While the United States has long imported oil and other raw materials from the third world, we used to import manufactured goods mainly from other rich countries like Canada, European nations and Japan.
But recently we crossed an important watershed: we now import more manufactured goods from the third world than from other advanced economies. That is, a majority of our industrial trade is now with countries that are much poorer than we are and that pay their workers much lower wages.
For the world economy as a whole - and especially for poorer nations - growing trade between high-wage and low-wage countries is a very good thing. Above all, it offers backward economies their best hope of moving up the income ladder.
But for American workers the story is much less positive. In fact, it’s hard to avoid the conclusion that growing U.S. trade with third world countries reduces the real wages of many and perhaps most workers in this country. And that reality makes the politics of trade very difficult.
Let’s talk for a moment about the economics.
Trade between high-wage countries tends to be a modest win for all, or almost all, concerned. When a free-trade pact made it possible to integrate the U.S. and Canadian auto industries in the 1960s, each country’s industry concentrated on producing a narrower range of products at larger scale. The result was an all-round, broadly shared rise in productivity and wages.
By contrast, trade between countries at very different levels of economic development tends to create large classes of losers as well as winners.
Although the outsourcing of some high-tech jobs to India has made headlines, on balance, highly educated workers in the United States benefit from higher wages and expanded job opportunities because of trade. For example, ThinkPad notebook computers are now made by a Chinese company, Lenovo, but a lot of Lenovo’s research and development is conducted in North Carolina.
But workers with less formal education either see their jobs shipped overseas or find their wages driven down by the ripple effect as other workers with similar qualifications crowd into their industries and look for employment to replace the jobs they lost to foreign competition. And lower prices at Wal-Mart aren’t sufficient compensation.
All this is textbook international economics: contrary to what people sometimes assert, economic theory says that free trade normally makes a country richer, but it doesn’t say that it’s normally good for everyone. Still, when the effects of third-world exports on U.S. wages first became an issue in the 1990s, a number of economists - myself included - looked at the data and concluded that any negative effects on U.S. wages were modest.
The trouble now is that these effects may no longer be as modest as they were, because imports of manufactured goods from the third world have grown dramatically - from just 2.5 percent of G.D.P. in 1990 to 6 percent in 2006.
And the biggest growth in imports has come from countries with very low wages. The original “newly industrializing economies” exporting manufactured goods - South Korea, Taiwan, Hong Kong and Singapore - paid wages that were about 25 percent of U.S. levels in 1990. Since then, however, the sources of our imports have shifted to Mexico, where wages are only 11 percent of the U.S. level, and China, where they’re only about 3 percent or 4 percent.
There are some qualifying aspects to this story. For example, many of those made-in-China goods contain components made in Japan and other high-wage economies. Still, there’s little doubt that the pressure of globalization on American wages has increased.
So am I arguing for protectionism? No. Those who think that globalization is always and everywhere a bad thing are wrong. On the contrary, keeping world markets relatively open is crucial to the hopes of billions of people.
But I am arguing for an end to the finger-wagging, the accusation either of not understanding economics or of kowtowing to special interests that tends to be the editorial response to politicians who express skepticism about the benefits of free-trade agreements.
It’s often claimed that limits on trade benefit only a small number of Americans, while hurting the vast majority. That’s still true of things like the import quota on sugar. But when it comes to manufactured goods, it’s at least arguable that the reverse is true. The highly educated workers who clearly benefit from growing trade with third-world economies are a minority, greatly outnumbered by those who probably lose.
As I said, I’m not a protectionist. For the sake of the world as a whole, I hope that we respond to the trouble with trade not by shutting trade down, but by doing things like strengthening the social safety net. But those who are worried about trade have a point, and deserve some respect.
Paul Krugman is Professor of Economics at Princeton University and a regular New York Times columnist. His most recent book is The Conscience of a Liberal.
Copyright 2007 The New York Times Company
John Edwards is our best, electable chance to deal with this issue.
This is the problem with neo-liberals such as Paul Krugman, and why liberals shouldn’t be trusted, any more than neo-conservatives. Liberals such as Krugman and Tom Friedman give cover, to the destructive effects of our brand of capitalism, and enable economic injustice to continue.
The best book ever written, on the principles and methods, of our current economic system - was written by Dr. Seuss - it’s called “The Lorax”. Short and colorful, even an eight year old can read it, I suggest you get a copy Paul.
In the meantime, stop defending, slave labor in China, rainforest destruction in Brazil, and economic destruction in the United States - all by products of “Free” trade. What were you thinking “free” trade was? I’ll trade you my English wool for your Spanish wine? That was a nice theory a few centuries ago. Update your economic library get “The Lorax”.
Ramsay
Progressives write many absurd things on Commondreams, but Ramsay’s post is a new low. It makes me wonder about his sanity.
The problem with Globalization, as practiced by the Friedman crowd – Hello, Mr. Greenspan - is they simply view the disruptions as an expected drop in the price of a “resource” and argue those resources can be redeployed where they are needed. Sounds great in theory except the resources in question are human beings. A drop in their price has serious consequences for their ability to provide food and shelter for themselves and the developing resources that often depend on them. Redeployment means uprooting themselves from their homes and destroying relationships with other resources, which often provide support in various forms. This can be a challenge when it involves redeploying to a different city or state. It is darn near impossible when it means redeploying to a different country or continent.
