a productivity advantage over other countries would not export everything, but only those goods in which it had a comparative advantage. Thus, paradoxically, an advanced country would find it advantageous to import goods even if it could produce those goods more efficiently than other countries. Conversely, countries behind the technological frontier without an ‘absolute’ productivity advantage in anything (in comparison with others) could still export goods in which its comparative disadvantage was the least and import goods in which its comparative disadvantage was the greatest – and benefit from doing so."
This concept was already hinted at when you asked why can't the US make smartphones and someone very succinctly explained by Abizz why the US can't make smartphones efficiently. I don't think you are aware of this but by suggesting the US should just move all this manufacturing back to the US and it would better you are essentially denying that comparative advantage exists. Watch this short video
This basic concept explains why it isn't just beneficial for the US to make everything in America. Anyway the whole idea that the US just has to be more like China on tariffs to benefit the middle class is absurd and not supported by anything. Its just opinion without evidence turned into policy.
Less partiality, gamesmanship, and corruption than we would see in an isolationist world. And no, we haven't tried "my way" of doing things. You are not recognizing that trade can be organized a lot of ways different than now without resorting to isolationism. And you keep ignoring that the Bretton Woods era was beneficial for the US middle and free trade was the norm in the 1970s and 1980s as well before the income inequality skyrocketed.
Also many people believe the UN and WTO should be enforcing or nudging tying human rights conditions to access to global trade - so there is some check and balance on certain things such as Qatar WC construction conditions to name just one example.
First the article is not on universal health as you would know if you clicked on it. It discusses the wider issues that illustrate how much deeper the problem is than just free trade/loss of US manufacturing.
And you think universal healthcare (an idea with 70% public supporting and gaining momentum) is impossible but your protectionist ideas like forcing all smartphones sold in the US to be made in the US are actually both possible and desirable?
The irony here is you still haven't linked to a single source supporting your claims about protectionism being good for the middle class. Just because you say it 50 times doesn't make it true. And you keep ignoring that freeing up trade from protectionism was a big part in the economic rise of the US middle class from 1950 to 1970. Its not the variable that changed to see the wealth inequality we see here. It was a conflux of factors.
Who do you think is an authority on what is good for the middle class? You? What are your credentials?
Also for the record, there are a lot of economists that care about wealth distribution (like every labour economist), you are making a huge error in assuming every economist is Thomas Sowell justifying every policy good for the 1% based on trickle down.
Again this is a red herring. No one ever questioned whether there has been wage stagnation. It's how you just assume the cause of it as one thing that is the problem.
This is why I pointed out that you keep mistaking correlation for causation. You need to provide evidence for your claims:
1) that wage stagnation is the direct result of manufacturing jobs and free trade only as you claimed.
2) that somehow implementing not only tariffs but radical ideas like your requirement make the product to sell it in America would actually help the middle class
There is a lot of supporting evidence that the wealth inequality cannot be reduced to the bogeyman of manufacturing and free trade. So far there is none supporting this protectionist idea.
Your own article from the Harvard Business Review above doesn't even support your claims on protectionism:
"It took many factors — some the result of deliberate policy choices, some the outcome of broad economic processes — to produce decades of wage stagnation for the typical worker. Similarly, it will take many incremental reforms and new policies to reestablish the conditions that support robust, broadly shared wage growth. There is no single wage growth panacea, but many policies would help, including: raising the minimum wage; increasing worker bargaining power (including by reducing noncompete contracts or collusion among firms); ensuring adequate labor demand through looser fiscal or monetary policy; increasing dynamism through pro-mobility or entrepreneurship policies; and making broad improvements to education or productivity policies. Given the longstanding trends and limited improvements in living standards for many workers, taking action to increase wage growth is one of the most important policy imperatives we face."
I never said that removing the Smoot Hawley tariff "caused the boom". I really wish you would read the articles I linked to better understand.
