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Tilting at Windmills

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April 10, 2006
By: Kevin Drum

FREE TRADE....Niall Ferguson urges us not to give up on free trade and liberal immigration policies:

Global flows of labor, capital and goods are all under attack and this in a country that has been enjoying robust growth for the better part of five years. I shudder to think what would be coming out of Congress if the country was in recession. Presumably a bill for total autarky, mandating the construction of a vast, impermeable dome from sea to shining sea.

....Proponents of a new generation of anti-global measures claim to want to protect vulnerable native groups from the ravages of competition....Yet it would be an error to blame the widening inequalities of American societies on globalization and to seek to rectify matters with the old, failed policies of nativism and protectionism. American inequality has much more to do with not-very-progressive taxation and patchy welfare provisions than with immigration and free trade.

But it's people like Ferguson who are the source of the problem. He's obviously able to work up a serious head of steam about the dangers of protectionism and nativism, and he even recognizes that the answer is to pair up free trade proposals with more liberal social policies to help the poor and the working class the ones who pay the bulk of the price for globalization.

But after coming up with the answer, what does he do? Propose more liberal social policies? No. Instead, he proposes a new slogan for our schoolchildren: "If you flunk, you're sunk." That's fine, but why not propose more liberal social programs too?

Kevin Drum 12:28 PM Permalink | Trackbacks | Comments (52)

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"If you flunk, you're sunk." Kevin Drum

If you're poor, there's the door

Posted by: Eric Paulsen on April 10, 2006 at 12:33 PM | PERMALINK

For the vast majority, the country has not been enjoying robust growth for the last five years. Last year, for example, executive pay rose more than 20%, while the rest of the country did not keep up with inflation.

"Free trade" under current rules is set up in a way that favors capital over labor; only the big investors, the corporate execs, and a relatively small skilled class is capturing the gains, and the small skilled class is under threat from the vast number of PhD's being cranked out by India and China.

Posted by: Joe Buck on April 10, 2006 at 12:34 PM | PERMALINK

If you're gay, go away.
If you're black, don't come back.

So you're rich? Welcome bitch!

Posted by: Eric Paulsen on April 10, 2006 at 12:35 PM | PERMALINK

More liberal social programs are the answer?

BWHAHAHAHAAHAAAAA!!

Posted by: Frequency Kenneth on April 10, 2006 at 12:37 PM | PERMALINK

My 7 to 5 wages have not kept up with inflation.
But I learned the word 'autarky' today.

Posted by: wishIwuz2 on April 10, 2006 at 12:43 PM | PERMALINK

Sure, criticize someone else's plan, but does Frequency Kenneth have a plan of his own?

That's a conservative for you -- out of ideas.

Posted by: Doug on April 10, 2006 at 12:43 PM | PERMALINK

Ferguson writes: "American inequality has much more to do with not-very-progressive taxation and patchy welfare provisions than with immigration and free trade."

I guess it doesn't bother Ferguson that income inequality has been DECREASING while George Bush was in office.

Posted by: Al on April 10, 2006 at 12:43 PM | PERMALINK

1) Growing income inequality has almost nothing to do with taxation, but rather with technological changes that reward higly skilled, intellectually intensive labor much more highly than unskilled labor.

2) If you wanted to one thing for all the poor kids in lousy inner city schools that would really help them, you'd give them all vouchers equal to the cost/pupil in the public school system and let them escape. NYC spends approximately $200,000 per classroom; is there a single reader of this blog that doesn't think there's something wrong with that? Not with the amount spent, but with the abysmal results and lack of accountability? If you were told to start a school from scratch, and given $200,000 per classroom to make it work, don't you think you could do better? The public schools are run for the benefit of the unions, period, end of story.

Posted by: DBL on April 10, 2006 at 12:44 PM | PERMALINK
Yet it would be an error to blame the widening inequalities of American societies on globalization and to seek to rectify matters with the old, failed policies of nativism and protectionism.

