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Bloggingheads 10-25-2011 11:50 AM

Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 

ginger baker 10-25-2011 12:24 PM

Re: Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 
this should be fun. *cough*

TwinSwords 10-25-2011 12:56 PM

RE: Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 
What's happening in the real world is that poverty is increasing, and much of the middle class is losing ground, while almost all of the new wealth created by all workers is being hoarded by the people at the very top.

http://img651.imageshack.us/img651/7669/inequality.jpg

http://img191.imageshack.us/img191/2...seholdinco.png

Rathertired 10-25-2011 01:06 PM

Two Cheers For the Mott Haven Kid!!!
 
Kevin D. Williamson tells us more than once how he's living in the Bronx. It'd be interesting to know if Williamson was born and raised in the Bronx (in which case his down with the people, I'll tell you what my neighbors in the South Bronx would think about student loans is merely misguided and not ludicrous hipster affectation as well) or if he's currently living in the Bronx because Wall Street has made Manhattan unaffordable. An irony he might want to address.

Schmitt briefly touches on vocational schools, but is too kind to plunge the knife in. I'll refrain from evoking the huddled masses I live among (a la the rough & tumble Mott Haven Kid Williamson!), but, you know, the Mott Haven Kid might want to check out how the DeVry and University of Phoenix chains are currently ripping off poor people across America, encouraging them to take out sizable loans for often worthless degrees. And the students there (many vets) don't think they're going to vocational schools, much less being conned. Touchingly, they think they're getting degrees which will lead to middle-class jobs and lives.

Both Phoenix and DeVry are backed by Wall Street. A disgrace.

Williamson might find there are exponentially more people at any branch of either institution than, oh say, the feminist film program at Smith. (Nice stereotype, btw! The 1980s really do live at National Review!)

Somewhat off topic: a discussion of these schools might make for a fantastic BHTV episode.

Then, of course, there's the actual cost of higher education throughout the U.S. (even for "real", i.e., non rip-off, schools) and the very lucky position the loaners are in: government guaranteed, but the tremendous profits are all theirs. Kind of like Wall Street in 2008, come to think of it!

Finally, while we're giving the Mott Haven Kid things to do, he might want to check his smugness a bit. I'm sure he didn't mean to seem condescending to the always gracious Schmitt.

apple 10-25-2011 01:48 PM

Re: Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 
Kevin: The protesters are socialists and ignorant, aimless riffraff.

Right, but so is the Tea Party. Let's not forget that these idiots nearly forced House Republicans to not raise the debt limit.

sugarkang 10-25-2011 02:45 PM

Re: Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 
Quote:

Originally Posted by TwinSwords (Post 229481)
almost all of the new wealth created by all workers is being hoarded by the people at the very top.

Ahh, good old labor theory of value. Pretty sure this is the root of economic illiteracy.

DWAnderson 10-25-2011 03:23 PM

Re: Two Cheers For the Mott Haven Kid!!!
 
Eliminating the ad hominems we have:

Quote:

Originally Posted by Rathertired (Post 229482)
the DeVry and University of Phoenix chains are currently ripping off poor people across America, encouraging them to take out sizable loans for often worthless degrees.

Don't forget the huge role of the federal government in enabling this.

To the extent it exists, this problem would not exist without the loans. The government has subsidized such loans (in part with guarantees) and then, to limit the cost of the program, made them non-dischargeable in bankruptcy. Kids who heavily discount the future payment obligations are left holding the bag years later.

If you eliminated the non-dischargeability in bankruptcy going forward, I think you would see this problem disappear. The government would no longer guaranty nearly so many loans (because of the high default risk). Students sacrificing their own savings would be much more discriminating about what institutions they went to. In short the phenomenon of schools created to scoop up government loans would disappear almost overnight.

DWAnderson 10-25-2011 03:24 PM

Re: Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 
Quote:

Originally Posted by sugarkang (Post 229489)
Ahh, good old labor theory of value. Pretty sure this is the root of economic illiteracy.

It is in close competition with the notion that there is no such thing as government failure.

miceelf 10-25-2011 03:27 PM

Re: Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 
Quote:

Originally Posted by DWAnderson (Post 229493)
It is in close competition with the notion that there is no such thing as government failure.

LOLs.

Like the belief that the market is always right and always produces the most desireable outcome isn't a complete inanity with the exact same structure as a false religious belief.

chamblee54 10-25-2011 03:36 PM

Re: Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 
I am at the 9 minute mark, and I just listened to Mr. Williamson's hypothesis about the depression. He says we are spending more money than we have, which is true. He does not say that we are spending trillions of those dollars on self destructive wars.
chamblee54

Don Zeko 10-25-2011 07:27 PM

Re: Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 
Kevin's obnoxious know-it-all act is particularly irritating when he's not responding to Mark's arguments. Take this exchange, for example.

