A lengthy defense of NAFTA and free trade generally from Bradford Delong in Vox is here. Delong is hardly a disinterested party: he was Under-secretary of Treasury under Robert Rubin.
This does not mean he is wrong.
His piece is 8,000 words, but here is a summary:
By and large, the jobs that we shed as a result of NAFTA and China-WTO were low-paying jobs that we did not really want. Because of NAFTA and China-WTO, we have been able to buy a lot of good stuff much cheaper — which means we have had more income to spend on other things and to pay people to do other, more useful things than work on low-productivity blue-collar assembly lines. Skeptical? I understand. But leave me space to make my argument, and I will return to this point later.
We have not done our proper job in cushioning the incomes of and providing opportunities to those people and communities that have found themselves behind the eight-ball, in sectors flooded by imports as other countries industrialize (especially China). But NAFTA and China-WTO look, to me, like things that have been broadly good for the American economy.
I have highlighted the portions for a reason, because it in a way avoids the entire debate because:
- Many of these jobs were in fact union jobs and not low wage jobs as he suggests,
- It assumes that if is POSSIBLE to cushion incomes.
As I have posted here before, substantial money was set-aside in the tobacco settlement to help communities hurt by the decline in Tobacco planing. It was not successful. So in this sense Delong is playing a double game: on the one arguing it didn’t hurt, and on the other that it didn’t need to have hurt.
Dani Rodrik makes the relevant argument in surveying the literature:
The most detailed empirical analysis of the labor-market effects of NAFTA is contained in a paper by John McLaren and Shushanik Hakobyan. They find that the aggregate effects were rather small (in line with other work), but that impacts on directly affected communities were quite severe.
Anyone who has taken economics at a graduate level will tell you Free Trade is accepted wisdom access the ideological spectrum. But it is always accompanied with the following proviso:
“The winners will compensate the losers”
Which is basically nonsense. Winners never compensate losers. Hence the term “winner”. It is one of those ideas that show the gap between academic thinking and reality.
Tim Duy has a piece worth reading as well, his a response to Krugman.
He noted in part:
Sometime during the Clinton Administration, it was decided that an economically strong China was good for both the globe and the U.S. Fair enough. To enable that outcome, U.S. policy deliberately sacrificed manufacturing workers on the theory that a.) the marginal global benefit from the job gain to a Chinese worker exceeded the marginal global cost from a lost US manufacturing job, b.) the U.S. was shifting toward a service sector economy anyway and needed to reposition its workforce accordingly and c.) the transition costs of shifting workers across sectors in the U.S. were minimal.
He notes further:
It was a great plan. On paper, at least. And I would argue that in fact points a and b above were correct.
But point c. Point c was a bad call. Point c was a disastrous call. Point c helped deliver Donald Trump to the Oval Office. To be sure, the FBI played its role, as did the Russians. But even allowing for the poor choice of Hilary Clinton as the Democratic nominee (the lack of contact with rural and semi-rural voters blinded the Democrats to the deep animosity toward their candidate), it should never have come to this.
The transition costs were not minimal.
In some ways there is no greater challenge for Progressives than understanding just what is meant by transition costs. Because among economists it is a rather simple concept.
But transition costs are about the destruction of communities. The problem is when jobs leave, they do more than destroy incomes. As Zeynep Tufecki wrote: “Jobs are identity”.
The Sociologist Michele Lamont wrote:
Morality is generally at the center of these workers’ world. They find their self-worth in their ability to discipline themselves and conduct responsible yet caring lives to ensure order for themselves and others. These moral standards function as an alternative to economic definitions of success and offer them a way to maintain dignity and to make sense of their lives in a land where the American dream is ever more out of reach.
This is precisely what Trump trapped into and why the collapse among those making under 50K was so severe for Democrats.
Chris Arnade describes transaction costs in concrete terms:
But the results, and disruption from free trade, was even messier than what they knew or, given their world view, could know. The winners used their winnings to hoard more power, and to write rules making sharing even less likely to ever happen.
