Wednesday, February 11, 2004
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Mankiw speaks the truth on trade, and everyone goes postal
N. Gregory Mankiw, chairman of the White House Council of Economic Advisers, testified before Congress yesterday to present the Economic Report of the President. Here's what he said about outsourcing:
Later on, he told reporters, "Outsourcing is just a new way of doing international trade. More things are tradable than were tradable in the past and that's a good thing."
As I've argued ad nauseum, Mankiw's correct on the economics. Alas, on the politics, it looks like he's stepped on a land mine. Here's the Washington Post lead:
Kerry's statement is a shame -- until now, he had been the most adult Democratic candidate when it came to foreign economic policy save Lieberman [Given the rest of the field, he could say this and still be the most adult candidate on this issue!--ed. Plus, he needed to get out in front on the issue.]. What's more worrisome is that Republicans are making similar noises:
More from the New York Times:
Actually, the Senator owes an apology to every consumer in America, but I'm not going to hold my breath in wait.
FINAL UPDATE: Virginia Postrel chips in with this point:
What are the chances Bush will defend Mankiw? I'd say slim and none, and slim seems to have left town lately.
Surprise us, Mr. President. Show us you really are a free trader.posted by: Al on 02.11.04 at 12:33 AM [permalink]
From MSNBC: "The rising household debt causes some economists to worry that when interest rates rise — as they eventually must — millions more consumers will get caught in a debt squeeze, possibly posing a risk to the commercial banking system."
Visa offered me a low interest balance transfer for a few months. So I took it. At the end of the period they set the new rate at 20.9%. In subsequent calls they refused to lower it, I guess expecting I wouldn't be able to pay it off. Not only did I pay it off; I transferred my business banking to another bank!
I see "default rates" of 27% in their unwanted copious mass mailings - and economists are expecting rates to rise? I'm dearly looking forward to outsourcing some fricking banker's jobs and sack the SOBs here in the States! As the saying goes, "They've earned it!" Clear the sidewalks and bring out the body bags... the bankers will be raining out of the buildings!posted by: gram on 02.11.04 at 12:33 AM [permalink]
"I think outsourcing is a growing phenomenon, but it's something that we should realize is probably a plus for the economy in the long run," Mr. Mankiw told reporters on Monday.
Let me see.
2. "It is a plus in the long run". Accordingly to Keynes in the long run
Will Mr. Drezner hazard a guess if outsourcing long run will be before or after Mr. Drezner will get a tenure?
I am amused by economists pronouncements where they feel free to ignore time. What kind of crockpottery is that? If economics is a science, it must have some predictive power. It must be able to guesstimate times processes will take. If economics cannot do that, why should I believe their pompous pontifications?posted by: mik on 02.11.04 at 12:33 AM [permalink]
Why am I getting the feeling that Mr. Smoot and Mr. Hawley are about to make a reappearance in Washington? Is there any doubt that they will have the same effect?posted by: DSpears on 02.11.04 at 12:33 AM [permalink]
It is politics, not economics that matters. No matter how much theory backs up Mankiw, he just can't be saying that in public. Any politician wanting to score points would just jump all over him. He knew that, and that is why Bush will probably cut him lose on this rather than back him up.
I am wondering if he is just looking for an escape hatch from the disasterous supply-side advocacy position he has got himself trapped into. His statement on the Hill might be his chance to get out of the Bush Adminstration and re-gain some respect from economists at the same time. Currently he is in danger of being treated as a joke in his field due to his blind following of the belief (that he even wrote against in his textbook) that cutting taxes will increase government revenues. Coming off as principled on this issue will help him regain some respect as an economist. It will be interesting to see what DeLong and Krugman have to say about it.posted by: Rich on 02.11.04 at 12:33 AM [permalink]
Al --- Two words: steel tariffs. This Administration has already shown that when it comes down to politics vs. free trade, politics will win every time.
Then again, it's not like pro-NAFTA Kerry is covering himself in glory at the moment. There's no difference between losing service jobs to India and losing manufacturing jobs to Mexico (where they pit-stopped on the way to China).posted by: Brooklyn Sword Style on 02.11.04 at 12:33 AM [permalink]
"Many if not most economists contend that the expansion of free trade, in goods as well as services, ultimately benefits all countries that participate...."