Mark begins by arguing that the way in which corporations divide up profits between executives and workers is a big driver of inequality, and that in this case the problem is a straightforward case of the same profit being divided differently than it would have been in 1960.

Kevin responds by first throwing out a non sequitur accusation that Mark doesn't care about Chinese peasants escaping rural poverty, then argues that greater global competition means that firms have to keep labor costs low and that the relative value of CEO's is higher in a world full of larger, more competitive firms.

But the first half of that is completely unresponsive to Mark's point, and the second half doesn't stand up to the most cursory scrutiny. After all, the paychecks for a CEO and a greeter at Wal-Mart are both part of "labor costs" for a firm. If foreign competition means that firms can't afford to be generous to their employees, that should hurt upper management as much as anyone else unless there's some other reason for them to be paid more. Now Kevin thinks that greater competition means that CEO's are more important now than in the past, but the evidence that this is anything but a myth is awfully thin. The CEO's of foreign firms make far, far less than US firms, but there's basically zero evidence that this has made US companies more efficient. In practice, there is voluminous evidence that CEO pay is both a massive market failure and an extremely corrupt practice.

So here we have a clear example of inequality driving wage stagnation. In the 1960's, upper management had a relatively weak bargaining position when it asked for higher shares of profits, and labor had a relatively strong position. Since then labor unions have disappeared and corporate boardrooms have become far more incestuous and irrational, and lo and behold we have stagnant or falling median income and skyrocketing CEO pay.

Don Zeko 10-25-2011 07:44 PM

Re: Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 
The guy that just said he doesn't believe the government should make any provision for universal primary education at all just upbraided a Democrat for not caring about the poor people that don't have enough choices in education? What? Exactly how many educational choices will the poor have if we eliminate all education expenditures and plow that money into tax cuts?

db63 10-25-2011 07:47 PM

Re: Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 
ugh, any orthodoxy is so silly. every time i hear williamson extol the virtues of the unimpeded free market i reach for my wallet. why is it so difficult for some people to understand that corporations are good at some things (making cheap ipods, exploiting china's non-existent labor laws--when that revolution comes it'll be interesting) and terrible at others (self-regulating CDOs).

Mike 10-25-2011 08:05 PM

Re: Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 
Quote:

Originally Posted by Don Zeko (Post 229508)
If foreign competition means that firms can't afford to be generous to their employees, that should hurt upper management as much as anyone else unless there's some other reason for them to be paid more.

I am pretty sure that is not the crux of what foreign competition is doing. It is not that firms can't afford to be generous to employees, it is that they increase profits by paying foreign workers lower wages for equivalent labor. And that in turn will drive wages down for local workers, unless they are willing to be replaced. The only way this can extend to CEOs is if there is a large group of foreign, trained individuals willing to provide equivalent managerial service at a lower price, which simply has yet to happen although it is not impossible. So you cannot conclude that foreign competition must decrease CEO pay if it decreases lower level pay.

Quote:

So here we have a clear example of inequality driving wage stagnation. In the 1960's, upper management had a relatively weak bargaining position when it asked for higher shares of profits, and labor had a relatively strong position. Since then labor unions have disappeared and corporate boardrooms have become far more incestuous and irrational, and lo and behold we have stagnant or falling median income and skyrocketing CEO pay.
So, certainly labor unions have declined in power and there seems to be very good evidence to suggest that CEO's take peer compensation greatly into account when deciding CEO salaries (although it is improbable that 90% of those firms actually meet their target salary of the median or above of the peer group, we would expect a more normal distribution). Yet the connection between the two is still problematized by the role of foreign competition, as seen above, and when you design policy to remedy the situation, you would like to strike the cause of the problem. I would like to see a little more explanation before I consider that to be CEO pay.

Don Zeko 10-25-2011 08:06 PM

Re: Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 
While I'm complaining, Williamson proof that public schools are horribly inefficient basically goes as follows: many Americans are poorly educated. Therefore public schools suck. The possibility that educating impoverished children in communities blighted by crime and poverty might actually be much more difficult than producing consumer electronics devices is not discussed. And of course there was no talk of how incredibly difficult it is to evaluate the effectiveness of our schools.

If nothing else, you'd think that our private colleges and universities, where by far the most predictive variable of outcomes is the economic status of the parents of the students admitted, would suggest to Kevin that the private sector would have just as much trouble dealing with the incredibly complex and intractable problems of education as the public sector does.

Don Zeko 10-25-2011 08:28 PM

Re: Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 
Quote:

Originally Posted by Mike (Post 229514)
I am pretty sure that is not the crux of what foreign competition is doing. It is not that firms can't afford to be generous to employees, it is that they increase profits by paying foreign workers lower wages for equivalent labor. And that in turn will drive wages down for local workers, unless they are willing to be replaced. The only way this can extend to CEOs is if there is a large group of foreign, trained individuals willing to provide equivalent managerial service at a lower price, which simply has yet to happen although it is not impossible. So you cannot conclude that foreign competition must decrease CEO pay if it decreases lower level pay.

