True.
even if you assume that a SMALL number of workers lose in the SHORT-run.
If this was as clear-cut as you paint it Samuelson wouldn't have written his mea culpa and we wouldn't be having this discussion.
displaced workers in outdated industries do not become permanently unemployed: they find other jobs.
Here also you muddy the waters. The industries in question are not outdated. Rather the same products can be made abroad using cheaper labor. Thus high-priced American labor is either forced to accept much lower wages, forced into unemployment, or able to find a similar or better paying job in a new industry. What's at issue are the proportions or each.
Does that hurt American workers?
If it lowers their wages, yes. How would you feel if your employer told you he could replace you with someone earning only half your salary? I know plenty of people in IT who've faced this.
One can easily say that the present, lower wages are normal
It's you who fall into the trap by creating false categories. In a market system there's no such thing as normal. However, when it comes to received monies more is better and less is worse...and decades of experience have taught fiscal planners that falling wages are very bad psychologically.
Also investors have no trouble going to Congress and the Courts to ask for protection from unfair competition - meaning tariffs to equalize a cost advantage gained by employing cheaper foreign labor (or time to move their own companies abroad). But, somehow, the definition of unfair becomes incredibly difficult to pin down when labor asks for the same protections.
The "equalization" occurs in a dynamical system only if it is closed...The process of globalization has been in place forever
We're not speaking about idealizations in physics. We're making crude models of economic reality. For nearly a century there's been a national market in the United States that could've been considered closed for many purposes. Thus unions could be formed and the environment protected.
No longer.
But in the future world markets will approach some sort of - relatively - stable equilibrium where it will no longer be worthwhile to move whole industries out of a country to take advantage of cheap labor elsewhere...or the whole system will collapse into revolution and chaos.
Don't feel bad: Lenin too fell for the same error.
I don't feel bad and I don't make the typically partisan error of assuming that mistakes are made only by those who disagree with me.
What does a liberal --- and, judging by your remarks, VERY liberal Larry is doing on a conservative forum?
Testing my ideas, of course. Is there any other reason to indulge in political discourse?
TQ: Firstly, the benefits accrue not only to investors...but also to consumers.
LL: True.
Well, if you agree that it's true, then what is the issue? In a modern capitalist economy (the U.S.), the cvast majority of people act in three roles --- as consumers, investors and workers. The benefits accrue to most of people thus, whereas only a small percentage of workers get hurt --- an only in the SHORT run and only in one of the roles.
What you do, as most of the liberal media is elevate only one of components of a person's welfare --- that which is derived from wages -- and make it paramount. It is not unlike arguing that one became poorer since his employer started to pay wages by check rather than cash. Cash receipts is only one component of income, and wages is only one component of welfare.
Moreover, elevating wages (and workers) to such prominence is precisely what Marx did. He was wrong then, but given what we know at the present time, doing so is intellectually dishonest. Any support or criticism of policy must include the impact on all three components and not just wages.
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TQ: even if you assume that a SMALL number of workers lose in the SHORT-run. LL: If this was as clear-cut as you paint it Samuelson wouldn't have written his mea culpa and we wouldn't be having this discussion.
Your argument is an ad hominem support of Samuelson and an ad hominem attack on me: you simply state that you don't trust me and do trust Samuelson. I don't know why? Do you know my real name?
More importantly, you must not have read Samuelson's article yet. It is a model, and his has certain assumptions like any other.
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TQ: displaced workers in outdated industries do not become permanently unemployed: they find other jobs.>P> LL: Here also you muddy the waters. The industries in question are not outdated. Rather the same products can be made abroad using cheaper labor. Thus high-priced American labor is either forced to accept much lower wages, forced into unemployment, or able to find a similar or better paying job in a new industry. What's at issue are the proportions or each.
The "outdated" industries were given merely as an example: to see an effect clearly, it helps to take up the case where it is large.
An industry such as production of TV sets has become outdated just as SOME portions of IT: call centers, from the standpoint of economics, may be viewed as an industry.
The percentage of people is not an issue: aggregate unemployment, which is very small, gives an answer. And, you will notice, most people talk largely about IT --- just like they did about TV sets in late 1980s -- precisely because there is not much else to point to. Again, lack of intellectual honesty.
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TQ: Does that hurt American workers?
LL: LIf it lowers their wages, yes. How would you feel if your employer told you he could replace you with someone earning only half your salary? I know plenty of people in IT who've faced this.
For centuries, it was a fundamental perception of Americans that there are good times and bad. So, when times were not so good, people viewed it as averaging out of good times they had before. Have you DESERVED an abundant crop? Nature smiled at you one year but then gave you a bad crop the other. That's all. Nobody was questioning the fundamental precepts of the economic system because of fluctuations.