I'm shocked that the NY Times would print this. It's patently obvious that the vast majority of economists believe free trade benefits all participating countries. "Many if not most economists" is deceptive.posted by: Xavier on 02.11.04 at 12:33 AM [permalink]
“Surprise us, Mr. President. Show us you really are a free trader.”
A very fair question: will President George W. Bush stand by N. Gregory Mankiw? I’ve long said that the current Democrat Party is committed to protectionist legislation. It utterly rejects the free trade policies of the 1992 Bill Clinton. Did anyone really think that Senator Kerry was going to dissent from this iron clad dogma? The irony is that President Bush can only help himself politically by continuing to support Professor Mankiw.posted by: David Thomson on 02.11.04 at 12:33 AM [permalink]
Surely Paul Krugman will tell us how wrongheaded John Kerry's statement is.posted by: Tinky on 02.11.04 at 12:33 AM [permalink]
For the time being John Kerry doesn't get to set policy. Bush does,
And he is a protectionist.
No, maybe not as bad as we had them back in the 1930s. This is a different world after all.
But after the steel traiffs and the sugar exclusion with Australia its clear that politics always comes first for this WH.posted by: GT on 02.11.04 at 12:33 AM [permalink]
If Bush is a protectionist, so are all his predecessors, since the coddling of the sugar lobby has been going on since the beginning of time. (The Dems managed to keep their Senate seat in Louisiana, in part, because of the sugar lobby. Think Rove isn't aware of that? Think that wouldn't influence the policy of ANY administration?)
We are never going to have perfect free trade in this country, because there will always be some interest group somewhere who will get itself protected. The thing about free trade is that GOP interest groups, in general, fear it less than organized labor. So it's going to take a profile in courage (and let's give Clinton a LOT of credit for this) for a Democrat to be a free trader.
This means, if free trade is important to you, you will probably vote Republican. Unless,of course, the assininity of their budgets ends up outweighing the benefits of free trade.posted by: Appalled Moderate on 02.11.04 at 12:33 AM [permalink]
GT-- as noted by others, if the sugar industry support makes W. a protectionist, then all Presidents we've ever had have been protectionists, certainly including Clinton. Odd how not removing the sugar support while otherwise negotiating much lower tariffs with Australia is much worse than not removing the sugar support while not negotiating lower tariffs with Australia at all, for example.
The net effect of Bush's trade policies so far will be to lower tariffs thanks to several bilateral and regional deals, especially with the steel tariffs revoked, as they have been. (Much to the complaint of Democrats and others.)
Clinton didn't accomplish anything on trade other than the welcome arm-twisting to get the already negotiated NAFTA passed, and generally not making things worse. (There were some lumber tariffs applied against Canada, and plenty of "antidumping" actions, things that go on under all Presidents. Certainly the Seattle WTO trade talks fell apart, but it's really not clear if any blame can be ascribed to Clinton for that.)
A large reason for this, of course, is that he was unable to get Congress to give him fast-track authority, which it had granted to Reagan and Bush. Not that this was just the fault of the Republicans-- 75-80% of them voted for FTA for Clinton, versus a tiny percentage of Clinton's own party. Republicans in marginal, anti-trade districts were unwilling to stick out their neck for Clinton, especially when their opponents from Clinton's own party would attack them if they were for free trade. Not exactly profiles in courage, though.
When Bush became president, even fewer Democrats would vote for FTA, including formerly "free trade" Democrats. However, W. was able to lean on more Republicans in order to get authority. The eventual slim passage by one or two votes meant that the President had to make promises to try to not touch certain despicable tariff regimes in the negotiations. A couple more free traders on either side of the aisle and this could have been prevented.posted by: John Thacker on 02.11.04 at 12:33 AM [permalink]
I'm a Democrat and an economist (it says so on my business card, at least the economist part), and I'll gladly defend Mankiw (it's nice to finally have an opportunity to do so, now that he's said something worth defending). In fact, I was defending him (or at least defending what he said) to my wife just yesterday morning (she's a Democrat but not an economist).
One question is whether his boss will defend him, as others have noted above.