Outsourcing is a separate question. Kevin was talking about competition from Europe and Japan.

Quote:

Originally Posted by Mike (Post 229514)
So, certainly labor unions have declined in power and there seems to be very good evidence to suggest that CEO's take peer compensation greatly into account when deciding CEO salaries (although it is improbable that 90% of those firms actually meet their target salary of the median or above of the peer group, we would expect a more normal distribution).

Whether they meet it or not isn't the point. If every firm is trying to pay more than average, you're going to get an inflationary spiral out of proportion to the actual benefit provided by getting a better CEO.

Quote:

Originally Posted by Mike (Post 229514)
Yet the connection between the two is still problematized by the role of foreign competition, as seen above, and when you design policy to remedy the situation, you would like to strike the cause of the problem. I would like to see a little more explanation before I consider that to be CEO pay.

I'm not saying that this is the only cause of inequality or income stagnation. But every other story you can tell about this is problematic as well. And given that Williamson was suggesting that there's no causal link at all, I think this is worth considering, particularly since the productivity of American workers has been increasing as median wages have not. Certainly I think part of the solution would be finding a way to get the Chinese to accept some appreciation of their currency, but there's a lot of stuff that is at least partly amenable by policy to work with.

Mike 10-25-2011 09:02 PM

Re: Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 
Quote:

Originally Posted by Don Zeko (Post 229517)
Outsourcing is a separate question. Kevin was talking about competition from Europe and Japan.

Sure, if that is all we are considering, my point is off. I thought he brought in the part about Europe and Japan to show that after the end of WWII, America was the largest manufacturing nation in the free world, and as time progressed from then, globalizing factors set in. But I could be mistaken, or I might be giving Williamson more than his due in thinking that. And of course hiring foreign employees is among the features of the globalizing trend.

Quote:

Whether they meet it or not isn't the point. If every firm is trying to pay more than average, you're going to get an inflationary spiral out of proportion to the actual benefit provided by getting a better CEO.
Certainly, I recognize that will likely happen. I do not want this to be the main point, though. I was simply expressing doubts that the distribution of CEO pay actually would fall in that manner, which if it did not, would leave it open as to whether they are making a rational decision instead of just stating irrational aspirations.

Quote:

I'm not saying that this is the only cause of inequality or income stagnation. But every other story you can tell about this is problematic as well. And given that Williamson was suggesting that there's no causal link at all, I think this is worth considering, particularly since the productivity of American workers has been increasing as median wages have not. Certainly I think part of the solution would be finding a way to get the Chinese to accept some appreciation of their currency, but there's a lot of stuff that is at least partly amenable by policy to work with.
I do not doubt that you appreciate much of the complexities of the situation, and I think it is worth considering too, at the very least in the academic sense that I would like to see how the theory stands up to test and criticism. Notice that the issue in increased productivity of workers not being correlated to increased wages also cuts both ways. Many of the productivity increases are due to cost-saving mechanization in manufacturing, which requires little manpower to operate. I would not expect pay increases to anyone save the engineers responsible for those technologies in such situations, and that is not problematic. Of course in the situations where this is not applicable ...

aajax 10-25-2011 09:09 PM

Re: Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 
None of your graphs indicate poverty.

Do any of your graphs include wealth transfers from higher income groups to lower income groups via entitlements?

aajax 10-25-2011 09:22 PM

Re: Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 
He did not say that all school expenditures had to be cut. He said they could be distributed as vouchers, like food stamps, so there could be competition among private schools as there is among grocery stores.

That's the theory at least, so if you are going to attack his position, at least get his position right.

aajax 10-25-2011 09:23 PM

Re: Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 
Corporations don't have to be good at everything in order to make Williamson's point. They only have to be better than the government monopoly. That is a pretty low hurdle.

stephanie 10-25-2011 09:39 PM

Re: Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 
Quote:

Originally Posted by Don Zeko (Post 229515)
If nothing else, you'd think that our private colleges and universities, where by far the most predictive variable of outcomes is the economic status of the parents of the students admitted, would suggest to Kevin that the private sector would have just as much trouble dealing with the incredibly complex and intractable problems of education as the public sector does.

Not to mention that the theory that for-profit primary schools will be so much better seems inconsistent with our actual experience with for-profit colleges, as Rathertired's post references.

osmium 10-25-2011 09:39 PM

Re: Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 
In all fairness to Kevin, who manages to make me angry in every episode, the second section is provocatively mis-titled because that's not really what he meant. In fact, he agreed with the OWS sense of malaise, re: falling individual wages, stagnant family wages, etc.

