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Defending Free Trade from Candidates' Pandering
University of Rochester economist Steven Landsburg has a terrific column in today's New York Times defending free trade and excoriating the anti-free trade pandering of Republican hopefuls Mitt Romney and John McCain. To wit:
All economists know that when American jobs are outsourced, Americans as a group are net winners. What we lose through lower wages is more than offset by what we gain through lower prices. In other words, the winners can more than afford to compensate the losers. Does that mean they ought to? Does it create a moral mandate for the taxpayer-subsidized retraining programs proposed by Mr. McCain and Mr. Romney?
Um, no. Even if you’ve just lost your job, there’s something fundamentally churlish about blaming the very phenomenon that’s elevated you above the subsistence level since the day you were born. If the world owes you compensation for enduring the downside of trade, what do you owe the world for enjoying the upside?
I doubt there’s a human being on earth who hasn’t benefited from the opportunity to trade freely with his neighbors. Imagine what your life would be like if you had to grow your own food, make your own clothes and rely on your grandmother’s home remedies for health care. Access to a trained physician might reduce the demand for grandma’s home remedies, but — especially at her age — she’s still got plenty of reason to be thankful for having a doctor.
Some people suggest, however, that it makes sense to isolate the moral effects of a single new trading opportunity or free trade agreement. Surely we have fellow citizens who are hurt by those agreements, at least in the limited sense that they’d be better off in a world where trade flourishes, except in this one instance. What do we owe those fellow citizens?
One way to think about that is to ask what your moral instincts tell you in analogous situations. Suppose, after years of buying shampoo at your local pharmacy, you discover you can order the same shampoo for less money on the Web. Do you have an obligation to compensate your pharmacist? If you move to a cheaper apartment, should you compensate your landlord? When you eat at McDonald’s, should you compensate the owners of the diner next door? Public policy should not be designed to advance moral instincts that we all reject every day of our lives.
Whole excellent Landsburg op/ed here.
|1.16.08 @ 12:01PM|#
Since the policy benefits the collective as a whole, its impact on those individuals it harms is not worthy of our concern.
|1.16.08 @ 12:09PM|#
Free trade isn't a policy, it's a lack of policy.
Changing our trade policy is a policy.
kinnath|1.16.08 @ 12:09PM|#
Since the policy benefits the collective as a whole, its
impact on those individuals it harms is not worthy of our
concern.
Yup
|1.16.08 @ 12:15PM|#
Why do politicians assume everyone wants to work in the steel and/or textile mills again? I sure as shit don't.
|1.16.08 @ 12:19PM|#
Cesar,
Talking about what to do when such jobs migrate, in the manner Bill
Clinton and Robert Reich and some of the Repubicans do, is exactly
the opposite of wanting people to work in the mills again.
Fred Thompson made a good point on the teevee this morning about
the solution to job loss in South Carolina being to add two jobs
for every one lost, rather than trying to stop that one from being
lost.
|1.16.08 @ 12:19PM|#
Since the policy benefits the collective as a whole, its
impact on those individuals it harms is not worthy of our
concern.
Yup
In joe's defense, turn that around. If a wealth redistribution
policy was damaging to the top 10% of income earners, but benefited
the other 90%, would you support that?
|1.16.08 @ 12:20PM|#
Since the policy benefits the collective as a whole, its
impact on those individuals it harms is not worthy of our
concern.
That's an unfair assessment of what he said. It may be true, but
it's certainly not what he's saying.
What I got out of the op/ed is that it would be morally
inconsistent to be against free trade/for protectionist policies
for the sake of jobs and fairness, and not to apply that same moral
standard to all of our economic transactions.
I have quite liberal friends who insist on paying more for the same
items just because they bought them at a small business instead of
a chain. They seem to look to me to reprimand them for it, but I
don't know how much I've told them that individual decisions that
they make in a market are not wrong or right. If they choose to
spend extra money on something they value (in this scenario a small
locally owned store in an aesthetic walkable downtown who decorates
their windows around Christmas), that is their decision. If enough
people valued those same things, they wouldn't have to vote to
impose them on others.
|1.16.08 @ 12:20PM|#
Talking about what to do when such jobs migrate, in the manner Bill Clinton and Robert Reich and some of the Repubicans do, is exactly the opposite of wanting people to work in the mills again.
Clinton and Robert Reich are decent in my book when it comes to
trade. My criticism is mostly leveled at the John Edwards/Lou Dobbs
crowd.
Christopher Monnier|1.16.08 @ 12:21PM|#
Here's the bugmenot
username/password:
Username: downwithprereg
Password: downwithprereg
|1.16.08 @ 12:27PM|#
Reinmoose,
One can consider those who buy Hondas instead of Chevrolets to be
morally blameless, and still agree there is a moral imperitive to
aid those harmed by local deindustrialization.
Cesar, I think we're pretty much in the same place.
kinnath|1.16.08 @ 12:28PM|#
In joe's defense, turn that around.
joe did not address the actual point of the text referenced
above:
As a society, do we owe compensation to
individuals harmed by free trade? The answer is absolutely
not.
As a society, do we have some moral obligation to ease the pain of
those harmed by free trade? The answer is still no on the level of
society. As free individuals, we get to choose individually whether
we feel a moral obligation to help those suffering pain.
Collectively, we may vote to provide some form of safety net (evils
of taxation to be discussed elsewhere), but we should primarily be
focussed on private participation in charitable organizations.
|1.16.08 @ 12:31PM|#
One can consider those who buy Hondas instead of Chevrolets
to be morally blameless, and still agree there is a moral
imperitive to aid those harmed by local
deindustrialization.
"It's not your fault you knowingly chose to purchase a better car
from a foreign company. You can now spend the money that you saved
by making that decision (through maintenence costs and longer
life-span, and better gas mileage) on the now former-employees of
the American car company you didn't buy from."
Is that about right?
Yeah, I guess that works somewhat. Maybe as long as the savings
realized by buying the foreign good are higher than the amount
contributed to helping the formerly-employed.
|1.16.08 @ 12:33PM|#
As a follow-up, as kinnath stated, the best way to ensure that the balance for the purchaser of the foreign good remains positive is to let him/her distribute their personal savings from the transaction themselves.
Franklin Harris|1.16.08 @ 12:35PM|#
Since the policy benefits the collective as a whole, its impact on those individuals it harms is not worthy of our concern.
Way to totally miss the point. Landsburg's point is that even the
people harmed by free trade benefit more than they are harmed:
"Even if you've just lost your job, there's something fundamentally
churlish about blaming the very phenomenon that's elevated you
above the subsistence level since the day you were born."
|1.16.08 @ 12:37PM|#
Maybe as long as the savings realized by buying the foreign
good are higher than the amount contributed to helping the
formerly-employed.
The benefits received by the formerly-employed would be less than
the savings by the buyer, but the cost to the buyer would be higher
than the savings. The benefit to the government official in charge
of implementing the policy would account for the difference.
|1.16.08 @ 12:40PM|#
Reinmoose,
I think you are individualizing it too much. I don't think someone
who buys a Honda has any more moral responsibility for people in
Detroit than someone who buys a Dodge.
It is both right, and wise, to have a safety net, and to prevent
individuals and regions suffering from economic dislocation from
going into a death spiral.
But looking at your last point without the individual element, yes,
the additional society-wide wealth enjoyed by freer trade with more
producers and consumers means this is not a zero-sum game.
|1.16.08 @ 12:43PM|#
Franklin Harris, that's a cheap appeal to emotion.
Let's try it in other ways. There is something fundamentally
churlish about burn victims blaming the very phenomenon that's kept
them warm since the day they were born.
Yeah, whatever. It's still a good idea to make your fireplace
fireproof, whether someone decides it makes a good argument to cast
aspersions on those who notice that, or not.
|1.16.08 @ 12:45PM|#
The benefits received by the formerly-employed would be less
than the savings by the buyer
Perhaps, but let's remember a couple of important points: there are
a lot more car buyers than auto workers, and the benefits of better
and cheaper cars extend beyond the individual car buyers, to
greater economic growth as a whole.
|1.16.08 @ 12:51PM|#
You know, a lot of libertarians might agree to some temporary
help if only it wasn't endless.
