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Populism and the Economics of Globalization [pdf]

129 points by sukruh 9y ago

pillowkusis 9y ago
I don't like the use of the word "predictable". I would qualify this populist uprising as a Black Swan[0], and as Taleb describes in his book, one of the common reactions to a black swan is to rationalize it's obvious predictability after the fact. Were there logical reasons to believe this populist uprising would occur? Of course (and this paper does a good job exploring them). Was it predictable? I don't know. By and large most of us did not predict it, so I'm not so sure. Only with hindsight is this outcome "obviously" predictable. 0: https://en.wikipedia.org/wiki/Black_swan_theory https://en.wikipedia.org/wiki/Black_swan_theory
- justicezyx 9y ago
  > Were there logical reasons to believe this populist uprising would occur? Of course (and this paper does a good job exploring them). Was it predictable? Contradicting statements. Believe means somewhat possible. If you assign someone possibility then it's predicted.
  - pillowkusis 9y ago
    To clarify, by "predict" I mean "to be reasonably sure of the outcome before it happens". I can assign logical reasons for Uber to declare bankruptcy tomorrow, but I would definitely not predict it.
- Mikeb85 9y ago
  > By and large most of us did not predict it, so I'm not so sure. Please, economists have been predicting this for awhile. Read someone like Piketty, he presents a plethora of evidence that inequality is reaching the levels of the gilded age, and that era wasn't exactly devoid of strife, political change, wars, etc... The only people who are surprised are those who are too distracted by their own insular worlds to see what's happening around them.
  - pillowkusis 9y ago
    Taleb addresses this too. Of course somebody DID predict it. I don't know if that means the event is, in general, "predictable." If you put 1 million people in a room and told them to randomly guess what events would occur next, someone would predict correctly. The question is, should WE (as a society) have predicted this? Did reasonable application of our knowledge permit us to know this? I don't know the answer to that question.
    - Mikeb85 9y ago
      > The question is, should WE (as a society) have predicted this? Did reasonable application of our knowledge permit us to know this? I don't know the answer to that question. Not everyone is an expert in all fields. This is the domain of economists, sociologists and political scientists. Certainly many of them did predict this, there's a ton of data to support their theories and predictions. The problem is that if you're one of the people who are comfortable with the status quo, you're not going to be paying attention to these things, much like a labourer in the south likely doesn't care about the stock market or happenings in the venture capital markets in the Bay Area. The truth is that it's the media and political class who let us all down, by ignoring the experts and working class.
      - geodel 9y ago
        > The truth is that it's the media and political class who let us all down, by ignoring the experts and working class. I'd say they listened to experts who are ideologically like them e.g ivy league elites, the ones mostly benefitted by globalization.
- deleted 9y ago
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- tome 9y ago
  Agreed. It's predictable in the same way that the security services knew about 9-11 in advance. Yes, they had tip-offs, but they also had tip-offs about many other attacks that never happened.
- DINKDINK 9y ago
  I agree that we should doubt that the populism was predictable. Ex-post many people claim things could have been predictable but I would argue against this political movement as a Black Swan. The main point in Taleb's book is that Black Swans are /critically/ a result of inductive reasoning. Black Swans events are called such because black swans used to be a mythic creature that people would refer to because they had never been seen.
  - pillowkusis 9y ago
    Yeah, great point about the inductive reasoning. I haven't thought about that aspect too much, although I guess I would call this line of reasoning inductive: "this globalization sure is impacting people's livelihoods, and causing major economic shifts. Maybe we should slow down." "it will definitely raise GDP. Rising GDP has always led to rising standard of living. We'll be fine."
    - DINKDINK 9y ago
      The incompleteness of inductive reasoning is exemplified with The Turkey Problem: All year, day after day, the farmer feeds the turkey. The turkey concludes that the farmer is benign. The day before Thanksgiving, the farmer kills the turkey. The event that the turkey cares the most about, his death, is not in the set of evidence that he uses to make his conclusions about the state of the system. Therefore he is unprepared to handle the outcomes of the system he lives in. The political establishment had the ability to sense the effect of policy. They chose to be ignorant to it or not address it. This is not an example of Turkey Problem or Black Swan, it's more of a Ostrich Problem.
- candiodari 9y ago
  I would argue quite the opposite. It's not a Black Swan at all. It's an entirely predictable outcome that is caused by the incentives of large groups of people. E.g. when people say "software is eating the world", that really means software engineers, like most people reading this site, are taking away the means of existence of hundreds millions of people. In the US, but much more so outside of the US. Can you really call it a black swan when 1) you see it coming 2) it is perfectly clear what can be done (e.g. killing globalization and stopping people movement around the globe, as is being advocated, yes it's racist, yes it's going to kill GDP and in that sense "make us all worse off", but it's hard to deny that it will help. Not in the way we want it, it'll kill our access to ipads, and force inferior alternatives in many ways. But it will help) 3) you will not cooperate with preventing the black swan, even yourself, because of incentives (you would lose your job) 4) ... This "populist uprising" is a feedback loop that's just barely getting started. It is currently absolutely not worth the word "uprising". A few republicans got elected. Sorry to point this out but that won't be the end of it. It hasn't even begun. We'll need to be very lucky to avoid another war.
  - geodel 9y ago
    You have made very relevant arguments. I have same opinion about happening in my country (India) where middle class by media is defined as top 5-8% of population. Anyone lower survive on most basic food and housing. But with onslaught on low end tech jobs even the sector which mostly benefited from globalization is going to get crushed there. We are indeed heading toward turbulent times in most of the world.
- dsfyu404ed 9y ago
  It's a black swan if you take a 50% gray and round it up.
- thecolorblue 9y ago
  Agreed. The only things that could have been predicted are that globalization would have repercussions and that the losers in globalization would have interest in disrupting the winners. The same could be said of the next 20 years.
- lettergram 9y ago