However, he is wrong that this has nothing to do with jerks on Wall Street getting big bonuses. This is highly relevant, because there is a sense of entitlement loose in the world, and this manifests in people believing that if you work in the financial industry you are a special and chosen and deserve to get a large bonus no matter what the facts on the ground are. You can manage to make a quarter look good at the expense of everything after the quarter, and still count on your bonus, which you believe you are entitled to.

As Kevin points out, this sense of entitlement occurs other places, for instance in believing that you are entitled to some sort of fancy education or the best house you could possibly afford. But the people who have come to control capital feel equally entitled, and I have no trouble believing that it has driven the economy bad places for all of us.

You can tell me all you want that it wouldn't matter if bosses made only 40 times more than the lowliest employee, flew coach, and drove Hondas, but the fact is that it does. Because this sets the tone for the rest of society.

osmium 10-25-2011 10:02 PM

Re: Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 
Okay, so now I'm in the third section and we're arguing about the income of the top 1%. Instead of considering the top 1% of actual people, why not consider the top 1% of positions? Even if the actual people in these positions is a volatile quantity, I am interested to know what the earning of those people were, whomever they happened to be at the time. Also, I am interested in the number of first class flights they charged to work, the number of working meals they had, how many guests they had at these meals, and what everybody ate and drank. Can't do business without charging it to the account can you? I'm sure all those people paid their dues, so they deserve it. In fact, it's class war for me to even think about this.

Don Zeko 10-25-2011 10:03 PM

Re: Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 
Quote:

Originally Posted by aajax (Post 229520)
He did not say that all school expenditures had to be cut. He said they could be distributed as vouchers, like food stamps, so there could be competition among private schools as there is among grocery stores.

That's the theory at least, so if you are going to attack his position, at least get his position right.

He's actually pretty clearly not saying that. Mark initially assumes that he is adopting the position that you describe, but he later spells out that he considers vouchers a second-best alternative to completely removing the government from having any responsibility to ensure universal primary education.

TwinSwords 10-25-2011 10:25 PM

Re: Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 
Quote:

Originally Posted by aajax (Post 229519)
None of your graphs indicate poverty.

No, they don't, but this has been in the news recently.


Quote:

Originally Posted by aajax (Post 229519)
Do any of your graphs include wealth transfers from higher income groups to lower income groups via entitlements?

No. Can you imagine how out of whack things would become if Republicans* had their way and we abolished Social Security and Medicare/Medicaid? Those programs do a great deal to preserve the American way of life as we have understood it for several decades.



*I will note that when we talk about "Republicans" favoring the elimination of the social safety net, we should be clear that we are only talking about the tier of professional Republicans -- politicians, party leaders, pundits, the media arms at Fox News and in AM talk radio, conservative blogs, web sites, magazines, journals, the think tanks and policy planning institutions.

One of the problems for the Republican base -- the actual rank and file membership -- is that the professional tier don't really represent them. The Kevin Williamsons and Glenn Becks are way, way, way to the right of the real GOP rank and file.

Or, to get to the point, most Republican rank and file support the continuation of Social Security, Medicare, and Medicaid, while the overwhelming majority of the professional tier favor their abolition (or reformulation into engines for siphoning wealth into the hands of investment bankers, as with schemes to privatize Social Security).

TwinSwords 10-25-2011 10:50 PM

Re: Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 
Quote:

Originally Posted by Mike (Post 229514)
I am pretty sure that is not the crux of what foreign competition is doing. It is not that firms can't afford to be generous to employees, it is that they increase profits by paying foreign workers lower wages for equivalent labor.

Well, theoretically it could be equivalent labor, but you state this as if it being equivalent is a prerequisite or necessary condition. It's not. This is another one of the recurring myths in the debate about global labor markets.

In a great many cases -- a majority in my own experience -- the quality of the labor is lower. This is not intended to be a slam on the individuals who work in India or China. Obviously Indians and Chinese have the same capacity to do good work as anyone else. But there are practical obstacles when working with employees who don't speak your language and who live 12 time zones away. It's not that under identical conditions they could not do identical quality work. It's that conditions are not identical, and the differences tend to mean a reduction in quality.

So, contrary to your assertion, more often than not the labor is not equivalent, it's substandard* -- but corporations are willing to accept the tradeoff because the savings are so great. We often pay foreign labor 3%-5% of what employees make in countries where workers have secured their rights -- i.e. labor rights, workplace safety, child labor laws, and on and on and on.


*I'll add that of course it had a lot to do with the type of work. When it comes to manufacturing, there are fewer obstacles of the kind I'm describing. When it comes to anything collaborative, there are significantly more obstacles. I have the greatest personal exposure to software development done in India and China, and infrastructure support services in India (not call centers). These roles all require a great deal of interaction, communication, and collaboration, and because of the obstacles I described, are harder to perform from India or China, and the work suffers as a result.