But the bigger mistake came in understanding the impact on the losers, who lost a lot more than just jobs. Their communities were devastated, and for many in those places self-worth wasn’t just about the job, it was about their town. About the land and people around them.
For many, their entire sense of value was destroyed. Their loss were beyond anything that could measured in numbers, or mitigated with hand outs. The loss of factories and good jobs set off a magnifying cascade of additional losses: Families broke up, drugs entered, suicides spiked.…
We built a world that demanded you either buy into this culture of efficiency, things and science, or you were demeaned. For many it has been humiliating.
The result, Arnade argues:
Now many people who feel screwed over by this system are more and more trafficking in conspiracy theories. That is partly push-back against a rationality that viewed by them, has destroyed their communities sense of worth. A rationality that often views any other forms of meaning, as irrational and worthless.
This is the piece Democrats just do not get. PEOPLE ARE MAD. They feel betrayed. As Tim Duy suggests, in fact THEY WERE PURPOSELY BETRAYED.
Since the election I have thought most Democrats are just in complete denial over what was behind their loss.
I will post this again:
I do not think people have yet come to grips with the swings in the Midwest, which are enormous. In some ways unprecedented: it is very rare to see swings this large confined to particular groups in exit polls.
One might say there are the wages of transaction costs.
For whatever reason, these groups felt Obama heard them, and Clinton did not. My belief is that this was because Obama was never viewed as part of the establishment in the way Hillary Clinton was.
It is worth noting that the betrayal here was in some ways bi-partisan.
very interesting, thanks. “transition costs” discussion has two components – the destruction of social fabric, history, and individual possibilities mentioned, and the fact that moving to a different way of life [mentioned a while back on this blog, if jobs are disappearing why not move where the jobs are] may not be preferable, humanly speaking – i.e. moving to an atomized individual consumer context. A while back NYTimes or the like had an article about someone trying to build a sky resort in region of India, iirc. Small farmers didn’t want to sell although the resort owner promised them jobs as ski lift operators. developer was surprised they didn’t want to trade subsistence farming for sky lift operator.
I’m sure they saw it as giving up status as land owner and becoming “a flunky”.
yes, that’s certainly a factor, but I’m also trying to get at the connection between ppl and work. the social message these days is all about making $$ then quitting work – as if work is something one puts up with while amassing enough to quit working. that pipe dream involves 1 – prioritizing the paycheck not the work 2- being ready to abandon the job and the work context [friends, coworkers, ancestral lands] as soon as one strikes it rich. I subscribe to neither, nor do lots of ppl. but that credo is behind the transitional costs being imposed on ppl – to the extent that there’s any consideration of the ppl on whom they’re imposed.
It depends on what you are doing. I was very happy when I was an Engineer. My father didn’t understand this. More than one computer programmer has told me that they would do the work for free if they had to. And I’m still writing programs now that I am retired, not from programming, the H1-B program did that, but from manual labor at the post office. Even there, I had satisfaction when I solved a tricky problem, mostly involving computers. One of the techs I worked with took home scrap metal to work on handicrafts on his home lathe, because he liked it.
However, who likes picking up garbage and throwing it into the truck? Who likes standing at a register and checking out goods? Who likes stocking shelves? And cleaning rest rooms. Even in management, people like throwing their weight around and having others grovel, but who likes sitting in dull meetings listening to some smart ass drone on? Or kissing upper management’s ass?
Doctor’s may enjoy healing and the intellectual challenge of solving a health problem, but dislike dealing with whiny patients and idiot administrators.
As my daughter told me when she was a nurse’s aide, “You haven’t lived until you’ve had to clean up a 300 pound woman who had diarrhea AND clean up her bed.” Lawyers may like the legal dueling but hate the bored irascible judges and neer-do-well clients.