  The whole idea of a "black swan" is bullshit in my opinion. In his book, nearly all events were predictable if the right people were consulted, research was done, or if people even looked at data. The problem, is the mainstream media, and even educated researchers miss the mark regularly. To me it appears most poeple assume they know better or listening to the wrong experts. That's actually the whole reason I created my startup: https://projectpiglet.com/ https://projectpiglet.com/ We basically filter out the noise, and listen to experts. It works amazingly well for investing, but also predicts things like Trump winning the election. It even creates an awesome (highly relevant) news feed. I think most people just live in their bubbles and close their senses to what's right in front of them.
  - pillowkusis 9y ago
    Sentiment analysis based on media is going to make you even more vulnerable to black swans. Black swans come from our collective blind spot -- if the media is reporting it (with a correct sentiment), it's by definition not on our blind spot.
    - lettergram 9y ago
      Who said we were doing sentiment analysis on the media? That's decidedly not what we're doing ;)
sr2 9y ago
For those who don't want to click, here's the abstract: > Populism may seem like it has come out of nowhere, but it has been on the rise for a while. I argue that economic history and economic theory both provide ample grounds for anticipating that advanced stages of economic globalization would produce a political backlash. While the backlash may have been predictable, the specific form it took was less so. I distinguish between left-wing and right-wing variants of populism, which differ with respect to the societal cleavages that populist politicians highlight. The first has been predominant in Latin America, and the second in Europe. I argue that these different reactions are related to the relative salience of different types of globalization shocks.
- justicezyx 9y ago
  Not sure why quote works like this, but it's very difficult to read on a phone.
  - jameskegel 9y ago
    HN works like this, and it is a terrible misuse of UI
  - wtallis 9y ago
    This being Hacker News, the indented block quote is styled appropriately for code, which you want presented in a monospaced font without extra word wrapping. Quotes of prose are better off set in italics instead.
- jayess 9y ago
  > Populism may seem like it has come out of nowhere... Only if you haven't been paying attention or are living in a bubble...
notadoc 9y ago
You mean exporting the middle class and then undercutting upward mobility was doomed to face a political backlash? What a surprise.
- justicezyx 9y ago
  Agree 100% No matter how many ways to justify, the wealth and power enjoyed by a few are simply irrational. Edit: the wording is difficult, but all replies below have the same idea. Or I should rephrase it to: the absurdity of the wealth and power enjoyed by people grows exponentially with their rank in the social ladder. The ideal probably should quadratically.
  - candiodari 9y ago
    You do realize that while the 1% doesn't include all IT workers in the bay area, the 2% does (I believe 1.6% is 100k per year before tax). It's easy to complain about the 1%, but most people on this site ... are the 1%. Median household income in the US is $55,775. That means, about half of all US households have less than that. [1] By and large, it's not the wealth enjoyed by the few. It's the comfortable, but probably not excessive wealth enjoyed by millions. [1] https://en.wikipedia.org/wiki/Household_income_in_the_United_States https://en.wikipedia.org/wiki/Household_income_in_the_United...
    - frgtpsswrdlame 9y ago
      Exactly. I think the 0.1% or 0.01% are the ones who truly warp our political/economic system but it is the top 10% or 20% who lock in that warped system by engaging in forms of political NIMBYism to prevent any real change. (see the Democratic party's relationship with progressives and their funders: https://theintercept.com/2016/10/11/warren-goldman-dccc/ https://theintercept.com/2016/10/11/warren-goldman-dccc/)
    - deepnotderp 9y ago
      It's not even the "1%", it's the "1% of the 1%", Zuckerberg is great no doubt, but does he really deserve 2000X as much as a high level machine learning researcher? The issue is that ~6-8 people in the world own the same amount of wealth as the bottom 40% of the world, that's not because of eight software engineers making $100K.
candiodari 9y ago
It is too easy to forget that when a person is employed at $100k-$200k per year in the Bay Area, you want things like stopping climate change, more parks, more air, fair treatment, and above all, peace and prosperity. When making $30k with absolutely zero hope of real increases in Atlanta being a warehouse worker for an industry that's disappearing, the same person would burn all those things down, I would have said to get $10k more per year. Today I would say, getting an extra year at $30k is enough to justify the burnings. We should think a bit more about Maslow's hierarchy. If you can't give people a decent living first, they will revolt if you try to "make them matter" or try to reach these lofty goals. You might think that wage improvements don't matter if we don't fix the climate, but the exact opposite is true. I'm not making the point that the climate isn't worth saving, racism doesn't need solving if we can't fix poverty and "underemployment". I'm saying that we won't succeed unless we fix that ... first. Globalism produces beautiful iPads. But global average wage is $2k ... not per month. Per year. If you're average, working in a non-booming industry, and of course most people are exactly that, that is a terrifying prospect. The sad part is ... yes killing globalization will make us all worse off, in terms of the country's GDP. But it will lessen the gap between the 1% and the 99% (note that 2% is $97k per year, and as such anyone working in the Bay Area in IT is likely at least in the top 2%). Of course, mostly by making the 0.1% - 50% a LOT worse off (that's anyone making less than about 2.6 million per year and more than $56k. Even in the Bay Area, that's probably C-level wages).
- perfmode 9y ago
  Racism and poverty are related.
  - muninn_ 9y ago
    Sure, care to elaborate or were you just doing a drive-by?
  - ferentchak 9y ago
    Agreed. If we address poverty it will remove most racism. Most racism is classism in disguise. Heck, most people confuse the two when they are being discussed. //edited to remove an extra 'in'.
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rayiner 9y ago
The discussion on 4-9 is worth looking at. Among policymakers on both sides of the aisle, there is this reflexive recitation that trade increases economic efficiency. While that's true, that assumes the purpose of national policy is to increase economic efficiency. To the contrary, the mandate of politicians in a Democracy is to improve the welfare of the majority of voters. Likewise, the discussion on 13-15 is important. People don't like the idea of valued social progress being undermined by unfair competition. There is an intuitive appeal to the idea that workers in America or Germany shouldn't have to compete with workers in countries where child labor is accepted and environmental standards are non-existent. People wonder why boring trade policy becomes such an emotional thing, and the article does a great job of explaining why. The reason is not just scapegoating, as apologists of globalism assume. Rather, there is a deep-seated belief that citizens of the world types simply don't share our most basic values: that the government exists not to advance ideals, but the welfare of the polity; that social advances that are widely celebrated in the western world are worth more than economic efficiency, etc.[1] [1] There is a reason even Trump campaigned on cleaning up the air and water. Even Americans who think the EPA or OSHA or DOL are out of control wouldn't tolerate the labor and environmental standards that exist in Bangladesh or China.