Quote:

Originally Posted by Mike (Post 229514)
And that in turn will drive wages down for local workers, unless they are willing to be replaced.

Exactly. Corporations found that they could not roll back the social achievements made by the American people during the past 100 years at the ballot box, despite all their funding of libertarian think tanks, so instead they wrote "free trade agreements," handed them to conservatives in Congress, and found a way around American law and a way to usurp the American standard of living.

Don Zeko 10-25-2011 10:56 PM

Re: Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 
Quote:

Originally Posted by TwinSwords (Post 229539)
Well, theoretically it could be equivalent labor, but you state this as if it being equivalent is a prerequisite or necessary condition. It's not. This is another one of the recurring myths in the debate about global labor markets.

In a great many cases -- a majority in my own experience -- the quality of the labor is lower. This is not intended to be a slam on the individuals who work in India or China. Obviously Indians and Chinese have the same capacity to do good work as anyone else. But there are practical obstacles when working with employees who don't speak your language and who live 12 time zones away. It's not that under identical conditions they could not do identical quality work. It's that conditions are not identical, and the differences tend to mean a reduction in quality.

So, contrary to your assertion, more often than not the labor is not equivalent, it's substandard* -- but corporations are willing to accept the tradeoff because the savings are so great. We often pay foreign labor 3%-5% of what employees make in countries where workers have secured their rights -- i.e. labor rights, workplace safety, child labor laws, and on and on and on.


*I'll add that of course it had a lot to do with the type of work. When it comes to manufacturing, there are fewer obstacles of the kind I'm describing. When it comes to anything collaborative, there are significantly more obstacles. I have the greatest personal exposure to software development done in India and China, and infrastructure support services in India (not call centers). These roles all require a great deal of interaction, communication, and collaboration, and because of the obstacles I described, are harder to perform from India or China, and the work suffers as a result.

Exactly. Corporations found that they could not roll back the social achievements made by the American people during the past 100 years at the ballot box, despite all their funding of libertarian think tanks, so instead they wrote "free trade agreements," handed them to conservatives in Congress, and found a way around American law and a way to usurp the American standard of living.

As an aside, I don't understand how the policy recommendation at the end of Mike's argument here isn't massive protectionism. If competition with low-wage workers in India and China necessarily means that the American working class won't see their incomes increase until Indian and Chinese workers' wages reach American levels, then what exactly is the point of free trade? The various free trade agreements making this process possible certainly wouldn't have passed if they were popularly understood as massive altruistic wealth transfers from working class Americans to Chinese and Indian peasants that will have the happy side effect of spectacularly enriching the top half percent of Americans. if you think this is what globalization implies, how on earth do you plan on sustaining it politically?

Ocean 10-25-2011 11:05 PM

Re: Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 
Yes, sir! New Jersey is a lovely state!

Sulla the Dictator 10-25-2011 11:14 PM

Re: Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 
Quote:

Originally Posted by Don Zeko (Post 229540)
As an aside, I don't understand how the policy recommendation at the end of Mike's argument here isn't massive protectionism. If competition with low-wage workers in India and China necessarily means that the American working class won't see their incomes increase until Indian and Chinese workers' wages reach American levels, then what exactly is the point of free trade?

The point of free trade to receive these goods make with low skill labor, in addition to commodities, at a lower price. Theoretically, new modes of technology are kept apace with the transfer of labor so that the native population has an outlet to shuffle into, and thereby either increasing their wage or at least preserving it, and at the same time making products at market substantially cheaper (Textiles, for example).

Free trade assumes an enthusiastically capitalist regime though; and we haven't had that for about 20 years. So it is more like a hole in the bucket covered with the tape of cheaper consumer goods. As we see, that doesn't last forever.

Quote:

The various free trade agreements making this process possible certainly wouldn't have passed if they were popularly understood as massive altruistic wealth transfers from working class Americans to Chinese and Indian peasants that will have the happy side effect of spectacularly enriching the top half percent of Americans.
That isn't what they're supposed to do. They're supposed to provide the consumer a dollar that stretches further, while they develop a pool of consumers of their own to purchase our exports in the form of expensive finished goods.

The proper way to conduct free trade is to do so after the ladder has been kicked away. Of course, the reason we don't do that is because of the incessant moralizing of cosmopolitans.

Don Zeko 10-25-2011 11:24 PM

Re: Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 
Quote:

Originally Posted by Sulla the Dictator (Post 229542)
The point of free trade to receive these goods make with low skill labor, in addition to commodities, at a lower price. Theoretically, new modes of technology are kept apace with the transfer of labor so that the native population has an outlet to shuffle into, and thereby either increasing their wage or at least preserving it, and at the same time making products at market substantially cheaper (Textiles, for example).

Free trade assumes an enthusiastically capitalist regime though; and we haven't had that for about 20 years. So it is more like a hole in the bucket covered with the tape of cheaper consumer goods. As we see, that doesn't last forever.