I tend not to be protectionist – and quite frankly, I don’t know if we ultimately have much of a choice when it comes to whether or not to “allow” globalization – but we can certainly do a better job of managing the pace and balancing the pains and the gains that result from these forces.
NAFTA, CAFTA, etc. must be revisited. If we’re going to open our markets up to the low cost resource suppliers, we need to make sure the playing field is a little more level by mandating at least approximate levels environmental and work place safety protections. I know tariff is a bad word but it would certainly be appropriate to levy them on goods coming from countries that did not meet such standards. Such a system would not stop outsourcing of jobs but it would certainly dampen its pace and the negative effects.
While Pareto efficiency may not be achievable, we can and must do a better job of sharing the gains of Globalization. We need to improve training and assistance programs for those displaced by outsourcing. The tariffs noted above could help fund such efforts as could increased taxes on corporations.
These policies would not stop Globalization but they would change the game from one where one set of players – MNCs and Developing Countries, in particular, received all of the benefits at the expense of another set – US workers.
And I agree with you about Ramsey. It always amazes me how often Krugman is attacked on this site. Comparing him to Friedman is just idiotic but typical. Some people would rather plug their ears and sing at the top of their lungs than support a point of view that dilutes their idealism with even the slightest bit of practicality.
with almost slave labor,that means more $$$ for the elite
Ramsay has a point. How can trade be fair if a country has little to no labor laws, minimum wage, environmental laws etc.? It is a race to the bottom unless you have some way of creating a somewhat level playing field. Doling out more welfare as more and more people lose there jobs or are moved into lower paying jobs treats the symptom not the problem and is not sustainable either. Show me a Wall St. banker who wants to increase his income tax so we can have more free trade deals and thus more social programs????? I generally agree with Krugman on economic issues but I am missing something in the above article.
Nobody suggested a Wall Street Banker is going to WANT to increase his taxes. The question is, whether the benefit of increased income from Globalization is worth a modest tax increase. A rational person would give up $10 to make $100. The problem is, we’ve created a system where they don’t have to give up anything; all the sacrifice is made by someone else. In fact, we’ve given those bankers BOTH globalization AND lowered thier taxes.
As long as getting it all is one of the options, that’s what they’ll choose. If that option is taken away, they’ll take the one where they earn the most money even if it means a little more in taxes. If they don’t, someone else will. Its called … oh yeah, competition.
Paul Krugman is a national treasure. That being said, when I was young I used to think that free trade meant that all countries would end up at the same standard of living, or at least the excesses of the highest would be curbed and the poverty and starvation of the lowest would be reduced. I thought free trade would be wonderful overall. But after a few years of freer trade we can see that free trade really means that the multi-nationals screw over the poor of one country for a few years, then move to wherever they can screw over the locals for even less. And the rules are made so that only the multi-nationals benefit. For example, how many mexican/central american farmers have lost their farms because they are ‘freely’ competing with agri-businesses in the U.S. that produce subsidized corn? Because of the subsidies U.S. corn, even with shipping costs, sells for less in Mexico than locally produced corn. So, what they’re calling free trade isn’t, it’s just a way to screw over everyone but the multi-nationals.
Krugman should get a lot of credit for abandoning his earlier “free trade” advocacy, which prior to the Bush Administration was close politically to Friedman, if somewhat better informed. For my “favorite example” of the former Krugman, see http://www.fair.org/articles/naiman-krugman.html
He’s come a long way. For someone with his background, it’s a big deal.
The object of economy is to spread prosperity. Prosperity consists in the enjoyment of goods and services made available through society. Free trade is a necessity concomitant of prosperity.
The object of capital, however, is not prosperity but profit. This distinction is at the root of all the problems because profits cannot physically exist. The concept is a violation of the second law of thermodynamics. What physically exists under capital is victimization, both here and abroad. Free trade promotes the spread of victimization which undermines the object of economy; trade is stunted because victims cannot afford prosperity.
Until the laws of thermodynamics are applied seriously, economics will remain a pseudo-science: its production dynamics a form of alchemy and its market dynamics a form of astrology.
kind of odd and depressing when a supposed economic liberal seems not to know his history. We are not trading with other countries, our corporations are moving therir manufacturing facilities there- quite a different thing. NO COUNTRY EVER HAS BEEN ABLE TO DEVELOP TOWARDS PROSPERITY AND SELF SUFFICIENCY VIA EXTERNAL INVESTMENT AND MANAGEMENT. NEVER EVER. Since the renaissance all nations have developed via internal economic development. protectionist taxes and tariffs and political and economic dominance of poor and less developed nations. period. trade is important if between equals- but a downward slide if between unequal parties. the peoples of the world are much poorer- all statistics so say- and the environment all the more despoiled with the current system. it enriches only a chosen few and there bought and sold politicians. see central and south america and aall of africa. read eduardo galeano and see how tghe systemed worked. a brilliant lie. . .