Well, the prescriptive part might be a real error, but the descriptive part would only be an error in the sense that it conflicts with Ferguson's ideology. As many who've studied the effects of globalization have found (seem Amy Chua's World on Fire, among others) the actual effects of globalization benefit, the wealthiest slice of the capitalist class in both the more and less developed partners, and drive increasing inequality in both more and less developed partners. This isn't limited, by any stretch, to the US, so the particular policy array in the US isn't the source of the problem.

Indeed, in a system with open border for capital, goods, and labor, effective redistribution policies in the US would counteract only one of the many effects of globalization: the tendency to drive investment from the less developed partners to the more developed partner. With such a system, capital would want to go elsewhere more.

Of course, changing this alone doesn't help.

What the US needs to do is not adopt protectionist or nativist policies on the old mold, what it needs to do is pursue free and fair trade based on common standards -- the corrective policies to address the distributional harms of globalization cannot be local policies. They must apply, not only in theory but in practice, to all partners in free trade, necessitating common institutions with public accountability.

Posted by: cmdicely on April 10, 2006 at 12:44 PM | PERMALINK

But it's people like Ferguson who are the source of the problem.

Wrong Kevin. It's protectionists and nativists like you who are the problem. Free trade is good because it helps everybody. In free trade, everybody does what they're best at and everybody win. If the Indians or Chinese are good at doing something, they get hired. But since they make more money from their new jobs, they use that money to buy American goods which means we Americans make more money too. And we hire new American workers also who also make more money. So American workers make more money in free trade and everyone wins.

Posted by: Al on April 10, 2006 at 12:46 PM | PERMALINK

"If you flunk ... " - sort of sounds like "tough love" from a parent with a potty mouth. It doesn't sound like a liberal solution to me either. Somewhere in me is a defense of this idiotic paragraph along the lines of the "time inconsistency" argument, but I'll skip defending his rant until he decides to write a coherent version of this paragraph. Question - did he flunk high school? If he passed, it certainly wasn't based on this type of writing.

Posted by: pgl on April 10, 2006 at 12:51 PM | PERMALINK

"pair up free trade proposals with more liberal social policies to help the poor and the working class the ones who pay the bulk of the price for globalization."

Ummm.. isn't that a clear indication that it DOES NOT WORK? Seriously. If you accept the liberal principal that the middle and working classes are the foundation of a strong economy, and can readily accept the fact that globalization has hurt the middle and working class, what else do you need to understand that the unfettered globalization we currently suffer is bad for our economy, and bad for America?

Big money is capable of taking advantage of the opportunities of globalization. Regular people and small business are not. Big money can go into a poor country, set up deals to strip it of resources, and employ labor that could have been used to improve their own country to make products americans used to make for a pitance. Certainly not enough to create a market for "US" goods. What american goods are people earning $15 a day going to buy?

In and idealized, equal world, sure, globalization makes a lot of sense. IF you unify currencies, and IF you pay everyone equally for equivalent work. All globalization does right now is allow the investment class to make even more money for no work than they make now. The savings of near-slave labor are not passed on, they go to big CEO salaries and stock holders.

Posted by: Mysticdog on April 10, 2006 at 12:53 PM | PERMALINK

Over the course of its history, the United States has gained enormously from its image as an open society. Anyone who wants to disagree needs to wake up and smell reality.

Posted by: Jon Karak on April 10, 2006 at 12:58 PM | PERMALINK

More education isn't going to have a huge effect on the loss of decent paying jobs. It is easier to outsource those intellectually demanding jobs than almost anything else. Just ask the IT guy the next time he delivers your pizza.

Posted by: Col Bat Guano on April 10, 2006 at 1:03 PM | PERMALINK

It seems that some look forward to increased competition with glee because it will provide a greater "stick" which with people can be punished if they do not perform.

Posted by: Constantine on April 10, 2006 at 1:03 PM | PERMALINK

It seems that pretty much all of the pro-multinational liberals come to the same place: they note that the winners from their favorite kind of trade regulations could compensate the losers with a net gain all round, and then they go home.