- elihu 9y ago
  It's also important to consider that reducing or eliminating tariffs is effectively a tax cut for large corporations. Whether trade increases economic efficiency is kind of beside the point, even if we were to agree that economic efficiency is something that national policy ought to attempt to increase. Eliminating income tax would probably increase economic efficiency as well, but we don't do it because the money to pay for government operation and services needs to come from somewhere.
  - haltingthoughts 9y ago
    Why on corporations? Most of the burden is passed on to consumers in the form of more expensive goods.
    - 9y ago
the_cat_kittles 9y ago
just a minor gripe: was predictable is lame. you either predict the future or you dont. you dont say that you could have predicted it. i get the point of the article, but its lame when people try to act like the "could have predicted" something, because they are using the fact that it happened.
- ygaf 9y ago
  Seconding this, the use of predictable actually makes me think the article isn't worth it.
- heavenlyblue 9y ago
  One of the first names that comes to my mind regarding the prediction of the right-wing populism is Camille Paglia. Now while I agree with the point you're trying to make, it seems to me that the main motivation behind the article is that there are political climates when the changes are inevitable; and the question this article is trying to answer is when should we listen to the individuals rather than take the larger picture of the opinion landscape?
- nopinsight 9y ago
  To be fair, the paper's author published a book titled "Has globalization gone too far?" in 1997. Book description: "Globalization is exposing social fissures between those with the education, skills, and mobility to flourish in an unfettered world market—the apparent "winners"—and those without. These apparent "losers" are increasingly anxious about their standards of living and their precarious place in an integrated world economy. The result is severe tension between the market and broad sectors of society, with governments caught in the middle. Compounding the very real problems that need to be addressed..." https://piie.com/bookstore/has-globalization-gone-too-far https://piie.com/bookstore/has-globalization-gone-too-far
bradleyjg 9y ago
The reason it was predictable can be explained by examining two concepts used in public policy theory: Pareto Improvement: A change that is an improvement for at least one person and no worse for any other. Kaldor-Hicks Improvement: A change such that those that are made better off could hypothetically compensate those that are made worse off and lead to a Pareto-improving outcome. It turns out that people aren't particularly thrilled with hypothetical compensation. Who could ever have imagined that?
Leader2light 9y ago
People need to realize there is not enough for everyone. Apple just hit 1 billion iphones. Facebook is close to 2 billion. There are 7.5 billion people on earth. They all want iphones, facebook, AC, food, clean water. You can see where this is going and it's not good. I personally think its almost made worse by the internet and people being connected, they see and feel what they are missing. Most Africans, for example, would kill to be in Europe / USA.
- TommyBombadil 9y ago
  > Most Africans, for example, would kill to be in Europe / USA. I hope you meant this figuratively, because it is fair to say that it is a completely ridiculous statement otherwise.
  - deleted 9y ago
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clavalle 9y ago
The trouble with economic globalization is that we assumed that markets work and work well all over the world. That there would be an inevitable stable middle class built from the sheer power of market forces. It turns out that those in power around the world have every incentive to keep the gains to themselves and keep their population desperate -- desperate people have to weigh their economic decisions against their physical well-being and continued existence and play the game not to gain power but not to lose everything. And our answer in the US seemed to be that the market is always right; if parity can't be achieved by lifting the poor around the world up to a near-US level of middle class, then it must be reached by pushing the middle class in the US down to desperation level and reducing our overhead to compete on a world stage where other leaders in power can more easily ignore the negative externalities that they push on their population. It was, in a word, stupid. It is too easy for the wealthy of the greater world to ignore the problems they create at home by being 'citizens of the world'. I don't agree with Trump on much but I do agree that relying upon the market to fix all ills hasn't worked. We need to flex the economic muscle we have and tie trade to political reforms or find a way to bypass the powers that be and pull up the people directly. Otherwise, we are stuck in a race to the bottom.
- Brakenshire 9y ago
  > I don't agree with Trump on much but I do agree that relying upon the market to fix all ills hasn't worked. We need to flex the economic muscle we have and tie trade to political reforms or find a way to bypass the powers that be and pull up the people directly. Otherwise, we are stuck in a race to the bottom. Yes, you have to have some common standards which undercut a race to the bottom, otherwise countries will compete by undermining each others protection and welfare systems. But you're implying that Trump believes this? Trump has always struck me as a 'cut regulation at all costs' candidate. And the real deal which must make this work will have to be international - perhaps to build these common standards into the trade deals. But Trump again stands directly opposed to that, he wants a 'my country first, beggar thy neighbour' solution, which cannot be sustained.
  - clavalle 9y ago
    Fair points. I don't know what Trump's actual policy is when it comes to trade deals I was making (bad) assumptions on the fact that he backed out of or signaled backing out of some trade deals that relied too much on market forces doing the reform work for us.
justforFranz 9y ago
1. Labor has no pricing power. 2. All the spigots for cheap labor & goods have been on full blast with no real sign of slowing - at all. 3. We can't have a mature conversation in this country about adjusting the pace of change in society. It's basically whatever capital wants, capital gets. 4. Since productivity gains were decoupled from labor's wage increases in the late 1970's, the notion of "getting ahead" by working & providing labor is ultimately an exercise in irony. 5. Ameliorating these concerns by replacing them with race antagonism is deeply stupid. 6. Fundamentalism of all religious stripes is a conservative reaction against encroaching modernity, globalization & cosmopolitanism - which upsets local power hierarchies & is a threat to the status quo. 7. We need labor power with continued, but this time measured international engagement. Isolationism won't work and is an over-reaction.
