Friday, February 20, 2004
Questioning Facts?
Why is free trade an issue in the democratic race? Edwards is trying to differentiate himself from Kerry, as the NYT reports, by noting Kerry's consistent voting record in support of free trade; Mr. Edwards seems to be making a stand against free trade in an attempt to pull an upset in the primaries.
Let me say that again: He's questioning the validity of free trade theory.
Huh? Maybe it's because I attend the University of Chicago, the home of such economic greats as Milton Friedman, but I never knew there was a logical rational for being against free trade. Last time I checked Marxism and pure socialism were abject failures, as is protectionism (anyone remember the Great Depression and Smoot-Hawley, perhaps?) Modern economics both supports increased free trade and relies on it to make accurate predictions and theories.
Maybe this explains it:
Alarmist OpEd's such as Bob Herbert's don't help matters.
He writes:
An aside: I'm from Clayton OH, a suburb of Dayton, and I can easily state that there are plenty of great jobs to be found in that area. They are not going to be handed to you, however. If you're layed off at the GM plant, you're not going to be able to find another job that pays that well that isn't going to require you to become more dynamic and perhaps get more education and experience in another field. The same goes if you're laid off at Lexus Nexux.
Simply because you cannot find the same type of job you once had in the same geographic area does not mean that one does not exist elsewhere, or that you cannot retrain to find another well-payed job in a different field.
There are winners and losers in globalization, and naturally the losers are the ones who are going to be more vocal than the winners. If the price of shoes went down 1 cent, but at the cost of a hundred american jobs, no one is going to support the decrease in shoe prices, but you can bet the layed of shoe workers are going to complain.
However, the net effects of globalization are a more efficient economy that yields a higher standing of living. There is change however, and as I've said the change bring about winners and losers.
I find interesting Mr. Herbert's concluding statements. Let me offer a bit of analysis on them.
The middle class is being 'targeted'. I like that. It makes it sound like globalization is a vast conspiracy to screw honest americans that is perpetuated by an oligarchy of multinational corporations.
The jobless rate in America is not that high, and is actually decreasing now. If one considers the net economic benefit of globalization over the past ten years on the US, one would have to conclude that it has been a staggering success. A monumental amount of wealth was created over these ten years, even when one considers in that total the burst dot-com bubble and the minor recession that recently ended.
The US jobless rate is 5.4 percent. That's not too shabby, especially when you compare the US to other large, wealthy nations such as France and Germany, where it is much higher and the economy is much more socialistic and less laisez-faire.
What seems to be the issue is that those that are losing their jobs are complaining loudly, while those that find a great new job are not complaining, but instead working and being productive.
What to do about what? About those that are losing jobs? Is the criticism that people are losing well-paying jobs? So Mr. Herbert finds fault with the President and the democratic nominees because they cannot find an economic solution that would end people losing jobs. What a great, unreasonable gripe. Does he expect someone to discover a solution that leads to utopia? I hope our political and economic discussions can be more pragmatic than that.
This same complaing has been made in the past every time jobs have been lost, and every time the American economy has succeeded in advancing and replacing these jobs with new ones. But, this isn't an instintaneous process. And, it's better than the option of protecing all jobs, which would stop complaining but lead to economic stagnation. If one remembers the USSR, there was 100% employment, but it an employment state that was sustained by backward, antiquated industrial production and useless jobs (my Soviet History Prof. Ronald Suny one day humerously described the old women that would be payed to watch escalators for no particular reason); it was a nation that had to import high technological products such as computer chips from the west, and which was completely uncompetitive with the capitalist nations.
If one wanst to protect jobs, one is going to put a damper on economic advancement, which will lead to the US economy becoming less competitive, leading to more protection being necessary to prevent job losses, creating an endless cycle that leads to collapes (ala 1991 in the USSR).
What Mr. Herbert wants is an honest search for solutions that no one is going to find, and honest solution for a Utopia that is really a fantasy. Economics, a modern science, has already proven that free trade is efficient and necessary, and history has proven that it is more successful than closed systems (a contemporary example: North Korea).