I would be very surprised if Krugman or DeLong don't defend Mankiw (if they happen to write about this altercation, and they should)posted by: David on 02.11.04 at 12:33 AM [permalink]
Two words: steel tariffs. This Administration has already shown that when it comes down to politics vs. free trade, politics will win every time.
I'm with you on the steel tariffs. I am hopeful, however, to see this instance disprove your theory that politics will win "every time". If politics only wins half of the time, I'll take it.posted by: Al on 02.11.04 at 12:33 AM [permalink]
"To help workers adversely affected by trade develop the skills needed for new jobs, the Administration has worked hard to build upon and develop programs to assist workers and communities that are negatively affected by trade."
Can anyone name any program that helps assist software engineers, help desk workers, financial analysts and other highly educated workers?
I believe in free trade, but the programs to help displaced workers only help a tiny percentage of people (even only a tiny percentage of uneducated workers).
I know several people with M.S. in Computer Science have been unemployed for 1 - 2 years. Are they supposed to go back to school for 4 years so they can work in Bio-tech?
"Clinton didn't accomplish anything on trade other than the welcome arm-twisting to get the already negotiated NAFTA passed"
I'm sorry but this is just laughable.
Clinton was the most free trade president we have had in decades who was willing to go against his party and pay a political price to push free trade.
Yes, I know all other presidents have coddled the sugar industry before. But Bush is unwilling to take anyone on. If Clinton had passed the steel tariffs in 2000 Gore probably would be President right now.
Whatever else you can say about Clinton his was a free trade administration and willing to fight for that. Bush is neither.posted by: GT on 02.11.04 at 12:33 AM [permalink]
I'm a die-hard democrat and I agree with him. As a lefty my question is "how distributed is this benefit?" And my guess is "not very." Almost all knowlege-based jobs are liable to moved overseas at this point and those are generally middle-class jobs. New knowlege based jobs will continue to replace them as long as the US is a worldwide innovator but the time between job-creation and job-offshoring is probably only going to get shorter.
I'd rather see us invest in creating a flexible middle-class workforce than invest in protectionist subsidies and tariffs. I'm talking about improved transitional assistance - health care, unemployment, community colleges. Give me those and bring on the free trade.posted by: josh on 02.11.04 at 12:33 AM [permalink]
Re David Guy's comment: no programs that I'm aware of. In fact, if I remember correctly, I read recently that programs set up to help with retraining workers who lose manufacturing jobs are denying assistance to IT, etc., folks. There are some lawsuits pending on this. I think the rationale is that these kind of workers don't manufacture anything (which is debatable, but there you are) and so don't qualify.
posted by: tendancer on 02.11.04 at 12:33 AM [permalink]
YES, SIR!!posted by: Brad DeLong on 02.11.04 at 12:33 AM [permalink]
As others have mentioned, outside of economic-savvy circles this is near-suicide to state outright.
I believe Brad's post hits the issue - nobody is loudly stating any benefits other than the abstract (to 99% of people) assertation that "everyone benefits". Nobody seems to have explained to all those left jobless how it benefits them - I'm certainly not capable of it. The easiest result for 99% of people to see is they now have no job, and their (ex) bosses can rake in more money since they just slashed their payroll costs drastically.
But perhaps the reason there's no loud explanations of why it "benefits everyone" is because that explanation likely needs to follow the declaration - which no politician is likely to do at this point - Bush or Kerry - or anyone. Do economists have a plan for how to handle this rapid shifting in the workforce? This shift seems to be going much faster than previous ones - vague promises of re-training or whatever are cold comfort to those left jobless with (likely) lots of debt. So maybe we need more people explaining how to handle the situation than reciting 'free trade benefits everyone'(?)posted by: TG on 02.11.04 at 12:33 AM [permalink]
The theory is right, but the human cost of it is terrible. Seeing the model work is sexy, dealing with the problems of the newly unemployed is dismissed.
Until economists' jobs start getting offshored, it will be awhile before they understand that.posted by: Sebastian on 02.11.04 at 12:33 AM [permalink]
TG hits the nail on the head. Dan moans about the Democrats, DeLong moans about the press corps, and both treat the abstract nature of gains from outsourcing as if it were not an issue. Dan compounds the error by taking at face value Mankiw's statement about the administration's efforts to assist displaced workers.