That isn't what they're supposed to do. They're supposed to provide the consumer a dollar that stretches further, while they develop a pool of consumers of their own to purchase our exports in the form of expensive finished goods.

The proper way to conduct free trade is to do so after the ladder has been kicked away. Of course, the reason we don't do that is because of the incessant moralizing of cosmopolitans.

You're misunderstanding my point. Read the rest of the discussion. Mike is positing free trade with China, India, and other very low wage countries as an explanation for stagnating/falling wages in the American working and middle class. I'm saying that if free trade causes the wages of 70%-80% of the country to stop growing or decline for the foreseeable future, then that's an extremely powerful argument against free trade.

Also, at the risk of getting horribly off topic, what do you mean by "enthusiastically capitalist regime." I can't imagine a definition of that term that makes any sense while still describing the US prior to 1990 but not the the US between 1990 and today.

Oh, and this:

Quote:

Originally Posted by Sulla the Dictator (Post 229542)
The proper way to conduct free trade is to do so after the ladder has been kicked away. Of course, the reason we don't do that is because of the incessant moralizing of cosmopolitans.

is nonsense. If anything, the manner in which liberalizing trade concentrates losses in specific industries and communities, while spreading greater gains around the rest of the economy, makes the argument for a welfare state and a redistributionist government policy stronger.

miceelf 10-25-2011 11:25 PM

Re: Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 
Quote:

Originally Posted by Mike (Post 229514)
I am pretty sure that is not the crux of what foreign competition is doing. It is not that firms can't afford to be generous to employees, it is that they increase profits by paying foreign workers lower wages for equivalent labor. And that in turn will drive wages down for local workers, unless they are willing to be replaced. The only way this can extend to CEOs is if there is a large group of foreign, trained individuals willing to provide equivalent managerial service at a lower price, which simply has yet to happen although it is not impossible. So you cannot conclude that foreign competition must decrease CEO pay if it decreases lower level pay.

But in fact, foreign (and not third world, just foreign) companies that are very successful pay their execs a lot less. The fact that these companies are successful suggests they aren't getting poor quality exec "labor" and are paying lower for it.

Don Zeko 10-25-2011 11:28 PM

Re: Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 
Quote:

Originally Posted by miceelf (Post 229545)
But in fact, foreign (and not third world, just foreign) companies that are very successful pay their execs a lot less. The fact that these companies are successful suggests they aren't getting poor quality exec "labor" and are paying lower for it.

Exactly. Large pay disparities between American and foreign firms happily persist so long as the "overpaid" workers are in a strong position to bargain for high wages. If those workers aren't, then you get a race to the bottom. The more I think about inequality in America, the more I'm convinced that the answer is basically expressed in one word: unions.

miceelf 10-25-2011 11:29 PM

Re: Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 
Quote:

Originally Posted by TwinSwords (Post 229534)
One of the problems for the Republican base -- the actual rank and file membership -- is that the professional tier don't really represent them. The Kevin Williamsons and Glenn Becks are way, way, way to the right of the real GOP rank and file.

Once again I refer to our man at TNR, Tim Noah:


http://www.tnr.com/blog/timothy-noah...-message-again

TwinSwords 10-25-2011 11:39 PM

Re: Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 
Quote:

Originally Posted by miceelf (Post 229548)
Once again I refer to our man at TNR, Tim Noah:


http://www.tnr.com/blog/timothy-noah...-message-again

Excellent article.

This fact -- the fact that the rank and file of the GOP is not represented by the leaders of the party -- is the reason that the politics of hate are sooooo important to the GOP. The reason they always cook up social issues -- ACORN, the Wise Latina, the New Black Panthers, black flash mobs, black on white crime, the Ground Zero Mosque, to name but a few -- is because they need to keep the base distracted from the issues of actual importance, and the population divided along various cultural and demographic lines.

This is why the message of the left has always been about the commonality and of all humanity -- black, brown, red, white, yellow, citizen, immigrant, atheist, believer, gay, straight, and so on -- while the messages of the right has always been designed to divide and sow hatred.

badhatharry 10-25-2011 11:48 PM

Re: Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 
Quote:

Originally Posted by TwinSwords (Post 229550)
This is why the message of the left has always been about the commonality and of all humanity -- black, brown, red, white, yellow, citizen, immigrant, atheist, believer, gay, straight, and so on -- while the messages of the right has always been designed to divide and sow hatred.

http://www.motifake.com/image/demoti...1238184002.jpg

Sulla the Dictator 10-25-2011 11:53 PM

Re: Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 
Quote:

Originally Posted by TwinSwords (Post 229550)
This is why the message of the left has always been about the commonality and of all humanity -- black, brown, red, white, yellow, citizen, immigrant, atheist, believer, gay, straight, and so on -- while the messages of the right has always been designed to divide and sow hatred.