It's like the old jok about the mathematician and the hotel fire: he looks at the fire hose, turns on the faucet and dabbles his hand in the water, thinks for a bit and crows, "A solution exists!"

and then goes back to sleep.

Posted by: paul on April 10, 2006 at 1:04 PM | PERMALINK


FERGUSON: why not use the money to get this simple message across to the kids in American high schools: If you flunk, you're sunk.

Yeah, if kids just stay in school all will be fine. So why don't we just guarantee everyone an advanced degree. That way, everyone will be a doctor, lawyer, engineer or in some other equally lucrative profession. We won't have to worry about poor people then, by gosh. No wait, that's thinking too small. Let's let everyone be either a pro athlete, a rock star or a movie star. We'll be living large then. No, no, I've got it! Can you say C E O ? Think of it: 6 billion CEOs! After a while, people won't have to work at all because within a few generations we'll have nothing but children of CEOs who can simply live off their inheritance and interest. Brilliant, huh?

But for now, stay in school. Because you can't win if you don't enter.


Posted by: jayarbee on April 10, 2006 at 1:09 PM | PERMALINK

Yet it would be an error to blame the widening inequalities of American societies on globalization and to seek to rectify matters with the old, failed policies of nativism and protectionism.

I'd be all for some sort of grand bargain, where traded reductions of barriers on movement of goods and workers for an expanded safety net, a higher minimum wage, a more progressive tax structure, and union protections with actual teeth in them.

I guess Ferguson is for this too. The difference is in how to respond when the other side says 'no deal.' Niall Ferguson and his ilk would apparently say that if they won't deal, we should just give 'em what they want and get nothing in return. The rest of us say that's a good way to keep getting nothing in return, and maybe we'd be better served by walking away from the table with no deal.

Posted by: RT on April 10, 2006 at 1:16 PM | PERMALINK
I guess it doesn't bother Ferguson that income inequality has been DECREASING while George Bush was in office.

Probably it doesn't bother him because its not true.

Not one major measure of income inequality has fallen during Bush's term. From the US Census Department Report Income, Poverty, and Health Insurance Coverage in the United States: 2004, issued last August: the Gini index has risen trivially, the income ratios of the 95th vs. 10th percentile, the 95th vs. 20th percentile, the 95th vs. 50th percentile, the 80th vs. 20th percentile, and the 80th vs. 50th percentile have all increased slightly, the share of household incole of the lowest three quintiles has dropped, while that of the highest quintile has increased. All of these indicators point to greater, not lesser, inequality.

Now, while most of these are small or even statistically insignificant increases in measures of inequality, they are all in the same direction. You might perhaps argue that inequality has remained basically unchanged based on the mixture of very small increases in some measures and no statisitically significant change in others, but you certainly can't argue that it has decreased based on any actual evidence.

Posted by: cmdicely on April 10, 2006 at 1:19 PM | PERMALINK
"Free trade" under current rules is set up in a way that favors capital over labor; only the big investors, the corporate execs, and a relatively small skilled class is capturing the gains, and the small skilled class is under threat from the vast number of PhD's being cranked out by India and China.

More generally, the conception of free trade as purely negative, simply removing government-imposed barriers to exchange among nations, favors capital over labor (and any other concern) as you describe. Only with common, accountable institutions like those found in the "free trade" regimes that exist with the EU (or among the US states) can this be mitigated.

Posted by: cmdicely on April 10, 2006 at 1:24 PM | PERMALINK

Free markets, and the "creative destruction" that they generate as a new supposedly better businesses replace the out-moded ones. But, does this model necessarily require the destruction of communities and often families, along with the destruction of businesses? Mobility of labor sounds great, but it involves uprooting families, and cracking communities up. Isn't there some way to have the business spread itself around to where the families are rather than having the families move?

Posted by: zeph on April 10, 2006 at 1:40 PM | PERMALINK

Dang! You know what I meant by the above, but sorry for the incomplete thought on the first sentence.

Posted by: zeph on April 10, 2006 at 1:42 PM | PERMALINK

DBL writes: "Growing income inequality has almost nothing to do with taxation, but rather with technological changes that reward highly skilled, intellectually intensive labor much more highly than unskilled labor."