The states, regions, individuals who make bad decisions or find
themselves in bad circumstances frequently don't take steps to get
out of them. Tell you what - I'll support some job retraining and
assistance aid for Michigan when it agrees to a Right to Work law
(modified to allow employers to require union shops if they so
desire.)
|1.16.08 @ 12:52PM|#
We should help people who lose their jobs make a trasition into a new one. Ultimately though, if someone loses a job to a foreign competetor, he lost that job because the foreign company offered some comparative advantage over the domestic one. The death of the domestic company creates the opportunity for those people to move into fields where they have the comparative advantage and everyone wins. Look at it this way, it sucked when people had to move off the farm and into the city because farming had become so efficient that their labor wasn't needed anymore, but that migration created the labor pool that enable a lot of the industrial reveloution. To put it another way, we couldn't have had the industrial revolution if we still needed 75% of our labor just to feed ourselves.
Click \'n\' Learn|1.16.08 @ 12:54PM|#
I have to admit, it truly is an excellent editorial. It shows that people like Steven Landsburg are some degree of traitors, willing to sell out their countrymen for money. And, willing to slap them in the face afterwards. I agree, everyone should read it.
|1.16.08 @ 12:58PM|#
Wow, that's refreshing. It's always enjoyable to see and benefit
from clear thinking.
All economists know that when American jobs are outsourced,
Americans as a group are net winners.
Too bad I never learned that in school. I did learn it eventually,
but I'll confess that I've always wondered if it might be
beneficial to compensate the people who are larger net losers for
any given change - in other words, those who lose a job.
Two good points Landsburg makes above that I should have
considered, but didn't:
1. These folks are still huge overall net winners relative to the
what the situation would be if they did not participate in free
trade.
2. Losing a job is just a special case of the more general
situation that there are net losers in any transaction. Asking for
compensation in the situations where you lose, but not being
willing to pay others in the situations where they lose is
hypocritical. Compensating everyone in every situation would be
impossible and undesirable.
|1.16.08 @ 1:02PM|#
I think you are individualizing it too much. I don't think
someone who buys a Honda has any more moral responsibility for
people in Detroit than someone who buys a Dodge.
Actually, I think that is exactly the issue. People make purchases
based on what they value (I don't think anyone here disagrees with
that), albeit with less-than-perfect information, so those
decisions are not completely accurate to a person's value
structure. It is unreasonable to expect them to completely express
their values through what they purchase, but there are other, more
moral ways to do it than government programs.
The reason we have government redistribution of funds in ways that
"protect jobs" and "promote sustainable living," is that people
would rather throw around the concept of what we "should" do, as
opposed to actually doing it. It's easier to say "we're going to
protect these steel workers from losing their jobs" and pay for the
resulting costs through taxes and higher steel prices, than it is
to find out which construction companies use steel from where and
only frequent businesses that use American steel, or more
specifically, steel from Pittsburgh. The problem is that, just as
people don't realize the direct costs of their foreign purchases on
domestic workers, they don't realize the direct costs of protecting
the domestic workers from foreign purchases through government
policies, which are MUCH more permanent than buying trends.
Therefore, decisions to use protectionist policies are frequently
not economic decisions, but rather emotional ones, as the costs of
protecting jobs is almost never mentioned in political arenas. It's
always framed as whether or not "we" "should."
That being said, I think a safety net is a fine idea, and much
better than protectionist policies. I would donate a portion of my
yearly salary to one, especially if it were proven by the fund
managers that it actually had a net benefit on those who were
receiving help as well as the greater economy. I do not, however,
want to donate an involuntary and undisclosed amount decided by
corrupt and powerful lawyers to something over which I have no
influence.
|1.16.08 @ 1:02PM|#
One should also consider that re-training programs and other projects which intend to rapidly re-integrate the unemployed into the workforce constitutes a trade. Confidence and good faith stabilize speculation and financial markets. By making the unemployed confident of the future we avoid wasting their potential to society and the economy.
|1.16.08 @ 1:13PM|#
creech,
If I were to come up with a list of what I'd like to see, it would
look something like this:
1. Funding for Community Colleges
2. Job Retraining Programs.
3. Investments in Regional IT Infrastructure.
4. Redevelopment and Infrastructure Programs to Make Urban Centers
More Attractive Places. These should concentrate on advancing,
promoting, and expanding those features which provide a unique
advantage to the effected area.
5. Georgraphically-Targetted Tax Credits for New and Expanded
Businesses.
6. Small Business Loans for Local Entrepreneurs, Especially Those
Whose Business Model Takes Advantage of Something Particular to the
Effected Area. Ideally, that includes using the specialized labor
pool in a growing, rather than declining, industry sector.
|1.16.08 @ 1:14PM|#
Leaving aside discussions about morals and fairness and stuff, isn't "bribing" the losers from free trade in order to ease political opposition a good idea? I'd do that trade-off with a smile on my face.
stuartl|1.16.08 @ 1:22PM|#
6. Small Business Loans for Local Entrepreneurs, Especially
Those Whose Business Model Takes Advantage of Something Particular
to the Effected Area. Ideally, that includes using the specialized
labor pool in a growing, rather than declining, industry
sector.
joe, are you seriously recommending an industrial policy run by
government? History has not been kind to those kinds of
policies.
|1.16.08 @ 1:23PM|#
4. Redevelopment and Infrastructure Programs to Make Urban Centers More Attractive Places.
With eminent domain?
What about the argument that re-development often benefits yuppies
at the expense of the poor already there?
|1.16.08 @ 1:26PM|#
If "what we lose through lower wages is more than offset by what we gain through lower prices" is true, why have real wages fallen for most of the last three decades? The present "free trade" agreements are little more than corporate wish lists where their intellectual and investment property rights are protected, while they can still get government subsidies and enjoy artificially underpriced currencies and a complete lack of enviromental and labor standards. It's a system that works very well to their interests, but not to the average worker's. Please don't call this self-serving arrangement free trade in any meaningful sense of the term.
|1.16.08 @ 1:26PM|#
No. That's not what that says.
When GE left Fitchburg, MA, a group of laid-off engineers started a
consulting business which utilized the expertise they developed in
the now-defunct industry. THEY approached the GOVERNMENT for some
scratch to get the business off the ground. That's what I'm talking
about.
|1.16.08 @ 1:28PM|#
Cesar,
If fixing your toilet requires a wrench, you use a wrench.
"But I knew a guy who broke his thumb with a wrench."
That's nice. Um, so?
Russ 2000|1.16.08 @ 1:33PM|#
All economists know that when American jobs are outsourced,
Americans as a group are net winners.
The real problem with the editorial is that jobs don't have
nationalities.
|1.16.08 @ 1:35PM|#
Cesar,
The redevelopment efforts, like our trade policies, should be aimed
at boosting the economy overall. This would benefit the
"collective."
Just as the existence of net-losers in free trade does not make
protectionism wise, the existence of people made worse off by
necessary redevelopment does not make it wise to allow dislocated
cities and region to go into a death spiral. If there are
individuals who are harmed in the process, then society has a
responsibility to help them out.
Abdul|1.16.08 @ 1:36PM|#
joe,
Your six point plan isn't bad. It seems minimally invasive.
However, isn't there something to be said for encouraging surplus
population to leave a declining region? The decline of some urban
centers is a good thing. A city which arose based on one industry
(like Detroit and cars; Rochester and Kodak) should be allowed to
decline when that industry does. The urban redevelopment plans are
just keeping the patient breathing long after the soul has left the
body.
stuartl|1.16.08 @ 1:37PM|#
When GE left Fitchburg, MA, a group of laid-off engineers
started a consulting business which utilized the expertise they
developed in the now-defunct industry. THEY approached the
GOVERNMENT for some scratch to get the business off the ground.
That's what I'm talking about.
Why shouldn't they go to a bank or private investors whose skin
will be in the game? Why should I (the taxpayer) be helping
them?
R C Dean|1.16.08 @ 1:40PM|#
If a wealth redistribution policy was damaging to the top
10% of income earners, but benefited the other 90%, would you
support that?
No, because that would be coercive wealth
distribution.