Mikeb85 9y ago
The biggest problem with Globalisation is that it doesn't contribute to global economic development. It merely outsources manual labour and less profitable/desirable work from rich countries to less-developed countries because of the price difference in labour. Growing up I always imagined a world where the big cities of Africa could be just as developed as those in Europe, Asia or America. Instead we've been given a new form of colonialism where developed countries take the best minds from the developing world, and outsource all the work we don't want to poor countries. This of course hurts our working class, as well as contributing nothing to the actual development of poor countries. So it's really no surprise that our working class is rebelling, as well as creating unrest in the developing world.
- haltingthoughts 9y ago
  You sure that globalism has contributed nothing to the development of poor countries? The number of people in poverty has decreased drastically over the past half century. Do you have any other candidates other than trade liberalization? https://ourworldindata.org/extreme-poverty/ https://ourworldindata.org/extreme-poverty/
  - Mikeb85 9y ago
    That's a terrible definition of extreme poverty. Also, inequality matters. It's nice that the crumbs poor people receive are getting bigger, but things like social unrest, wars, revolutions, crime, famine are due to inequality and unequal distribution of resources. Being poor isn't a problem by itself, it's the other things that come with it which are a problem. Having cell phones and making more than $1.90 per day didn't prevent the revolutions in Libya and Syria, and subsequent deaths/displacement of millions. Actual development and reducing inequality is massively important.
    - haltingthoughts 9y ago
      How is that a terrible definition? What do you propose? What metric do you want? Infant mortality? Life expectancy? Subjective happiness? Unrest? Hunger? Global inequality? All of them are drastically down globally. Within country inequity? Flat. https://ourworldindata.org/happiness-and-life-satisfaction/ https://ourworldindata.org/happiness-and-life-satisfaction/ https://ourworldindata.org/income-inequality/ https://ourworldindata.org/income-inequality/
dragonwriter 9y ago
It wasn't only predictable, but, in the US, its not even new; it's been a significant, powerful feature of the political landscape and since almost precisely the time the Democratic Party leadership was conquered by the neoliberal/DLC Third Way movement led by Bill Clinton. (Remember H. Ross Perot and the campaign that launched the party under whose banner Donald J. Trump would launch his first Presidential run in 2000?) It's had limited policy impact because the electoral system limits the scope of viable alternatives and both major parties have leveraged other divisive issues to keep the wide opposition to neoliberal policies from being electorally decisive. The only real question given the durable and strong opposition in the electorate (cutting across the usual left/right divide) to neoliberal globalization, was which major party would, rather than diverting from that, harness the opposition by nominaing a candidate willing to at least rhetorically reject the neoliberal globalist elite consensus first.
- sjg007 9y ago
  Bernie vs Trump would've been great.
  - Mikeb85 9y ago
    And Bernie would have won. But the Dems shot themselves in the foot by basically ignoring Bernie's voters, and continuing with the status quo. The reason Trump won is because whether or not anyone actually believed he could fix their problems, he was the only candidate left who acknowledged the existence of their problems.
jmull 9y ago
Hm... I guess I would have a lot more respect for this author's claim about the predictability of the rise of populism if she(?) has predicted it. Perhaps she did, but this paper is dated this month. Not to mention, prediction by itself isn't worth much. Seeing it coming isn't too useful if you can't do something to change course. And being able to change course isn't useful if you can't find a better alternative to change course to. Globalization didn't arise out of policy decisions. It was a natural consequence of improvements in information technology and transportation technology (exponential in the case of IT). China isn't some distant land. It's our next door neighbor and has a view straight into our living room. Policy can guide or mitigate globalization, but it can't stop it. You would have to roll back the changes in information and transportation to roll globalization back and that might be worse than the cure. IMO, we should be focusing on policy that will prevent the benefits of globalization accruing only to people at the top, and not on stopping globalization.
wu-ikkyu 9y ago
"I am convinced that if we are to get on to the right side of the world revolution, we as a nation must undergo a radical revolution of values. We must rapidly begin [applause], we must rapidly begin the shift from a thing-oriented society to a person-oriented society. When machines and computers, profit motives and property rights, are considered more important than people, the giant triplets of racism, extreme materialism, and militarism are incapable of being conquered. A true revolution of values will soon cause us to question the fairness and justice of many of our past and present policies. On the one hand we are called to play the Good Samaritan on life’s roadside, but that will be only an initial act. One day we must come to see that the whole Jericho Road must be transformed so that men and women will not be constantly beaten and robbed as they make their journey on life’s highway. True compassion is more than flinging a coin to a beggar. It comes to see than an edifice which produces beggars needs restructuring. [applause] A true revolution of values will soon look uneasily on the glaring contrast of poverty and wealth. With righteous indignation, it will look across the seas and see individual capitalists of the West investing huge sums of money in Asia, Africa, and South America, only to take the profits out with no concern for the social betterment of the countries, and say, “This is not just.” It will look at our alliance with the landed gentry of South America and say, “This is not just.” The Western arrogance of feeling that it has everything to teach others and nothing to learn from them is not just. A true revolution of values will lay hand on the world order and say of war, “This way of settling differences is not just.” This business of burning human beings with napalm, of filling our nation’s homes with orphans and widows, of injecting poisonous drugs of hate into the veins of peoples normally humane, of sending men home from dark and bloody battlefields physically handicapped and psychologically deranged, cannot be reconciled with wisdom, justice, and love. A nation that continues year after year to spend more money on military defense than on programs of social uplift is approaching spiritual death. [sustained applause]" -Dr. King, Beyond Vietnam (1967) http://kingencyclopedia.stanford.edu/encyclopedia/documentsentry/doc_beyond_vietnam/ http://kingencyclopedia.stanford.edu/encyclopedia/documentse...
justforFranz 9y ago
Slavoj Žižek Explains Why He Chose Trump (Jan. 2017) https://www.youtube.com/watch?v=03k-NhQ3AKg https://www.youtube.com/watch?v=03k-NhQ3AKg