If you read the articles you would see that Smoot Hawley was removed after WWII by Truman. What I did say and the articles I linked also mentioned was that removing the tariffs and protectionism of the 1930s after WWII was an integral factor in why the US Middle Class saw such great fortune in the 50s-70s after WWII. To put this another way: the era you harkened back to (1970s) where people could 'get good jobs', that era was created without protectionism where international trade was integral to the growing economy. The other take away is that the move towards protectionism (again I already linked these articles so no need to link again) did absolutely nothing to help anyone in the 1930s and everyone who has studied this era recognizes that protectionism contributed to the long depression rather than helping anything.
To answer your question, your ideas of higher tariffs and even stronger protectionism are just as bad ideas today as they were in the 1930s and 1830s.
This is yet again a problem with mistaking correlation for causation. You are also conflating a whole lot of issues here and trying to reduce everything to a simple proposition: that free trade and manufacturing job loss is mostly responsible for the "decimated" middle class. I have already highlight other aspects that disprove this. That long article from The Atlantic on the New American Aristocracy
Here is a video on the topic:
You have to understand the process is far more complicated than just "free trade and manufacturing loss". Other factors that increase intergenerational wealth transfer (attacks on inheritance tax), Elite schools increasing influential at the executive levels and how legacy looks this in (see Jerome Karabel's The Chosen: The Hidden History of Admission and Exclusion at Harvard, Yale, and Princeton), Bailout Nation policies for companies (see Barry Ritholtz), tax cuts and the lies of trickle down 'Voodoo Economics', the massive deregulation cash grabs from Savings and Loan in 80s to California Energy De-Regulation to Mortgage Back Security financial crisis of 2008 (see Nouriel Roubini among others), the push for the HMO system in the 1980s/90s that emphasized the effects of privatization of health care and more.
There is a grocery list of factors in how the gains of the last 40 years have gone to the elite and it goes far beyond the reductionist mantra of "free trade sucks, bring back manufacturing jobs".
You are basically claiming here that because China has some high tariffs, therefore all the good things in China's economy are because of the high tariffs while ignoring every other factor. This is just a logical and statistical error in reasoning. It's just not valid reasoning here.
For a long time China also benefited from far looser laws on pollution , changing labor laws that allowed/still allow labor conditions that would be completely unacceptable in modern US or Europe, and other factors. China has been shifting from an old school planned economy to implementing market solutions. Its a unique situation that is not comparable to the US that never had a planned economy.
In doing so they have benefited from conditions that the US has already decided are not morally preferable - bad labor conditions, not paying attention to pollution or climate change while industrializing, etc. These are aspects we need to consistently nudge China to improve upon of course but analytically we can't ignore pure economic benefits (at a human cost unfortunately): You can't just reduce any comparable advantage that China has to tariffs and call it a day, that's just not an accurate way to look at China regarding the big picture.
This is an important concept to highlight there and that is comparative advantage. This is why David Ricardo is one of most influential economists even after 200 years:
"The key idea behind comparative advantage is that every country, no matter how advanced or behind it might be in the productivity of its labour compared to other countries, would be able to engage in beneficial trade with others. A country with a productivity advantage over other countries would not export everything, but only those goods in which it had a comparative advantage. Thus, paradoxically, an advanced country would find it advantageous to import goods even if it could produce those goods more efficiently than other countries. Conversely, countries behind the technological frontier without an ‘absolute’ productivity advantage in anything (in comparison with others) could still export goods in which its comparative disadvantage was the least and import goods in which its comparative disadvantage was the greatest – and benefit from doing so."
This concept was already hinted at when you asked why can't the US make smartphones and someone very succinctly explained by Abizz why the US can't make smartphones efficiently. I don't think you are aware of this but by suggesting the US should just move all this manufacturing back to the US and it would better you are essentially denying that comparative advantage exists. Watch this short video
This basic concept explains why it isn't just beneficial for the US to make everything in America. Anyway the whole idea that the US just has to be more like China on tariffs to benefit the middle class is absurd and not supported by anything. Its just opinion without evidence turned into policy.
