Posted on 09/30/2004 4:35:23 PM PDT by rmlew
Up to now, offshoring of American jobs has been a political flashpoint but, judging by the responses of both parties, has been adjudged by the powers that be to be just another annoying political issue, which changes nothing fundamental and should be handled the way political issues usually are: by jockeying for position within the established policy consensus.
The Democrats, quintessentially John Kerry, have sought to make the smallest policy proposals sufficient to position themselves as the good guys on this issue for those voters that care about it. The Republicans, because they are in office, must defend a status quo they are no more or less responsible for than the Democrats, and are defending it using the same arguments that have always been used on the free-trade issue, as if nothing has changed.
Both responses are perfectly rational within the confines of ordinary day-to-day Washington politics, which is precisely why they have occurred. Unfortunately, both are completely deluded, because offshoring is already setting off a political earthquake that will reshape American politics for a generation. For in reality, free trade is dead and the only question is which party will figure this out fast enough to collect the burial fee.
The key to understanding why free trade is dead is to be honest about the fundamental way free trade is experienced by Americans as citizens of a high-wage nation:
Free trade is cheap labor embodied in goods.
Naturally, everyone wants the labor they consume, whether directly or embodied in goods, to be cheap. But as a wage earner, they also want the labor that they are paid for to be expensive.
Whether this is “efficient,” as academic economists understand this term, or not is irrelevant to the politics. This is shown by the fact that in American history there have been long-lived and stable electoral coalitions producing both free-trade and protectionist outcomes. Economists' theories about the efficiency of free trade touch the way voters actually experience trade peripherally at best and flatly contradict it at worst.
What is relevant to the politics is that this analysis implies the possibility, in a democracy, of a stable political coalition in which one part of society treats itself to cheap labor at the expense of another part. So long as the enjoyers of cheap labor exceed the victims in number, this coalition is viable.
For example, one could have a coalition of everyone who is not a manufacturing worker (roughly 85% of the population) against everyone who is. Manufacturing workers suffer the competition from cheap foreign labor, everyone else enjoys the cheap foreign goods, and a majority is happy. At least in the short run, before everyone begins to suffer the consequences of a depleted industrial base.
You may already see what the problem is and where this is going. What if the percentage balance in the coalition isn't stable? What if we go from 15% of the population harmed and 85% benefited to 30/70? Or 50/50? Or 70/30 the other way? The coalition starts to fall apart.
Free-traders have an argument here: they will tell us that even if we go to 90% or even 100% of the population being impoverished by competition with cheap labor, we will still be better off because goods will be cheaper.
The problem is, as is intuitively obvious to any laid-off factory worker who has contemplated the cheap knick-knacks on sale at Wal-Mart, that the drop in cost of living never matches the drop in wages. Like many free-trade arguments, it is qualitatively true but quantitatively false. The mitigating factors mitigate; they just don’t mitigate enough.
Don't believe this? Let's count up how many people have voted against incumbents because they were unemployed, and compare this to how many have done so because they couldn't buy a pair of scissors for $.99. Has there ever been a demonstration in the streets about the latter?
Free traders might have half an argument here if inflation were a live political issue today, but it isn't. Allan Greenspan has been worrying about deflation, not inflation. And given that the biggest inflationary factor looming on the horizon is the coming collapse of the dollar under the weight of accumulated trade deficits, they're better off not raising the topic.
But back to our electoral math: what offshoring has done is to radically shift the percentages of the electorate who fall into the two categories. So this beggar-my-neighbor coalition is starting to fall apart.
Of course, this takes time, as offshoring all the tens of millions of jobs that can now be offshored cannot be done overnight.
But what doesn't take nearly that much time is for the fear that this is going to happen to ripple through the electorate. Right now, people are taking a wait-and-see attitude, wondering if this is going to be just another one of those crises that were supposed to end life as we know it that never actually happened.
The problem is, unlike running out of oil in 1973, this is actually going to happen. Don’t believe it? It’ll probably only take another two years of empirical data for the trend to become dispositive.
As a result, the cozy acquiescence of a majority of Americans in letting free trade destroy American wages sector-by-sector is going to end. The dividing line between the winners and the losers, which the winners thought, as recently as the dot-com boom of a few years ago, would remain stable, has grown fluid.
