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No mystery here. Of course most of the "progress" came from China. Meanwhile middle class wages in the U.S have been stagnant for decades, structural unemploy

No mystery here. Of course most of the "progress" came from China. Meanwhile middle class wages in the U.S have been stagnant for decades, structural unemployment has taken hold in the U.S. and other Western nations, social program and welfare dependency is on the rise, and corporate profits are at an all time high. We have simply unplugged the middle class in the U.S. and plugged in people who can be paid relative dirt wages, yet still see it as progress because they were so utterly poor before. This is no great economic mystery or capitalist achievement. It is good that there are fewer people in extreme poverty, but there has also been a heavy cost. The western world and America in particular have long been addicted to free or cheap labor and this is now simply coming at the expense of those whose forebears built this country right up until the last decades. True democratic capitalism is long overdue.

hencq 13y ago
You make it out like this is a zero-sum game. As if lifting people out of poverty means other people (Americans and Europeans) will necessarily be worse off. I don't believe this is the case. More people with money also means a bigger market for western products. I'm frankly a little bit put off by the scare quotes you put around "progress". As if giving a billion people a better life is somehow not something to aspire to.
- rbanffy 13y ago
  Most of the time, capitalism works as a zero-sum game - profits can be extracted more easily from moving resources than from creating them and therefore moving will be prefered to making. We must admit there is something wrong when unemployment is rising together with corporate profits and economic inequality. It's not only the average rising - standard deviation is also increasing. The social tissue can only stretch that much before it ruptures and nobody likes to be near the rupture.
  - CompelTechnic 13y ago
    >Most of the time, capitalism works as a zero-sum game - profits can be extracted more easily from moving resources than from creating them and therefore moving will be prefered to making. This isn't true. At the heart of capitalism is any economic exchange- trading sheep for wheat, trading dollars for an xbox, etc. For any trade to occur, each party in the trade has to believe that they will gain from the exchange, i.e. get increased utility/value from it. By that means, any economic exchange where both parties are acting freely is most likely to be positive-sum, in terms of value received. Where jobs have moved to poorer countries, real wages have increased- this is indicative of the fact that they are now able to produce goods and services that their trading counter-parties perceive to be more valuable. This doesn't make rich countries as much worse off as you think it does- the majority of the increased production of poorer countries goes to meet local needs, overall having a relatively small effect on the price of global labor. On your other point, I will agree with ya that our current income inequality is pretty bad.
    - flyinRyan 13y ago
      > trading sheep for wheat Amusing example, since it is zero sum even if the two parties don't perceive it as such.
    - unclebucknasty 13y ago
      Your explanations are textbook idealizations but don't hold in the real world (at least in the context of this discussion) and leave out some very important factors. For instance, while it may be positive sum strictly for trading partners, the positive value accrues to a smaller percentage of the population (i.e. the corporations and shareholders) and frequently even comes at the expense of the worker (or ex-worker). This is in large part why we are seeing the economic inequality that you referenced. It is a product of the "zero-sumness" of the game when viewed in total vs. just between trading partners/corporations.
    - unclebucknasty 13y ago
      >This doesn't make rich countries as much worse off as you think it does- the majority of the increased production of poorer countries goes to meet local needs, overall having a relatively small effect on the price of global labor. That bit of contorted reasoning has long been the dogma of some economists. Whether you belive this thinking became entrenched due to some grand globalist agenda or was simply wishful thinking, you must admit that it is counter-intuitive to believe that massive outsourcing to low wage countries would have no effect on domestic wages. And, now, many economists are having second thoughts: [1] http://economix.blogs.nytimes.com/2012/08/29/changing-views-of-globalizations-impact/ http://economix.blogs.nytimes.com/2012/08/29/changing-views-... And, from Nobel economist, Michael Spence [2] http://www.cfr.org/industrial-policy/evolving-structure-american-economy-employment-challenge/p24366 http://www.cfr.org/industrial-policy/evolving-structure-amer...
- unclebucknasty 13y ago
  If you don't see that it is being played out like a zero sum game, then you haven't been paying attention. That is exactly what I am saying. >More people with money also means a bigger market for western products. A bigger market for western products that are also manufactured elsewhere cheaply, giving the corporations higher profits that generally benefit a relative few shareholders who continue to grow wealthier. I put quotes around progress because there is more to the story than just pure progress. But, I explicitly acknowledged that giving people a better life is a good thing. My point was that it is not the product of some grand benevolence and it comes at a price. Look at poverty rates in the U.S. alone, for example. For instance, in 2013, U.S. child poverty rates reached record levels. All we have really done is redistributed jobs and wealth from the working and middle classes of the developed world to developing nations and the wealthy.