129 points by sukruh 9y ago

I don't like the use of the word "predictable". I would qualify this populist uprising as a Black Swan[0], and as Taleb describes in his book, one of the common reactions to a black swan is to rationalize it's obvious predictability after the fact. Were there logical reasons to believe this populist uprising would occur? Of course (and this paper does a good job exploring them). Was it predictable? I don't know. By and large most of us did not predict it, so I'm not so sure. Only with hindsight is this outcome "obviously" predictable. 0: https://en.wikipedia.org/wiki/Black_swan_theory https://en.wikipedia.org/wiki/Black_swan_theory

justicezyx 9y ago
> Were there logical reasons to believe this populist uprising would occur? Of course (and this paper does a good job exploring them). Was it predictable? Contradicting statements. Believe means somewhat possible. If you assign someone possibility then it's predicted.
- pillowkusis 9y ago
  To clarify, by "predict" I mean "to be reasonably sure of the outcome before it happens". I can assign logical reasons for Uber to declare bankruptcy tomorrow, but I would definitely not predict it.
Mikeb85 9y ago
> By and large most of us did not predict it, so I'm not so sure. Please, economists have been predicting this for awhile. Read someone like Piketty, he presents a plethora of evidence that inequality is reaching the levels of the gilded age, and that era wasn't exactly devoid of strife, political change, wars, etc... The only people who are surprised are those who are too distracted by their own insular worlds to see what's happening around them.
- pillowkusis 9y ago
  Taleb addresses this too. Of course somebody DID predict it. I don't know if that means the event is, in general, "predictable." If you put 1 million people in a room and told them to randomly guess what events would occur next, someone would predict correctly. The question is, should WE (as a society) have predicted this? Did reasonable application of our knowledge permit us to know this? I don't know the answer to that question.
  - Mikeb85 9y ago
    > The question is, should WE (as a society) have predicted this? Did reasonable application of our knowledge permit us to know this? I don't know the answer to that question. Not everyone is an expert in all fields. This is the domain of economists, sociologists and political scientists. Certainly many of them did predict this, there's a ton of data to support their theories and predictions. The problem is that if you're one of the people who are comfortable with the status quo, you're not going to be paying attention to these things, much like a labourer in the south likely doesn't care about the stock market or happenings in the venture capital markets in the Bay Area. The truth is that it's the media and political class who let us all down, by ignoring the experts and working class.
    - geodel 9y ago
      > The truth is that it's the media and political class who let us all down, by ignoring the experts and working class. I'd say they listened to experts who are ideologically like them e.g ivy league elites, the ones mostly benefitted by globalization.
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tome 9y ago
Agreed. It's predictable in the same way that the security services knew about 9-11 in advance. Yes, they had tip-offs, but they also had tip-offs about many other attacks that never happened.
DINKDINK 9y ago
I agree that we should doubt that the populism was predictable. Ex-post many people claim things could have been predictable but I would argue against this political movement as a Black Swan. The main point in Taleb's book is that Black Swans are /critically/ a result of inductive reasoning. Black Swans events are called such because black swans used to be a mythic creature that people would refer to because they had never been seen.
- pillowkusis 9y ago
  Yeah, great point about the inductive reasoning. I haven't thought about that aspect too much, although I guess I would call this line of reasoning inductive: "this globalization sure is impacting people's livelihoods, and causing major economic shifts. Maybe we should slow down." "it will definitely raise GDP. Rising GDP has always led to rising standard of living. We'll be fine."
  - DINKDINK 9y ago
    The incompleteness of inductive reasoning is exemplified with The Turkey Problem: All year, day after day, the farmer feeds the turkey. The turkey concludes that the farmer is benign. The day before Thanksgiving, the farmer kills the turkey. The event that the turkey cares the most about, his death, is not in the set of evidence that he uses to make his conclusions about the state of the system. Therefore he is unprepared to handle the outcomes of the system he lives in. The political establishment had the ability to sense the effect of policy. They chose to be ignorant to it or not address it. This is not an example of Turkey Problem or Black Swan, it's more of a Ostrich Problem.
candiodari 9y ago
I would argue quite the opposite. It's not a Black Swan at all. It's an entirely predictable outcome that is caused by the incentives of large groups of people. E.g. when people say "software is eating the world", that really means software engineers, like most people reading this site, are taking away the means of existence of hundreds millions of people. In the US, but much more so outside of the US. Can you really call it a black swan when 1) you see it coming 2) it is perfectly clear what can be done (e.g. killing globalization and stopping people movement around the globe, as is being advocated, yes it's racist, yes it's going to kill GDP and in that sense "make us all worse off", but it's hard to deny that it will help. Not in the way we want it, it'll kill our access to ipads, and force inferior alternatives in many ways. But it will help) 3) you will not cooperate with preventing the black swan, even yourself, because of incentives (you would lose your job) 4) ... This "populist uprising" is a feedback loop that's just barely getting started. It is currently absolutely not worth the word "uprising". A few republicans got elected. Sorry to point this out but that won't be the end of it. It hasn't even begun. We'll need to be very lucky to avoid another war.
- geodel 9y ago
  You have made very relevant arguments. I have same opinion about happening in my country (India) where middle class by media is defined as top 5-8% of population. Anyone lower survive on most basic food and housing. But with onslaught on low end tech jobs even the sector which mostly benefited from globalization is going to get crushed there. We are indeed heading toward turbulent times in most of the world.
dsfyu404ed 9y ago
It's a black swan if you take a 50% gray and round it up.
thecolorblue 9y ago
Agreed. The only things that could have been predicted are that globalization would have repercussions and that the losers in globalization would have interest in disrupting the winners. The same could be said of the next 20 years.
lettergram 9y ago
The whole idea of a "black swan" is bullshit in my opinion. In his book, nearly all events were predictable if the right people were consulted, research was done, or if people even looked at data. The problem, is the mainstream media, and even educated researchers miss the mark regularly. To me it appears most poeple assume they know better or listening to the wrong experts. That's actually the whole reason I created my startup: https://projectpiglet.com/ https://projectpiglet.com/ We basically filter out the noise, and listen to experts. It works amazingly well for investing, but also predicts things like Trump winning the election. It even creates an awesome (highly relevant) news feed. I think most people just live in their bubbles and close their senses to what's right in front of them.
- pillowkusis 9y ago
  Sentiment analysis based on media is going to make you even more vulnerable to black swans. Black swans come from our collective blind spot -- if the media is reporting it (with a correct sentiment), it's by definition not on our blind spot.
  - lettergram 9y ago
    Who said we were doing sentiment analysis on the media? That's decidedly not what we're doing ;)