Worse, no-one really knows where it will one day solidify. So no-one knows – on a personal, let alone political level – how to protect themselves.
Basically, there is not much left of the American economy that is invulnerable to offshoring. There are, basically, these jobs:
1. Those services that must be performed in person: cooking, policing, bagging groceries, teaching school, prostitution etc.
2. Those activities, like construction, that are performed on physical objects too large or heavy to be economically shipped from abroad.
3. Those activities, like agriculture, mining, and transportation, that are performed on, or relative to, objects fixed in place.
4. Those activities, like the practice of law or advertising, that depend upon peculiarly American knowledge that foreigners don’t have. But even this is rapidly breaking down as law firms, for example, start to offshore work.
5. Activities of government impinging upon sovereign power, like the military, or democratic legitimacy, like Congress. But given our use of mercenaries (sorry, “civilian security contractors”) in Iraq, clearly this can be nibbled away at in surprising ways.
6. Industries where America enjoys significant technological superiority tied to local labor pools or educational institutions, a rapidly-shrinking category.
7. Owning capital. Although not really a job, it's at least an occupation, and so long as America maintains a political consensus that rules out significant expropriation of capital, owners of capital gain from consuming cheaper labor and lose nothing.
The problem is, this isn't enough. In particular, it isn't a high enough number of high-wage jobs, as most, though obviously not all, of the jobs in these seven categories are relatively low-paid. This is largely inevitable, since jobs that must be done by hand, like stocking a Wal-Mart, are difficult to automate to increase their productivity.
So our little coalition starts to fall apart. What happens next?
For a start, the bad news for Republicans is that the psychological bourgeoisie starts to shrink. I use this term to describe everyone in the economy who identifies emotionally with the owners of capital, whether or not a majority of their income is investment income. All those yuppie financial analysts who may now get offshored are an obvious example, but there are far more people in this category, people all over American suburbia.
The key psychological bargain such people have until now had with the system is that economic forces are something that happen to other people. Someone with this attitude can indulge an amazingly dispassionate concern with economic efficiency.
More obnoxiously, he can explain that the jobs being lost are only "bad" jobs, while the jobs being kept, like his, are worth keeping. This is a wonderful way to covertly congratulate himself that his existence is a worthwhile one while that of a blue-collar worker is not. Thus the galloping narcissism of the baby-boomers becomes an emotional motor of globalist economics.
But that party's over, soon. It probably has only one presidential election cycle to go.
The bad news for Democrats is that they sold out so completely to free trade under Clinton that they've thrown away their natural position, earned over 60 years, as the party that protects Americans from the rougher edges of capitalism. With the classic stupidity of the imitator, they embraced free trade just before the fad went sour.
Either party could be the first to turn on free trade and thus capture public support on this issue. The Democrats could follow Ralph Nader's idea’s; the Republicans, Pat Buchanan’s. The fact that these wildly different figures oppose free trade is a strength, not the weakness the Wall St. Journal supposes, as it means that ending free trade can be credibly sold to people on either end of the political spectrum. Or packaged into a nice balanced pitch for the middle.
You want a right-wing America First appeal? You got it. You want a hippie sob-story about exploited workers? You can have that instead. You want a moderate and reasonable “commitment to a middle-class society?” Done.
Once the issue heats up some more after a few more rounds of depressing job-creation numbers from the Bureau of Labor Statistics, the only thing that will be keeping the status quo in place is the corrupt bargain of the American political duopoly, in which each party agrees with the other to not make trade an issue. This bargain is intrinsically unstable because of the temptation to score politically by defecting from it, so one must assume one party must eventually defect from it.
The other will have no choice but to follow or face electoral extinction, and America’s experiment with free trade, which has outlived its Cold War purpose of bribing foreign nations to not go communist, will finally be over.
You can post that quote or ANY quote by me, I don't care. But I refuse to allow statements which are false about our greatest patriots to pass without calling you on them.
Stop that crap and I wouldn't have much to talk to you about.
First of all, YOU concider Hamilton to be wonderful because he was an big government authoritarian like you.
Second, I never said anything false about him.