Well, the abstract nature of whatever gains may resort from outsourcing is an issue, a big one, because the gains are no evident to many people now. I grant that they may be in 15 years or so, but this is not the rack to set one's political hat on.
If this famously message-conscious White House were as politically competent as people say it is, it might have insisted that Mankiw reword the paragraph Dan quotes to include some numbers on the jobs gained through trade liberalization in services (which do exist) and make the point that it has long been the United States insisting on such liberalization. Only after establishing that this has had concrete benefits to specific people can one then go on to make the valid point that America cannot expect to have trade liberalization work in only one direction.
Also -- one more time -- you can't just pretend that outsourcing to reduce costs in the short term, drive up corporate stock prices in the short term, and thereby increase executive compensation in the short term isn't happening. I don't expect any economist working for the administration to either defend this practice or propose ways to prevent it, but you can't go into an election year when corporate greed will be an issue and look as though you are pro-greed. More than you do already, at any rate.
As I've said before, a major reason support for free trade is declining in this country is that its defenders do such a lousy job.posted by: Zathras on 02.11.04 at 12:33 AM [permalink]
Mankiw has lost all credibility. His fiscale budget numbers are bogus. If in addition to that, that doesn't convince you then this passage that Dan cited does the final death blow:
"When a good or service is produced at lower cost in another country, it makes sense to import it rather than to produce it domestically. This allows the United States to devote its resources to more productive purposes."
What's wrong with that? Nothing except that it's a statement of absolute advantage. Absolute advantage means exactly what Mankiw cited above - that the country with the greater absolute efficiency should produce a product. Ricardo's comparative advantage theory is based on a different idea. Comparative advantage means that you should produce goods with the least opportunity cost. What that means is that you make what you're best at, and don't make what you could otherwise better spend your time on elsewhere.
Since Mankiw is a phenomenal economist I cannot believe that this confusion of terms is anything less than significant. It may be that he was "talking down" to his audience, assuming that they wouldn't know the difference. But frankly it rang some alarm bells. If he's citing the trade laws on the grounds that they are best on absolute advantage because maybe he knows that they fail the comparative advantage test.
Why would he do such a thing? To further the political plan of his bosses. Mankiw wouldn't do such a thing you say? Well he just did on the budget and fiscal outlook numbers. Personally that phrasing rang all sorts of alarm bells in the oldman's head. It may be a subtle distinction but Mankiw really does know better. If he's signalling that absolute advantage is the basis of these trade deals, the US can expect to lose allot of marketshare in the near future because lowest marginal cost production tends to lead to marketshare capture. What's wrong with that? Trade means trading back and forth. What are we trading them? Ask yourself that question. For comparative advantage trade to work, we have to be trading something. What are we trading? What are they buying that's ours?posted by: oldman on 02.11.04 at 12:33 AM [permalink]
“John F. Kerry should know better. If he becomes president--and if he wishes to have a strong American economy--he will need to build support for expanding trade. Anything that he says now that makes that future task harder is not in America's interest, or even in his interest if he wants a second term. “
Brad DeLong is no longer an insider of the Democrat Party. On the contrary, he is a heretic. When will he realize that I’m right to say that the Bill Clinton of 1992 would not capture the nomination in 2004? The Democrat Party leaders are now dogmatically committed to protectionist policies. George W. Bush is something of a wimp on the issue, but the Democrats are now almost a total disaster. By the way, did Professor DeLong ever blast the Democrats who employed protectionist scare tactics to win those two major elections in Louisiana? Was I perhaps hibernating during that time?
“As I've said before, a major reason support for free trade is declining in this country is that its defenders do such a lousy job.”
Baloney. The real reason is that the Liberals control the “mainstream” media. How many stories are run highlighting the success stories? Instead, they neverendingly focus on the troubles of garment workers who have experienced economic troubles due to NAFTA.
Eek! Eek! The liberals, in the mass media no less.
Yeah, I had a sneaking feeling there was something I was missing. Silly me. Only the Great Left-Wing Conspiracy (TM) would think to cast a comment like "outsourcing is a good thing" in a negative light.