sr2 9y ago

For those who don't want to click, here's the abstract: > Populism may seem like it has come out of nowhere, but it has been on the rise for a while. I argue that economic history and economic theory both provide ample grounds for anticipating that advanced stages of economic globalization would produce a political backlash. While the backlash may have been predictable, the specific form it took was less so. I distinguish between left-wing and right-wing variants of populism, which differ with respect to the societal cleavages that populist politicians highlight. The first has been predominant in Latin America, and the second in Europe. I argue that these different reactions are related to the relative salience of different types of globalization shocks.

justicezyx 9y ago
Not sure why quote works like this, but it's very difficult to read on a phone.
- jameskegel 9y ago
  HN works like this, and it is a terrible misuse of UI
- wtallis 9y ago
  This being Hacker News, the indented block quote is styled appropriately for code, which you want presented in a monospaced font without extra word wrapping. Quotes of prose are better off set in italics instead.
jayess 9y ago
> Populism may seem like it has come out of nowhere... Only if you haven't been paying attention or are living in a bubble...

notadoc 9y ago

You mean exporting the middle class and then undercutting upward mobility was doomed to face a political backlash? What a surprise.

justicezyx 9y ago
Agree 100% No matter how many ways to justify, the wealth and power enjoyed by a few are simply irrational. Edit: the wording is difficult, but all replies below have the same idea. Or I should rephrase it to: the absurdity of the wealth and power enjoyed by people grows exponentially with their rank in the social ladder. The ideal probably should quadratically.
- candiodari 9y ago
  You do realize that while the 1% doesn't include all IT workers in the bay area, the 2% does (I believe 1.6% is 100k per year before tax). It's easy to complain about the 1%, but most people on this site ... are the 1%. Median household income in the US is $55,775. That means, about half of all US households have less than that. [1] By and large, it's not the wealth enjoyed by the few. It's the comfortable, but probably not excessive wealth enjoyed by millions. [1] https://en.wikipedia.org/wiki/Household_income_in_the_United_States https://en.wikipedia.org/wiki/Household_income_in_the_United...
  - frgtpsswrdlame 9y ago
    Exactly. I think the 0.1% or 0.01% are the ones who truly warp our political/economic system but it is the top 10% or 20% who lock in that warped system by engaging in forms of political NIMBYism to prevent any real change. (see the Democratic party's relationship with progressives and their funders: https://theintercept.com/2016/10/11/warren-goldman-dccc/ https://theintercept.com/2016/10/11/warren-goldman-dccc/)
  - deepnotderp 9y ago
    It's not even the "1%", it's the "1% of the 1%", Zuckerberg is great no doubt, but does he really deserve 2000X as much as a high level machine learning researcher? The issue is that ~6-8 people in the world own the same amount of wealth as the bottom 40% of the world, that's not because of eight software engineers making $100K.

candiodari 9y ago

It is too easy to forget that when a person is employed at $100k-$200k per year in the Bay Area, you want things like stopping climate change, more parks, more air, fair treatment, and above all, peace and prosperity. When making $30k with absolutely zero hope of real increases in Atlanta being a warehouse worker for an industry that's disappearing, the same person would burn all those things down, I would have said to get $10k more per year. Today I would say, getting an extra year at $30k is enough to justify the burnings. We should think a bit more about Maslow's hierarchy. If you can't give people a decent living first, they will revolt if you try to "make them matter" or try to reach these lofty goals. You might think that wage improvements don't matter if we don't fix the climate, but the exact opposite is true. I'm not making the point that the climate isn't worth saving, racism doesn't need solving if we can't fix poverty and "underemployment". I'm saying that we won't succeed unless we fix that ... first. Globalism produces beautiful iPads. But global average wage is $2k ... not per month. Per year. If you're average, working in a non-booming industry, and of course most people are exactly that, that is a terrifying prospect. The sad part is ... yes killing globalization will make us all worse off, in terms of the country's GDP. But it will lessen the gap between the 1% and the 99% (note that 2% is $97k per year, and as such anyone working in the Bay Area in IT is likely at least in the top 2%). Of course, mostly by making the 0.1% - 50% a LOT worse off (that's anyone making less than about 2.6 million per year and more than $56k. Even in the Bay Area, that's probably C-level wages).

perfmode 9y ago
Racism and poverty are related.
- muninn_ 9y ago
  Sure, care to elaborate or were you just doing a drive-by?
- ferentchak 9y ago
  Agreed. If we address poverty it will remove most racism. Most racism is classism in disguise. Heck, most people confuse the two when they are being discussed. //edited to remove an extra 'in'.

deleted 9y ago

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rayiner 9y ago

The discussion on 4-9 is worth looking at. Among policymakers on both sides of the aisle, there is this reflexive recitation that trade increases economic efficiency. While that's true, that assumes the purpose of national policy is to increase economic efficiency. To the contrary, the mandate of politicians in a Democracy is to improve the welfare of the majority of voters. Likewise, the discussion on 13-15 is important. People don't like the idea of valued social progress being undermined by unfair competition. There is an intuitive appeal to the idea that workers in America or Germany shouldn't have to compete with workers in countries where child labor is accepted and environmental standards are non-existent. People wonder why boring trade policy becomes such an emotional thing, and the article does a great job of explaining why. The reason is not just scapegoating, as apologists of globalism assume. Rather, there is a deep-seated belief that citizens of the world types simply don't share our most basic values: that the government exists not to advance ideals, but the welfare of the polity; that social advances that are widely celebrated in the western world are worth more than economic efficiency, etc.[1] [1] There is a reason even Trump campaigned on cleaning up the air and water. Even Americans who think the EPA or OSHA or DOL are out of control wouldn't tolerate the labor and environmental standards that exist in Bangladesh or China.