Don’t know that much about economics but it was easy to see in Krugman’s words that he speaks with forked tongue.The jobs in the US are gone so lets move on.Don’t like it. Tony
gavingourley - have you read the Lorax?
You know “Truffula Trees” that used be as far as the eye could see and “Brown Bar-ba-loots” frisking about. But of course the soon-to-be lonely Once-ler had to get “bigger and biggerer” until the trees were no more.
I agree with Ramsay Mameesh - read this book if you want to understand mindless capitalistic behavior. We are living it today.
By the way the Lorax ends as follows:
“SO…Catch!” calls the Once-ler. “It’s a Truffula Seed. It’s the last one of all!….Plant a new Truffula. Treat it with care. Give it clean water. And feed it fresh air. Grow a forest. Protect it from axes that hack. Then the Lorax and all of his friends may come back”.
Ken
“Unless someone like you cares a whole awful lot, nothing is going to get better. It’s not” (from the Lorax)
http://en.wikipedia.org/wiki/The_Lorax
If you look at the world in simplistic commercial terms then you won’t understand the reality. “Free trade” is not about trade but about control. The corporate governments instituted their “trade” programs to weaken the union movements, which is to say that their programs are specifically designed to control populations. Nothing else.
In the case of the U.S. it has backfired because the people implementing the repressive controls were not smart enough to understand the damage they were doing to themselves.
CLASS ACT: Your reference to astrology was unfair and reveals your lack of knowledge on the subject. A good astrologer can SEE economic cycles, and many on Wall St use such astrologers to predict profitable trends. That is not my cosmic cup of tea, but I take offense at your insult.
I’ll confess. I am a strong believer in protectionism - and historically it has always benefited the working class. That is why we had a revolution: England was protecting her own companies and treating good Englishmen in America as if they were dirty colonials!
The only purpose a government has is to provide for the health and welfare of its citizens. According to our Constitution, that is supposed to include ALL American Citizens, Not just ephemeral made-up persons called ‘corporations’.
I get heartily tired of Milton Friedman clones spouting all this Free Trade crap. Keynesian economics created a unique, prosperous society with a well-paid unionized labor force. Free or affordable education for those who wanted it [I am speaking of the dominant white society of course], and employer paid healthcare and pensions.
When Milton and his buddies instituted the economic theory that Greed is Good and excuses all failings of the system to provide for the workforce, it doomed the US to growing chasms between rich and poor, increasing poverty, and cast-aside workers who no longer were profitable.
The Free Trade Bonanza is even more successful then the Southern Plantation slave-based economy. No one has to provide even minimum food and shelter to worn out cogs in the machine.
I really have never understood how anyone who works for wages [and that includes anyone dependent on a salary rather then investments] can go along with the propaganda that they too can become rich by aiding and abbetting the oppressors!
jmacneil stated “The corporate governments instituted their “trade” programs to weaken the union movements, which is to say that their programs are specifically designed to control populations… In the case of the U.S. it has backfired because the people implementing the repressive controls were not smart enough to understand the damage they were doing to themselves.”
Huh? Workers in Ohio and Michigan were devastated, of course, but you’re just looking at the wrong set of figures. For the first time ever, every single person in the Forbes 40 Index was a billionaire and the wealthiest 1% of Americans control more wealth than the bottom 90% combined.
This “free trade” thing is working great!
More liberal obfuscation of basic realities: the financial system is sucking cash from wherever it can in a desperate and decreasingly effective effort to prop up the price of speculative paper. The rest of it is effect, not cause.
Prof. Krugman states “As I said, I’m not a protectionist. For the sake of the world as a whole, I hope that we respond to the trouble with trade not by shutting trade down, but by doing things like strengthening the social safety net.”
Riiight…
The thing that’s always missing from this kind of discussion is the idea that some things should be protected.
Let’s take an example. In my area — and I’m guessing that this applies to most if not all areas of the US — landlords are required to furnish a working refrigerator with their rental properties. Most of us probably think this is a good idea. Renters cannot be expected to lug a refrigerator from rental unit to rental unit even if they owned one. They’re heavy, bulky, and moving them risks refrigerant escaping into the environment, which is a bad thing that effects everyone.
However, the landlord does have to cover the cost of the refrigerator, meaning that the renter must pay more for the rental unit than he would if it had no refrigerator. Note that this is not an option for either landlord or renter. It’s required by code.
Here’s where the dominoes begin to fall. The renter must then bring home a higher income to cover to meet the higher rent. This, in turn, translates into higher wages that must be paid by employers. You get the picture. Refrigerators cost money and that cost propagates all the way up the line.
And so now here’s the question: are Chinese landlords compelled to supply refrigerators with their rental units?
And more questions: what about on-the-job safety and health? Are Chinese Industrial titans required to supply their welders with UL-certified welding helmets and fireproof gloves and coveralls? Do their coal-fired power plants have to have scrubbers on their stacks? Are their vehicles required to have catalytic converters, air bags, and seat-belts?
All these and and many other things such as environmental protections are mandated by law in the US. Such regulations impose a hefty economic cost on businesses and individuals — heavy industry in particular. We nevertheless subscribe to such regulations because they protect things that we consider valuable, such as workplace saftey, the environment, and a decent standard of living for workers.