What unbelievably self indulgent twaddle. Maybe you're confusing modern politics with the Lord of the Rings. :rolleyes:

Your side seems to do that a lot.

TwinSwords 10-26-2011 12:33 AM

Re: Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 
Quote:

Originally Posted by Don Zeko (Post 229540)
As an aside, I don't understand how the policy recommendation at the end of Mike's argument here isn't massive protectionism. If competition with low-wage workers in India and China necessarily means that the American working class won't see their incomes increase until Indian and Chinese workers' wages reach American levels, then what exactly is the point of free trade? The various free trade agreements making this process possible certainly wouldn't have passed if they were popularly understood as massive altruistic wealth transfers from working class Americans to Chinese and Indian peasants that will have the happy side effect of spectacularly enriching the top half percent of Americans. if you think this is what globalization implies, how on earth do you plan on sustaining it politically?

Yeah. Excellent questions.

You mentioned currency appreciation.

Another strategy discussed at the time NAFTA and GATT were debated was to ensure that corporations could not circumvent American law when they take jobs overseas, e.g., they would have to respect our laws regarding minimum wages, 40 hour work week, overtime, workplace and consumer safety, child labor, i.e., the full, long list of victories that working people fought, bled, and in many cases died to secure from intransigent corporations throughout the long labor struggles of the past century.

But of course any requirements to this effect were excluded from the legislation. The reason given?

The same reason we can't have a 1% increase on marginal rates over $1 million: It would crash the economy and destroy incentive.

Which, incidentally, were the same reasons given in 1903 when the industrial economy was almost totally unregulated. If you go back and read literature from the time, you hear the exact same arguments used today were used back then to oppose incredibly basic worker and consumer protections.


Quote:

Originally Posted by Don Zeko (Post 229540)
... massive altruistic wealth transfers from working class Americans to Chinese and Indian peasants ...

I have my doubts that's the reason for these trade agreements. Companies relocate from one foreign country to another as soon as the first country tries to secure better conditions or pay for its workers, or as soon as another country demonstrates a willingness to provide "conditions more favorable for trade," as the euphemism goes.

Certainly the role of US business in, for example, Haiti -- and much of Latin America -- has not been an altruistic wealth transfer, or part of a program putting those nations on a path to American style propserity (broadly shared, large middle class). Rather, we have done business in those countries to exploit resources and cheap labor.


Quote:

Originally Posted by Don Zeko (Post 229540)
if you think this is what globalization implies, how on earth do you plan on sustaining it politically?

Exactly.

I think the elites have given a lot of thought to this, and I think their answer will be to sharply curtain democracy. They are already actively placing significant restrictions on voting rights. And they now openly talk about repealing the 17th Amendment. They openly talk about taking away the right of public workers to vote. They talk about removing the right to vote from people who don't own property.

And they will be able to rationalize this as consistent with the Founder's vision for America: in the early decades of the United States, you had to own proprty - often a lot of it - to vote.

So: That's what I think we need to expect: as the consequences of libertarian economic policies and globalization worsen, there will be an escalating effort to contain the population and limit its voice and power.

Mike 10-26-2011 12:41 AM

Re: Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 
Quote:

Originally Posted by Don Zeko (Post 229540)
As an aside, I don't understand how the policy recommendation at the end of Mike's argument here isn't massive protectionism. If competition with low-wage workers in India and China necessarily means that the American working class won't see their incomes increase until Indian and Chinese workers' wages reach American levels, then what exactly is the point of free trade? The various free trade agreements making this process possible certainly wouldn't have passed if they were popularly understood as massive altruistic wealth transfers from working class Americans to Chinese and Indian peasants that will have the happy side effect of spectacularly enriching the top half percent of Americans. if you think this is what globalization implies, how on earth do you plan on sustaining it politically?

What exactly was the policy recommendation that I made? I did not positively state one, I just pointed out that there were certain weaknesses in the support of another. Also, it's pretty easy to see that it is false that if there is competition with low-wage workers in India and China, then American workers won't see income rise until the competitor's wages rise. You can always redistribute, for one. Workers could also relocate to areas less susceptible to replacement. Information industries are the usual case here. I thought the benefits of free trade was in allowing specialization among nations, which increases consumption possibilities between them given certain conditions. This becomes problematic in certain scenarios, but not necessarily for the reasons you have given.

As for sustaining globalization politically, I honestly have little insight to offer here. I would like to note that I do not think it is the sort of thing that really feeds off political support, since much of globalization is accomplished privately now. There are websites now that place global auctions on jobs now, with the task going to the lowest bidder. If he does not do a good job, then you don't pay him and simply run the auction again. In mathematics, there are social networks in which mathematicians present work in progress to peers for guidance or to review finished proofs before formally submitting them. Just to name a few supporting examples.