Less partiality, gamesmanship, and corruption than we would see in an isolationist world. And no, we haven't tried "my way" of doing things. You are not recognizing that trade can be organized a lot of ways different than now without resorting to isolationism. And you keep ignoring that the Bretton Woods era was beneficial for the US middle and free trade was the norm in the 1970s and 1980s as well before the income inequality skyrocketed.
Also many people believe the UN and WTO should be enforcing or nudging tying human rights conditions to access to global trade - so there is some check and balance on certain things such as Qatar WC construction conditions to name just one example.
First the article is not on universal health as you would know if you clicked on it. It discusses the wider issues that illustrate how much deeper the problem is than just free trade/loss of US manufacturing.
And you think universal healthcare (an idea with 70% public supporting and gaining momentum) is impossible but your protectionist ideas like forcing all smartphones sold in the US to be made in the US are actually both possible and desirable?
The irony here is you still haven't linked to a single source supporting your claims about protectionism being good for the middle class. Just because you say it 50 times doesn't make it true. And you keep ignoring that freeing up trade from protectionism was a big part in the economic rise of the US middle class from 1950 to 1970. Its not the variable that changed to see the wealth inequality we see here. It was a conflux of factors.
Who do you think is an authority on what is good for the middle class? You? What are your credentials?
Also for the record, there are a lot of economists that care about wealth distribution (like every labour economist), you are making a huge error in assuming every economist is Thomas Sowell justifying every policy good for the 1% based on trickle down.
Last edited:
oh and as @Cal? mentioned, robots, automation, micro-trends and maker bots are the future of manufacturing anyway. Its important not to miss the opportunities for the future reminiscing about the past.
There is no authority on what's good for the middle class, and certainly not economists. We have never been faced with a situation comparable to what we face right now where the world is so interconnected that, for example, you can produce your goods on one side of the world (e.g produce) and the supply chain takes it to the other side of the world in one day and puts it in supermarkets here. That's one of the good things globalization has produced. But there are so many bad things... And, I bet most people would give up any advantages from it to return to the stability of the past where it was easy to find a good job and you didn't have to worry about it being outsourced etc. - when employees were paid a decent wage.
We are at a crossroads wondering which way to go with no sign to point us in the right direction. We have wandered down the wrong path (the one you advocate) for a very long time and paid a very high price for this. Now, there seems to be only one other direction to go in and Trump is leading the way. If it doesn't work, then we have to find something else.
Regarding your post, you took some time to write it so thank you for that. But lets be honest, your bit about comparative advantage is economics 101.
Free trade is good because it increases production and makes it more efficient (point already conceded by me). But, that is not the relationship we have with China and others. There is no comparative advantage because we don't produce goods for them since they don't open their markets to us. That is one problem. The other is that globalization has massive expanded the labor market. It's a race to the bottom in many cases. And the American worker is very poorly positioned to win that race (not that we would want to).
Since you love economics so much, what happens to price when supply increases in a free market with no restrictions and demand does not increase at the same rate? Globalization has resulted in a massive increase in the supply of labor. Companies have had to pay their labor less and pocketed more of the profits for themselves. I realize that this is a simplification but it is still the fundamental truth about globalization. Certain sectors of the economy have been hurt more than others but we are still on a downward trend and they are not done yet. Trumps tariffs are trying to force China's hand - if it works, then the market expand for US companies and the effects of the massive spike in labor supply will be offset somewhat by the increase in demand.
Free trade was the norm before we had globalization yes without many bad consequences. But coupling it with globalization is a whole different monster. I am not for isolationism but I am for some sensible restrictions and if one of those is that we have to restrict trade somewhat, so be it.