“Free trade”, of course — and despite the unsubstantiated steaming pile of horse manure that passes for reasoned argument in this area — is intended to achieve exactly the opposite effect. Why should an employer have to pay a wage that enables a worker to have a refrigerator when he can just move offshore and bypass the regulation? Who gives a crap whether babies downriver or downwind of a coal-fired industrial plant have birth defects due to mercury poisoning? Deformed babies don’t appear on his bottom line. Expensive equipment needed to mitigate environmental impact does.
What it boils down to is this: do you think that workers deserve refrigerators? Is our environment worth protecting? Are on-the-job safety and decent working conditions are worthwhile? If so, recognize that these things need to be protected. And these protections need to be factored into our trade agreements.
A safety net? Hah! Better to just enjoy your refrigerator while you still have it.
“So am I arguing for protectionism? No. Those who think that globalization is always and everywhere a bad thing are wrong. On the contrary, keeping world markets relatively open is crucial to the hopes of billions of people.”
Paul Krugman is a brilliant man, but I sometimes think he’s been inhaling too long the vapors in the air at the NY Times or Princeton to have a handle on what’s really going on out in Fly-Over Country. Out here, many towns are devastated — just as if a neutron bomb had hit city hall — with shops closed and ‘for sale’ signs everywhere and formerly bustling business districts devoid of people. Houses are up for sale cheap or vacant, and most every person in the town is either unemployed or making much less than they were a decade ago. And let’s not even talk about the cities like Akron that once had thriving factories and businesses. All gone. It’s called a depression, and one so far nearly unnoticed by the economic cognoscenti on the East Coast.
It’s also not true that those with advanced education have benefitted from the misnomer of globalized free trade — I can name three people I know off the top of my head who are working in other fields for less income than they were earning since their jobs in computer software or IT were shipped overseas. Even mundane and low-paid service jobs have been sent to the Pacific Rim and South Asia.
If you want to see what America is going to look like after ‘globalized free trade’ (really meaning ‘restricted trade so that the rich make money while the rest of us go broke’), just take a drive through the rural areas of the Midwest — hell, even Wal-Mart’s are closing these days. Here, protectionism is not a dirty word at all.
Funny posts! Free trade is not working as the corporate governments hoped, because it is fueling resentment and that auspices the end of autocratic rule. The ruling parties did not understand that the proper way to control peoples was to insure their health and welfare and then they would be obliged to undertake hardship to ensure the continuance of their own well being. The ruling parties, in their ignorance, due to their low intellectual development, thought that control by force would be sufficient for their purpose. But that is never the case and the use of force to try to control populaces is always a recipie for disaster because those to be controlled will always vastly outnumber the scum which desire to control them.
So am I arguing for protectionism? No. But I am arguing for an end to the finger-wagging, the accusation either of not understanding economics or of kowtowing to special interests that tends to be the editorial response to politicians who express skepticism about the benefits of free-trade agreements.
This article is obviously “inside baseball”. It’s a defense of a Democratic presidential candidate, against the editorial comments, of the NYT, WaPo, WSJ, or some other unspecified publication. This article is not meant for us mortals.
Who is Krugman shilling for? Which paper is he attacking? Because his economic arguments are too stupid for even a liberal. To those who call me crazy, all I can say is, thank you.
Ramsay
Krugman misses the point. Free trade in and of itself is not the issue. The key issue is that countries like China had little to trade 30 years ago, even if we had free trade with them. In fact, the little trade we had was paid for with opium. The Chinese leaders used to boast they reserved their best opium for Americans which we used to fund our black operations.
The real issue has been the transfer of US capital and jobs to 3rd world and developing countries, with technology transfer, to allow them to be able to produce goods previously manufactured in the US, and then sold to Americans at lower prices than if they were made in the US. Now, the lower prices sound good, but if Americans make less money due to they work at lower paying jobs and have to pay for the goods with credit cards that charge usury interest rates, it does not work so well for them.
However, as the economists say, free trade makes countries richer. This may be true. However, the countries increased wealth is not distributed evenly. Thats why you see a growing gap between the income of the top 1% or even 10% and the rest.
The capital that was sent out to other countries was created in America. Why do we allow our capital and jobs to leave freely. In fact, the governments tax policies encourage capital outflows. Corporations do not have to pay tax on their profits unless they send it back to the US. Even when they do bring it back, the effective tax rate is only 5% since they are allowed to adjust for what they paid in taxes overseas. So the capital that could generate profits in the US that would be taxed at 35% is sent out, and in fact the profits it generates brings less than 5% tax revenue on their overseas profits.
As a result, individuals pay 3 times as much tax as corporations today, and 50% of the average critters income is taxed in one way or another, add to this usury interest on money created from nothing and the real inflation being higher than the fraudelent CPI, and pretty soon Mexico will be building fences to keep the American critters out.
In 1963, JFK, was trying to push through a Interest Equalization Tax. It was a tax on capital being exported since he saw the dangers to our economy if jobs and factories were able to be exported freely and without penalty. Shortly thereafter he was assassinated. The bill went through ,but after being watered down by LBJ, Capital could still flow out w/o being taxed so long as it was loaned by a bank to recipients outside the country, or if it went out via Canada. So it was not very successful.