But there's a problem with this theory. The problem is that compensation for highly skilled labor, other than for top executives, hasn't been going up with respect to inflation.

Posted by: Joe Buck on April 10, 2006 at 1:50 PM | PERMALINK
Mobility of labor sounds great, but it involves uprooting families, and cracking communities up. Isn't there some way to have the business spread itself around to where the families are rather than having the families move?

For some businesses there are, and if people value family and community enough, businesses who are able to and choose to do this will have an incentive to do so, as it will reduce the cost of recruiting and retaining labor.

Posted by: cmdicely on April 10, 2006 at 1:51 PM | PERMALINK

Probably it doesn't bother him because its not true.

Not one major measure of income inequality has fallen during Bush's term. From the US Census Department Report Income, Poverty, and Health Insurance Coverage in the United States: 2004, issued last August: the Gini index has risen trivially, the income ratios of the 95th vs. 10th percentile, the 95th vs. 20th percentile, the 95th vs. 50th percentile, the 80th vs. 20th percentile, and the 80th vs. 50th percentile have all increased slightly, the share of household incole of the lowest three quintiles has dropped, while that of the highest quintile has increased. All of these indicators point to greater, not lesser, inequality.


Well, you're just flat wrong. A recent Fed study found that income inequality has been decreasing over the period from 2000 - 2004.

"The evidence is in a new Fed study of family finances, the latest in a triennial series. It shows modest but clear signs of incomes converging rather than diverging. Between 2001 and 2004 (the most recent year for which data are available), incomes of the poorest 20 percent of families increased while incomes of the richest 20 percent fell. Basically, the poorest families' share of total incomes grew, and the richest families' share shrank. Incomes became just a little less unequal."

http://money.cnn.com/magazines/fortune/fortune_archive/2006/03/20/8371806/index.htm?cnn=yes

Posted by: Al on April 10, 2006 at 1:58 PM | PERMALINK

Free trade is a religion -- that is, like religion, one bases their beliefs in free trade on faith. So when the consequences of globalization are clearly apparent, true believers are never shaken in their beliefs.

People who are otherwise liberal sudden abandon any sympathies for the working poor, trade unions or those initially entering the workforce as soon as the subject of "free trade" comes up.

As for this absurd comment: I guess it doesn't bother Ferguson that income inequality has been DECREASING while George Bush was in office. -- I guess the facts would mean little to Al, but here they are:

The wealthiest 20 percent of households in 1973 accounted for 44 percent of total U.S. income, according to the Census Bureau. Their share jumped to 50 percent in 2002, while everyone else's fell. For the bottom fifth, the share dropped from 4.2 percent to 3.5 percent.

Source: the Census Bureau

Posted by: Dicksknee on April 10, 2006 at 2:01 PM | PERMALINK

I wrote: "I guess it doesn't bother Ferguson that income inequality has been DECREASING while George Bush was in office."

Dicksknee writes: "The wealthiest 20 percent of households in 1973 accounted for 44 percent of total U.S. income, according to the Census Bureau. Their share jumped to 50 percent in 2002, while everyone else's fell. For the bottom fifth, the share dropped from 4.2 percent to 3.5 percent." (emphasis added)

Gee, Dicksknee, George Bush was in office in 1973?!?!??? Who knew? I guess THAT'S why he didn't show up at the Alabama National Guard!

Smarter lefties, please!

Posted by: Al on April 10, 2006 at 2:08 PM | PERMALINK

As Ferguson thinks the Iraq invasion was a great idea and that the U.S. needs to embrace its neo-Imperialism, I think it's clear that he can be ignored all together, regardless the topic.

Furthermore, he's a filthy foreigner here on an academic visa. "Papers please."

Posted by: Jeff II on April 10, 2006 at 2:21 PM | PERMALINK

I find Ferguson's premise to be flawed, as there is no global flow of labor as with goods and capital. Isn't that what this whole recent immigration debate has been about? The free flow of labor?

