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Also, how much of this effect is basically the rest of the world playing catch up in terms of economic production? China and the rest of Asia are magnitudes mo

Also, how much of this effect is basically the rest of the world playing catch up in terms of economic production? China and the rest of Asia are magnitudes more competitive compared to 50 years ago. And prior to that US industry was unmatched thanks to the massive effects world war 2 had on the other, western industrialized nations.

deogeo 7y ago
> Also, how much of this effect is basically the rest of the world playing catch up in terms of economic production? If the rest of the world becoming more productive results in US workers being worse off, then something is severely wrong with US trade policy. For one, it contradicts the dogma that more trade is strictly beneficial.
- bilbo0s 7y ago
  I think that dogma though was meant to address the situation in a global context. ie - More trade is strictly beneficial for the global population in aggregate. But yeah, it's still trade, so there will be lows and highs, and ebbs and flows.
- asark 7y ago
  > For one, it contradicts the dogma that more trade is strictly beneficial. Ricardo's original idea was applicable with a narrow set of assumptions/conditions and didn't have much to say about who'd end up with the greater net wealth. I'm not sure how/why it was turned into a magical improve-any-economy law of nature.
  - astazangasta 7y ago
    Ricardo's mistake is not thinking about development; comparative advantage is optimal now, but a society that just makes coffee beans is going to lose in the end to the one that makes microchips because of the difference in how the economy and society develop over time.
    - 0815test 7y ago
      This may have been a mistake by Ricardo, but not one that points towards less trade as optimal. Indeed, export-led development (implying more trade openness) is the one reliable way we know about of going from the "coffee beans" to the "microchips" stage of development.
      - astazangasta 7y ago
        False, I recommend Ha-Joon Chang's writing on this subject. The US did not develop in a climate of trade openness, it used tariffs to protect its development. In fact no developed economy developed this way, all of them protected their industry until it was mature and ready to compete, had their governments invest in research and infrastructure and so on. If you have an example of a country that successfully developed through export led development and trade openness I would love to hear it.
- cycrutchfield 7y ago
  >For one, it contradicts the dogma that more trade is strictly beneficial. It is strictly beneficial, in aggregate. But in any situation, there are winners and there are losers. There are no decisions you can make where everybody wins. If you live in a first world country and your skill set is worse than somebody in the developing world, you’re going to have a bad time.
  - deogeo 7y ago
    > But in any situation, there are winners and there are losers. The usually trotted-out theory of comparative advantage claims there are only winners.
    - cycrutchfield 7y ago
      I don’t think you fully understand comparative advantage then.
    - ACow_Adonis 7y ago
      again, only in the aggregate/ entity of measurement level. I would argue anyone who says otherwise is either being disingenuous or doesn't actually understand economics. That is not to say that is not trotted out frequently. Also, to be fair, during my economics education they had this whole focus on modeling policies and finding optimizations where no one is worse off. Of course, in the real world, that practically never happens... and there is an argument that the focus on efficient/competitive markets/ equilibria/rational agents is also a bit "wouldn't it be nice if the world was actually like this...", whereas in the real world only the most trivial goods/markets can vaguely be described as such...
  - FooHentai 7y ago
    >If you live in a first world country and your skill set is worse than somebody in the developing world, you’re going to have a bad time. Even if your skill set is greater, your cost of living is higher. So you'd have to be more than marginally better. Also, the logical conclusion of where this seems to be headed is that if you're a low-skill person living in a first-world county, voting for protectionist, isolationist policies/politicians is a rational choice.
maxxxxx 7y ago
That doesn't explain why inequality within the US keeps growing. As a whole the country is doing well but somehow the benefits go a small number of people while everybody else is stagnating.
- zebrafish 7y ago
  Sure it does. US consumer demand rises after WWII because of GI bill & repurposing of capital -> competition drives prices down -> Securities & Exchanges Act essentially mandates firms optimize for returns to capital as a fiduciary duty to shareholders -> producers look to countries where standards of living demand lower wages to maintain market positions -> US jobs decline but shareholder value grows -> wealth concentrates in the hands of those who have the opportunity to be a shareholders
  - moorhosj 7y ago
    You kind of hand-waved 70 years of economic history/decisions. How does “US jobs decline” match with an historically low unemployment rate?
- AndrewKemendo 7y ago
  It's explained somewhat in the article: We’ve also had a combination of tax and regulatory policy that has encouraged capital formation and increasing returns to capital, so labor’s share of returns has decreased. To add to that, capital is exponentially more portable than labor. With globalization, capital in the form of investments can move wherever it needs to to grow, it's borderless. Labor however, in order to grow wealth has to physically move. Remote jobs for basic labor doesn't exist - that's almost exclusively knowledge work. So if you're a coal miner, your ability to create wealth is extremely limited to certain physical places. If you're a remote Java dev, you can code from anywhere and grow wealth much easier, but there is a serious time cost to switching work. If you're an investor and just need to drop money into an account, not only can you do it from anywhere, you can move things around more or less immediately with little (relative) cost. It's about portability of the thing that is growing the wealth. Labor = slow, Capital = fast.

