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I know it's wrongthink so say that globalism has seemed like a bad thing, so: I'm a programmer, not an economist. Could somebody explain to me why trying to e

• ng12 8y ago
  Agreed. I've never convinced that globalism is anything other than a way to sell long-term stability for short-term profits.
• village-idiot 8y ago
  As a programmer, you've benefitted massively by the transition of the US economy from a manufacturing based economy to an ideas & services economy. The process is called comparative advantage, where two economies benefit mutually by specializing in different ways. This is an outgrowth of the globalization that is such a hot-button issue. The history of using tariffs (taxes) to protect local industries is bad, but it would take decades of protectionist policies to make us realize exactly how badly we'd fucked up, and by then it would be far too late. The classic example here are soviet or developing nations using tariffs or import restrictions to protect local industries, often automobiles. The result is expensive and subpar products that become locally mocked & detested. Eventually the need for open trade will become too much, politically and economically, and when that happens the free market typically destroys the inferior local products. Of course, none of this ever comes to a head if you decide that you will never trade with another country. Which ... good luck with that.
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  • ng12 8y ago
    > you've benefitted massively by the transition of the US economy from a manufacturing based economy to an ideas & services economy But this isn't a dichotomy, isn't it? The USA is big, we could have had Silicon Valley and Detroit at the same time. > The result is expensive and subpar products that become locally mocked & detested But we're still designing better products, we're just building them in China and in the process giving away a cut that used to go to American workers. I don't think this analogy fits.
    • dictum 8y ago
      > But we're still designing better products, we're just building them in China and in the process giving away a cut that used to go to American workers. While that may be true, something that's often overlooked is that US-based manufacturing can be cost-neutral within the domestic US market (prices rise, but wages rise enough to cover the former) but not globally (other countries have lower purchasing power, so if prices of American-designed product rise, non-US markets shrink)
    • village-idiot 8y ago
      > But this isn't a dichotomy, isn't it? The USA is big, we could have had Silicon Valley and Detroit at the same time. That is exactly what comparative advantage implies. The US cannot be great at Silicon Valley and Detroit (well, the manufacturing bits) at once. > But we're still designing better products, we're just building them in China and in the process giving away a cut that used to go to American workers. I don't think this analogy fits. We are designing better products because of globalism. If we cut off free trade with the rest of the world (protectionism), either our designs or our manufacturing quality would stagnate compared to the rest of the world.
      • tivert 8y ago
        > That is exactly what comparative advantage implies. The US cannot be great at Silicon Valley and Detroit (well, the manufacturing bits) at once. Why not? On another continent, Silicon Valley and Detroit would be in entirely different countries. Labor arbitrage doesn't reflect a real comparative advantage.
        • village-idiot 8y ago
          Distance doesn’t seem to matter as much as culture, government, and monetary policy. Silicon Valley and Detroit share a currency, a government, and a population.
• afroviking 8y ago
  This reminds me of a Neal Stephenson quote from Snow Crash which seems relevant: "When it gets down to it — talking trade balances here — once we've brain-drained all our technology into other countries, once things have evened out, they're making cars in Bolivia and microwave ovens in Tadzhikistan and selling them here — once our edge in natural resources has been made irrelevant by giant Hong Kong ships and dirigibles that can ship North Dakota all the way to New Zealand for a nickel — once the Invisible Hand has taken away all those historical inequities and smeared them out into a broad global layer of what a Pakistani brickmaker would consider to be prosperity — y'know what? There's only four things we do better than anyone else: music movies microcode (software) high-speed pizza delivery”
  • woolvalley 8y ago
    The funny thing about that list is all of those industries (except pizza) are centered in california.
    • rjsw 8y ago
      Pizza delivery is centred in California too, at least the model of it called Uber.
      • ams6110 8y ago
        The fast pizza delivery model in the US was really invented/established in suburban Detroit (Domino's).
  • brownbat 8y ago
    I know Stephenson was mostly joking, but a part of me felt sad visiting Seoul and seeing just how phenomenally better at food delivery they are than America, and I assume anywhere in the world. They'll strap an inexpensive meal to the back of a motorcycle and deliver it wherever you are standing. Sometimes they'll return in an hour to pick up the real plates and silverware they left with you. With the way they have industrialized pop music, and given the movie industry there, it is almost like Korea read Snow Crash and took it as a challenge.
• api 8y ago
  Part of the problem is that globalism isn't. What today is called globalism is the free flow of international capital so that capital can do labor arbitrage. That benefits the ultra wealthy and large corporations the most. It also benefits the very poor to some extent, but that benefit is capped since as soon as wages start to rise even a little bit capital starts looking elsewhere. It benefits China so much because China is effectively one mega-corporation. Its like Amazon, Wal-Mart, GE, Honda, etc. all vertically integrated with control of a sovereign currency. People meanwhile are stuck subject to nations and local governments just like always. There is also no global democracy or system of representation of any kind.