Where's the freedom in free trade if capital can go wherever it wants but immigration laws constrain me from where I can look for a job?

Posted by: joe bob on April 10, 2006 at 2:26 PM | PERMALINK

How about if the vast undocumented hoards that are jumping the queue were asked to pay some compensation to the chumps that are suffering from their presence? One example is social security, where, when an illegal alien comes out of the shadows, our govt spends a lot of resources in tracking down his misapplied social secuity withholdings to recredit to his new number. A heartless Repub like me thinks this money should be confiscated in lieu of a fine. Likewise the $2000 [or is it now $1000] "penalty" illegals are going to be asked to pay for the right to stay in this country, while the law abiders have to wait another nine years: why not increase that fee and apply the money to services for low paid legal workers. We could call it the Cesar Chavez fund, named after the zealous opponent of amnesties for illegals.

Posted by: minion of rove on April 10, 2006 at 2:33 PM | PERMALINK
Well, you're just flat wrong.

Well, in saying that there is no measure of inequality that has decreased, perhaps not, although I'd argue that you should be looking for a measure of inequality that has decreased from the level measured in 2000, and that aside, the measure you point to alone is not convincing against all the other measures pointing the other way.

A recent Fed study found that income inequality has been decreasing over the period from 2000 - 2004.

No, it didn't. It found, according to your source, that one measure of inequality (the 80th/20th percentile ratio) of family incomes fell in the period 2001-2004 (not 2000-2004).

Now, first, its important to note that -- especially, e.g., with declining marriage rates and increasing long-term cohabitation -- there are good reasons to question the wisdom of looking at family-based statistics instead of household-based statistics.

And then to look at all the household statistics of 2000-2004 pointing the other way, as from the Census Department report I cited.

(As to why the household and family numbers would diverge, assuming both are accurate, there are a number of possibilities: a faster decline in marriage rates and more cohabitation among the wealthier compared to the poorer, for instance, could produce the kind of split between the household and family figures that seems to be going on here.)

Posted by: cmdicely on April 10, 2006 at 2:34 PM | PERMALINK

Dicksknee: Free trade is a religion

Replace "religion" with "cult" and you have the best one line description there is.

No facts please, we already know the conclusion we're supposed to come to.

Posted by: alex on April 10, 2006 at 2:39 PM | PERMALINK

Ten year old child: I flunked reading, writing, and arithmetic.

Niall Ferguson: You had your opportunity, you blew it, now you are sunk. You should have no expectation for further assistance from society. Society has no responsiblity to educate and socialize children who are poor students or who have home lives that prevent them from obtaining an education. America is home to libertarian ideology and it is up to each individual, especially children, to take full responsibilty for their lives. I will give you two dollars to let me suck your cock.

Posted by: Hostile on April 10, 2006 at 2:40 PM | PERMALINK
Dicksknee writes: "The wealthiest 20 percent of households in 1973 accounted for 44 percent of total U.S. income, according to the Census Bureau. Their share jumped to 50 percent in 2002, while everyone else's fell. For the bottom fifth, the share dropped from 4.2 percent to 3.5 percent." (emphasis added)
Gee, Dicksknee, George Bush was in office in 1973?!?!??? Who knew? I guess THAT'S why he didn't show up at the Alabama National Guard!

In each of the first four years George W. Bush was President (2001-2004), the Gini coefficient was either greater than the highest Gini coefficient of the last four years that he was not President (1997-2000), or (in 2002) equal to the highest Gini coefficient of those prior four years.

In 2004 the ratio of lower limit of the 90th percentile of household income to the upper limit of the 10th percentile was 11.07. In 2000, the ratio was 10.58. Other ratios of higher/lower percentile cutoffs similarly increased.

Of course, on top of that, unrelated to inequality, the mean income of every quintile dropped between 2000 and 2004.

Posted by: cmdicely on April 10, 2006 at 2:48 PM | PERMALINK

This article is a steaming pile of incoherent cheerleading. Has Ferguson taken Thomas Friedman's writing seminar?