Anyway, the answer to oldman's question is quite a lot in the area of services. The bilateral equation doesn't always even out -- India probably sells more in services to us than we to them, though I wouldn't swear to this -- but America prospers as a provider of services to the world when free global trade in services prevails (the bulk of our trade deficit is in manufacturing and commodities, principally oil). The documentation for that, or for political purposes the anecdotal defense of that, is available. If the administration really wants to defend free trade they had better get used to leading with it, instead of scrambling for a response when its spokesmen walk into headlines like "Bush Aid: Outsourcing is Good."
It's the administration's job, and more broadly the job of supporters of free trade, to make the case for it. They can't expect the media or anyone else to make it for them, nor can they expect that just restating the theoretical case in a way that a classroom full of career academics would agree with is the same thing as making an effective public argument.posted by: Zathras on 02.11.04 at 12:33 AM [permalink]
Democrats aren't the only ones 'going postal' as you call it. Check out: http://www.washingtonpost.com/wp-dyn/articles/A30194-2004Feb10.htmlposted by: Brendan McDaid on 02.11.04 at 12:33 AM [permalink]
“Eek! Eek! The liberals, in the mass media no less.
Yeah, I had a sneaking feeling there was something I was missing. Silly me. Only the Great Left-Wing Conspiracy (TM) would think to cast a comment like "outsourcing is a good thing" in a negative light.”
You obviously need to stop wanting to appear sophisticated---and just deal with the facts. The Liberals dominate the media. Studies overwhelmingly show that most “mainstream” journalists are Democrat voters. Only today, Dr. Bob Arnot left NBC:
“In his letter to Mr. Shapiro, he wondered why the network wasn’t reporting stories of progress in Iraq, a frequently heard complaint of the Bush administration. "As you know, I have regularly pitched most of these stories contained in the note to Nightly, Today and directly to you," he wrote. "Every single story has been rejected." . . .”
I contend that the liberal media highlight the anti-NAFTA stories and mostly ignore the good news. Does any rational person truly disagree with me?
Basic summary: the U.S. is responsible for 17.4% of global exports in services (that figure increases when transportation and tourism are excluded). India is responsible for 1.5% of global exports in services (that figure also increases when transportation and tourism are excluded)posted by: Dan Drezner on 02.11.04 at 12:33 AM [permalink]
Isn't "outsourcing" as old as the hills? Isn't any direct investment by a U.S. multi-national technically a form of outsourcing, and haven't U.S. firms been engaging in such direct investment for a very long time? If, say, Ford opened a plant in England in the 1920's, wasn't that outsourcing? Why the fuss now, and why are defenders of free trade so on the defensive these days? (seems to me to be the worst outlook for trade of my 37+ years on this earth).posted by: P.B. Almeida on 02.11.04 at 12:33 AM [permalink]
To answer a previous question........ECONOMICS IS NOT A SCIENCE. That is precisely why economists should not be taken seriously.posted by: RRF on 02.11.04 at 12:33 AM [permalink]
What kind of science has no predictive power? Just a collection of factoids and abstract models (anyone for the theory of circular cow?) that are too abstract to give much insight into real life.
Alchemy comes to mind.posted by: mik on 02.11.04 at 12:33 AM [permalink]
"I know several people with M.S. in Computer Science have been unemployed for 1 - 2 years. Are they supposed to go back to school for 4 years so they can work in Bio-tech?"
Who says they have to spend 4 years in school to get their foot in the door? If it's the government, then the government should stop doing that.
"I believe Brad's post hits the issue - nobody is loudly stating any benefits other than the abstract (to 99% of people) assertation that "everyone benefits". Nobody seems to have explained to all those left jobless how it benefits them - I'm certainly not capable of it."
It's pretty easy to explain. We've all been benefiting for years. Everytime we buy a car that runs well without breaking the bank. Every time we buy a digital camera, personal computer, or what have you. Every time we get online. Every time we buy clothes for ourselves and our kids, or buy appliances, TV's, washers and dryers, toys for the kids, just about anything at Wal-Mart.
Programmers have been getting lots of benefits from liberal world trade for many years. Those in the profession that advocate protectionism now, after all those years of enjoying the benefits of free trade, should not be listened to.posted by: Ken on 02.11.04 at 12:33 AM [permalink]
"It's pretty easy to explain."
OK, the price of goods for American consumers have gone down - how are those who lost jobs going to benefit from that? Their savings will last a few weeks longer - then what?