Folks who lose their jobs to market forces, even market forces
altered by the removal of trade barriers, have not lost their jobs
to coercion, but to its opposite.
Perhaps, but let's remember a couple of important points: there
are a lot more car buyers than auto workers,
Which still provides no moral or economic basis for taxing car
buyers to support auto workers, although it does illustrate nicely
the basic public choice problem.
and the benefits of better and cheaper cars extend beyond the
individual car buyers, to greater economic growth as a
whole.
Which provides an excellent reason not to tax car buyers for the
benefit of auto workers, as doing so reduces teh societal benefits
of better and cheaper cars.
Russ 2000|1.16.08 @ 1:41PM|#
When GE left Fitchburg, MA, a group of laid-off engineers
started a consulting business which utilized the expertise they
developed in the now-defunct industry. THEY approached the
GOVERNMENT for some scratch to get the business off the
ground.
Sounds like a feudal way of looking at it.
|1.16.08 @ 1:43PM|#
I would say that the greatest philanthropists/givers to charity in the world are the people in this country or any other place in the world who work for less than what will allow them to live. They suffer so the more wealthy can buy tons of cheap crap.
|1.16.08 @ 1:44PM|#
Further to my post above, the paragraph relating to moral instincts is libertarian "reasoning" at its shallowest. If the government allows others to compete with me using controlled, undervalued currencies and enviromental or labor practices that could land me in jail, then it should level the playing field or compensate. I know this will be labled as protectionism by corporate whores- so be it!
|1.16.08 @ 1:44PM|#
When GE left Fitchburg, MA, a group of laid-off engineers
started a consulting business which utilized the expertise they
developed in the now-defunct industry. THEY approached the
GOVERNMENT for some scratch to get the business off the ground.
That's what I'm talking about.
I think it's safe to say that most industrial workers who are laid
off from a job are not prone to entreprenurial activities. It may
work well if you had an entire factory that shut down all at once,
but if you have gradual lay-offs, I don't think it's reasonable to
expect that to happen. I mean, sure it can be part of a larger
plan, but I just don't see that happening in a lot of the cases
we're looking at.
|1.16.08 @ 1:47PM|#
Abdul,
It's all about a soft landing, not keeping the plane flying
forever. Keeping declining cities from getting smaller should never
be the goal.
stuartl,
Because when we're talking about a region suffering from severe
economic dislocations, one of the points along the downward spiral
is a shortage of private credit.
Because private credit is going to be more expensive due to
profit-taking by the lender, and if the goal is to stoke the local
economy, diverted profits are counter-productive.
And because an effort aimed at sparking economic redevelopment
needs to be willing to accept greater risk than a profit-seeking
lender.
|1.16.08 @ 1:48PM|#
We can fund the Federal Industrial Asset Allocation Board with tariffs; everybody wins!
|1.16.08 @ 1:49PM|#
Libertarian Reasoning:
Sure there is a group of people who are hurt by 'free trade' but
they aren't valuable people anyway.
|1.16.08 @ 1:50PM|#
Folks who lose their jobs to market forces, even market
forces altered by the removal of trade barriers, have not lost
their jobs to coercion, but to its opposite.
Perhaps this is what people without any dinner can say instead of
Grace, RC.
P.S., I made it quite clear that I'm not talking about taxing car
buyers, King of Straw. I wrote a whole comment about it.
|1.16.08 @ 1:54PM|#
Reinmoose,
First, it only takes a few people to be the founders of a
business.
Second, if we're talking about the basic churning that accompanies
normal economic activity in a region, then we don't need to do
anything to keep that region's economy strong. Any government
efforts there should be tight-beam efforts to help needy
individuals or solve narrowly-defined problems with
carefully-tailored solutions.
I'm talking about places like Detroit, Gary, or Buffalo, where
economic decline is both broad and severe here.
|1.16.08 @ 1:56PM|#
James | January 16, 2008, 1:49pm | #
Libertarian Reasoning:
Sure there is a group of people who are hurt by 'free trade' but
they aren't valuable people anyway.
My version was better, because it put the problem in terms the
libertarians could relate to.
|1.16.08 @ 1:56PM|#
Statist reasoning:
Sure there is a (very large) group of people who are helped by
'free trade' but they aren't valuable people anyway.
|1.16.08 @ 1:58PM|#
Libertarian Reasoning:
Sure there is a group of people who are hurt by 'free trade' but
they aren't valuable people anyway.
Statist reasoning:
Sure there is a (very large) group of people who are helped by
'free trade' but they aren't valuable people anyway.
Whoopie! Look at me, everybody, I'm a centrist!
How the $&%# did THAT happen?
|1.16.08 @ 2:01PM|#
James, you can't argue with the numbers.
Free trade boosts overall wealth, and the winners outnumber the
losers by a wide margin.
We need a catalytic converter here, not a ban on cars.
|1.16.08 @ 2:03PM|#
If the world owes you compensation for enduring the downside
of trade, what do you owe the world for enjoying the
upside?
I think Kyoto andits focus on the developed world was a start in
attempting to answer that question.
|1.16.08 @ 2:03PM|#
Any government efforts there should be tight-beam efforts to
help needy individuals or solve narrowly-defined problems with
carefully-tailored solutions.
*prolonged, outright laughter*
|1.16.08 @ 2:05PM|#
Anyway, believe me, don't believe me, agree, disagree,
whatever.
At the very least, you have to acknowledge that there is a
non-protectionist criticism of free trade, raised by Clinton,
Reich, and others, and non-protectionist policies designed to
address the problems that criticism points out.
At a minimum, if you are going to argue against them, you need a
different argument than you'd use against the protectionists.
|1.16.08 @ 2:06PM|#
I'm sorry, but while it sounds lovely and all, I'm going to have
to join P Brooks in laughing.
It's not that it's not a nice compromise of an idea for
libertarians, it's just that... you seem to propose a government
solution that can keep itself under control and restrain itself
from growing.
LarryA|1.16.08 @ 2:09PM|#
Public policy should not be designed to advance moral
instincts that we all reject every day of our lives.
Public policy should not be designed to advance moral instincts
period.
4. Redevelopment and Infrastructure Programs to Make Urban
Centers More Attractive Places.
Two of the main reasons many urban centers are decaying are that
businesses are fleeing high urban center taxes and historical
preservation groups won't let anyone tear anything down. Government
redevelopment and infrastructure programs tend to perpetuate the
problems they seek to solve.
Just as the existence of net-losers in free trade does not make
protectionism wise, the existence of people made worse off by
necessary redevelopment does not make it wise to allow dislocated
cities and region to go into a death spiral. If there are
individuals who are harmed in the process, then society has a
responsibility to help them out.
Except that time and again it has been those the government has
spent the most money and effort "helping" that have ended up in
that "death spiral."
I spent a year in Lebanon, PA. Many of my neighbors worked in the
local steel plant. It had been shut down several years, because it
was too obsolete to produce steel anyone could afford. The
steelworkers union was proud that, when it was open, they had
blocked every attempt at modernization. The "workers" were still on
extended unemployment. They had turned down relocation/retraining
offers because their representative kept telling them that One Day
Real Soon Now Congress would reopen the plant, so they could have
"their" jobs back.
|1.16.08 @ 2:09PM|#
I'm not going to lose any sleep over your skepticism.
It's pretty rare to meet the libertarian who admits that programs
he objects to on philosophical grounds are perfectly doable.
|1.16.08 @ 2:11PM|#
joe -
can you provide me with an example of such a focused, reigned-in,
effective government program?
|1.16.08 @ 2:12PM|#
I don't morally owe a dime to the unionized workers in Detroit who are out of a job because their collective bargaining demands made their employer uncompetitive, led to them turning out crappy, overpriced cars, and led me to buy Toyotas. I don't morally owe a dime to able-bodied people capable of finding another job with the American subsidiaries of the competitive automakers, or in some other industry, but who chose to not go looking for another job in a state that has labor shortages. I certainly don't owe a moral debt to pay the money that pandering politicians trying to buy votes in Michigan with other people's money have promised. And I don't have a moral debt to participate in an unconstitutional government program that violates the Tenth Amendment.
|1.16.08 @ 2:14PM|#
That's a nice myth, LarryA, but it has two problems.