The last time globalization died, some historians say, it was an American backlash that killed it. ... The great disruption caused by World War I certainly did a large part of the damage ...

A large part of the damage? Talk about understatement. Compared to WWI the Chinese Exclusion Act and the Smoot-Hawley tariffs had no discernible effect.

BTW, free trade was supposed to stop things like WWI (oops), but I would have thought the Opium Wars would have been sufficient to kill that silly theory.

As early as 1882, the United States had introduced the Chinese Exclusion Act

As horribly racist as it was, the Chinese Exclusion Act hardly killed US immigration. In fact we had our peak immigration rates in the decades that followed. Does chronology matter to cheerleaders? Does Ferguson look good with pom-poms? Personally I'll take the real thing.

Never wholly committed to free trade in the 19th century, the United States ...

Never wholly committed? The US was notoriously protectionist! As was Germany. Of course by around 1900 the poor deranged protectionist US and Germany had greater industrial capacity and growth than the "free trading" British. The British though, to be fair, had only become free traders after destroying the textile competition in India.

The protectionist Smoot-Hawley trade bill that was enacted in June 1930 dealt a lethal blow to business confidence

Another cherished myth. While Smoot-Hawley was a bad idea, even Uncle Miltie Friedman has said that if you look at the numbers, it's obvious that it's effect on the Great Depression was quite small.

Posted by: alex on April 10, 2006 at 2:56 PM | PERMALINK

1) Growing income inequality has almost nothing to do with taxation, but rather with technological changes that reward higly skilled, intellectually intensive labor much more highly than unskilled labor.Posted by: DBL

You and Al (of course) are both full of pooh-pooh.

The marked increase in income equality seen, particularly in the last five years, has everything to do with taxation and nothing to do with technology, as the current level of techonology (meaning computerization of all sorts) is not markedly different now from when Bush took office. The tax code, however, has changed dramatically, and approximately 95% of the change benefits households that already had $200,000/year or more gross income.

During this same period of time, we've seen the further errosion of the U.S. manufacturing base. This mostly affects people in the lower-middle and lower income brackets.

People at the lowest end of the income scale face growing numbers of illegal immigrants willing to take less than native born Americans for menial labor, creating further downward pressure on wages.

2) If you wanted to one thing for all the poor kids in lousy inner city schools that would really help them, you'd give them all vouchers equal to the cost/pupil in the public school system and let them escape. NYC spends approximately $200,000 per classroom; is there a single reader of this blog that doesn't think there's something wrong with that?

Only $200,000 per classroom per year? If that's accurate, which is unlikely, that's peanuts. Pull the $35,000-$45,000/year out for the teacher's salary, and that leaves $7,046 to $7,500/student figuring (conservatively 22 students per classroom). Other than crappy Jesus-based parochial schools, you aren't going to find a private school in this country worth attending for less than $1,000.00 a month.

You obviously have no childern or no experience with public or private education.

Posted by: Jeff II on April 10, 2006 at 2:56 PM | PERMALINK

Al, that CNNMoney report is talking about the effects of globalizations on educated workers. It is not that the truly rich are getting closer to the middle, rather the upper middle is sliding down. To see the real income inequality trend you have to look at where the top, let's say, 2% are relative to everyone else.

Posted by: Ilya on April 10, 2006 at 3:06 PM | PERMALINK

If the only benefit to 90% of the U.S. from free trade and globalization is cheap textiles and electronics at Walmart, then it's entirely logical that they should be against it. It's not that big a sacrifice.

Posted by: Tim on April 10, 2006 at 3:41 PM | PERMALINK

Jeff II - NYC spends $13,000 per student per year. If there are 25 kids in the average classroom, that's $325,000 per classroom per year. Please tell me that you couldn't run a great school for that. Even if you paid every teacher $100,000, that would leave $225,000 for facilities, arts, music, athletics, administration, etc. etc. for that one classroom full of kids. That's obviously more than enough money, which means the problem with the NYC public schools is not lack of money but something else. What do you think that might be?