Don Zeko 10-26-2011 12:55 AM

Re: Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 
Quote:

Originally Posted by Mike (Post 229557)
What exactly was the policy recommendation that I made? I did not positively state one...,

I know, and I didn't mean to imply that you did. I'm just following a tangent here that I think is relevant, since the argument you presented is frequently invoked by others to argue against policy responses to inequality and income stagnation.

Quote:

Originally Posted by Mike (Post 229557)
I just pointed out that there were certain weaknesses in the support of another. Also, it's pretty easy to see that it is false that if there is competition with low-wage workers in India and China, then American workers won't see income rise until the competitor's wages rise.

I don't think that's clear at all. if the economic logic of outsourcing is irresistible, as I think you are arguing, then the wages of American workers won't rise until either a)no population of potential foreign replacement workers is substantially cheaper than American workers or b)American workers become dramatically more educated/productive relative to foreign workers. a) is an awfully long wait, as there is already evidence of firms outsourcing from China to places like Vietnam and Cambodia. And b) might be longer. massive improvements in American education are difficult and expensive, and they're certainly more difficult and more expensive than the gains that illiterate peasants in the third world will get from much cheaper and less complex improvements in education. So again, your argument seems to imply that American workers are waiting for a slow train that never comes if we maintain free trade.

Quote:

Originally Posted by Mike (Post 229557)
You can always redistribute, for one.

Redistribution as a substitute for economic conditions that allow mass prosperity (aka Pity-Charity Liberalism) is a dead end. It's degrading to its "beneficiaries" and politically unsustainable. There's just no substitute for middle and working class economic, social, and political power.

Quote:

Originally Posted by Mike (Post 229557)
I thought the benefits of free trade was in allowing specialization among nations, which increases consumption possibilities between them given certain conditions. This becomes problematic in certain scenarios, but not necessarily for the reasons you have given.

In the big picture, maybe that's true. But the model of outsourcing as a damper on US wages you presented suggests that it is not. As Twin has been describing, outsourcing has the potential to reach awfully far up the skill ladder. If all jobs that can be done with any effectiveness from India or China will be, then the best case scenario is a long, painful adjustment period that will be disastrous for the bottom 60% of the country. If that's what's in the cars (a big if!), then I don't think that free trade is worth sacrificing the middle class society that we have to achieve.

Mike 10-26-2011 01:20 AM

Re: Two Cheers For New Jersey! (Mark Schmitt & Kevin D. Williamson)
 
Quote:

Originally Posted by Don Zeko (Post 229559)
I know, and I didn't mean to imply that you did. I'm just following a tangent here that I think is relevant, since the argument you presented is frequently invoked by others to argue against policy responses to inequality and income stagnation.

That is fine. I was sort of taken aback at first, but following a tangent is certainly fair game if you feel it is an important point.

Quote:

I don't think that's clear at all. if the economic logic of outsourcing is irresistible, as I think you are arguing, then the wages of American workers won't rise until either a)no population of potential foreign replacement workers is substantially cheaper than American workers or b)American workers become dramatically more educated/productive relative to foreign workers. a) is an awfully long wait, as there is already evidence of firms outsourcing from China to places like Vietnam and Cambodia. And b) might be longer. massive improvements in American education are difficult and expensive, and they're certainly more difficult and more expensive than the gains that illiterate peasants in the third world will get from much cheaper and less complex improvements in education. So again, your argument seems to imply that American workers are waiting for a slow train that never comes if we maintain free trade.
The statement in question was if there is competition from low-wage foreign workers, then wages of American workers (who are currently paid higher) will fall. All I needed to do to falsify that statement is assume there is such competition and construct a case in which wages of American workers rise. That can be done, consistently with the assumption, by redistribution. That was all that point was supposed to be doing here. I recognize it is not the best political plan.

Quote:

Redistribution as a substitute for economic conditions that allow mass prosperity (aka Pity-Charity Liberalism) is a dead end. It's degrading to its "beneficiaries" and politically unsustainable. There's just no substitute for middle and working class economic, social, and political power.
I recognize this is not a pleasing alternative. See above.

Quote:

In the big picture, maybe that's true. But the model of outsourcing as a damper on US wages you presented suggests that it is not. As Twin has been describing, outsourcing has the potential to reach awfully far up the skill ladder. If all jobs that can be done with any effectiveness from India or China will be, then the best case scenario is a long, painful adjustment period that will be disastrous for the bottom 60% of the country. If that's what's in the cars (a big if!), then I don't think that free trade is worth sacrificing the middle class society that we have to achieve.
I don't know if it will be disastrous for the bottom 60%. Many jobs today are in service industries which are quite impractical to export. And it is likely not the only damper on wages; if you can remedy those areas, with clear justification naturally, then that is a benefit as well. Also, I got a chuckle reading "If that's what's in the cars."


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