So here we are today. Free trade. 9 million jobs lost. Huge trade deficits. Huge buget deficits. Declining living standard and wages for Americans. The lower wages being made up in part by the household going from 1 wage earner, to 2 wage earners working in some cases more than 1 job to make ends meet. Yet the rich are richer, all is well. The top 1% make 22% of the income and hold 40% of the wealth, the biggest concentration of wealth since 1928. Mission Accomplished.
The March to One World Government continues. Just one more Depression followed by a World War when we build up Russia and China a bit more and they can put up a good fight, and then the world critters should be ready.
Now, some may say, the critters will finally awaken and seize control. The various laws, Executive Orders, etc passed since 2001 and the massive spending on the security apparatus in the US and globally, intended they say to fight “terrorism”, was instead preparation for the day when critters would awaken. Hope you had a good sleep for those that are stirring. But it’s way too late. Just enjoy the show.
Bless you, sorefeets! Your line, “trade is important if between equals — but a downward slide if between unequal parties” is SO true. In fact, you nailed the whole problem of “free” trade in a few sentences.
Reminds me of an economics professor I once saw on C-Span; he got my immediate attention by declaring, “Don’t study economics, study THE HISTORY OF ECONOMIES.”
I admire Krugman, but he’s off his game here.
class act: if you will pardon me for pointing it out, the laws of physics include the second universal law of thermodynamics. the laws of economics are a whole different animal.
paul krugman is the economics expert i most rely upon. he makes sense and deals in facts. he also wants people to come out of it all right, not enslaved nor starved nor working at age seven. he rightly discussed the subprime mortgage crisis when it was a home values bubble. i hope he becomes an economics advisor to our new president, if we survive long enough to get one.
Equal pay for equal work. If a worker in China makes a widget and a worker in the U.S.A. makes an identical widget then they should both get the same pay for each widget. Sounds fair? But the standard of living for U.S.A. workers is so out of bounds with sustainability that U.S.A. workers will have to accept much less at the same time that Chinese workers get a little more.
I’m giving Mr. Krugman a mediocre “C” grade for this article since he misses the most important issue: The political implications of integrating the US economy with the economies of countries with vastly different political systems.
As Marx said, the political superstructure is a manifestation of the economic substructure.
Americans tend to view all countries as the same: The decision to invest and do business in Country A vs Country B is a purely commercial decision. They don’t appreciate how doing business in Country A, with a vastly different political system, transforms politics in the US as US corporations lobby Congress on behalf of foreign governments. Madness, blind stupidity….
A neoliberal is a conservative who believes in free trade as long as he controls it.
Well, I don’t know about anyone else, but I am a senior citizen and I have been either receiving or buying products with the stamp “Made in China” since I was a child. Krugman gives the impression that “free trade” with developing countries is a rather new phenomenon, when in fact it isn’t; it has simply grown as globalization has grown, as populations have grown, and as sane fiscally responsible people from the generation preceding mine who believed in ’saving’ have turned into debt piling consumers who have succumbed to the global disaster called consumerism, where everyone wants ‘things’ that they really don’t need, and don’t mind going deeply into credit card debt to satisfy the addiction. As the Friedman philosophy of “greed is good” burns the temples on Wall street next year it should be interesting to see how sustainable the model is as gargantuan trade deficits collide with national debt and an egregious annual deficit. Normally Krugman makes more sense than anyone else, and makes Greenspan look like the govt and big business lackey that he is/was. But I don’t quite get this essay. pbk
Why would anyone want to work in an industry controlled by global capital? Krugman’s beating a dead horse. Bye bye, global capital. People everywhere are moving toward localism.
We do have protectionism for agriculture–corn and sugar, fo example–but not for industrial goods; consequently, we have about lost our industrial sector to overseas competition. Why could we not have offered some protection to industry, as Japan and China have done?
It all comes down to the fact that the most powerful unions in this country were in the manufacturing sector. Unions are pretty well gone now, a Wall Street dream come true. The erstwhile middle class is back to waiting for the trickle-down economy to bring them salvation.
Unfortunately, capitalism depends on ever expanding markets, urbanization of peasants and farmers, and the increasing destruction of natural environments and ancient cultures, traditions and languages (ethnocide).
It also promotes basic food, shelter and job insecurity as a modus operandi.
Though it temporarily makes some nations richer and it also makes many more impoverished. For example, Argentina and Czechoslovakia were among the richest nations in the ’30s; today, they don’t come anywhere near that elite group.
Capitalism also overwhelms masses of people with the US/UK pop and fashion culture while at the same time it balkanizes ethnic groups into provincial comsumers of industrially produced and “scientifically” marketed and trivia and pap.
The only group that receives security quarantees from the state are the corporations and the wealthy whom derive their economic benefits from these corporations.
Most corporations know that the US government, for example, is the market of last resort. And if needs be, failing corporations will be bailed out (using the tax monies of the non-elite) and thus they don’t have to face the negative consequences of bad decisions…but we do.