Third, you can disagree with someone on their opinion of things without all the personal crap you always fire at anyone who doesn't toe your goofy line on things.
Forth, you have declined again to make the deal, so one can only conclude that you like these little personal battles.
Now go lay down, you'll feel better.
The perfect corollary to that is what is happening in America regarding the responsibility for our lives.
Our central government is constantly assuming a greater and greater share of the responsibility for every phase of our lives. The result is that many Americans are behaving with proportionately less personal responsibility, which in turn results in the call for ever more laws, restrictions and government assumption of responsibility for us.
Hamilton's government was TINY so that is a LIE. And a ridiculous lie at that since the fedgov cost less than $10 per person during his day. Hamilton was the most brilliant of the Founders and the devotion Washington showed to him and the hatred Jefferson had for him is sufficient to give him credibility by themselves. Of course you will claim Washington was a "big government authoritarian." Which is as big a LIE as it is applying it to me.
You stated an absolute LIE when you claim he was no friend of freedom. He was one of Freedom's greatest friends but you would have to understand what the term means to understand that.
Any disagreement is not bad just lies about the subject at hand raises my dander. Had you stated an objective statement about Hamilton there would be no issue (though I might dispute it) but to state bald-faced Lies as you did will not get a pleasant response. However I NEVER lie about your comments.
I have no objection to "personal battles" nor name-calling nor insults and can take any of them without getting my panties in a twist and whining for the moderator.
The problem is not the government but the People. These laws and regulations are there because the People either WANT them or don't care enough to resist them.
Of course the lying RATmedia doesn't help this problem go away either.
Please: NO profanity, NO personal attacks, NO racism or violence in posts.
Funny, I was driving home from fishing club last night with my good friend and neighbor, who is a retired bank executive and a "liberal."
Believes in the free market and free trade, spent much of his life representing his company abroad, but is voting for Kerry.
OTOH, as far as I can see, those opposing free trade are equally likely to be conservative or liberal.
Seems to me that many of those on the left who oppose free trade are the same people who would like the UN to exercise some power over the US in other areas.
As far as whether increased government power is the fault of the people or the government, I would agree with Thos. Jefferson that it is the nature of government to gather ever more power to itself. Not that the people do not encourage it as well, we are willing to sacrifice liberty in return for various things that government power can accomplish that seem for the moment to be desirable to us.
There is a difference between posting a LIE which is what you have done and being a LIAR which I never called you.
If you cannot understand the difference ask someone to explain it.
When you post a comment such as that I go out of my way to make people aware I am white as in post no. 175 that is just a LIE. What is one supposed to call a LIE but a LIE?
I consider Jefferson to be an expert on nothing though he was a good cabinet maker. Governments grow because of many factors but none can hold sway unless the People allow them.
Our fedgov was TINY until the Civil War when its growth became both natural and necessary. It shrank after the War but was still bigger. This has happened after every war though the Cold War caused it to maintain more of its growth than after other conflicts.
Governments grow just from the sheer increase in complexity of societies thus the government acceptable when the nearest neighbor was 20 miles away is not powerful or large enough when they are 20 feet away. It is an inescapeable fact of life.
They also grow when more rights are claimed by citizens. Thus, paradoxically the more rights we claim the larger the government must become to protect those rights.
Opposition to Free Trade is largely centered in the Left. You will see those claiming to be Right opposing it but they use the Concepts, slogans and rhetoric of the Left in making their arguments. Every contra argument on this thread validates this point.
54, white, widower, father of two sons, Financial Analyst, loves bridge, voracious reader, music lover, lover of beautiful women, born in Arkansas, now lives in Chicago, alumnus of Univ. of Chicago, Wayne State Univ., Univ. of Illinois, M.A in Economics, history minor, Member NRA, Federalist Society, Anthroposophical Society, Art Institute of Chicago, Oriental Institute, Elder Mayfair Presbyterian church. Actually member since impeachment as aka.
I challenge you to find any other bio on his site which proclaims a persons race so conspiciously.
I mtold no lie, I made an observation. Sorry you regard your race so importantly that you list it number two on your bio, much less at all.
Please stop calling me a liar, it is against posting guidelines.