The questions that Mr. Herbert should be raising are how can politicians help make the US economy more vibrant, dynamic, and efficient so that it may compete even better in the world market. While the same jobs may not always exist (the trite buggy-whip manufacturers), if the economy is vibrant and competitive market forces will push business to create new jobs that peform tasks that cannot even be imagined now. To question these facts, yes facts (modern economics is a science based in mathematics) is to be alarmist and to hinder a real discussion on the state of the economy and current trade and tax policies.
Back to the democratic primary: So people are shortsided, ignorant, and selfish. A deadly combination. People are willing to try to protect their own jobs even though it is to their detrement economically to the whole, even though it may be of benefit to their small part of the whole.
It seems to me quite reckless to be campaigning against free trade, however (just as it is reckless to write an OpEd against free trade). What if Edwards wins, or if he forces Kerry to modify his stance on trade to be more protectionist. Having a President that would attempt to support protectionist policies in an attempt to secure his base (just as Bush supports tax cuts to secure his base) would be quite dangerous, risking trade wars and economic damage simply for political capital.
Isn't that dangerous political opportunism, wagering everyone's economic future for a few more votes? I understand that certain policies have a political nature, but aren't some issues just so obvious and logical that they just shouldn't be politicized, even if ignorant, stupid, or selfish voters consider it an issue?
Free trade is one of those issues.
Let me say that again: He's questioning the validity of free trade theory.
Huh? Maybe it's because I attend the University of Chicago, the home of such economic greats as Milton Friedman, but I never knew there was a logical rational for being against free trade. Last time I checked Marxism and pure socialism were abject failures, as is protectionism (anyone remember the Great Depression and Smoot-Hawley, perhaps?) Modern economics both supports increased free trade and relies on it to make accurate predictions and theories.
Maybe this explains it:
"Even though Americans aren't overwhelmingly protectionist  we don't elect people who are explicitly protectionist  it is an issue that can catch hold under tough economic times," Mr. Mann said. "And the delayed response in the job market to the economic recovery makes it all the more useful."
Alarmist OpEd's such as Bob Herbert's don't help matters.
He writes:
The sense of anxiety is growing and has crossed party lines. "We are losing the information-age jobs that were supposed to take the place of all the offshored manufacturing and industrial jobs," said John Pardon, an information technology worker from Dayton, Ohio. Mr. Pardon described himself as a moderate conservative, a longtime Republican voter who has become "alienated from the Republican Party and the Bush administration" over the jobs issue.
Mr. Pardon does not buy the rhetoric of the free-trade crusaders, who declare, as a matter of faith, that the wholesale shipment of jobs overseas is good for Americans who have to work for a living.
"There aren't any new middle-class `postindustrial' or information-age jobs for displaced information-age workers," he told me. "There are no opportunities to `move up the food chain' or `leverage our experience' into higher value-added jobs."
An aside: I'm from Clayton OH, a suburb of Dayton, and I can easily state that there are plenty of great jobs to be found in that area. They are not going to be handed to you, however. If you're layed off at the GM plant, you're not going to be able to find another job that pays that well that isn't going to require you to become more dynamic and perhaps get more education and experience in another field. The same goes if you're laid off at Lexus Nexux.
Simply because you cannot find the same type of job you once had in the same geographic area does not mean that one does not exist elsewhere, or that you cannot retrain to find another well-payed job in a different field.
There are winners and losers in globalization, and naturally the losers are the ones who are going to be more vocal than the winners. If the price of shoes went down 1 cent, but at the cost of a hundred american jobs, no one is going to support the decrease in shoe prices, but you can bet the layed of shoe workers are going to complain.
However, the net effects of globalization are a more efficient economy that yields a higher standing of living. There is change however, and as I've said the change bring about winners and losers.
I find interesting Mr. Herbert's concluding statements. Let me offer a bit of analysis on them.
We've allowed the multinationals to run wild and never cared enough to step in when the people losing their jobs, or getting their wages and benefits squeezed, were of the lower-paid variety. Now the middle class is being targeted, and the panic is setting in.
