Economists May have gotten Globilization Wrong

Posted by $ Thoritsu 3 weeks, 6 days ago to Economics
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I couldn't agree more. Nothing is more ironic than a "Union Proud" bumper sticker in Walmart.

While in general, I support simple free trade. I believe that the open trade with China has wiped out our manufacturing industrial base, and that "free trade" is nothing of the sort when they don't play by the same rules. IP is a good example.

Maybe some people can learn.
SOURCE URL: https://getpocket.com/explore/item/economists-on-the-run


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  • Posted by $ blarman 3 weeks, 2 days ago
    Part of the hubris from these economists is in glossing over "minor" details like the fact that trade isn't really free when you have governments putting their weight on the scales. China's currency manipulations and government subsidy of industry. Japan's kairetsu's (subsidized mega-corporations). Oil cartels like OPEC. "Free trade" is more a concept than a reality yet economists like Krugman refused to acknowledge this "itsy, bitsy but ever-so-crucial detail."

    Krugman also will be loathe to admit that he was one of the principle cheerleaders of normalized and even Most-Favored Nation status with China despite their rampant theft of intellectual property, currency manipulations, and suppression of free markets even in its own nation. Krugman has no one to blame but himself.

    Personally, I think we ought to use this COVID-19 crisis to completely re-evaluate our relationship to China. I think that Trump ought to make it known to the world that China has been complicit in the spread - if not the original development - of COVID-19 and encourage a world-wide embargo on China until they become a free nation. Revoke their trade status with the United States and push all industries using China for cheap labor and manufacturing to bring those jobs back to the United States by drastically lowering corporate taxes (taxes which get paid by consumers anyways).
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    • Posted by freedomforall 3 weeks, 1 day ago
      Excellent suggestions, blarman. đź‘Ť
      I'd eliminate incomes taxes completely on small businesses to encourage more people to take financial responsibility for themselves and their families. Unfortunately, small businesses have no voice in con-gress. Only big (corrupt) business has lobbyists to bribe con-gress and to crush potential competitors in small businesses.
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      • Posted by $ blarman 3 weeks, 1 day ago
        I'm with you. I'd eliminate corporate taxes entirely as they're just a hidden tax on consumers in the first place. Just as with obfuscation such as FICA and SS, if taxpayers really understood how much they actually paid in taxes they'd clamor for reform.
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  • Posted by freedomforall 3 weeks, 6 days ago
    So according to the article the solution is statist intervention giving labor (and the left) more power.
    They praise the people in Clinton's economic team and describes them as "worried about globalization". Clinton's people gave away the intellectual property tech advantage that US companies had worked so hard to get. Clinton's people started this so we need to give the reins back to them to really mess things up with socialism.
    From 1989 to 2017 the administrations gave away the store repeatedly. So they blame Trump when he has so few weapons to use to repair the sinking economy.
    Typical. Blame others for your mistakes.
    https://www.youtube.com/watch?v=JTF2j...
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    • Posted by $ 3 weeks, 6 days ago
      Well, there is only so much crow an arrogant economist can eat. I can't believe there is even a whisper, and view it as a defensive measure relevant to the upcoming election.
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  • Posted by tdechaine 3 weeks, 2 days ago
    Can't agree. Globalization improves the SOL for all.
    Free trade is always healthy; it is statist policies that interfere with it, turning win/win trade into win/lose or lose/lose trade.
    Nationalism is what harms us. E.g. Trump's "fair trade" to always put "America first" has led to improper interference in the marketplace.
    Manufacturing loss due to bad regulations and legislation is expected; but it lowered the cost of goods and did not harm our economy.
    There are other ways to punish China for whatever they have done to harm the U.S.
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    • Posted by CaptainKirk 3 weeks, 2 days ago
      Yes, IN THEORY, I would agree.
      But add in Flawed Humans, and Abject Corruption (ie, the world we live in), and it's a giant fail.

      First, the EPA had job #1 to STOP new businesses in this country. Making ever increasing hurdles. Does it make ANY sense to have such stringent rules in the USA that DRIVE the companies to countries without those rules? (Notice the difference from rules that generally improve things at a realistic pace. I am NOT against a local government saying that a building must spend X% on artistic look/decorations to enhance the areas appeal. Now when X grows out of whack, the new building stop!).