Most people hate their work because it’s dull, uncomfortable, dehumanizing, degrading or just plain boring. Also, I always say that THE best thing about retirement is getting up when you want to, not in the middle of the night to drive through insane traffic and arrive just as the sun rises. Humans are not robots to run on a schedule. Once, I had the opportunity to work from home. When my interest flagged I quit. I might work four hours one day and twelve the next. I never started until I felt like it and I quit when my attention wandered. I was at my most productive on that job because it had my full interest and attention. There was never a day when I just marked time watching the clock. But bosses don’t like to judge work based on quality and output, perhaps because they are incapable. They prefer time cards and to stroll through an open bullpen like the overseer on a galley. I learned to fake industry instead of staring blankly at the ceiling while thinking, although that was more productive than paper shuffling.
“You haven’t lived until you’ve had to clean up a 300 pound woman who had diarrhea AND clean up her bed.”
My summer job after graduating from high school while I was still only seventeen. It’s not the work that to this day makes me shudder, but the bad back from lifting that 300 pound woman. But she was really sweet and sad to see me leave.
My first office job was filing. After two days I figured out that I’d go batty if I had to do it for eight hours a day. So, began figuring out how to do it faster. Within a month, I’d cleaned up the backlog and ran out of work. Being young and naive, I thought that they’d either give me something else to do or let me kick back and read. I was told to “look busy” because this was a new and unanticipated problem for them. Not welcomed either because every six months or so, the accounting clerks were offered Saturday overtime to clean up the filing backlog. The solution was to get me off that desk and my replacement got things back to normal within three days.
LOL Same here. Had loan desk at insurance com. Done by 11am. So got given the reinsurance desk, TOO. Only monthly statements kept me busy 8 hrs. But the experience did send me running back to school. Some have knack for paperwork–it runs in my family. Doesn’t mean you like it.
As my second boss told me, “You have to be a Hollywood actor.”
interesting that you all replied about jobs and or unpleasant tasks connected with a given job, I was trying to get at the concept of work that is conveyed in our culture. so many workplace issues nowadays anyway, can’t take on the topic now given time work and job time constraints
Trump proposed significant changes to the H1-B program.
H1-B has been abused for a long time.
https://www.bloomberg.com/news/articles/2017-01-30/trump-s-next-move-on-immigration-to-hit-closer-to
-home-for-tech
Re buying good stuff cheap. it all depends on who are “we”. Corporations bought stuff cheap, cut prices maybe by a smidgeon, maybe just failed to increase prices or failed to increase prices as much, but the general public never got a price deflation. But, of course, when a Democrat says “we”, he means “Wall Street”.
“It is worth noting that the betrayal here was in some ways bi-partisan.”
Huh? Who passed almost all of the “free-trade” deals? Got MFN for China?
A Nickel A Sock
There is more labor involved than just picking, but the point is well taken.
This is raising some eyebrows…http://98.139.236.92/search/srpcache?p=The+huge+disparities+in+US+life+expectancy+in+five+charts&
;ei=UTF-8&hspart=mozilla&hsimp=yhs-002&fr=yhs-mozilla-002&u=http://webcache.googleus
ercontent.com/search?q=cache:wzkv4Go5ikgJ:https://www.ft.com/content/80a76f38-e3be-11e6-8405-9e5580d
6e5fb%20The%20huge%20disparities%20in%20US%20life%20expectancy%20in%20five%20charts&icp=1&.i
ntl=us&sig=GsjTNfMgeWh3brToKj.bjA–
The cached page of this article…The huge disparities in US life expectancy in five charts (FT)
Again, toplines conceal the truth: “Yet looking at country averages, which are essential to make international comparisons, has the effect of omitting a big part of the US story. Inequality means that individuals in the US have very different experiences in terms of both longevity and spending on health.”
More wages of NAFTAs.
A lot of this obesity and crime.
If you compare life expectancy it is interesting since the US has a single payer system for those over 65. Not much difference for men, more for women.