And we have no government acting as our employer of last resort.
The list goes on…
Capitalism is simply the latest manifestation of economic and political hierarchy, and “combined and unequal development.”
However, the constant social and political upheaval it causes and the wars that feed it produces people who can’t find an identity through possessing a craft, art, and a community-based appreciation for craft-products.
In other words, capitalism increasingly destroys traditional crafts and long-time developing, and aesthetically complex artistic forms and replaces them with mindless stimulation, emotionally shallow products and constantly changing, ahistorical cultural fads.
Eventually, why have even produce today’s simplistic, meaningless, and shallow forms of commercial music? With the increasing use of aural and visual entertainment receiving devices, the next step would be to directly stimulate those parts of the brain to simulate the pleasure of music or visual art.
Any thoughtful or aesthetic interaction with music or art (which requires knowledge and conscious appreciation) would be by-passed.
So what if capitalism sometimes contributes to the “wealth of (some) nations.”
This wealth comes at the price of underdeveloping the individual’s interior life while it also underdevelops the individual’s interrelation with nature, and , last, it underdevelops the economies of most nations.
California tomatoes went from being 80% hand-harvested to 80% machine harvested in just 5 years. The resulting economic dislocations to workers was devastating. You can stop progress, machine harvesting is coming! But YOU CAN SLOW IT DOWN (to 10 or even 15 years), giving ordinary human beings time to respond. The problem with ‘free-market’ capitalism is not the change it incurs, its the PACE of that change. As change happens more rapidly, ‘managing’ the economy means increasingly managing the PACE of change to something an ordinary human being can deal with without severe social disruption. I believe that is where Krugman is coming from.
I like Krugman too, but he’s wrong here. I’m not an economist and don’t play one on TV but I don’t need to be. It’s obvious “free trade” is another term for corporate abuse of labor. Why move manufacturing 15000 miles unless you’re planning to exploit labor? Why ship product that far? Essentially “free trade” means “free labor”. Why not instigate a policy that says workers anywhere will be paid as much as similar workers in the country where the product is sold? And if you think that sounds crazy you might ask why. Just about as crazy as giving companies the mobility to find the cheapest labor anywhere on the globe and then paying them dirt. We, the people of Earth have been eating shit corporate pie for so long that we’re starting to think it tastes good. Here, Paul, have a piece.
Complete gibberish. What is Krugman trying to say anyway? It sounds like he woke up from a three day bender with a deadline and just typed in some incoherent ravings about nothing.
The elevation of corporations over individuals has been a disastrous system, both for the individual and the corporation. The Founders knew this, which is why corporate charters were hard to get and strictly limited in their scope until the late 19th century. The corporation, until then, had to prove that their business worked to the advantage of the citizens in the state where the corporation was chartered, an important codicil that has been left off corporate charters these days. In Oliver Stone’s film ‘Wall Street’ Gordon Gecko said “Greed is good” but he didn’t further examine the implications of his own statement; as Michael Douglas’ character showed, it is also an all-consuming and destructive obsession, a sickness that ultimately devours the humanity of the host as he becomes the demented servant of his own greed. It’s worse than any crack addiction: You are no longer earning money to enjoy a more comfortable life, you are just earning money to earn more money. That’s what’s happening now, and why the system is falling apart; the addicts can never get enough and they eventually drive themselves crazy and kill themselves in the pursuit of the next high that never comes. To mix metaphors, they are in a mindless shark-like feeding frenzy that will stop only when there is nothing left to eat. In America, the food is quickly running out.
The ‘intervention’ in this case, will be the collapse of the US market as Americans are unable to buy imported merchandise and afford over-priced oil and housing. It’s slowly happening all over the country while the happy-talk media blithely ignores the signs they present themselves. Case in point: Look at how often you’re watching the financial news and they chortle over how the economy is booming, followed after the Cialis ad by a report that some major US company is cutting thousands of workers. That schizophrenia does not add up to corporate profits, nor a healthy economy. That economic model and that world are ending, a suicide caused by the twin delusions of unchecked avarice and eternal permanence.
Kayker wrote: “Equal pay for equal work. If a worker in China makes a widget and a worker in the U.S.A. makes an identical widget then they should both get the same pay for each widget. Sounds fair? But the standard of living for U.S.A. workers is so out of bounds with sustainability that U.S.A. workers will have to accept much less at the same time that Chinese workers get a little more.”
Both Chinese and American workers could earn a good wage and have a high standard of living if the middle men — the giant corporations and their investors who suck up billions and cheat their labor force out of a fair pecentage of that gain — were forced to evenly share the profits. It used to be the job of unions and the government to keep them fair, a system which lasted from FDR to Reagan.
Why even have a government unless it serves the needs of the people over those of predatory corporations?
Of course, in the near future, with the rise of robotics, we’re going to have far fewer jobs and the old American ethic of a day’s pay for a day’s work will be inapplicable. The government, business and the wealthy will be compelled by the majority to adjust to this new reality, or they’ll end up as obsolete as the Ottoman Empire.
RSJ
That is the direction of both capitalist production and militarism: robots.