The middle class is being 'targeted'. I like that. It makes it sound like globalization is a vast conspiracy to screw honest americans that is perpetuated by an oligarchy of multinational corporations.
The jobless rate in America is not that high, and is actually decreasing now. If one considers the net economic benefit of globalization over the past ten years on the US, one would have to conclude that it has been a staggering success. A monumental amount of wealth was created over these ten years, even when one considers in that total the burst dot-com bubble and the minor recession that recently ended.
The US jobless rate is 5.4 percent. That's not too shabby, especially when you compare the US to other large, wealthy nations such as France and Germany, where it is much higher and the economy is much more socialistic and less laisez-faire.
What seems to be the issue is that those that are losing their jobs are complaining loudly, while those that find a great new job are not complaining, but instead working and being productive.
No one really knows what to do  not the president, not John Kerry or John Edwards, and most of all not the economists and other advocates who have been so certain about the benefits for American working men and women of unrestrained trade and globalization.
What to do about what? About those that are losing jobs? Is the criticism that people are losing well-paying jobs? So Mr. Herbert finds fault with the President and the democratic nominees because they cannot find an economic solution that would end people losing jobs. What a great, unreasonable gripe. Does he expect someone to discover a solution that leads to utopia? I hope our political and economic discussions can be more pragmatic than that.
What happens when the combination of corporate indifference and the globalized pressure on jobs and wages becomes so intense it weakens the very foundations of the American standard of living?
The fact that this critically important issue is finally becoming an important part of the national conversation is, to borrow a phrase used in another context by the chairman of the president's Council of Economic Advisers, "a good thing."
Perhaps an honest search for solutions will follow.
This same complaing has been made in the past every time jobs have been lost, and every time the American economy has succeeded in advancing and replacing these jobs with new ones. But, this isn't an instintaneous process. And, it's better than the option of protecing all jobs, which would stop complaining but lead to economic stagnation. If one remembers the USSR, there was 100% employment, but it an employment state that was sustained by backward, antiquated industrial production and useless jobs (my Soviet History Prof. Ronald Suny one day humerously described the old women that would be payed to watch escalators for no particular reason); it was a nation that had to import high technological products such as computer chips from the west, and which was completely uncompetitive with the capitalist nations.
If one wanst to protect jobs, one is going to put a damper on economic advancement, which will lead to the US economy becoming less competitive, leading to more protection being necessary to prevent job losses, creating an endless cycle that leads to collapes (ala 1991 in the USSR).
What Mr. Herbert wants is an honest search for solutions that no one is going to find, and honest solution for a Utopia that is really a fantasy. Economics, a modern science, has already proven that free trade is efficient and necessary, and history has proven that it is more successful than closed systems (a contemporary example: North Korea).
The questions that Mr. Herbert should be raising are how can politicians help make the US economy more vibrant, dynamic, and efficient so that it may compete even better in the world market. While the same jobs may not always exist (the trite buggy-whip manufacturers), if the economy is vibrant and competitive market forces will push business to create new jobs that peform tasks that cannot even be imagined now. To question these facts, yes facts (modern economics is a science based in mathematics) is to be alarmist and to hinder a real discussion on the state of the economy and current trade and tax policies.
Back to the democratic primary: So people are shortsided, ignorant, and selfish. A deadly combination. People are willing to try to protect their own jobs even though it is to their detrement economically to the whole, even though it may be of benefit to their small part of the whole.
It seems to me quite reckless to be campaigning against free trade, however (just as it is reckless to write an OpEd against free trade). What if Edwards wins, or if he forces Kerry to modify his stance on trade to be more protectionist. Having a President that would attempt to support protectionist policies in an attempt to secure his base (just as Bush supports tax cuts to secure his base) would be quite dangerous, risking trade wars and economic damage simply for political capital.
Isn't that dangerous political opportunism, wagering everyone's economic future for a few more votes? I understand that certain policies have a political nature, but aren't some issues just so obvious and logical that they just shouldn't be politicized, even if ignorant, stupid, or selfish voters consider it an issue?
Free trade is one of those issues.
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