elihu 9y ago
It's also important to consider that reducing or eliminating tariffs is effectively a tax cut for large corporations. Whether trade increases economic efficiency is kind of beside the point, even if we were to agree that economic efficiency is something that national policy ought to attempt to increase. Eliminating income tax would probably increase economic efficiency as well, but we don't do it because the money to pay for government operation and services needs to come from somewhere.
- haltingthoughts 9y ago
  Why on corporations? Most of the burden is passed on to consumers in the form of more expensive goods.
  - 9y ago

the_cat_kittles 9y ago

just a minor gripe: was predictable is lame. you either predict the future or you dont. you dont say that you could have predicted it. i get the point of the article, but its lame when people try to act like the "could have predicted" something, because they are using the fact that it happened.

ygaf 9y ago
Seconding this, the use of predictable actually makes me think the article isn't worth it.
heavenlyblue 9y ago
One of the first names that comes to my mind regarding the prediction of the right-wing populism is Camille Paglia. Now while I agree with the point you're trying to make, it seems to me that the main motivation behind the article is that there are political climates when the changes are inevitable; and the question this article is trying to answer is when should we listen to the individuals rather than take the larger picture of the opinion landscape?
nopinsight 9y ago
To be fair, the paper's author published a book titled "Has globalization gone too far?" in 1997. Book description: "Globalization is exposing social fissures between those with the education, skills, and mobility to flourish in an unfettered world market—the apparent "winners"—and those without. These apparent "losers" are increasingly anxious about their standards of living and their precarious place in an integrated world economy. The result is severe tension between the market and broad sectors of society, with governments caught in the middle. Compounding the very real problems that need to be addressed..." https://piie.com/bookstore/has-globalization-gone-too-far https://piie.com/bookstore/has-globalization-gone-too-far

bradleyjg 9y ago

The reason it was predictable can be explained by examining two concepts used in public policy theory: Pareto Improvement: A change that is an improvement for at least one person and no worse for any other. Kaldor-Hicks Improvement: A change such that those that are made better off could hypothetically compensate those that are made worse off and lead to a Pareto-improving outcome. It turns out that people aren't particularly thrilled with hypothetical compensation. Who could ever have imagined that?

Leader2light 9y ago

People need to realize there is not enough for everyone. Apple just hit 1 billion iphones. Facebook is close to 2 billion. There are 7.5 billion people on earth. They all want iphones, facebook, AC, food, clean water. You can see where this is going and it's not good. I personally think its almost made worse by the internet and people being connected, they see and feel what they are missing. Most Africans, for example, would kill to be in Europe / USA.

TommyBombadil 9y ago
> Most Africans, for example, would kill to be in Europe / USA. I hope you meant this figuratively, because it is fair to say that it is a completely ridiculous statement otherwise.
- deleted 9y ago
  [deleted]

clavalle 9y ago

The trouble with economic globalization is that we assumed that markets work and work well all over the world. That there would be an inevitable stable middle class built from the sheer power of market forces. It turns out that those in power around the world have every incentive to keep the gains to themselves and keep their population desperate -- desperate people have to weigh their economic decisions against their physical well-being and continued existence and play the game not to gain power but not to lose everything. And our answer in the US seemed to be that the market is always right; if parity can't be achieved by lifting the poor around the world up to a near-US level of middle class, then it must be reached by pushing the middle class in the US down to desperation level and reducing our overhead to compete on a world stage where other leaders in power can more easily ignore the negative externalities that they push on their population. It was, in a word, stupid. It is too easy for the wealthy of the greater world to ignore the problems they create at home by being 'citizens of the world'. I don't agree with Trump on much but I do agree that relying upon the market to fix all ills hasn't worked. We need to flex the economic muscle we have and tie trade to political reforms or find a way to bypass the powers that be and pull up the people directly. Otherwise, we are stuck in a race to the bottom.

Brakenshire 9y ago
> I don't agree with Trump on much but I do agree that relying upon the market to fix all ills hasn't worked. We need to flex the economic muscle we have and tie trade to political reforms or find a way to bypass the powers that be and pull up the people directly. Otherwise, we are stuck in a race to the bottom. Yes, you have to have some common standards which undercut a race to the bottom, otherwise countries will compete by undermining each others protection and welfare systems. But you're implying that Trump believes this? Trump has always struck me as a 'cut regulation at all costs' candidate. And the real deal which must make this work will have to be international - perhaps to build these common standards into the trade deals. But Trump again stands directly opposed to that, he wants a 'my country first, beggar thy neighbour' solution, which cannot be sustained.
- clavalle 9y ago
  Fair points. I don't know what Trump's actual policy is when it comes to trade deals I was making (bad) assumptions on the fact that he backed out of or signaled backing out of some trade deals that relied too much on market forces doing the reform work for us.

justforFranz 9y ago

1. Labor has no pricing power. 2. All the spigots for cheap labor & goods have been on full blast with no real sign of slowing - at all. 3. We can't have a mature conversation in this country about adjusting the pace of change in society. It's basically whatever capital wants, capital gets. 4. Since productivity gains were decoupled from labor's wage increases in the late 1970's, the notion of "getting ahead" by working & providing labor is ultimately an exercise in irony. 5. Ameliorating these concerns by replacing them with race antagonism is deeply stupid. 6. Fundamentalism of all religious stripes is a conservative reaction against encroaching modernity, globalization & cosmopolitanism - which upsets local power hierarchies & is a threat to the status quo. 7. We need labor power with continued, but this time measured international engagement. Isolationism won't work and is an over-reaction.