In both instances, robots solve the capitalist problem of dealing with human labor. Corporations need workers work work at an increasingly faster pace, are willing to work increasingly more hours per week, concentrate on an assigned task at a consistently high level, do exactly what they are told (i.e., follows directions), take on no extended sick leave or vacations, and require no retirement benefits.
We know why the military eventually needs to robotize its army, navy and airforce. Many of their needs are similar to that of corporate capitalists.
With the increasing pace, duration and intensity of capitalist production, more and more humans will be unable to keep up and will be labeled as disposable. Even cheap labor won’t be able to keep up.
My only addition to your observation about robotization is that it is possible that capitalists may “man” the unskilled or semi-skilled levels of production with human/ape hybrids (i.e., chimeras).
These hybrids could easily be created in industrial laboratories and mass-produced.
They would be easy to genetically manipulate in order to fit the exact specifications needed for long-term productive tasks, military duties and long-distance space exploration.
Like robots, they would possess little will power, very little unpredictable needs and they would be disposable. They would have no legal rights or organizational power.
I have only a superficial knowledge of the actual data, but my impression is that globalization has been wonderful for the multinationals, but at the expense of the average worker, whether in terms of job security or income.
Before the US enters into any more free trade agreements, our congressional representatives should insist on receiving explicit criteria as to how “success” will be measured. My guess is that once the average voter sees how little she has to gain in measurable terms, free trade agreements will become a thing of the past.
This op-ed by Paul Krugman is commendable as far as it goes. But these words gave me pause:
“For the sake of the world as a whole, I hope that we respond to the trouble with trade not by shutting trade down, but by doing things like strengthening the social safety net.”
Most western countries have much better unemployment benefit systems than ours - in terms of the length a person can stay on the rolls and the amount of money received in relation to a person’s wages when they were working.
Bringing U.S unemployment benefits into line with that of countries (mostly in Europe) whose political culture is more highly evolved than our own is a good start and qualifies as improving the “social safety net.” But, like welfare benefits, such benefits are a stopgap measure which have tended to become a permanent part of the economic system.
In our highly non-functional system (and in Europe’s too), workers who are laid off have been written off - that is, they have been increasingly “paid” so as to continue to function as consumers, and nothing more. The catch-all term is “transfer payments” and includes social security retirement and disability payments and welfare benefits.
But such an arrangement essentially and obviously also pays people to stay idle on the productive end of the equation.
It really destroys a person to pay that person to be idle in every economic respect except functioning as a consumer, unless of course, that person is so seriously ill, or too old to work, or so incapacitated so as to warrant the description of “permanently and totally disabled.”
What puzzles me about so-called “liberal” commentators like Mr. Krugman is that they never call for a masssive program to re-industrialize our nation - and to put up whatever trade barriers will be necessary until a reindustrialized U.S. is “up and running.” Curiously, only commentators like Paul Craig Roberts - an Reaganite economist whose essays on “Supply Side Economics” and “The Lafffer Curve” are to be found in the Palgrave Encyclopedia of Finance - speak up for doing whatever is necessary by way of protective measures in order to keep the American workforce from economic serfdom.
Mr. Krugman spoke out commendably also recently in his “State of the Unions” message about the need to restore the union movement in the U.S. He maintained that the decline of unions began as the U.S. South, with its union-unfriendly environment, began to be developed economically by our national corporate and financial power elite (that wasn’t his expression) starting about 40 years ago.
It’s a dirty word but I’ll use it: PLANNING. America needs planned, emergency programs to re-industrialize our country - including training and education for our workers who are overqualified for the low wage unskilled and semi-skilled jobs which have abounded since the Reagan Era began.
Why aren’t so called “liberals” calling for this? (Why should they, come to think of it - if so-called “Progressive” and “Left” commentators don’t.)
How can anyone take seriously an economic commentator who, upon assessing America’s economic plight, fails to call for a socially and economically PLANNED approach to solving America’s delemma of a threateningly servile, two-tier economy divided between those “of independent means” (and their economic, legal and political auxiliaries) and a drastically underpaid workforce sitting dead in the water, with no economic future for themselves or their children?
Don’t “liberals” realize that an authentic servile state threatens the future of American life - and constitutes a “ticking time bomb” that will almost certainly go off when (not “if”) America’s economic situation worsens catastrophically, as it did during the three years after October 29, 1929?
RSJ: Great comments!
BALAKIREV: I wonder if you realize how closely your “prophetic robot” message corresponds with events that actually happened, according to America’s “Sleeping Prophet” Edgar Cayce, back in Atlantean times? Cayce explained that the Atlanteans penetrated the genetic codes and indeed DID create a labor caste that was “built” for physical exertion but lacked the intellectual capacity to challenge its puppet masters. This is the dream of capitalism combined with the Brave New World of genetic engineering. It is also one of the reasons Atlantis sunk. Human beings can only go so far before they incite those elemental forces that hold this world (natural world) together.
CYBOMAN1: Good posting. Al Gore was onto the “planning” thing when he strongly suggested that a kind of FDR program might be instituted where citizens are employed in creating a new energy efficient infrastructure. I’ve always wondered why military forces (pre Iraqi war) were not deployed to urban centers where they could play mentor and bring back the old practice of apprenticeship by guiding troubled unemployed youth into programs that would rebuild the tenements into affordable housing communities. There is so much infrastructure not being used, certainly not being used intelligently or with conservation in mind. Community gardens belong there, too.