First, the flight of capital from center cities and older
industrial areas was not driven by taxes, but by issues of physical
access and new layouts of industry.
And second, that flight has been reversed even without the
impossible anti-tax policies you with for. And in just about every
case, historic preservation and restoration as a means of improving
the quality of life in the city center has played a prominent
role.
Tell you what, I'll come up with a list of cities that have been
successful at redevelopment using strategies like mine, and you
come up with a list of cities that have been successful at
redevelopment by cutting their taxes. But first, one thing: NAME ME
ONE. I dare you.
Except that time and again it has been those the government has
spent the most money and effort "helping" that have ended up in
that "death spiral." Yeah, well, the highway system isn't
going anywhere, so let's go to Plan B.
vm|1.16.08 @ 2:15PM|#
You know, some of the programs I might find objectionable on
libertarian grounds, might actually work!
(or: there are times, dunno how frequent or infrequent, where there
is actual market failure. Adverse Selection, Ex Post Moral Hazard
in Mkt for Health Insurance, for example)
Morris Altman
"How much economic freedom is necessary for economic growth? Theory
and evidence"
(2008, Vol. 15, No. 2.)
Secure private property rights is found to be a most significant positive causal variable as is sound money, whereas moderate amounts of labor regulation and big government are not found to be bad for the economy. Also, good corporate governance, in addition to economic freedom, is of considerable import
full confession: just found it, haven't read it beyond the
interesting-sounding abstract...
|1.16.08 @ 2:16PM|#
Reinmoose,
joe -
can you provide me with an example of such a focused, reigned-in,
effective government program? ESL classes in cities with
large, poor immigrant populations.
|1.16.08 @ 2:18PM|#
It's pretty rare to meet the libertarian
liberal who admits that programs he objects
to supports on philosophical grounds are
perfectly doable make virtually everyone in society
worse off.
Fixed.
|1.16.08 @ 2:18PM|#
I live in Michigan, so I know a little something about what is
affecting the auto industry. It is not outsourcing, foreign car
companies or right-to-work states, it is the ineptitude of the
Detroit auto companies. They did not have the insight nor the
innovation that the foreign car companies had. They kept producing
gas guzzling suvs, and it nipped them in the bud. In the 90s after
NAFTA was signed and outsourcing was taking place, Michigan was
experiencing a booming economy. But, the suv maket fell out, and
the big three were caught with there pants down.
Also, I have been assaulted for weeks by adds from Rombot replaying
the same message over and over again: China (Rombot mentions China
a lot) is producing textiles and toys, but soon it will be jumbo
jets and automobiles, we need to invest in technology...blah, blah,
blah! For doing so well in the private sector, Rombot now sounds
like an idiot, using fear mongering and scare tactics to win in MI,
and it worked.
|1.16.08 @ 2:19PM|#
I guess my problem is that I never developed prolefeed's
capacity for projecting evil and stupidity onto people in
need.
*rolls eyes* Yes, prolefeed, in a world undergoing transition from
nation-sized economies to a global economy, there will never be
people who get the short end of the stick unless they've been
stupid and evil.
|1.16.08 @ 2:24PM|#
"Keeping declining cities from getting smaller should never be
the goal."
Um, why? If the city is declining, then getting smaller is what it
needs to do to survive. If there are not enough jobs in the city to
sustain the population, then those without jobs will be best served
to seek them elsewhere. The remaining residents will then be better
able to operate since they won't be supporting the unemployed folks
who are producing nothing. They will be supporting each other
through the regular economy instead of a manufactured one propped
up by government taxation. They will be stressed less now that they
are not being made to bear the burden of the unemployed who are
producing nothing.
Ideally, companies or entrepenuers will create new jobs to limit
the exodus but if there simply isn't a need, the area will suffer
anyway. Better to let it happen quickly for faster recovery. The
people that leave will be leaving for work and that benefits them.
It is best for the jobless to seek employment elsewhere, perhaps
not in one mass migration to one other place, but around the
country as their skills warrant.
The wealth redistribution creates resentment, depression,
acceptance; all the things that hurt an area as much as a loss of
money.
|1.16.08 @ 2:24PM|#
If Free Trade agreements are so free, then why are the
agreements many thousands of pages long instead of just one or two
pages...I would submit to you that this is because they are not
about free trade but they are about all kinds of corporatist
protections and tax loopholes and b.s.
One of my biggest problems with the so-called free trade agenda is
I believe that it will further downgrade the rather miserable level
of democracy in the world, moving power to un-elected international
legal bodies/
Minion of URKOBOLD|1.16.08 @ 2:24PM|#
GAHHHHH!!!! LIBRUL. LIBRUL!!
BLAHHHHHHH *starts running in circles*
in transition, only "loosers" get the short end. gah!!!! yar!!!!!!
blather blather. demand kurv. demand kurv.
|1.16.08 @ 2:27PM|#
Ok, I didn't think that's what we were talking about. Maybe I
should have been more specific in my question.
I was referring to economic development activities in decaying
cities (such as Detroit, Buffalo, etc.), such as the one proposed
in number 6:
6. Small Business Loans for Local Entrepreneurs, Especially
Those Whose Business Model Takes Advantage of Something Particular
to the Effected Area. Ideally, that includes using the specialized
labor pool in a growing, rather than declining, industry
sector.
Besides, are you supporting these ideas as federal programs? I'm
from Upstate, NY, so obviously I've never seen an economic
development activity that's actually worked, and hasn't entrenched
itself with the local governments so that it is never held
accountable. My skepticism is more from experience than
beliefs.
R C Dean|1.16.08 @ 2:27PM|#
P.S., I made it quite clear that I'm not talking about
taxing car buyers, King of Straw.
So its better to tax people who didn't even benefit from the
transactions you complain of. Got it.
Free trade boosts overall wealth, and the winners outnumber the
losers by a wide margin.
We agree that far. Shame we can't take the next logical step
together, which is that redistribution distorts markets just like
trade barriers do, and reduces the admitted societal benefits of
free trade.
joe, what you don't grasp about prolefeed's comment is that it is
possible to not owe anything to somebody who isn't stupid and
evil.
What is stupid and evil is extracting money from me by threat of
force via a taxation scheme that drags everbody down, just a little
bit, unless they are rent-seekers of some kind.
|1.16.08 @ 2:28PM|#
Nick, reread the sentence. You read it exactly backwards.
James, that's a fine point, and one the feelthy libertarians make
all by themselves pretty regularly.
But the downsides to job migration and such are not caused by the
managed aspect of Free Trade Inc. We'd see those things, perhaps
even more, in a completely free-trading world.
|1.16.08 @ 2:31PM|#
Free trade only works when your trading partners are economic
equals, or at least close. Free trade with Mexico is always going
to create imbalance, and that's what hurts both sides. Free trade
with the EU would be much more beneficial.
Secondly, the free trade agreements with Mexico, Central and South
America are not free trade. It's still regulated and there are
various taxes and fees and whatnot. The WTO and other organizations
promote anything but free trade. Plus there are subsidies on both
sides which screw up the whole thing.
"What we lose through lower wages is more than offset by what we
gain through lower prices."
The problem with that argument, is that it turned America into a
consumer society. That is why we're in debt as a country and why
people are $10k in credit card debt on average. When we stop being
producers and lose a balance on production and consumption, our
economy suffers.
And to bring it to a current debate, the free trade agreements have
been a big cause of illegal immigration. That's why it makes no
sense for the Repubs to want to build walls, but keep the
agreements. They're playing both sides, and it makes no sense.
|1.16.08 @ 2:32PM|#
Sure, joe, let's put words like "stupid" and "evil" into my
mouth, words that I didn't use, and try real hard to not discuss
the substance of my comments that I don't have a moral duty to help
unionized autoworkers whose collective bargaining demands led to
people switching to other companies, that I don't have a moral duty
to help people who have chosen to not relocate and find other work,
that I don't have a moral duty to help out pandering politicians
trying to buy money with my votes, and that I don't have a moral
duty to support unconstitutional government programs that make
society better off.
If someone behaved so cavalierly and dismissively to a substantive
comment you'd made, you'd rip into them, and with good
reason.