• dhruvp 8y ago
  Theoretically, the argument against tariffs stems from the idea that a market increases the net surplus for everyone involved in the trade. This is because each individual in the economy would be able to focus on their 'comparative advantage' and trade to obtain a larger basket of goods than if they tried to create everything themselves. The way the US is expected to enjoy this trade surplus (in a world where it is a net importer) is through lower prices for goods. The benefit the US gains from this reduction in prices etc. is meant to on the whole offset the loss in jobs, exports etc that might come from globalism. Whether this happens or not is clearly a moot point. I believe the issue might be that while the US has enjoyed the surpluses of globalism, it has not redistributed that surplus well. In a tariff world, the need for redistribution is less - factory workers get the money directly in the form of a paycheck etc through their protected jobs. In a non-tariff world, these jobs no longer exist but the government would ideally now offset that loss through investments in education, infrastructure, new job opportunities etc. Hope this answers why globalism is supposed to work and where it may not be working.
  • DenisM 8y ago
    Excellent explanation. It also follows that tariffs are wealth-redistribution in disguise. Therefore Trump's actions benefit the working class, at the expense of the overall lesser economic efficiency, sort of the opposite of what you would expect from a republican president...
    • hyperpape 8y ago
      A limited subset of the working class in the short-term, at that. There are plenty of working class people who are absolutely screwed by this. Anyone whose industry relies on steel or aluminum is likely losing out (https://www.npr.org/2018/03/24/596744980/trumps-tariffs-lead-to-layoffs-at-steel-beer-keg-company https://www.npr.org/2018/03/24/596744980/trumps-tariffs-lead...). If tariffs really were the best way to help the working class at some expense to the wealthy and upper middle-class like most of us on this board, they would be worth it. But they're not.
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• twblalock 8y ago
  Tariffs are mutually destructive. In some cases they would hurt the US more than they hurt China. Tariffs will impact average consumers harder than the wealthy by raising the costs of everyday goods. Tariffs cause us to spend money sheltering uncompetitive companies. It’s not sustainable in the long term and distracts us from doing what we should be doing — making companies competitive and starting new companies in areas where we have comparative advantages. This has all been done before and we know it didn’t work out. All of these things are true even if China is breaking some free trade rules.
• hyperpape 8y ago
  "Because it doesn't work" is the short answer. The primary effect of a tariff is a price increase. Price increases are rarely a great thing for the economy--businesses buy less stuff or build less stuff, and people lose jobs because of that. The second effect is that you get retaliatory tariffs. I live in North Carolina--big pork and soybean country, with a lot of exporting to China. With Chinese tariffs, our farmers lose out on tons of sales to China. We've now reached a point where the government is taxing US citizens to pay farmers who can't sell goods to China, to avoid a political backlash. Its insanity. Worse than insanity, it's basically bribery, so that the politician who caused this damage can try to avoid losing an election in two years.
  • ng12 8y ago
    It's easy for me to say because I don't know any soybean farmers but the solution seems obvious: soybean farms are fat that needs to be trimmed. Out of all the industry we've shipped to China the only thing we're losing out on is some of the soybean market?
    • hyperpape 8y ago
      Ah yes, standing up for the people of the US by deciding which of them are "fat" that needs to be "trimmed". Here's a further list of "fat" that you can "trim" (https://www.uschina.org/sites/default/files/list_of_chinese_retaliatory_tariffs_on_the_united_states_-_june_15_2018.pdf https://www.uschina.org/sites/default/files/list_of_chinese_...).
      • ng12 8y ago
        We already decided thousands of jobs are better done in China. Either way somebody loses out.
        • ineedasername 8y ago
          We have record unemployment and until the market fluctuations of these past few weeks, arguably the strongest economy ever and the biggest in the world. I don't know what loses you mean. That fewer people spend their career in a factory? There's disruption yes as our economy transitions to other jobs, but the net trend for everyone is upwards.
• ManuelKiessling 8y ago
  “The world’s poor people have benefitted enormously as evidenced by a large increase in life expectancy in developing countries, a 60% decline in child mortality in less than four decades, a doubling of grain yields in developing countries after the mid-1960s and a large increase in per capita caloric food supply.” https://www.sciencedirect.com/science/article/pii/S1049007802001628 https://www.sciencedirect.com/science/article/pii/S104900780...
  • optimuspaul 8y ago
    Not sure living longer is a benefit if the life the live is a life of poverty.
    • dlp211 8y ago
      Then it's a good thing that globalization has lifted the vast majority of people out of abject poverty and most of the world is considered to be middle income now. Source: Factfullness
• optimuspaul 8y ago
  I am also not an economist and speaking to this from more of a philosophical perspective. I think that globalism is good for several reasons. It attempts to put everyone of level footing and remove unfair advantages that one country may enjoy. I don't think that we have ever really gotten close to achieving this level of globalism however. I also think that it acts as a governing mechanism to optimize workforces. If a company or worker cannot compete on a global scale then it is, in my opinion, a sign that they should do something else. I think you are wrong that "globalism seems to benefit the ultra wealthy but this seems to be at the cost of the middle class." The key points that I think are wrong is that it's not just globalism but free markets and capitalism and also not just the middle class but everyone other than the upper classes. I don't have a strong opinion about tariffs in general but they are a terrible tool for attempting to control a well established business. It tends to have a negative effect for all parties involved, at least in the short term and potentially long term as well.