      Next, Free trade MUST be free in BOTH directions. This concept that OUR goods are tariffed but theirs cannot be. Sorry. Wrong idea. No good businessman would enter into a one sided deal AGAINST them. But people MISTAKENLY call that Free Trade. Sorry, it's NOT. If we are NOT allowed to sell our goods in their country, or they are so heavily taxed we cannot afford to sell them there... Then what? We should still sell our stuff to them? (BTW, is it free trade when the CCP owns 51% of your intellectual property for opening up a business in their country, but you don't even get to AUDIT the books of a company listed in our stock market? Is that YOUR definition of Free Trade? It's not mine.
      Free Trade is a Two-Sided coin, In My Opinion. And ONCE one side is not FREE... The other side has some soul searching to do... I agree 100% w/trump and his approach to China. He's been right on this relationship since day 1, and I will give him plenty of latitude.)
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    • Posted by mccannon01 3 weeks, 1 day ago
      "There are other ways to punish China for whatever they have done to harm the U.S." Can you offer us a list?
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      • Posted by tdechaine 3 weeks, 1 day ago
        Sanctions, trade with other Asian countries vs. China, form alliances against them, etc.
        What is best depends on why you are dong it.
        But it does not need to hurt Americans. Isn't that the main point?
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        • Posted by mccannon01 3 weeks, 1 day ago
          Sanctions - you mean withhold American goods, especially agricultural products from going to China? Who covers the American farmers and others from loss? Where does the revenue come from to cover those losses?

          "trade with other Asian countries" - Good idea as long as they aren't screwing us the same as China.

          "form alliances against them" - with whom and how much will that cost?

          There is no way to engage these decades old problems without some kind of hurt to Americans. The tariff tool is the simplest at this point in time. Add in changes in other policies (domestic and international) to aid in repatriating businesses. Temporarily, I may pay more for something made in China at Walmart or Amazon, but eventually I may pay the same or less for the same goods made by my neighbors, who will be working instead of on the dole.
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  • Posted by BCRinFremont 3 weeks, 4 days ago
    F. Hayek, who received an Economics Nobel when they were still worth something, postulated that the guaranteed success of Free Market Capitalism would always lead to guilt which leads to social programs, which leads to more government which leads to Socialism, etc,etc, which leads to Revolution...where Free Market Capitalism begins again. And so it goes, round and round...
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    • Posted by $ 3 weeks, 4 days ago
      I will have to go read that description. It seems 100% plausible.
      Although I question “guilt”. Envy and sympathy seem stronger. Guilt would only apply to the wealthy. What we have is a structure where there are many that feel sympathize to others that have less, but plan to take from a third party to support those with less. We have an Empathic Lynch Mob.
      There is no doubt some guilt (maybe), for example Bill Gates. Although I think he is also motivated by ego. Look at all these little commoners that I’ve made feel better. I can’t wait until I see Larry on the boat and ask him how many letter he got!
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  • Posted by $ Olduglycarl 3 weeks, 5 days ago
    Every country should be as self sufficient as possible and what ever uniqueness comes out of that would be something sought after by the free market...and yes, If one, if a country, has satisfied their needs then the excess value usually and naturally gets passed on in the free market...just like every single cell in your body.

    The free market needs no central authority to do what it does best.
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    • Posted by $ jlc 3 weeks, 2 days ago
      In a classic free market exchange, I knap 12 arrowheads and exchange 6 of them to you for 6 arrow shafts, feathered and nocked. We both specialize at our skills, and we each get 6 complete arrows faster than we would working alone.

      This system breaks down when I no longer know how to make the arrow shafts. At that point, even if you are crummy at knapping arrowheads (as long as you can still make them), if I am not able to make the shafts at all, I am now at your mercy.

      We either have to trust each other or we have to have backup capabilities. China is not trustworthy (unlike Taiwan, who is) and the US is perilously close to 'not still being able to make arrow shafts'. That is where free market and national self interest both come into play.