Now, care to discuss where this moral duty to acquiesce to being
robbed by the government to participate in morally dubious and
counterproductive programs comes from again?
Chucklehead|1.16.08 @ 2:33PM|#
Since the policy benefits the collective as a whole, its
impact on those individuals it harms is not worthy of our
concern.
Are you talking about Hillary's economic stimulus speech?
|1.16.08 @ 2:36PM|#
Oh, gee, I get to make all of my arguments twice because RC
can't read them the first time!
So its better to tax people who didn't even benefit from the
transactions you complain of.
joe | January 16, 2008, 12:45pm | #
The benefits received by the formerly-employed would be less than
the savings by the buyer
Perhaps, but let's remember a couple of important points: there are
a lot more car buyers than auto workers, and the benefits
of better and cheaper cars extend beyond the individual car buyers,
to greater economic growth as a whole.
Shame we can't take the next logical step together, which is
that redistribution distorts markets just like trade barriers do,
and reduces the admitted societal benefits of free trade.
There might be a cost in overall growth, traded for the gain of
better distribution of benefits. Only a fool who claim to know how
to balance them in individual cases without knowing anything about
the individual case. Only a fool would claim that alleviating harms
can never be worth a cost.
joe, what you don't grasp about prolefeed's comment is that it
is possible to not owe anything to somebody who isn't stupid and
evil.
That must be why every single case he cited involved him describing
the stupidity and evil of the people who suffer from dislocation,
then.
It really is easy to divide the responses on this thread into
thoughtful and moronic. Hi, you two!
|1.16.08 @ 2:38PM|#
Free trade only works when your trading partners are
economic equals, or at least close.
HAHAHA!
Sure, when a low-income person buys a hamburger at McDonalds, that
free trade benefits all parties, but when an upper-income person
makes the exact same purchase, no one benefits.
When rich Americans buy goods from a poor country like China, no
one benefits. The booming economy in China based on free trade is
an illusion, as are the savings pocketed by American consumers.
|1.16.08 @ 2:39PM|#
Free trade only works when your trading partners are economic equals, or at least close.
Sorry, but the millions of people lifted out of poverty through
free trade in the world would disagree.
|1.16.08 @ 2:41PM|#
prolefeed, if you didn't want to characterize everyone who loses
from job migration as stupid and evil, then don't go out of your
way to point out how stupid and evil they are.
You could have ended that sentence with "auto workers PERIOD," but
no, your cramped little view of the world won't let you do
that.
Ditto with "unconstitutional," and ditto with every other
base-stealing thumb-on-the-scale bit of rhetoric you throw in.
|1.16.08 @ 2:41PM|#
Free Trade is fundamentally anti-nationalist, which is fine for me frankly, but are there really no good reasons why a nation might want to protect certain industries?
matt|1.16.08 @ 2:45PM|#
Free trade only works when your trading partners are
economic equals, or at least close.
Google "comparative advantage." We'll wait.
|1.16.08 @ 2:45PM|#
Look at this P.O.S.:
Now, care to discuss where this moral duty to acquiesce to being
robbed by the government (ohnoes!) to participate in
morally dubious (ohnoes!) and counterproductive
programs (ohnoes!) comes from again?
No, I don't. Would you care to ask me where the moral duty to help
those in need comes from?
Andrew Jackson|1.16.08 @ 2:46PM|#
Free trade has undesirable consequences on both sides, but that does not mean we should abandon free trade altogether. Farmers in Mexico are losing their jobs because they cannot compete with the farmers in the United States, but do we ever hear about that? A nation will lose in some areas, and win in others.
Chucklehead|1.16.08 @ 2:48PM|#
prolefeed, if you didn't want to characterize everyone who
loses from job migration as stupid and evil, then don't go out of
your way to point out how stupid and evil they are.
What's that thing you always say joe? Something about arguing with
the person in your head?
|1.16.08 @ 2:48PM|#
"Nick, reread the sentence. You read it exactly backwards."
(pounds face into keyboard)
My inability to read not withstanding, my point make sense, right?
I'm arguing that it is countrerproductive to prop up the city and
the unemployed workers at an extensive level of wealth
redistribution and programs you suggested in your 6 point plan. I
am saying your plan will do what your (now understood) sentence
opposes.
Which is it? We either prop up the city through wealth distribution
and programs, or we allow it to shrink naturally. You've argued for
both.
|1.16.08 @ 2:51PM|#
China (a very authoritarian regime) has embraced free trade and seems to be benefitting, but on the other hand South American Countries (which have also shown significant economic growth have begun to reject free trade(after they lost their authoritarian gov'ts which were largelly on board for it...so maybe there is more than one model for development? What can be said for certain however is that free trade is not synonomous with Freedom in many other senses and certainly not democracy.
|1.16.08 @ 2:51PM|#
Chucklehead, give me a fucking break. Here are some snips from
prolefeed's description of people who lose from job migration and
economic decline:
the unionized workers in Detroit who are out of a job because
their collective bargaining demands made their employer
uncompetitive...able-bodied people capable of finding another
job...who chose to not go looking for another job in a state that
has labor shortages.
My characterization of his comments are apt. Stop whining at
me.
|1.16.08 @ 2:51PM|#
That must be why every single case he cited involved him
describing the stupidity and evil of the people who suffer from
dislocation, then.
Well, no, if you read my comments I never once characterized anyone
as "stupid" or "evil". Those are your words, not mine. Would you
posit that poor people working for low wages have a moral duty to
hand money over, under the threat of being jailed, to financially
better off people who are choosing to not work? Because that is the
inexorable outcome of the policy you are advocating.
My moral duty, as a Christian, is to VOLUNTARILY help the less
fortunate. Involuntary and grudging don't cut it.
|1.16.08 @ 2:52PM|#
Nick -
joe always says that he's an advocate for soft landings, or
something like that.
|1.16.08 @ 2:54PM|#
I don't really feel sorry that the union workers are losing
there jobs as businesses move overseas. If they did not try to use
coercive tactics to keep their compensation above the market level,
they might be competitive now. The product from their factories
might actually be durable and desirable.
Instead, they are overpaid. Because pay is tied to tenure, not
performance, they have no incentive to do a quality job. Do they
really expect people to keep buying that crap when they can get it
better and cheaper elsewhere?
|1.16.08 @ 2:54PM|#
Nick,
I'm arguing that it is countrerproductive to prop up the city
and the unemployed workers at an extensive level of wealth
redistribution and programs you suggested in your 6 point
plan. I didn't suggest any levels. I suggested types of
programs, which could be implemented at any level of funding and
activism.
I am saying your plan will do what your (now understood)
sentence opposes. If implemented at the cost and scope
necessary to maintain job numbers in a region seeing severe job
loss, yes, it would. That would be a terrible idea.
We either prop up the city through wealth distribution and
programs, or we allow it to shrink naturally. You've argued for
both. No, I've argued for a middle course between those two.
The phrase "soft landing" comes to mind.
Andrew Jackson|1.16.08 @ 2:56PM|#
The auto workers in Michigan are a joke. If you have never heard of a job bank, I suggest you research it, and then you will understand why the UAW and other union workers get such a bad reputation.
|1.16.08 @ 2:57PM|#
Now when it comes to these unionized auto workers that everyone hates so much let us be clear...one of the major costs that gets lumped into the manufacture of a Ford (for example) is healthcare, whereas other countries like Japan and Germany etc. provide universal healthcare, so they are not simply beating American companies b/c of their free-market principles.
|1.16.08 @ 2:57PM|#
Well, no, if you read my comments I never once characterized
anyone as "stupid" or "evil". Those are your words, not
mine.
Yes, you did, prolefeed. My words simply characterize your
arguments.
Or perhaps you meant your kind words about lazy people who won't
get jobs and unions who drive their employers out of business to
compliment their wisdom and moral fiber?
If you don't wish your words to be read as being judgemental, don't
lard up your arguments with language intended to express moral
judgements.
|1.16.08 @ 2:58PM|#
My moral duty, as a Christian, is to VOLUNTARILY help the
less fortunate. Involuntary and grudging don't cut it.