rdtsc 13y ago
> True democratic capitalism is long overdue. Painting with broad strokes, how would you define that? And was it / is it working anywhere? Is that an idealized model that is unstable in the real world (much like other idealist systems)?
- unclebucknasty 13y ago
  There has been a long-standing tension between capital and labor. The problem now is that labor is losing in a way that is no longer tenable for the maintenance of a stable system. So, ironically, I think it's this "free market at any cost and by any manner" ideology that is the unstable idealization. Witness the grave economic disparity that it is producing. It's funny, because the "democratic capitalism" system that I'm referencing consists of the capitalism that is defined in economic textbooks and the democracy that is described in the U.S. Constitution, etc. It's what we have now that is the bastardization of these principles: the crony-capitalism and pay-to-play political system into which we've devolved. So, I'm arguing for a true meritocracy and economic opportunity for more than just a handful of bankers and gatekeepers. It would need to start with a true democratic government vs. one that has sold out to those same bankers and gatekeepers.
yummyfajitas 13y ago
Meanwhile middle class wages in the U.S have been stagnant for decades... This is only because compensation has shifted from taxed wages to untaxed benefits. This is easily fixable - eliminate the income tax but raise taxes on health insurance. http://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=1140 http://www.minneapolisfed.org/publications_papers/pub_displa... Furthermore, even the stagnation of wages is caused purely by a composition change. http://www.chrisstucchio.com/blog/2011/immigrants_simpsons_paradox_great_stagnation.html http://www.chrisstucchio.com/blog/2011/immigrants_simpsons_p...
- unclebucknasty 13y ago
  There's a good bit of tortured logic to rationalize the stagnation of real middle-class wage growth in the U.S. And, while there may be some relevance to those articles, they go a long way to avoid the globalization elephant in the room. On the other hand, economists are now finally acknowledging the negative domestic wage effects of globalization and outsourcing on the U.S. I referenced these elsewhere, but it's also relevant here: [1] http://economix.blogs.nytimes.com/2012/08/29/changing-views-of-globalizations-impact/ http://economix.blogs.nytimes.com/2012/08/29/changing-views-... [2] http://www.cfr.org/industrial-policy/evolving-structure-american-economy-employment-challenge/p24366 http://www.cfr.org/industrial-policy/evolving-structure-amer... The idea that continuous outsourcing to low wage countries would bring negative pressure to domestic wages was a common sense notion decades before now. Seems like economists are finally catching up. EDIT: The other elephant in the room and perhaps the most salient point is that relatively speaking, the working/middle-class is bearing the brunt of stagnation, no matter which metrics you apply or how you rationalize it. That is, the wealthiest are realizing a massive acceleration in wealth accumulation, period.
  - yummyfajitas 13y ago
    I do not dispute that outsourcing causes negative wage pressure on domestic compensation. I dispute that stagnation is anything other than a statistical artifact caused by measuring the wrong thing (e.g., wages rather than compensation).
notdrunkatall 13y ago
I've heard this foolish argument countless times, and it is still as irksome today as it ever was. Yes, wages have stagnated in the west, but our standard of living is still very high. The cost of lifting a billion people out of poverty for the first time in the history of the world was for our own standard of living to increase at a slower rate than it otherwise would have for a few decades. That is only a "heavy cost" if you are an incredibly short-sighted, self-centered westerner, a rabid anti-capitalist moron, or some combination of the both. Go tell the Chinese factory worker who is sending money back home to her poor family that the temporary halt in our standard of living was not worth her family being able to stop scraping a living out of the mud. Yes, the capitalist system is employing cheap labor, and in the process, it is allowing those people to create something of value in return for the opportunity that our culture had a few centuries ago. And when their standard of living rises to the point at which their labor is no longer cheap enough, our capitalist system will look for another pool of cheap labor, and if allowed to continue, the process will continue ad infinitum until all of the world's pools of cheap labor have been "exploited" right out of poverty for the first time in human history. In the meantime, our own standard of living might not increase as fast as it otherwise would have, and gasp it might even stagnate! The horror! The sky is falling! Capitalism is failing! What bullshit.
- flyinRyan 13y ago
  If what you said were actually true it might not be so bad. But in reality, the US is more than willing to use military force to ensure certain factors remain constant. I doubt that it would be below their standards to use similar mechanisms to prevent cheap labor countries from coming completely out of poverty.
  - notdrunkatall 13y ago
    Oh good god. /r/politics is invading HN, I see.
    - flyinRyan 13y ago
      To my eyes, it's you and your Rush Limbaugh-esque bullshit that is "invading".