I'm not saying it's not a good thing, but this explanation isn't going to really appease anyone who needs a job. This point can be (is) part of an explanation, but I don't think it's gonna fly as "the explanation".posted by: TG on 02.11.04 at 12:33 AM [permalink]
Dan, I appreciate the response. Please be aware of the distinction between the respective Indian and American share of global exports of services and the bilateral trade balance in services between India and the United States. You cannot effectively address concerns about the latter issue without first establishing the context provided by the former. You have provided one data point toward that end in the comments section of your weblog; how much better it would have been if someone had directed Greg Mankiw to include it in the Economic Report of the President.posted by: Zathras on 02.11.04 at 12:33 AM [permalink]
"When a good or service is produced at lower cost in another country, it makes sense to import it rather than to produce it domestically. This allows the United States to devote its resources to more productive purposes."
Oldman, if you define the cost of production as the opportunity cost of production then Mankiw is correct.posted by: Xavier on 02.11.04 at 12:33 AM [permalink]
Except that the cost of production is generally not the opportunity cost. The closest thing to indicate opprortunity cost is the ROI or return on investment for the capital. The lowest opportunity cost is effectively the highest return on investment. When you talk about cost of production or marginal cost you're generally talking about absolute advantage.
As for the rest of the discussion, it's well intended but it confuses position, speed, and velocity. It's not where we are, it's where they're gonna be relative to us or us to them. Imports are great, but you have to develop export growth industries to keep it in balance. If you don't, you have a situation with increasing trade, lost jobs to trade, but stagnant job growth because the workers "have no where to go". Sound familiar?The speed of import growth expansion in trade treaties has to be matched by structural growth in commercial exports.
It's not a question of whether or not trade is bad, but whether or not it's well managed. A one-sided treatment of the topic, focusing on lower costs from imports without focusing on structural growth in exports has already been proven to be a economically unfeasible model in the long-run. This is not a question of opinion, but of economic history. Those who ignore it, proceed at their own peril. The failure of such models have occurred multiple times in recent years, and the market did *not* save these situations.posted by: Oldman on 02.11.04 at 12:33 AM [permalink]
A few questions to which I have yet to see convincing answers:
Several direct questions for Brad:
(1) It has been admitted that even if the country as a whole may be better off with job exporting (which is debatable, but let's pass that over for now), some groups will, if not compensated, be net losers in this game. What programs, if any, would you propose to ease the pain of offshoring and free trade on specific groups of Americans who are negatively affected by it? Please be specific.
(2) What do you think the political feasibility is of the programs (if any) that you would recommend?
(3) How would you respond to a point made in one of Brad's threads that there is no realistic possibility that the losers of offshoring will be compensated in any way, and that therefore it is rational for the individuals in these groups to oppose it even if it results in a theoretical benefit to the country as a whole? Is it your assertion that they should sacrifice the well-being of themselves and their families for the enrichment of others? If so, what do you think is the political feasibility of *that* over the long term?
The point that I am making is that free trade is only viable over the long term if most of the American people are reasonably happy with their job situation and prospects. Economic rationalizations saying how things *should* work out only go so far, when they are clearly *not* working out right now, and there is no sign that they will any time in the near future. If you want to fight protectionism and the anti-offshoring movement, you'd better get cracking on the creation of good jobs. (Wal-Mart isn't going to impress many ex-coders.)posted by: Firebug on 02.11.04 at 12:33 AM [permalink]
A clarification: The questions were originally directed at Brad DeLong, but any of the pro-job-exporting posters on this group are welcome to answer them as well - if they can.posted by: Firebug on 02.11.04 at 12:33 AM [permalink]
You realize, of course, that it would be REAL easy to export Bloging. Heh, heh, heh...posted by: Jon Stopa on 02.11.04 at 12:33 AM [permalink]
Mr. Mankiew was not wrong. Cost in economics is always relative cost, for implicity they omitted the word "relative"!posted by: Sheng on 02.11.04 at 12:33 AM [permalink]
No answers to Firebug questions yet. I guess pro-job-exporting posters, most of whom appear to be goverment/education employees of one sort or other, are busy buying cheap Chinese crap at WallMart.posted by: Mik on 02.11.04 at 12:33 AM [permalink]
First of all, there is no economic concept called "absolute advantage". If you understood the concept of "comparative" advantage you would understand that it doesn't allow for such a concept. Absolute advantage would mean that all trade would shut down because one party would own everything and the other party or parties would have nothing to trade in return. I concede that there is a considerable group of people who actually beleive such a thing could happen to America. I expect them to be Democrats but unfortunately this is becoming a calling card of the Republican party as well.