      Jan
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    • Posted by $ mshupe 3 weeks, 2 days ago
      I perceive a contradiction here, every country should be as self sufficient as possible is not compatible with free markets. Government should be totally separated from economic freedom except to protect its individual participants. It doesn't matter if a company or individual trades across county lines, state lines, or federal lines.
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  • Posted by rhfinle 3 weeks, 2 days ago
    I've thought for years that our government should have some sort of think tank or directive force that monitors our ability to maintain infrastructure manufacturing - raw materials, nuts & bolts, tools, the basic things that we HAVE to have in case there's a breakdown in the 'global society'. The US did perfectly well without then, pre-WWII. We kept to ourselves and led the world in, well, pretty much everything. That of course wouldn't work, because it would have to be 'bipartisan' (Republicans and Democrats, not Libertarians) and it's primarily the Democrats who are pushing globalization in order to weaken us. Them and, of sourse, fine upstanding Republicans who happen to be making a buck and are so, in China's pocket.
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  • Posted by BradA 3 weeks, 2 days ago
    Globalization is the one note theme promoted by Cato along with its corollaries of "free trade" & "no borders." Unfortunately the myopic libertarian view that free trade will solve all problems is not realistic. When a power like China intends to use that free trade as part of an encompassing strategy whose goal is the domination and the control over its perceived adversaries, the short term benefits of free trade become problematic at best. It was nice to think that demonstrating the benefits of mutual trade would ameliorate the regime's tendency to abuse its power. But China's attempted territorial expansion into the South China Sea and it's discarding of its previous agreement regarding Hong Kong and the resulting stomping of basic human rights provides evidence that such optimism has failed.
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    • Posted by $ 3 weeks, 2 days ago
      Right, they let us optimize the short term (local minima), while playing the long game. We cripple ourselves, so that when the short term is over, they have a monopoly, at least long enough that their economic position supports a military position that controls a future threat.
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      • Posted by CaptainKirk 3 weeks, 2 days ago
        Reminds me of Microsoft Office...
        When WordPerfect and Lotus were around, it was $99 and good for 3-5 years...

        Once the competition was killed off, MSFT behaved like the monopoly it became. Let's face it, that's kinda the goal... To have price flexibility.
        Oracle is another example. Their licensing model eased up when competition increased. Once they dominated big data, they changed their rules.
        Developers could NO LONGER use the product for free and had to have a license... Then they went one step further, with Draconian License Reviews.
        I know 3 companies who have active plans to remove every Oracle database No Matter the cost.

        Now, that is kinda the free market at work. But I think even the most Ardent Free Market Libertarians know that Monopolies are usually EVIL.
        My last 2 examples: Google (Search... BTW, I use DuckDuckGo), and Social Media ... These are Quasi Private companies GIVEN SPECIAL RIGHTS,
        that are clearly abusing those rights to manipulate in ways that only near monopolies can, and are CLEARLY "Vote Tampering" and "In Kind Contributions"...

        As flawed humans, we will ALWAYS game a system. In some cases it's a good thing... At the extremes... It's at least... "Extreme"... LOL
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  • Posted by mccannon01 3 weeks, 1 day ago
    Hmmm. Experts getting things wrong. Seems to be a plague of that going around lately.

    Nice article, Thor. Thanks.
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    • Posted by $ 3 weeks, 1 day ago
      Of course they tried to recover their position of control, but it is nice to see the admission.

      Timing is a little suspicious. I wonder if they are paving the way for Biden to offer a different plan to deal with China, that departs from Trump's, and is yet another promise.
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  • Posted by term2 3 weeks, 2 days ago
    I objected to trump claiming that his tariffs on Chinese goods were paid by the Chinese. That is just totally wrong. Tariffs on Chinese goods coming here are paid by American importers , period
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    • Posted by tdechaine 3 weeks, 1 day ago
      If we all are free to buy the cheapest products through trade in a global market without tariffs or other distortions, consumers will reap the rewards. Our productive resources will naturally flow to our strongest, most skilled economic areas while “outsourcing” others to countries more efficient in a given field. As economist Gregory Mankiw put it, “Americans should work in those industries in which we have an advantage compared with other nations, and we should import from abroad those goods that can be produced more cheaply there.”

      The trade barriers we have in place today prevent this realignment from taking place in full. In doing so, they limit economic growth, decrease wages, and kill far more jobs than they protect. And by lowering its trade barriers, a government enriches its citizens regardless of the policies implemented by foreign governments.
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      • Posted by term2 3 weeks, 1 day ago
        Our real problem with China is that we send them peper money with no backing, and they send us goods. If we had to back up our dollars, the prices would be higher for the goods we buy from china, and we would buy less from them. Currently, we just print money thats worth nothing, and they send us goods.
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      • Posted by $ 3 weeks, 1 day ago
        I wonder why China's military is an order of magnitude stronger than it was 20 years ago, and growing at a massive pace.

        I don't know about you, but I don't do business with people who steal my property. I would seek to isolate them or at least distance them from me and my friends.

        Your assertion is fine in an open market. No present international market is open, and reciprocal. Your assertion also fails to address non-monotonic, or non-linearities. For example, if a business area is eliminated, reconstructing it is more costly and time consuming than increasing throughput in a present business.

        China increases its economic power by oppressing its people, requiring them to work at low wages and accept low standards of living. Other countries standard of living benefits. However, China has and will continue to use the economic power they receive to further their control and political system. They are stealing IP. They are seeking control of the South China Sea. We have subsidized this, and are creating a liability for ourselves. They will pressure Korea into submission if they can. This use of force is not a reversible, open economic model.
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