hencq 13y ago

You make it out like this is a zero-sum game. As if lifting people out of poverty means other people (Americans and Europeans) will necessarily be worse off. I don't believe this is the case. More people with money also means a bigger market for western products. I'm frankly a little bit put off by the scare quotes you put around "progress". As if giving a billion people a better life is somehow not something to aspire to.

rbanffy 13y ago
Most of the time, capitalism works as a zero-sum game - profits can be extracted more easily from moving resources than from creating them and therefore moving will be prefered to making. We must admit there is something wrong when unemployment is rising together with corporate profits and economic inequality. It's not only the average rising - standard deviation is also increasing. The social tissue can only stretch that much before it ruptures and nobody likes to be near the rupture.
- CompelTechnic 13y ago
  >Most of the time, capitalism works as a zero-sum game - profits can be extracted more easily from moving resources than from creating them and therefore moving will be prefered to making. This isn't true. At the heart of capitalism is any economic exchange- trading sheep for wheat, trading dollars for an xbox, etc. For any trade to occur, each party in the trade has to believe that they will gain from the exchange, i.e. get increased utility/value from it. By that means, any economic exchange where both parties are acting freely is most likely to be positive-sum, in terms of value received. Where jobs have moved to poorer countries, real wages have increased- this is indicative of the fact that they are now able to produce goods and services that their trading counter-parties perceive to be more valuable. This doesn't make rich countries as much worse off as you think it does- the majority of the increased production of poorer countries goes to meet local needs, overall having a relatively small effect on the price of global labor. On your other point, I will agree with ya that our current income inequality is pretty bad.
  - flyinRyan 13y ago
    > trading sheep for wheat Amusing example, since it is zero sum even if the two parties don't perceive it as such.
  - unclebucknasty 13y ago
    Your explanations are textbook idealizations but don't hold in the real world (at least in the context of this discussion) and leave out some very important factors. For instance, while it may be positive sum strictly for trading partners, the positive value accrues to a smaller percentage of the population (i.e. the corporations and shareholders) and frequently even comes at the expense of the worker (or ex-worker). This is in large part why we are seeing the economic inequality that you referenced. It is a product of the "zero-sumness" of the game when viewed in total vs. just between trading partners/corporations.
  - unclebucknasty 13y ago
    >This doesn't make rich countries as much worse off as you think it does- the majority of the increased production of poorer countries goes to meet local needs, overall having a relatively small effect on the price of global labor. That bit of contorted reasoning has long been the dogma of some economists. Whether you belive this thinking became entrenched due to some grand globalist agenda or was simply wishful thinking, you must admit that it is counter-intuitive to believe that massive outsourcing to low wage countries would have no effect on domestic wages. And, now, many economists are having second thoughts: [1] http://economix.blogs.nytimes.com/2012/08/29/changing-views-of-globalizations-impact/ http://economix.blogs.nytimes.com/2012/08/29/changing-views-... And, from Nobel economist, Michael Spence [2] http://www.cfr.org/industrial-policy/evolving-structure-american-economy-employment-challenge/p24366 http://www.cfr.org/industrial-policy/evolving-structure-amer...
unclebucknasty 13y ago
If you don't see that it is being played out like a zero sum game, then you haven't been paying attention. That is exactly what I am saying. >More people with money also means a bigger market for western products. A bigger market for western products that are also manufactured elsewhere cheaply, giving the corporations higher profits that generally benefit a relative few shareholders who continue to grow wealthier. I put quotes around progress because there is more to the story than just pure progress. But, I explicitly acknowledged that giving people a better life is a good thing. My point was that it is not the product of some grand benevolence and it comes at a price. Look at poverty rates in the U.S. alone, for example. For instance, in 2013, U.S. child poverty rates reached record levels. All we have really done is redistributed jobs and wealth from the working and middle classes of the developed world to developing nations and the wealthy.

rdtsc 13y ago

> True democratic capitalism is long overdue. Painting with broad strokes, how would you define that? And was it / is it working anywhere? Is that an idealized model that is unstable in the real world (much like other idealist systems)?