Regarding healthcare, I guess you don't live in the US. 1/6th of the US economy is healthcare. Do you remember the angst (people screaming on tv) about Obamacare at Republican rallies when he was trying to push it through? Obamacare was modest reform to the healthcare system so why that extreme reaction? It's because he was putting people's jobs at risk. The healthcare system is like a massive pyramid with people at the top making obscene amounts of money but you have all these low level workers who earn 30-40k a year at the bottom who do billing jobs, precert insurances etc. If you try to change that structure, you are in for a fight because what is a 40 year old biller going to do if you move to a single payer system where there are no healthcare insurances to bill (so his or her job is now redundant)? Transition to a new job? Do you know how hard that is?
You see, there are a lot of stakeholders who would oppose the change you are suggesting. It would be extremely painful and where is the political will to do it going to come from? Your 70 percent support figure sounds way off. At best, there are 20-25 percent who would support a transition to Medicare for all.
My view is that we should try to do it in steps - start by putting the Medicaid people into the Medicare program and we streamline their care and save money on the administration costs. Why do we need two programs for the old and the poor when there are clear criteria for qualifying for both that we could combine together? Not only that but providers would welcome the change as Medicare pays them a bit more than Medicaid. States would welcome the change because they would save money on Medicaid funding. And it wouldn't impact medical billers and other jobs like that very much since dealing with Medicaid is a massive headache for them. The only opposition would come from the special interest group lobbying for Medicaid advantage payers and I think that we could overcome this obstruction. After we take THAT first step in the direction of 'Medicare for all', then we start to think about the next step.
We are at a crossroads wondering which way to go with no sign to point us in the right direction. We have wandered down the wrong path (the one you advocate) for a very long time and paid a very high price for this. Now, there seems to be only one other direction to go in and Trump is leading the way. If it doesn't work, then we have to find something else.
Regarding your post, you took some time to write it so thank you for that. But lets be honest, your bit about comparative advantage is economics 101.
Free trade is good because it increases production and makes it more efficient (point already conceded by me). But, that is not the relationship we have with China and others. There is no comparative advantage because we don't produce goods for them since they don't open their markets to us. That is one problem. The other is that globalization has massive expanded the labor market. It's a race to the bottom in many cases. And the American worker is very poorly positioned to win that race (not that we would want to).
Since you love economics so much, what happens to price when supply increases in a free market with no restrictions and demand does not increase at the same rate? Globalization has resulted in a massive increase in the supply of labor. Companies have had to pay their labor less and pocketed more of the profits for themselves. I realize that this is a simplification but it is still the fundamental truth about globalization. Certain sectors of the economy have been hurt more than others but we are still on a downward trend and they are not done yet. Trumps tariffs are trying to force China's hand - if it works, then the market expand for US companies and the effects of the massive spike in labor supply will be offset somewhat by the increase in demand.
Free trade was the norm before we had globalization yes without many bad consequences. But coupling it with globalization is a whole different monster. I am not for isolationism but I am for some sensible restrictions and if one of those is that we have to restrict trade somewhat, so be it.
Regarding healthcare, I guess you don't live in the US. 1/6th of the US economy is healthcare. Do you remember the angst (people screaming on tv) about Obamacare at Republican rallies when he was trying to push it through? Obamacare was modest reform to the healthcare system so why that extreme reaction? It's because he was putting people's jobs at risk. The healthcare system is like a massive pyramid with people at the top making obscene amounts of money but you have all these low level workers who earn 30-40k a year at the bottom who do billing jobs, precert insurances etc. If you try to change that structure, you are in for a fight because what is a 40 year old biller going to do if you move to a single payer system where there are no healthcare insurances to bill (so his or her job is now redundant)? Transition to a new job? Do you know how hard that is?
You see, there are a lot of stakeholders who would oppose the change you are suggesting. It would be extremely painful and where is the political will to do it going to come from? Your 70 percent support figure sounds way off. At best, there are 20-25 percent who would support a transition to Medicare for all.
My view is that we should try to do it in steps - start by putting the Medicaid people into the Medicare program and we streamline their care and save money on the administration costs. Why do we need two programs for the old and the poor when there are clear criteria for qualifying for both that we could combine together? Not only that but providers would welcome the change as Medicare pays them a bit more than Medicaid. States would welcome the change because they would save money on Medicaid funding. And it wouldn't impact medical billers and other jobs like that very much since dealing with Medicaid is a massive headache for them. The only opposition would come from the special interest group lobbying for Medicaid advantage payers and I think that we could overcome this obstruction. After we take THAT first step in the direction of 'Medicare for all', then we start to think about the next step.