My view is this: (1) the benefits of free trade are undeniable - there isn't an economist anywhere who disagrees with this. (2) what makes free trade work is comparative advantage - countries that can produce things more cheaply will end up producing those things. More developed countries stay competitive only by moving up the value chain. (3) What we as a society owe everyone is a chance to compete, to move up the value chain. That means, first and foremost, excellent schools. While there are certainly many fine public schools in this country, most inner city schools are hopelessly and irredemiably bad and it is horribly unfair to condemn entire generations of school children on the alter of teacher unionization. (4) Free trade creates great disruptions along with lots of new jobs and economic growth. I have no problems with job-training programs for dislocated workers - give 'em a voucher and a 12-month stipend and wish 'em the best.

Posted by: DBL on April 10, 2006 at 4:06 PM | PERMALINK

Jeff II:

NYC spends $13,000 per student per year; at an average of 25 kids per classroom, that's $320,000 per classroom per year. If the teacher is paid $100,000, that leaves, for each classroom, $225,000 for arts, music, athletics, administration, etc. etc. That's obviously more than enough money to provide great, world-class schools. The failure to provide such schools, then, cannot be attributed to a lack of funds. What's your theory?

Posted by: DBL on April 10, 2006 at 4:10 PM | PERMALINK

I haven't read Ferguson's whole piece but my impression is that Ferguson doesn't mention that the volatility of the current immigration issue stems from the widespread corruption and quasi-sanctioned illegality of it. For example, many U.S. employers of illegal immigrants pay to all-zero SSNs. When you have this deep level of corruption, the issue becomes, to me, the corruption itself first.

We have to deal with our own corruption before addressing the immigration issue in any kind of coherent manner.

Posted by: Korsar on April 10, 2006 at 4:18 PM | PERMALINK

"If your a British twit, you don't know shit."

Sounds better in Gaelic.

Posted by: Brian in Oakland on April 10, 2006 at 4:46 PM | PERMALINK

Naill Ferguson = Herbert Spencer. Naill longs for the good old days of the Victorian Era.

Posted by: la on April 10, 2006 at 4:51 PM | PERMALINK

"(2) what makes free trade work is comparative advantage - countries that can produce things more cheaply will end up producing those things."

But you seem to be overlooking the fact that a fundamental assumption require for the principle of comparative advantage to hold - namely, that capital is largely constrained by national borders - no longer holds. What if a country can't produce *anything* more cheaply? As long as capital can't flee they have to produce *something* so comparaitve advantage applies. But if capital can all cross borders to where everything else is produced more cheaply then comparative advantage hits the ashheap of history.

Posted by: chaboard on April 10, 2006 at 4:58 PM | PERMALINK

You know, Kevin correctly identifies the gaping chasm between input and output in Ferguson's piece. But he fails to really address the core problem. Namely, Niall Ferguson is a used douchebag. He has a lovely vocabulary and he has memorized the pithy observations of many fine nineteenth-century conservative thinkers, but he doesn't have enough grasp of how the real world operates to make toast.

That the rambling inanities of a gung-ho wannabe-imperialist wanker like Niall Ferguson are taken seriously by the media, rather than being laughed at in the exact same way we laugh at the fringe nutbars who attempt to disprove the laws of thermodynamics on their blogs, is the key problem afflicting American politics.

Posted by: ajl on April 10, 2006 at 6:00 PM | PERMALINK

One out of six of our fellow American citizens has an IQ below 85. There are definite limits to how far they'll get on an academic path. Of course, Ferguson doesn't care about their welfare at all.

Posted by: Steve Sailer on April 10, 2006 at 6:37 PM | PERMALINK
But if capital can all cross borders to where everything else is produced more cheaply then comparative advantage hits the ashheap of history.

Which explains why one of the observed effects of globalization is capital leaving less developed partners in "liberalized" trade for the more developed partners.

Posted by: cmdicely on April 10, 2006 at 7:54 PM | PERMALINK

Mystic Dog is an ignoramus.

Big money is capable of taking advantage of the opportunities of globalization. Regular people and small business are not.