I am aware of what my bio says. It is merely information. Only an idiot would believe this "conspiciously" or even conspicuously makes an issue of race.
So stop posting LIES like that and I will not have to point out they are LIES. That would please me enormously.
Now calling me an idiot in addition to a liar. Please adhere to posting guidelines.
Please: NO profanity, NO personal attacks, NO racism or violence in posts.
I believe there is something of a paradox here, in that societies achieve complexity in direct proportion to the amount of freedom that they enjoy, the stricter the boundaries set by government in which a society must operate, the less complex and less successful it is likely to be. My opinion.
However, if government must regulate certain aspects of a complex society, as it must, the more local the authority doing the regulating, the better.
"This has happened after every war"
Regarding WWII, this was probably exaggerated by the fact that FDR had strong ambitions of increasing and moving leftward the powers of central government.
"Thus, paradoxically the more rights we claim the larger the government must become to protect those rights."
No arguing that point, when people think, as they now do, of their "rights" as services or remunerations that government can provide for them, then government must grow.
You are volunteering for the title "idiot" but I have no objection.
Actually the complexity of a society increases merely from population growth without regard to freedom. Freedom does allow MORE complexity as well but it is not necessary for it to occur.
Actually I believe most of the growth in government has been on the local/state level in the last 30 or 40 yrs.
FDR had a very difficult problem to deal with even before the War and was a stop gap to prevent an even GREATER leftwad shift. During the thirties there was great concern that there would be a communist revolution here. He had attackers from the Left from within his own party such as Huey Long.
I realize it is very popular here to attack FDR but I think in all fairness one must look at the context of the times he was attempting to operate within. When 25-30% of the work force is unemployed and NO ONE can figure out why there is a huge problem.
Well, I think that to the extent a society is totalitarian, and thus planned, it will be less complex by default than a society of limited government, since in totalitarian societies all the citizens are supposed to be working for the state goals instead of their own random goals. So the complexity they achieve is going to be in spite of government. I am sure one could say that Communist China is a complicated society because of its huge population, if only because it includes so many different ethnic groups. But I am sure it would be far more so if unleashed from its oppressive government.
I've been doing a little reading on FDR, it does seem that he was very sympathetic to socialist philosophy. I gather that he considerably increased federal powers, at least during his terms.
Whether a socialist revolution was likely during the Great Depression, I couldn't say, I have not heard that it was, although I'd agree that socialism had a much stronger foothold in the US then than it does now, notwithstanding the Democratic Party's adoption of so many socialistic principles and our general leftward movement of the last 40 or so years.
I was referring to the FEAR and expectation of many of a revolution that was rampant then. Socialism had essentially conquered the intelligensia of the West then due to its inability to get the truth about what was the real results. Then when our economies collapsed it made the appeal that much stronger because it seemed to many as if capitalism itself no longer worked.
Socialist was not synonimous with bigger government so I don't think what FDR was encouraging was socialism. But he saw no alternative to grow the government particularly after his initial steps (raising taxes to cut the deficit) made the situation worse. These were conservative measures and their failure forced him to consider more radical ones.
What the RAT party has adopted is welfarism not socialism. They are not the same.
As to the complexity of totalitarianism vs a free society you may be right but we have to consider the reality of totalitarianism vs the theory too. Black markets develop and unofficial methods for obtaining goods and services are also prevalent and these add enormous complexity. Certainly should these societies only have an official structure they would be less complex.
How long will foreigners keep putting money into the USA? Isn't the dollar going to fall against other currencies soon?
What about the concern that multi-nationals are setting up R&D overseas? If the RD is over there, where is the USA's comparative advantage?
Investment will continue within the US as long as capital's safety and growth continues. Theoretically, given equal safety, investment continues until rates of return to capital are equalized across countries.
An important factor in those rates of returns is labor productivity which is favorable to the US. However, if our educational systems continue to stress absurd subjects rather than reading, writing and rithmetic our productivity edge will disappear.
If Multinationals are forced to do this there is nothing you can do about it except resign yourself to slide into an economic backwater. After all Left wing propaganda has produced policies which lead to this and have for decades.
Diminishing RAT party power is the crucial factor in the retention of national greatness.
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