The time have changed because people like you were raised, and in turn raise others, to believe that progress is linear: from good gto better. If so, then indeed it follows that you are ENTITLED to what you have today. And, if tomorrow you do not have as much, then someone must've taken it away: the government, CEOs --- the capitalist system itself. And then you are really frustrated.
The foregoing is a logical development of a wrong premise and wrong expectations: progress is not linear; that it was such since you were born is an aberration.
From a different standpoint, you may want to consider a fundamental measure of satisfaction: it is equal to what is delivered minus what was expected. This is explains, in particular, why you are very happy with an even a small increase in something desirable -- salary, gifts, respect -- when none was expected.
Conversely, this explains the lack of satisfaction with today's labor market by people that follow your logic. Feeling unsatisfied, they conclude that NOT enough --- of jobs, wages, health care --- was delivered to them. But observe that there is a different explanation: low satisfaction is a result of unreasonably high expectations. This is corroborated by numerous observations --- and complaints on the part of conservatives --- they our culture has become narcistic, that even adults act as spoiled children.
More specifically, in the IT sector, there is no doubt that this is the case: the previous wages, which provided the grounds for unreasonable expectations, have been elevated for decades (and skyrocketed in the '90s) because of shortage of labor.
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LLIt's you who fall into the trap by creating false categories. In a market system there's no such thing as normal.
Thank you that was precisely my point: you cannot speak from both sides of the mouth. If you do not question capitalism when wages are high just because market forces make then so due to shortage of labor, then you should not question their decline when supply of labor increases. Both are market adjustments; that's all.
But that is not what you do. When capitalism produces enormous wealth and ridiculous IT wages --- even our poor live much better than Russian engineers today --- you do not suggest that that it needs to be fixed. You overlook, again only because as a Marxist you view wages as the sole component of welfare, that those extra-high IT wages of the '90s were paid by AMERICAN consumers and retirees that keep their savings in stocks and bonds. When, however, wages decline -- also as a result of market forces --- you complain and question the very system that has so far has proven to be a clear winner even for the poor. Whink what you may, but be honest with yourself. Actually, you make a mistake even as a Marxist. Marx valued complex labor according to training and education rahter than market forces. Well, when a 25-year-old kid makes $150,000 per annum in the '90s, and the AVERAGE salary of an electrical engineer with a Ph.D. and 20 years of experience is only $96,000 --- something is wrong even by Marx.
Make up your mind.
However, when it comes to received monies more is better and less is worse...and decades of experience have taught fiscal planners that falling wages are very bad psychologically.
Wrong. The problem is not that is, or can be, solved by fiscal planners: it is solved by parents and churches; it is they who instill values in you and thus determine how you deal with adversity. Both parenting and religion are in decline throughout the West, and even NORMAL occurrences are perceived as adversity by infantile adults with unreasonably expectations. It is true that this leads to social upheavals, but they have nothing to do with policy issues.
Also investors have no trouble going to Congress and the Courts to ask for protection from unfair competition - meaning tariffs to equalize a cost advantage gained by employing cheaper foreign labor (or time to move their own companies abroad).
Sorry but this is so factually incorrect that it makes it pure garbage. And, be intellectually honest here: the AVERAGE salary of a longshoreman, where no education is required, is about $130,000. That is who has protection through unions. That is how teachers keep talking about how they are underpaid getting $80,000 per annum for nine months of work --- all protected by a monopoly on their labor. As I said, it is the investor and the consumer who subsidize, rather than remain protected.
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TQ: The "equalization" occurs in a dynamical system only if it is closed...The process of globalization has been in place forever
LL:We're not speaking about idealizations in physics.
YOu appear to misunderstand both physics and economics here. It is the nature of constituents and the interaction between them that make a system physical or social, but both can be, and actually are, dynamical systems. If you study macroeconomics, you will find that a great deal of time is devoted to DYNAMICS. Even in your microeconomics courses you probably encountered the issue of convergence to market equilibrium.
For nearly a century there's been a national market in the United States that could've been considered closed for many purposes.
You are thoroughly misinformed. About 14% of assets in this country is owned by the British, and that occurred long, long ago. Where do you think the oil and tobacco produced in the U.S. go? Have you not heard that even before the U.S. became a country, we were shipping goods to Britain and the rest of the Americas to Spain and Holland?
Your perceptions are grossly incorrect.
More importantly and more fundamentally, even you put barriers to trade, the economy is never closed as a system: it interacts with the physical environment, the simplest example of which is the use of natural resources.
Given your assumptions, some of your conclusions do follow logically. But the assumptions are incorrect.