I don't give a crap about your soul.
|1.16.08 @ 3:03PM|#
I am not a full fleged protectionist but I do urge caution for those of us who have not been robbed of ability to care about others(by free market indoctrination or Christianity).
|1.16.08 @ 3:06PM|#
Unless you believe that the only reason labor costs are higher
in the United States than in other countries is because of our
mighty, mighty unions (snort), they you can't behind the argument
that only people who've used unions to inflate wages beyond market
levels are going to lose their jobs.
If, on the other hand, you've ever read anything about IT workers
in India, you realize that you don't get to blame the stupid, evil
workers for job migration.
|1.16.08 @ 3:08PM|#
joe, how were any of the people I described either "evil" or
"stupid"? Care to explain how it is evil or stupid to be unemployed
and choose to not vigorously try to become employed? But, since you
stubbornly insist on mischaracterizing my statements and being
wrong, let's try a different case where the absurdity of your slurs
would be more apparent:
A virtuous, smart, hardworking autoworker loses her job because
demand has shifted to other brands. Two very smart politicians
seeking the presidency visit that person's hometown right before a
primary election and rationally promise to enact a government
program to give money to the unemployed worker, in an attempt to
get elected.
A person who lives about 4,000 miles away from all of these events
posits that he has no moral duty to support the compulsory
taxation, extracted at the threat of imprisonment, for a
government-run program that violates the Tenth Amendment, and that
in his opinion would have unintended, counterproductive, and
harmful overall consequences, making people on average worse off,
because his reading of Jesus' teachings doesn't seem to support any
of that.
NOW are you ready to address the actual issue I raised of whether
or not I have a moral duty, and where that moral duty springs
from?
Andrew Jackson|1.16.08 @ 3:11PM|#
The world is too interdependent now to slow the tide of free trade and globalization. We need to adapt to the times, not fight them. If we try to recover some of the jobs from Mexico or China and in turn harm their economy, you can guarantee there will be undesirable consequences for our economy. Whether they stop buying our airplanes, electronics, agriculture or chemicals (manufacturing areas the US does well in) I do not know. But there is one thing I can tell you, and that is we do now want to go down that rabbit-hole.
|1.16.08 @ 3:17PM|#
The idea that 'we have gone too far to turn back so just get used to it' is rather dangerous in that I think it makes democracy and self-gov't a farce.
|1.16.08 @ 3:21PM|#
No, prolefeed, I'm not. I'm not even remotely initerested in indulging you, in going over the old ground about the efficacy of society-wide vs. individual-whim-based solutions, or even in explaining to you why throwing in unrelated issues to steal bases is wrong.
|1.16.08 @ 3:22PM|#
The world is too interdependent now to slow the tide of free
trade and globalization. We need to adapt to the times, not fight
them.
Amen! Some of us try to figure out how to do that, and some of us
try to think up excuses why we shouldn't.
|1.16.08 @ 3:24PM|#
...the anti-free trade pandering of Republican hopefuls Mitt
Romney and John McCain...
And Reason hates John McCain again. The harmonic balance
has been restored. We are all safe for now.
|1.16.08 @ 3:26PM|#
No, wait, I will indulge a bit, but only to teach you a
lesson.
What does your opinion about the constitutionality of the
approaches I mention have to do with the moral question you
asked?
If the Constitution read any differently, would it change the moral
issues involved?
No, of course it wouldn't. You just threw that in there for the
same reason people in movies pile furniture in front of a door when
the monster is coming. You aren't intersted in testing your ideas
about morality in a rational discussion, but in doing everything
you can to win, or at least look like you're winning, an
argument.
|1.16.08 @ 3:30PM|#
Unless you believe that the only reason labor costs are
higher in the United States than in other countries is because of
our mighty, mighty unions (snort), they you can't behind the
argument that only people who've used unions to inflate wages
beyond market levels are going to lose their jobs.
You are right Joe. Anyone who is only willing to work for wage
above the market level is going to lose his job to someone who is
willing. The principle is the same. If you try to sell a product
(labor) for more than people are willing to pay, they will buy it
from somewhere else.
Why should my money go to support someone who prices himself out of
the market?
|1.16.08 @ 3:37PM|#
No, prolefeed, I'm not. I'm not even remotely initerested in
indulging you, in going over the old ground about the efficacy of
society-wide vs. individual-whim-based solutions, or even in
explaining to you why throwing in unrelated issues to steal bases
is wrong.
In other words, you grudgingly concede that you are unable or
unwilling to try to refute my point that no one has a moral duty to
support these programs.
Your concession is accepted.
|1.16.08 @ 3:46PM|#
Reformed Republican,
Anyone who is only willing to work for wage above the market
level is going to lose his job to someone who is
willing.
Keeping in mind that in this context, "the market level" refers to
the market level in India, Mexico, or wherever (plus the
ever-shrinking cost of shipping), so we're talking about 1) a
pretty large number of people who 2) are working at what has been
the "market value" for years. So this isn't about union tough guys
getting $35/hr to sweep floors.
Why should my money go to support someone who prices himself
out of the market? 1) He didn't price himself out of anything,
the market changed. 2) Because we're talking about enough people
losing enough jobs to send a region into a death spiral.
prolefeed, what you are just noticing I posted at 3:26 is what I
call a "pre-buttal." Ha ha.
|1.16.08 @ 3:49PM|#
Actually, I gleefully concede that I am not remotely interested in bothering with you. There are intelligent people who can put together actual arguments, who are more interested uses of my time.
economist|1.16.08 @ 3:52PM|#
I think the real question here is freedom of association. Do people have a right to buy from a legitimate producer who makes a product for less than another producer? I think that the reasonable response is always yes. As to the part about helping alleviate economic dislocation, it should only be used when necessary to promote economic prosperity (which is hardly ever) and the regions and individuals that benefit should bear the monetary costs in the end. I wouldn't have a problem with Joe's government loan idea, if the loans were actually going to be paid back in full and the new revenue from loan payments reflected in lower taxes for those who paid for the loans in the first place.
Mike Laursen|1.16.08 @ 3:54PM|#
It's pretty rare to meet the libertarian who admits that
programs he objects to on philosophical grounds are perfectly
doable.
That just so disingenuous, joe. You devote hours of every day, as a
hobby I guess, seeking out libertarians who will argue with you,
and then act like you are put off by the arguments they make.
|1.16.08 @ 4:08PM|#
Joe, it is being argued that no one should be coerced to support
(taxation by force) a large group of people whose own actions over
time have caused them harm. You seem to be arguing that to avoid
death spirals of a given region, we should accept this force upon
us and forget that it was caused in part by bad business practices,
bad union decisions, and uncompetitive products.
You have failed to convince me why the region should not be allowed
to die. If it has acted so irresponsibly, what makes anyone believe
that it would use any programs (paid for by successful areas
outside the region) well?
If someone does see promise there, they can go in of their own free
will and build that area in the mold that they see as being
successful.
Chucklehead|1.16.08 @ 4:11PM|#
Careful Nick, you're gonna be accused of calling the workers stupid and evil.
GuyF|1.16.08 @ 4:22PM|#
Since the policy is just and benefits the collective as a whole, its impact on those individuals it harms is something something something.
|1.16.08 @ 4:23PM|#
Nick,
First, I don't see a reason to ignore the other issues at hand to
have yet another discussion of whether taxation = theft. We have a
government, it collects taxes, it pays for stuff. This particular
argument is about whether some particular stuff is worth paying
for.
Second, I am making no moral judgements whatsoever about what
causes regions to go into downward spirals. I posit only that they
happen, and that it is bad to allow them to continue. I would still
be arguing that this is so, even if I agrees with prolefeed that
them people got it coming. Why, for example, should my opinion
about the wisdom of the contract Ford signed with its employees
change my opinion about whether it is a good idea for the
waitresses, accountants, street sweepers, and housepainters of
Michigan to lose their jobs and prospects?
Third, it is simply inaccurate and disingenuous to argue that only
bad business practices, bad union decisions, and uncompetitive
products cause job dislocation. There are actual market-based
reasons for job migration.