What makes this all the more absurd is that people who believe in the mythical concept of absolute advantage look in fear not to an advanced industrial and knowledge based economy like Japan (who could be a serious threat if they ever get their economic house in order) as the country that would gain a mythical "absolute" advantage over the US, but a country that can not even feed it's people, a country where most people don't even have running water, sanitation or electricity, but yet are somehow going to "steal" all of our programming jobs.
This would be comical if I thought most people understood these concepts, but they don't. Even a graduate of Harvard who studied economics like Lou Dobbs spends an hour every night on a supposedly respectable news outlet spouting half-truths and outright lies in an effort to get people mad about something that isn't really happening. The xenaphobic ranting on exporting OUR jobs to countries inhabited by insects (my word, not his) or letting insects across our borders is downright scary. The Hitler reference is the most overused in the history of political discussion, so I won't go there. But I'm sure if you wanted to convince people that capitalism doesn't work, so we need to shut down our borders and have the government take over and direct the economy for the sole of benefit of "our" citizens and to the exclusion of "their" citizens, then the program Mr. Dobbs produced nightly would be a good starting point.
I don't think the phrase "Smoot-Hawley" can be overused at this point of you are a true champion of free trade. I haven't heard it yet in any mainstream media setting. Of course the vast majority of Americans wouldn't have a clue what that it anyway. So I won't hold my breath.posted by: DSpears on 02.11.04 at 12:33 AM [permalink]
You know you're losing an argument when you resort to calling your opponent a racist and the whole debate isn't even tangentially about race.
FYI, "free trade" and its resulting loss of good-paying industrial jobs has hit America's minorities the hardest. If you want proof I urge you to visit Bridgeport (CT), Lawrence (MA), Milwaukee, and Rochester (NY).
N. Gregory Mankiw just handed Kerry the keys to the White House. Mankiw could be a saboteur; he's from Harvard after all.posted by: TLM on 02.11.04 at 12:33 AM [permalink]
You know you are losing an arguement when you can't present any facts or logic to support your claims.
posted by: DSpears on 02.11.04 at 12:33 AM [permalink]
"OK, the price of goods for American consumers have gone down - how are those who lost jobs going to benefit from that? Their savings will last a few weeks longer - then what?"
The point is that they've been benefitting from that. For years.posted by: Ken on 02.11.04 at 12:33 AM [permalink]
Lest we forget, with all this talk of benefits for all, that when the steel, textile workers, farming and other jobs started leaving the US that the American population was sold the bill of goods which said that retraining in IT and knowledge based jobs was were the job growth would be. Now that these jobs are headed overseas too, I wonder what the next thing the US job seeking citizen will be told? Other than "Its all good".
History shows that the most common population delineations are ruling/wealthy class,
'Offshoring' is a prescription for economic disaster, high unemployment, continued recession, downward mobility, an eroding tax base, and crumbling infa-structure in the United States.
Where are the New Jobs going to come from after Corporations have sent American 'white Collar Jobs' overseas ?posted by: Tom Chiarello on 02.11.04 at 12:33 AM [permalink]
Although I was disheartened when I realized that the majority of Americans are ignorant of the basic economic prinicpals that govern capitalistic systems, as is evident by several comments on this page, I was relieved to see some people standing up for free trade and Greg Mankiw's honest and accurate assesment of outsourcing. Comments by DSpears and others lifted my spirits slightly. I wish that more people understood what was in their best interest. Perhaps econ 01 could fix that?posted by: Mark L on 02.11.04 at 12:33 AM [permalink]
It is more than obvious you people are not affected by outsourcing. In the future, it may be your jobs leaving. You can bash me all you want, but the reality of this is no one's job is secure any more.posted by: Rob Kayon on 02.11.04 at 12:33 AM [permalink]
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