• njarboe 8y ago
  One can think that free trade on a global scale is a good thing and still be against "free" trade with China. China did not join the WTO in good faith and has used its membership to its great advantage. It ignores WTO rulings against it while getting "Most Favored Nation" access to western markets. Being accused of being against free trade when one is in particular against the trade practices of China with respect to the US/west, is a dishonest tactic used by people who think the current US/China trade system is working just fine.
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• ineedasername 8y ago
  To answer your question, at least in part: Tariffs are negative sum, draining money out of the active economy and into less productive government pockets. From a game theoretic point of view they represent a "defection", where the initial defector promotes self interested short term gain but after multiple iterations promoting tit fir tat reprisals more and more is taken out of the active economy. It's no coincidence that long term economic growth these past two centuries has occurred as countries gradually, slowly used tarrifs less and less. (yes, of course there was more to it than just that) Tarrifs hurt all classes except the very wealthy who can purchase goods regardless of cost. For everyone else they raise the cost of living, reduce purchasing power, and thereby reduce the velocity of capital throughout the whole system.
• choochooboogalu 8y ago
  > Naively, globalism seems to benefit the ultra wealthy but this seems to be at the cost of the middle class. True free trade benefits the ultra wealthy and the middle class as well everyone else. Everyone has more buying power as the cost of goods and services are lower. Others make money by trading with new partners and markets. Our free trade deals are not true free trade as they just establish new kinds of winners and losers through government control. In fact, you don't need any kind of deal for free trade to work, just let people trade what they want to trade without restriction. > Could somebody explain to me why trying to effect the US's stance as an economic leader using tariffs is a bad idea? As the article mentions, this is what TPP was intended to do by strengthening non-chinese trading partners in Asian region. IMO, tariffs to protect US economy are more like tariffs or other government rules that protect any other industry - they make the pain less in the moment, but ultimately weaken the subject of the protection as they are not forced to compete on merit. This leads to a more dramatic crash when competition finally comes.. there is analogy to this in theory of disruptive innovation in tech.
• brownbat 8y ago
  Tariffs have benefits that are easy to imagine but costs that are hard to trace. When economists do the full analysis, the cost per job saved usually ends up being many multiples of the yearly salary: http://www.aei.org/wp-content/uploads/2017/01/MFG-1.png http://www.aei.org/wp-content/uploads/2017/01/MFG-1.png If you really want to understand the impact of tariffs, start by learning how to calculate "deadweight loss" and consumer and producer surpluses. There are a million YouTube videos on the subject, I think Kahn has one. It's not something most people can grok in the time it takes to read a comment. Might take thirty minutes, or learning and thinking about it over the course of a week. But it lead to a pretty profound eureka moment for me, I think it's worth understanding.
• lgleason 8y ago
  It is not naive, but is wrong think because that view could affect the bottom line of the ultra-wealthy. There is one tariff that is currently missing. Services, such as software development performed overseas. Globalism is a form of labor arbitrage that benefits the ultra wealthy at the cost of the middle class. Americans got fat, dumb and happy which is what allowed this to happen. As a result to wealthy pillaged the country and handed it to foreign adversaries. Americans have seen their standard of living go down while some people in other countries see theirs go up. Both parties in the US have been responsible for this because they are both for sale to the highest bidder. What is amazing about the discussion today is that for many, talking negatively about globalism is akin to a disrespecting the God of a deeply religious person.
• qqqwerty 8y ago
  As a progressive, I am actually lukewarm regarding the tariffs. I think they are a horrible long term strategy, but they do send a signal to the 'world order' that something is wrong. And if we don't fix it, populism will continue to take root in democracies around the world (and I don't think populism is necessarily bad, it just that it tends to get coopted by tyrants). I also think that the next President can use Trumps tariffs/positioning as political cover to take a tougher stance on China, which is something that has been necessary for a while. Regarding the class dynamics, I think globalism would have been fine (in the US at least) if it hadn't also coincided with massive tax cuts on the wealthy. The US benefits from being the world reserve currency, having a strong legal and IP system, and massive military, which is what allows the concept behind globalism to potentially work. But most of those benefits accrue to big corporations and the wealthy. Coupled with a strong social safety net and investments in jobs programs and education, I think it could have worked. But the wealthy led an unprecedented effort to convince half the electorate that big government is bad and tax cuts were the solution. So instead of a wide spread prosperity, we have a system that is mostly benefiting the wealthy.
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• nicodjimenez 8y ago
  Free trade is good but it takes two to tango. The tariffs are simply reciprocation for unfair trade practices by China - not to mention industrial espionage at unprecedented levels. Also there’s more than just economics at play. China has recently become a brutal, oppressive dictatorship. Xi is doing the opposite of what allowed China’s economy to growth at an incredible pace (the growth is thanks to Deng’s policies), but Xi looks like a genius due to recency bias. He will not look like such a genius in ten years. I feel sorry for the Chinese people. They deserve better.