If it has acted so irresponsibly... Who has acted
irresposibly? Every man, woman, and child in Gary, Indiana?
|1.16.08 @ 4:25PM|#
Heh, I've pissed off prolefeed enough to get him to post under
anonymous names, without emails.
ha ha
|1.16.08 @ 4:34PM|#
joe | January 16, 2008, 2:01pm | #
James, you can't argue with the numbers.
Free trade boosts overall wealth, and the winners outnumber the
losers by a wide margin.
joe | January 16, 2008, 2:05pm | #
Anyway, believe me, don't believe me, agree, disagree,
whatever.
At the very least, you have to acknowledge that there is a
non-protectionist criticism of free trade, raised by Clinton,
Reich, and others, and non-protectionist policies designed to
address the problems that criticism points out.
At a minimum, if you are going to argue against them, you need a
different argument than you'd use against the protectionists.
southpark1 | January 16, 2008, 4:17pm | #
Joe's comments amount to this: "Dey took ur' jubs!"
*points* Ha ha!
|1.16.08 @ 4:44PM|#
Yes, we agree the government collects taxes and I am suggesting
they stop using those taxes to prop up areas that suffer from bad
businesses and bad government. Usually, when an area lacks
diversity of industry it is because the primary industry, be it
through the company or the union or both, has monopolized the area
via special favors, restrictive legislation, and exclusive tax
breaks. Otherwise, the area would be diverse in its economy. Why
wouldn't other industries want to be where things are going well
and the standard of living is high? Probably because there are
things preventing them from being there. A community that lacks
industrial diversity is destined to fail.
I have sympathy for the waitresses, but they will either remain to
support what was left or they too will be better off jettisoning
the area. Some of them may be leaving anyway because they were
related to an industry worker who lost their job.
The voluntary charity scenario works for temporarily depressed
areas. It works poorly for areas that are artificially supported
because of the resentment/depression/acceptance factor I mentioned
earlier. If the community has a depth of good schools, hospitals,
and other services and a reasonably intelligent base it should not
be so difficult to attract new businesses. If the local and state
governments would ease the tax burdens of the remaining players and
make it easier for new businesses to come in, they likely would.
Too often, they try your plan and it doesn't work for the reasons I
have mentioned.
You say market forces are a contributing factor. I agree, but when
the markets are manipulated by the local governments to favor the
failing industry over the potentially new ones coming in, that is a
manipulated market force that could and should be avoided. It's a
contributing factor to the failure of the area. Let's not compound
the problem with more government.
|1.16.08 @ 5:03PM|#
One can consider those who buy Hondas instead of Chevrolets to be
morally blameless, and still agree there is a moral imperitive to
aid those harmed by local deindustrialization.
No. Assuming Chevys break down all the time and Hondas never break
down, (which isn't true, because Chevys are much better built now
because the free market forced Chevy to build better cars), do the
workers owe anything to the millions of Chevy drivers whose cars
are breaking down all the time? If it's true one way, then it's
gotta be true the other way. Bottom line is, if you got stuck
working for a company that makes a product or service the market
doesn't want, it's just too bad. Find another job - preferably at a
company that makes "better" products. So because now everyone
drives cars that don't break down, we need to compensate the
workers who built bad cars? No - sorry - we don't owe you
anything.
|1.16.08 @ 5:46PM|#
prolly late to the discussion, but isn;t unemployment insurance
the mechanism by which government addresses the 'moral' or
non-moral impact of free trade dislocations?
It's certainly a practical role for government...funded by the
payments of workers.
alisa|1.16.08 @ 5:49PM|#
I found this article kind of troubling.
I'm used to the standard, sensible free-trade argument that points
out mutual gains (and notes that protectionism invariably makes
people poorer).
But Landsburg goes a lot farther by saying we have no obligations
to compensate individuals harmed by trade and industrialization.
Even though "compensation" might look a lot like restructuring the
economy (making community college & job training more
accessible, making health insurance transferable from one employer
to another). It sounds a little dogmatic to insist "we don't owe
you anything." Isn't it more practical to make it easier to switch
jobs from something like manufacturing into a more productive
field?
Andy and others are right that lost jobs are due to consumers'
nasty habit of preferring better, cheaper products. I was at the
drugstore the other day, picked Crest over Colgate because it was a
dollar less, and felt a guilty twinge -- "Someone's going to get
laid off at Colgate because of people like me." But of course I
don't want policies that effectively make people choose Colgate
over Crest out of misplaced sympathy.
VM|1.16.08 @ 6:27PM|#
"I was at the drugstore the other day, picked Crest over Colgate
because it was a dollar less, and felt a guilty twinge --
"Someone's going to get laid off at Colgate because of people like
me." But of course I don't want policies that effectively make
people choose Colgate over Crest out of misplaced sympathy."
therein lies the difference between "obligation" and what you're
thinking in paragraph 3, perhaps. (where you appear to be
suggesting that the state, local, etc apparatus can have a fall
back plan to re train the human capital or something? - where it's
prudent and will pay off, not where it's forced and badly
organized, etc? that seems okay!)
but you honestly didn't feel guilty because of that???? um....
yeah.
grins. ducks.
|1.16.08 @ 7:46PM|#
Heh, I've pissed off prolefeed enough to get him to post
under anonymous names, without emails.
ha ha
Ummm, no, joe, I've only posted under "prolefeed". Somebody other
than me disagreed with you. So this is just another statement of
yours where you are confidently yet unambiguously wrong. ;)
P.S. Was that really you spewing that venomous, profanity-laced
rant last night, or someone posting under your name?
alisa|1.16.08 @ 8:06PM|#
VM--
I'm basically saying that there are practical strategies to adapt
to trade (and technology, which accounts for more layoffs.) Job
retraining, night schools (yes, maybe with gov't money; education's
one heck of a positive externality) and making retirement and
health benefits portable, since nobody can expect to spend his
working life in one job any more. Probably also incentives to start
small businesses, or at least cutting the regulatory startup
costs.
Yeah. I actually did feel guilty. But I enjoy my cheap dental
hygiene.
|1.16.08 @ 8:07PM|#
But Landsburg goes a lot farther by saying we have no
obligations to compensate individuals harmed by trade and
industrialization.
alisa, there is a whole slew of dubious suppositions packed into
that innocent-sounding short sentence. First, when you refer to
"we", you're apparently referring to the federal government, which
has no constitutional authority under the Tenth Amendment to take
money from people in one state and ship it off to people in another
state for this purpose. Second, if you're referring to an
individual "obligation", are you saying that whenever something
unfortunate or even just uncomfortable happens to someone, even if
it is the inevitable and foreseeable consequence of an action the
person freely chose, everyone else has a duty to chip in and
insulate them from the consequences of their own choices? Third,
when you say "compensate", are you positing that everyone else must
act as an involuntary insurance agency for everyone else's
misfortune? Can you see how this would lead to a tyranny of
everyone over everyone else? Fourth, when you say "harmed by
trade", are you seriously suggesting that every time someone buys
something, and thereby chooses one producer over another, that
anyone who offered a competing product that was not purchased was
"harmed"? When I go shopping at Costco, am I inflicting a series of
"harms" upon all the competing stores, and all the competing
products upon the shelves at Costco? Do I owe restitution to all
those producers, or should they buckle down and produce something I
want to buy at a price I'm willing to pay?
VM|1.16.08 @ 8:42PM|#
cool - thought that was the direction.
thx!
but as you know, to each his/her dentifrice. (I hope the minty,
fresh goodness was worth it, hrumph)
alisa|1.16.08 @ 9:02PM|#
1. I don't necessarily mean the federal government; I think most
things could be done at the state level. (The number and attendance
cost of community colleges, for example, is definitely up to
individual states.) As for the Tenth Amendment, I'm not a
constitutional scholar, but Congress has the power to regulate
commerce and set taxes, which reasonably includes something like a
tax break for small businesses.
2. On a personal level, I do believe in helping people who made bad
choices. Less in the sense of insulating them from consequences
than giving people a chance to change and start again. I was taught
that the best thing one person can do for another is to give him
the opportunity to be self-reliant.
3. As far as government goes, I'm far more suspicious of mandated
"generosity." Yes, I can see how this could lead to tyranny. But
I'm not proposing any vast increase in the social safety net -- I'm
mostly saying we should remove obstacles to switching jobs.