unclebucknasty 13y ago
There has been a long-standing tension between capital and labor. The problem now is that labor is losing in a way that is no longer tenable for the maintenance of a stable system. So, ironically, I think it's this "free market at any cost and by any manner" ideology that is the unstable idealization. Witness the grave economic disparity that it is producing. It's funny, because the "democratic capitalism" system that I'm referencing consists of the capitalism that is defined in economic textbooks and the democracy that is described in the U.S. Constitution, etc. It's what we have now that is the bastardization of these principles: the crony-capitalism and pay-to-play political system into which we've devolved. So, I'm arguing for a true meritocracy and economic opportunity for more than just a handful of bankers and gatekeepers. It would need to start with a true democratic government vs. one that has sold out to those same bankers and gatekeepers.

yummyfajitas 13y ago

Meanwhile middle class wages in the U.S have been stagnant for decades... This is only because compensation has shifted from taxed wages to untaxed benefits. This is easily fixable - eliminate the income tax but raise taxes on health insurance. http://www.minneapolisfed.org/publications_papers/pub_display.cfm?id=1140 http://www.minneapolisfed.org/publications_papers/pub_displa... Furthermore, even the stagnation of wages is caused purely by a composition change. http://www.chrisstucchio.com/blog/2011/immigrants_simpsons_paradox_great_stagnation.html http://www.chrisstucchio.com/blog/2011/immigrants_simpsons_p...

unclebucknasty 13y ago
There's a good bit of tortured logic to rationalize the stagnation of real middle-class wage growth in the U.S. And, while there may be some relevance to those articles, they go a long way to avoid the globalization elephant in the room. On the other hand, economists are now finally acknowledging the negative domestic wage effects of globalization and outsourcing on the U.S. I referenced these elsewhere, but it's also relevant here: [1] http://economix.blogs.nytimes.com/2012/08/29/changing-views-of-globalizations-impact/ http://economix.blogs.nytimes.com/2012/08/29/changing-views-... [2] http://www.cfr.org/industrial-policy/evolving-structure-american-economy-employment-challenge/p24366 http://www.cfr.org/industrial-policy/evolving-structure-amer... The idea that continuous outsourcing to low wage countries would bring negative pressure to domestic wages was a common sense notion decades before now. Seems like economists are finally catching up. EDIT: The other elephant in the room and perhaps the most salient point is that relatively speaking, the working/middle-class is bearing the brunt of stagnation, no matter which metrics you apply or how you rationalize it. That is, the wealthiest are realizing a massive acceleration in wealth accumulation, period.
- yummyfajitas 13y ago
  I do not dispute that outsourcing causes negative wage pressure on domestic compensation. I dispute that stagnation is anything other than a statistical artifact caused by measuring the wrong thing (e.g., wages rather than compensation).

notdrunkatall 13y ago

I've heard this foolish argument countless times, and it is still as irksome today as it ever was. Yes, wages have stagnated in the west, but our standard of living is still very high. The cost of lifting a billion people out of poverty for the first time in the history of the world was for our own standard of living to increase at a slower rate than it otherwise would have for a few decades. That is only a "heavy cost" if you are an incredibly short-sighted, self-centered westerner, a rabid anti-capitalist moron, or some combination of the both. Go tell the Chinese factory worker who is sending money back home to her poor family that the temporary halt in our standard of living was not worth her family being able to stop scraping a living out of the mud. Yes, the capitalist system is employing cheap labor, and in the process, it is allowing those people to create something of value in return for the opportunity that our culture had a few centuries ago. And when their standard of living rises to the point at which their labor is no longer cheap enough, our capitalist system will look for another pool of cheap labor, and if allowed to continue, the process will continue ad infinitum until all of the world's pools of cheap labor have been "exploited" right out of poverty for the first time in human history. In the meantime, our own standard of living might not increase as fast as it otherwise would have, and gasp it might even stagnate! The horror! The sky is falling! Capitalism is failing! What bullshit.

flyinRyan 13y ago
If what you said were actually true it might not be so bad. But in reality, the US is more than willing to use military force to ensure certain factors remain constant. I doubt that it would be below their standards to use similar mechanisms to prevent cheap labor countries from coming completely out of poverty.
- notdrunkatall 13y ago
  Oh good god. /r/politics is invading HN, I see.
  - flyinRyan 13y ago
    To my eyes, it's you and your Rush Limbaugh-esque bullshit that is "invading".