Last edited:
What's your background beyond you "work in health care" for anyone to listen to you on who should be considered an authority? You are implying you know more about what's "good for the middle class" than anyone who studies economics. Its truly a remarkably arrogant claim you are making.
Ultimately you just keep declaring over-simplifications as fact. You provided no actual evidence that the wage stagnation of the middle class is caused by "free trade". Your own article that you posted even disagrees with your claims. I will again quote the article that you linked since it appears you didn't even read it as it disagrees with you:
"It took many factors — some the result of deliberate policy choices, some the outcome of broad economic processes — to produce decades of wage stagnation for the typical worker. Similarly, it will take many incremental reforms and new policies to reestablish the conditions that support robust, broadly shared wage growth. There is no single wage growth panacea, but many policies would help, including: raising the minimum wage; increasing worker bargaining power (including by reducing noncompete contracts or collusion among firms); ensuring adequate labor demand through looser fiscal or monetary policy; increasing dynamism through pro-mobility or entrepreneurship policies; and making broad improvements to education or productivity policies. Given the longstanding trends and limited improvements in living standards for many workers, taking action to increase wage growth is one of the most important policy imperatives we face."
You've been suggesting ideas like trying to force smartphones to be made in the US to be sold in the US. That is very far removed from a sensible restriction and is straight radical protectionism - which has never worked historically.
Let me present two quick perspectives, one from Mercatus at George Mason (neo-classical point of view) and the other view from Joseph Stiglitz (who very much cares about wealth distribution and disagrees with followers of Hayek)
Mercatus at George Mason University:
"Myth: Free trade means jobs go overseas.
Reality: Free trade does not create more jobs, but neither does protectionism. Free trade may reduce jobs in inefficient industries, but it frees up resources to create jobs in efficient industries, boosting overall wages and improving living standards. Protectionism, in contrast, attempts to protect jobs that the market will not sustain, at the expense of more innovative industries.
- Much of the change in the labor force is not the result of free trade but of innovation. New technology, such as apps on mobile devices, has displaced a staggering variety of products, including radios, cameras, alarm clocks, calculators, compact discs, DVDs, carpenters’ levels, tape measures, tape recorders, blood-pressure monitors, cardiographs, flashlights, and file cabinets.
- Using protectionist policies to “save” a job comes at enormous cost, as opportunities shrink and input costs swell for industries downstream."
Now Stiglitz:
Brancaccio: You and President Trump would agree that globalization went wrong. You'd like to fix it with stronger international institutions. Would you say that's not what the president would want to do?
Stiglitz: Precisely. He wants to destroy the rules-based system that we've created over the period since World War II. He wants to go behind protectionist barriers that would actually result in doubling the damage that American workers suffered. They suffered when we opened up our markets. We created now efficient global supply chains and destroying those global supply chains is going to be just as disruptive, and the American workers are going to be worse off once again.
Stiglitz: America's role in the global economy inevitably was going to diminish, we're smaller relative to — as China, India, other emerging markets grow. He's hastened that change, but where he's gone really wrong is American leadership is still important. And our withdrawal from this will hurt the global system. But actually it's going to also hurt the United States...
... China-led globalization in some ways worries me because they are not concerned about human rights, labor rights. They probably aren't even really concerned about competitive marketplaces. So in some ways they're like Mr. Trump. They're willing to do deals. And they see things as very deal oriented. Where the United States could and should have played a role in the past, and could and should play a role in the future, is creating a fair rules-based system that works for small countries as well as large."
These two very different economic perspectives that present better solutions than Trump's naive protectionism.