4. I'm going to go with John Stuart Mill here. He says (in On
Liberty) that the harm from economic competition is a harm -- it
does damage the loser in a transaction -- but it's legitimate, in
that nobody owes compensation. You don't deserve compensation just
on the basis of having experienced something to your
disadvantage.
|1.16.08 @ 9:07PM|#
Nick,
I think you greatly overstate what causes industrial clusters to
develop. You also seem to think that "government" is some amorphous
blob whose specific characteristics are irrelevant in understanding
its impacts.
Andy,
You completely whiffed on the difference between "we owe them" and
"we have an obligation." Nothing I have written indicates that the
obligation people have to those suffering from dislocatioin is
based on the purchasing patterns of those who didn't by the goods
produced by the newly dislocated. In fact, I've stated exactly the
opposite. The obligation we have to people going through economic
dislocation is based on the universal obligation people have to
each other, not on righting some supposed wrong.
gaijin,
Unemployment insurance is good to help individuals going through
hard times, but it won't do anything to change underlying problems
causing the unemployment.
prolefeed,
You've already been caught posting under fake names to agree with
yourself, james henshaw aka jh aka notjoe, and the fact that you
remembered to delete the email field this time doesn't make you any
less transparent.
And that was totally me last night, and I've never been
prouder.
|1.16.08 @ 9:10PM|#
alisa,
You should grant neither that Landsburg's argument is limited to
the obligations of the federal government, nor that those suffering
from economic displacement brought it on themselves. The first is
directly contradicted by Landburg's statement "Even if you've just
lost your job, there's something fundamentally churlish about
blaming the very phenomenon that's elevated you above the
subsistence level since the day you were born. If the world owes
you compensation for enduring the downside of trade, what do you
owe the world for enjoying the upside?" and the latter is
contradicted by, well, everything ever written, pro and con, about
the "creative destruction" wrought by the globalization of the
economy.
|1.16.08 @ 9:24PM|#
Unemployment insurance is good to help individuals going
through hard times, but it won't do anything to change underlying
problems causing the unemployment.
But aren;t the underlying problems summed up as the 'free market'
and 'globalization'? Which I think we can adapt to but probably do
little to change.
|1.16.08 @ 9:35PM|#
I wasn't going that underlying, gaijin!
I was thinking of economic dislocation brought about by
globalization, whether through free market operatons or not.
I'm talking about adapting to those changes, too.
|1.17.08 @ 12:21AM|#
"I think you greatly overstate what causes industrial clusters
to develop. You also seem to think that "government" is some
amorphous blob whose specific characteristics are irrelevant in
understanding its impacts."
I've overstated what causes industrial clusters? In what way have I
done that? It has been my experience as a geographer that
populations shift to desirable locations. That could be anything
from climate and landscape to jobs to standard of living, and so
on. Areas that are built upon singular industries are almost always
less successful in the long term than those that diversify, or at
the very least build up a standard of living based on the single
industry and then diversify before it goes kaput.
Most industries that rely on finite resources or protectionism in
areas that do not diversify create the death spiral you seem to be
trying to stop. Propping them up does nothing. I understand your
soft landing desire but instituting job programs in areas with
singular industries does not work. For the areas to remain viable
for more than the immediate short term you need to bring in new
industries. (The immediate short term isn't a soft landing, it's a
skid off the runway as opposed to a nose first crash into the
concrete.) You don't do that by raising taxes. You do that by
getting out of the way of businesses coming to the area, or
incentivising them on a tax basis.
I don't disagree entirely with your idea about the urban
revitalization program but the locality should never wait for their
primary industry to fail before doing that. If the local government
had a reduction in taxation and regulation then businesses and
community groups (and dare I say, even unions) would have been
working together all along to have a desirable community. There
wouldn't need to be this urgent one-time revitalization if the city
didn't dork themselves in the first place by their
ineptitude.
And, yes, government is an amorphous blob. It is inefficient,
wasteful, often corrupt, and not designed for progress. They wait
for the worst to happen rather than fostering an environment where
revitalization happens ALL THE TIME. Instead of having the desired
ongoing program, they raise property taxes every time the standard
of living goes up by the smallest of metrics. This causes people to
leave for the suburbs. Then the tax base in the city goes down and
revitalization cannot continue on a consistent basis. Government is
retarded. They take the strong tax base they had from their
successful period and spend it short term because of their terms of
office. They need to keep things stable when they've hit success
but they never do. They tend to wait for the primary industry to
dry up before going after other industries to bring in. They have
no foresight because they spend the bulk of their time worrying
about re-election rather than doing what needs to be done.
If the mayors of Detroit, Gary, or Buffalo are reading this, my
services are available. You're welcome.
|1.17.08 @ 9:52AM|#
I've overstated what causes industrial clusters? In what way
have I done that?
Right here: Usually, when an area lacks diversity of industry
it is because the primary industry, be it through the company or
the union or both, has monopolized the area via special favors,
restrictive legislation, and exclusive tax breaks. Otherwise, the
area would be diverse in its economy.
and here There wouldn't need to be this urgent one-time
revitalization if the city didn't dork themselves in the first
place by their ineptitude. You keep asserting, in a quite
contra-factual manner, that it is government policy that leads
certain areas to have high concentrations of a single industry. I'm
not sure why you do that, other than a propensity to blame all bad
stuff on the government.
I understand your soft landing desire but instituting job
programs in areas with singular industries does not
work.
Why are assuming that I'm advocating saving jobs in a
locally-declining industry? What about "investing in IT
infrastructure," for example, makes you think I'm advocating for
saving declining industries instead of transitioning to new
ones?
And, yes, government is an amorphous blob. No, it is not.
You actually need to know what you're talking about to know what
you're talking about, and that's why you will never be able to
offer useful ideas of criticism about how the government can
operate better or worse.
economist|1.17.08 @ 3:40PM|#
Joe, do you have a life besides coming to this site and making inane comments? Honestly, don't you have a job or go to school or at least look for a job during the day?
|1.17.08 @ 4:15PM|#
Since the policy benefits the collective as a whole, its
impact on those individuals it harms is not worthy of our
concern.
After 100 years of fail, socialism degrades to "Well sure it sucks
but if we change it what about those poor people who used to
benefit from it sucking?"
Steve Verdon|1.17.08 @ 7:16PM|#
Since the policy benefits the collective as a whole, its
impact on those individuals it harms is not worthy of our
concern.
Did you really read the article? I have to wonder when one stops to
consider that we could solve the problem with "make work projects".
Pay everybody to do work nobody really wants done, and there you
go, outsourcing/offshoring problem sovled. Nevermind that people
employed in such a way aren't producing anything of value.
And what about shoping at a cheaper store as Landsburg notes.
According to Joe we should not allow this kind of thing: shopping
around for the best price. In fact, maybe we should just return to
the medival notion of a just price and let politicians set
it.
Talking about what to do when such jobs migrate, in the manner
Bill Clinton and Robert Reich and some of the Repubicans do, is
exactly the opposite of wanting people to work in the mills
again.
Robert Reich is a psuedo-economist. His arguments are facile and
stupid--e.g. capital moves instantaneously between countries. His
prescriptions, predictions, and so forth are all based on a make
work ethic. Dig a ditch. Now fill it in. Dig the ditch again. Don't
complain, at least you got a job.
Fred Thompson made a good point on the teevee this morning
about the solution to job loss in South Carolina being to add two
jobs for every one lost, rather than trying to stop that one from
being lost.
Right, and how exactly is the president to do that? Oh yeah, make
work. Dig a ditch. Now fill it in. Dig the ditch again. Don't
complain, at least you got a job.
Nevermind that nobody wanted the ditch, or even when we have one,
want it filled in. The "work" is actually "waste" in that the
person could try to find a job in the market and actually produce
something somebody wants.
Yes, finding employment isn't always quick or easy, but it sure
beats the Hell out of "employing" people to sit around wasting
their productivity.
Steve Verdon|1.17.08 @ 7:18PM|#
I was thinking of economic dislocation brought about by
globalization, whether through free market operatons or
not.
Here is a question:
Which causes more economic dislocation?
A) Globalization
B) Technological advancement
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