Nonsense. I live in China. Most of my foreign friends work for or run small businesses. They run small factories or trade various items in container lots or run / work for consulting or service businesses.

Big money can go into a poor country, set up deals to strip it of resources, and employ labor that could have been used to improve their own country to make products americans used to make for a pitance.

Just laughable. My employees write software that we sell to Hong Kong companies. I assume that Mystic Dog thinks that they should be writing software for China instead. But then where would China get the hard currency to buy things like Intel chips?

Apparently Mystic Dog has never heard of "Comparative Advantage". But he feels qualified to opine on economic matters? What a maroon!

Oh, and by the way, if I'm big money where's my money?

Certainly not enough to create a market for "US" goods. What american goods are people earning $15 a day going to buy?

$15 per day is RMB 120/day = RMB 2,500 a month, about what I pay a programmer with one year of experience. Based on what my staff buy I would suggest as examples:

  • Coca Cola
  • Motorola mobile phones
  • Computers with various US components

In addition, our company buys software, computers, copy machines (HP), printers, etc. much of it from America.

In and idealized, equal world, sure, globalization makes a lot of sense. IF you unify currencies, and IF you pay everyone equally for equivalent work.

Gah!! In such a world globalization would make no sense at all - there would be no point!!!

Why ship US IP to China to make computers or software if US and Chinese workers cost the same?!?!

All globalization does right now is allow the investment class to make even more money for no work than they make now.

Given I work 14 hour days I don't think I'm doing no work.

The savings of near-slave labor are not passed on, they go to big CEO salaries and stock holders.

Got an IRA? A 401K? A mutual fund? You are a stock holder.

Also, have you shopped at Walmart?

Notice those falling prices? How do you think that is happening? Those savings are passed on.

Posted by: Michael Friedman on April 10, 2006 at 11:42 PM | PERMALINK
$200,000 per classroom to make it work, don't you think you could do better? The public schools are run for the benefit of the unions, period, end of story. Posted by: DBL on April 10, 2006 at 12:44 PM |
That would be true only if the class size is 10 pupils. Otherwise, you are spouting the usual Republican nonsense.
It's protectionists and nativists like you who are the problem. Free trade is good because it helps everybody. Al 12:46 PM
Only an America hater would believe that. Free trade benefits corporate upper management and stockholders. Workers suffer. Notice, no company every offers its workers a say in whether their jobs are offshored or outsourced, and the only jobs that can not be are those like retail, construction, and other trades. If you're middle-management, your job is exportable.
Anyone who wants to disagree needs to wake up and smell reality. Jon Karak 12:58 PM
That shouldn't mean cutting your own economic throat.
DBL 4:10 PM: That's obviously more than enough money to provide great, world-class schools. The failure to provide such schools, then, cannot be attributed to a lack of funds.
If you look at the cost of private education, that kind of private school that the wealthy send the offspring to attend, you will note that the cost is generally in the area of $24,000 per year and up [18,000 and up for k-8] The budget that you claim is excessive, is barely providing basics.
Given I work 14 hour days I don't think I'm doing no work. Michael Friedman 11:42 PM
You're not a coupon-clipper which is what is meant by "investor class," i.e. those living off capital investments, not labor. You're not really disagreeing on that point. Posted by: Mike on April 11, 2006 at 1:25 AM | PERMALINK

"Only an America hater would believe that."

In that case, nearly every economist in the world is an "America hater"

"Notice, no company every offers its workers a say in whether their jobs are offshored or outsourced,"

That's because "jobs" are not something OWNED by the workers. Employment is provided by employers, and they can choose where & whom they want to employ.

Posted by: Dustin Ridgeway on April 11, 2006 at 8:38 AM | PERMALINK

Dustin--

I wouldn't so glibly assume that everyone agrees that "jobs" are purely the property of those who "provide" them. That is actually a fairly extreme position that most people would not agree with. Of course, I understand that slave mentality is pretty popular these days among economists, but our legal system has a slightly different take on the question.

Posted by: kokblok on April 11, 2006 at 12:53 PM | PERMALINK




 

 

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