Mikeb85 9y ago

The biggest problem with Globalisation is that it doesn't contribute to global economic development. It merely outsources manual labour and less profitable/desirable work from rich countries to less-developed countries because of the price difference in labour. Growing up I always imagined a world where the big cities of Africa could be just as developed as those in Europe, Asia or America. Instead we've been given a new form of colonialism where developed countries take the best minds from the developing world, and outsource all the work we don't want to poor countries. This of course hurts our working class, as well as contributing nothing to the actual development of poor countries. So it's really no surprise that our working class is rebelling, as well as creating unrest in the developing world.

haltingthoughts 9y ago
You sure that globalism has contributed nothing to the development of poor countries? The number of people in poverty has decreased drastically over the past half century. Do you have any other candidates other than trade liberalization? https://ourworldindata.org/extreme-poverty/ https://ourworldindata.org/extreme-poverty/
- Mikeb85 9y ago
  That's a terrible definition of extreme poverty. Also, inequality matters. It's nice that the crumbs poor people receive are getting bigger, but things like social unrest, wars, revolutions, crime, famine are due to inequality and unequal distribution of resources. Being poor isn't a problem by itself, it's the other things that come with it which are a problem. Having cell phones and making more than $1.90 per day didn't prevent the revolutions in Libya and Syria, and subsequent deaths/displacement of millions. Actual development and reducing inequality is massively important.
  - haltingthoughts 9y ago
    How is that a terrible definition? What do you propose? What metric do you want? Infant mortality? Life expectancy? Subjective happiness? Unrest? Hunger? Global inequality? All of them are drastically down globally. Within country inequity? Flat. https://ourworldindata.org/happiness-and-life-satisfaction/ https://ourworldindata.org/happiness-and-life-satisfaction/ https://ourworldindata.org/income-inequality/ https://ourworldindata.org/income-inequality/

dragonwriter 9y ago

It wasn't only predictable, but, in the US, its not even new; it's been a significant, powerful feature of the political landscape and since almost precisely the time the Democratic Party leadership was conquered by the neoliberal/DLC Third Way movement led by Bill Clinton. (Remember H. Ross Perot and the campaign that launched the party under whose banner Donald J. Trump would launch his first Presidential run in 2000?) It's had limited policy impact because the electoral system limits the scope of viable alternatives and both major parties have leveraged other divisive issues to keep the wide opposition to neoliberal policies from being electorally decisive. The only real question given the durable and strong opposition in the electorate (cutting across the usual left/right divide) to neoliberal globalization, was which major party would, rather than diverting from that, harness the opposition by nominaing a candidate willing to at least rhetorically reject the neoliberal globalist elite consensus first.

sjg007 9y ago
Bernie vs Trump would've been great.
- Mikeb85 9y ago
  And Bernie would have won. But the Dems shot themselves in the foot by basically ignoring Bernie's voters, and continuing with the status quo. The reason Trump won is because whether or not anyone actually believed he could fix their problems, he was the only candidate left who acknowledged the existence of their problems.

jmull 9y ago

Hm... I guess I would have a lot more respect for this author's claim about the predictability of the rise of populism if she(?) has predicted it. Perhaps she did, but this paper is dated this month. Not to mention, prediction by itself isn't worth much. Seeing it coming isn't too useful if you can't do something to change course. And being able to change course isn't useful if you can't find a better alternative to change course to. Globalization didn't arise out of policy decisions. It was a natural consequence of improvements in information technology and transportation technology (exponential in the case of IT). China isn't some distant land. It's our next door neighbor and has a view straight into our living room. Policy can guide or mitigate globalization, but it can't stop it. You would have to roll back the changes in information and transportation to roll globalization back and that might be worse than the cure. IMO, we should be focusing on policy that will prevent the benefits of globalization accruing only to people at the top, and not on stopping globalization.

wu-ikkyu 9y ago

"I am convinced that if we are to get on to the right side of the world revolution, we as a nation must undergo a radical revolution of values. We must rapidly begin [applause], we must rapidly begin the shift from a thing-oriented society to a person-oriented society. When machines and computers, profit motives and property rights, are considered more important than people, the giant triplets of racism, extreme materialism, and militarism are incapable of being conquered. A true revolution of values will soon cause us to question the fairness and justice of many of our past and present policies. On the one hand we are called to play the Good Samaritan on life’s roadside, but that will be only an initial act. One day we must come to see that the whole Jericho Road must be transformed so that men and women will not be constantly beaten and robbed as they make their journey on life’s highway. True compassion is more than flinging a coin to a beggar. It comes to see than an edifice which produces beggars needs restructuring. [applause] A true revolution of values will soon look uneasily on the glaring contrast of poverty and wealth. With righteous indignation, it will look across the seas and see individual capitalists of the West investing huge sums of money in Asia, Africa, and South America, only to take the profits out with no concern for the social betterment of the countries, and say, “This is not just.” It will look at our alliance with the landed gentry of South America and say, “This is not just.” The Western arrogance of feeling that it has everything to teach others and nothing to learn from them is not just. A true revolution of values will lay hand on the world order and say of war, “This way of settling differences is not just.” This business of burning human beings with napalm, of filling our nation’s homes with orphans and widows, of injecting poisonous drugs of hate into the veins of peoples normally humane, of sending men home from dark and bloody battlefields physically handicapped and psychologically deranged, cannot be reconciled with wisdom, justice, and love. A nation that continues year after year to spend more money on military defense than on programs of social uplift is approaching spiritual death. [sustained applause]" -Dr. King, Beyond Vietnam (1967) http://kingencyclopedia.stanford.edu/encyclopedia/documentsentry/doc_beyond_vietnam/ http://kingencyclopedia.stanford.edu/encyclopedia/documentse...

justforFranz 9y ago

Slavoj Žižek Explains Why He Chose Trump (Jan. 2017) https://www.youtube.com/watch?v=03k-NhQ3AKg https://www.youtube.com/watch?v=03k-NhQ3AKg