deogeo 7y ago

> Also, how much of this effect is basically the rest of the world playing catch up in terms of economic production? If the rest of the world becoming more productive results in US workers being worse off, then something is severely wrong with US trade policy. For one, it contradicts the dogma that more trade is strictly beneficial.

bilbo0s 7y ago
I think that dogma though was meant to address the situation in a global context. ie - More trade is strictly beneficial for the global population in aggregate. But yeah, it's still trade, so there will be lows and highs, and ebbs and flows.
asark 7y ago
> For one, it contradicts the dogma that more trade is strictly beneficial. Ricardo's original idea was applicable with a narrow set of assumptions/conditions and didn't have much to say about who'd end up with the greater net wealth. I'm not sure how/why it was turned into a magical improve-any-economy law of nature.
- astazangasta 7y ago
  Ricardo's mistake is not thinking about development; comparative advantage is optimal now, but a society that just makes coffee beans is going to lose in the end to the one that makes microchips because of the difference in how the economy and society develop over time.
  - 0815test 7y ago
    This may have been a mistake by Ricardo, but not one that points towards less trade as optimal. Indeed, export-led development (implying more trade openness) is the one reliable way we know about of going from the "coffee beans" to the "microchips" stage of development.
    - astazangasta 7y ago
      False, I recommend Ha-Joon Chang's writing on this subject. The US did not develop in a climate of trade openness, it used tariffs to protect its development. In fact no developed economy developed this way, all of them protected their industry until it was mature and ready to compete, had their governments invest in research and infrastructure and so on. If you have an example of a country that successfully developed through export led development and trade openness I would love to hear it.
cycrutchfield 7y ago
>For one, it contradicts the dogma that more trade is strictly beneficial. It is strictly beneficial, in aggregate. But in any situation, there are winners and there are losers. There are no decisions you can make where everybody wins. If you live in a first world country and your skill set is worse than somebody in the developing world, you’re going to have a bad time.
- deogeo 7y ago
  > But in any situation, there are winners and there are losers. The usually trotted-out theory of comparative advantage claims there are only winners.
  - cycrutchfield 7y ago
    I don’t think you fully understand comparative advantage then.
  - ACow_Adonis 7y ago
    again, only in the aggregate/ entity of measurement level. I would argue anyone who says otherwise is either being disingenuous or doesn't actually understand economics. That is not to say that is not trotted out frequently. Also, to be fair, during my economics education they had this whole focus on modeling policies and finding optimizations where no one is worse off. Of course, in the real world, that practically never happens... and there is an argument that the focus on efficient/competitive markets/ equilibria/rational agents is also a bit "wouldn't it be nice if the world was actually like this...", whereas in the real world only the most trivial goods/markets can vaguely be described as such...
- FooHentai 7y ago
  >If you live in a first world country and your skill set is worse than somebody in the developing world, you’re going to have a bad time. Even if your skill set is greater, your cost of living is higher. So you'd have to be more than marginally better. Also, the logical conclusion of where this seems to be headed is that if you're a low-skill person living in a first-world county, voting for protectionist, isolationist policies/politicians is a rational choice.

maxxxxx 7y ago

That doesn't explain why inequality within the US keeps growing. As a whole the country is doing well but somehow the benefits go a small number of people while everybody else is stagnating.

zebrafish 7y ago
Sure it does. US consumer demand rises after WWII because of GI bill & repurposing of capital -> competition drives prices down -> Securities & Exchanges Act essentially mandates firms optimize for returns to capital as a fiduciary duty to shareholders -> producers look to countries where standards of living demand lower wages to maintain market positions -> US jobs decline but shareholder value grows -> wealth concentrates in the hands of those who have the opportunity to be a shareholders
- moorhosj 7y ago
  You kind of hand-waved 70 years of economic history/decisions. How does “US jobs decline” match with an historically low unemployment rate?
AndrewKemendo 7y ago
It's explained somewhat in the article: We’ve also had a combination of tax and regulatory policy that has encouraged capital formation and increasing returns to capital, so labor’s share of returns has decreased. To add to that, capital is exponentially more portable than labor. With globalization, capital in the form of investments can move wherever it needs to to grow, it's borderless. Labor however, in order to grow wealth has to physically move. Remote jobs for basic labor doesn't exist - that's almost exclusively knowledge work. So if you're a coal miner, your ability to create wealth is extremely limited to certain physical places. If you're a remote Java dev, you can code from anywhere and grow wealth much easier, but there is a serious time cost to switching work. If you're an investor and just need to drop money into an account, not only can you do it from anywhere, you can move things around more or less immediately with little (relative) cost. It's about portability of the thing that is growing the wealth. Labor = slow, Capital = fast.