First the huge unnecessary increase in healthcare administration has largely been the result of the specific blend of inefficient policies that combine the worst of all worlds. Just like how nationalized social security keeps bureaucratic overhead to a minimum, a medicare for all system would also reduce unnecessary bloated HMO bureaucracy. There is a reason why every single universal healthcare system is fare more efficient than the mess of privatized HMO the US has mutated into.
The bolded is just ironic. You are now appealing to emotion about how hard it is to change jobs after you have been advocating for the protectionism in order to increase manufacturing jobs at the expense of dozens of jobs in high export fields from entertainment to tech to farmers.
Of course there are stakeholders. Primarily the bloated HMO bureaucracy and administration and pharmaceutical company executives. Those are the only direct jobs at risk. It wouldn't touch demand for the actual important jobs. The demand for nurses, doctors and specialists would remain the same just more logical. And the shareholders that profit off big pharma (the top 10% investor class) would just move on to other more efficient investments.
But the key is the benefits are for an overwhelming majority (well over 80% of the US citizens benefit far more). Even the libertarian think tanks say there are 2 trillion USD in overall savings to the US economy per year. That is pretty significant. And 70% public support and momentum is not something to dismiss. Trump's ideas won with far less public support than that back in 2013. Of course there would be a fight but we are approaching a moment in history where that fight is winnable for universal healthcare because it benefits the vast majority of people. Even David Goldhill's much hailed in libertarian circles as a "free market" health care solutions includes universal government coverage for accidents, terminal illness and other categories to eliminate the ridiculous impact of medical costs on bankruptcy and other factors. The time for universal healthcare is the present.
The Healthcare stuff is just ridiculous so I am not going to address that again.
Now, lets look at what your wonderful economists said:
"Myth: Free trade means jobs go overseas.
Reality: Free trade may reduce jobs in inefficient industries, but it frees up resources to create jobs in efficient industries, boosting overall wages and improving living standards. "
in inefficient industries,
Inefficient industries huh, like the whole of the US manufacturing sector in the 70s? It is so much more 'efficient' to move our factories to places where we only have to pay our workers 1/6th of the wages, where we don't have to worry about environmental regulations or labor laws, where business can thrive and we can make much more money. The cost of goods sold goes down, our profits go up. What could possibly be wrong with this?
it frees up resources to create jobs in efficient industries
This assumes the one percent reinvest this money in creating jobs. Reality suggests that they don't. People who start businesses are not the super wealthy for the most part
boosting overall wages and improving living standards.
Real wages in the US have stagnated or gone done. Real wages in China have gone up from the pittance they were before we donated our manufacturing sector to them.
But economists don't care about anything other than numbers so from a numbers perspective, the above is correct. Free trade is more efficient than making things ourselves and due to globalization, that efficiency has been massively increased since companies don't need to pay good wages any more. But I already conceded that point long ago and I think we are talking past one another now.
Now, lets look at what your wonderful economists said:
"Myth: Free trade means jobs go overseas.
Reality: Free trade may reduce jobs in inefficient industries, but it frees up resources to create jobs in efficient industries, boosting overall wages and improving living standards. "
in inefficient industries,
Inefficient industries huh, like the whole of the US manufacturing sector in the 70s? It is so much more 'efficient' to move our factories to places where we only have to pay our workers 1/6th of the wages, where we don't have to worry about environmental regulations or labor laws, where business can thrive and we can make much more money. The cost of goods sold goes down, our profits go up. What could possibly be wrong with this?
it frees up resources to create jobs in efficient industries
This assumes the one percent reinvest this money in creating jobs. Reality suggests that they don't. People who start businesses are not the super wealthy for the most part
boosting overall wages and improving living standards.
Real wages in the US have stagnated or gone done. Real wages in China have gone up from the pittance they were before we donated our manufacturing sector to them.
But economists don't care about anything other than numbers so from a numbers perspective, the above is correct. Free trade is more efficient than making things ourselves and due to globalization, that efficiency has been massively increased since companies don't need to pay good wages any more. But I already conceded that point long ago and I think we are talking past one another now.