When a tragedy hits people either compete for resources or learn to work together. Increasingly on the basis of karmic blowback, climate change and fiscal uncertainty, that issue will become key, front and center to a great many citizens.
The dismal scientists have fallen off the wagon. They fell off while whoring with corporate and governmental elites. With any lick they will be over-run by wagon wheels face down in a cowpie.
Look at 100 million workers in the U.S. and 2000 million workers in the 3rd world. We could totally ruin our middle class and it would not help those world workers one bit. But the wealthy that benefit from their labors will do nicely.
“BALAKIREV: I wonder if you realize how closely your “prophetic robot” message corresponds with events that actually happened, according to America’s “Sleeping Prophet” Edgar Cayce, back in Atlantean times? ”
Kurt Vonagut’s (sp?) ‘Player Piano’ is another classic on extreme mechanization. However, cheap 3rd world labor is much less expensive even with shipping costs than robotics currently. Gotta love free trade……..
cyboman1,
I do not think that economists favor a rebuilding of industrial might, because that may not be the right thing to do. We may have evolved beyond that but have not found what we should transition to. The market system is suppose to solve everything since Reagan and maybe people are waiting for that to happen. I would not wait any longer.
D n G — My having been closely associated within the sciences, has allowed me to partly grasp the entrainment that requires extreme levels of federal funding needed in all scientific research, and complicity with academia through the only source of available money.
Good scientists are essentially gov’t whores who have kept their integrity to publish real and accurate scientific results. Kind of like escort services sharing the quad at the universities
Bad scientists are essentially gov’t whores who have NOT kept their integrity and publish garbage results and inaccurate politicOK-un-scientific results. Kind of like scuzzy disease ridden street walkers, making money to pay for their AIDS medicine.
Both bunches really do no pure (open ended) research, and are feeding the corporate/military fascist beast an enriched fuel (and growth) mixture.
I do think Krugman is off the mark more than on.
He is one of those liberals who look the other way when real truth challenges their fundamental prejudices. He comes off as somehow believing in his own entitlement to a certain kind of lifestyle, which has not been examined thoroughly by him. That he is entitled, sorry to be so harsh but, to be one of the fleas on the ankle of the corporate greed machine, which is bleeding poor people all over the world.
Yesgoogle,
Can we please have a school class in integrity, for K-12, every year, as parents are too co-opted to even see the “fleas at their ankles”?
WAKE UP and have the SPIRIT move within, _ P L E A S E _
Namaste … … … … … … … … … … … … … … … … … Mahatma Gandhi … … … … … … … … … …
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I have often praised Krugman, but I think this is bullshit. The New Deal is over and economic slavery won’t bring it back. In Krugman’s world oil is a replaceable commodity and an economic given, as are clean air and astble ecology, but in the real US we have built a suburban lifestyle which depends on cheap and dependably available oil. Our cheap food comes from cheap oil, our daily traffic jam depends on it, our spread out houses, electricity, etc,. The economy, it turns out was not flourishing through the brilliant insights of wall street traders and high tech gurus. It was dependant on hardworking people building and buying houses and a lot of shit to fill them. The party is over. The oil supply has peaked and the US middle class is the most vulnerable. The oilsupply is ending and we have used it to fill the oceans with plastic, the air with greenhouse gases , and the landscape with farms and houses that run on oil. Neither college degrees nor giving banks truckloads of paper money dependent on maxed out credit cards will fix this mess.
right now there are 2 choices; fascism which isn’t working and backward looking Democratic neoliberalism which is fascism with a smile. We need to build a 3rd choice and we wont’ do it till our computers and TV’s blink off. America is full of old farts and we’re about to get our comeuppance. I predict nobody is gonna be all that thrilled to gain the presidency in 2008. As Warren Zevon sings on in his afterlife: the shit has hit the fan.
http://www.kunstler.com/index.html
The nazis lost and Vietnam was the beginning of the end for our version of empire. We have started a war we are going to lose. Unfortunately no one will win. You can’t win a war anymore than you can win a murder.
OK now that that is out of my system. There is a chance we will coast for awhile and come to our senses but the political system is as broke as the economic model. I am worried because we have filled the world with guns and wherever things break down the guns appear. I am actually more level headed than I sound. But I admit I’m worried in a big way.
I really like cyboman’s comments.
Also what is with his assumption that the millions of college educated Chinese will be content to snap and screw parts together, or that there will always be a ready supply of young and poor people ready to be incinerated for our lifestyle like so much oil. I smell a big rat.
Micky Mouse is ready as ever
GATT,CAFTA,NAFTA,WTO whatever you call it has been, as planned the death knell for what we had. We too up here above the 49th are losing our manufacturing and decent middle class jobs.
But if Krugman wants to see the benefitters of NAFTA for example, he can go to Mexico to see the results.
It’s not just about China making junk for the dollar stores, it’s about everything from farming to customer service to computer design.