Sigh, an unexpected export of trade…http://www.banderasnews.com/1204/hb-mexicanobesityepidemic.htm
Obesity Epidemic in Mexico Linked to NAFTA
Interesting that since 1980 there have been no life expectancy gains for middle and upper middle class women. Of course there were significant gains for these two demographics in the prior forty years. On average these two groups are more likely to access health care.
The chart showing that 5% use 50% of medical care shouldn’t have been included because that’s true of all UHC systems. Sick people need more care. Had income been included, it probably wouldn’t have added anything because age is a major factor in this and a high percentage of seniors are low income.
Money may not buy happiness, but it apparently does buy a longer life.
Life expectancy is changing on a class basis here. It has fallen for most women–notice no gains for women, even upper middle class women, only for the richest. And in a eye-popping reversal, middle and upper middle class men have longer life expectancy than all but the wealthiest women. (NC)
Are you misreading the spending chart? Perhaps it has nothing to do with age, per se, except we can assume the spending by poors DOES represent Medicare/Medicaid payments. It doesn’t categorically represent that for the rich. IF “the bottom 50 per cent” means the poor category of patients. It is not clear.
No, I’m not misreading the chart. All it’s saying is that in any given year, 50% the total spending on health care is consumed by 5% of the population. It makes no distinction by age, class, wealth/income, and the source of the payments for that care. However, it’s easy to extrapolate from that if one knows the average per capita health care costs of the total population (approximately $8,000) and the average per capita spending on those over age 64, in excess of $13,000 (that’s Medicare with a not insignificant amount from Medicaid).
That 5% consuming 50% is reasonably close to the ratio in countries with UHC.
wrt women. In 1980 lower middle life expectancy was a year or less than that of the poorest and middle and theirs was a year or less than that of upper middle. However, it was between 81 and 84 years for all four groups. Significantly above that for men in all groups except the richest which was equivalent to that for women except for those among the richest.
So, why did the richest men and women add approximately six years to their live expectancy and middle and upper middle men add eight years? In part their baseline in 1980 was low. Their tobacco and alcohol consumption was higher than that for women and has dropped considerably since then. Men in general and traditionally were also less likely to access health care as long as they felt okay. That has changed. Except for the poorest men who were the least likely to have health insurance before and after 1980.
Lifestyle changes probably accounts for the declines among poorest and lower middle women and poorest men. More calories and more of them empty calories than previously. A reasonable hypothesis for the lack of gains for middle and upper middle women. The upper middle men is the one anomaly. Maybe they’re just happier not being the sole breadwinner. Or maybe it’s Viagra.
You know that you are making the case for lower SS payments and/or extending the retirement age, don’t you?
Extrapolating what I’ve said about how to read those longevity charts and possible reasons for the changes since 1980 to a case for or against changes to SS payments or or the standard retirement age couldn’t be more wrong. The charts alone suggest that changes in opposite direction of what you’re thinking would be the more rational change.
However, I’m not making a case for any change at all because I don’t know what the longevity (actuarial) projections, by gender and income, were in the SS reform act of 1983. It would have been wildly irresponsible not to project increased life expectancy from the 1980 baseline for all groups and consistent with the gains over the prior three decades. The gains for the richest men and women and upper middle income men are probably more than what was projected, but they are also the smallest groups. I would guess that Middle income men are right in line with the projections. Everyone else is below what would have been projected. No wonder the projected date for when the SS trust fund would have to be tapped and when it would be exhausted has been continuously pushed further into the future since 1983.
Medicare is a separate issue, but there too the actuarial tables included an increasing senior population. The portion of total national healthcare spending consumed by seniors, adjusted for the increase in the senior population, may not be different from what it was in 1980. The problem is that health care spending in total has rapidly increased.
Well, the age-pension tradeoff seems to be aimed at an average age of death of 77-78. If age at death averaged over 81 in 1980 and it greater now, then the benefits are too generous.
Strangely enough the untaxed part of my pension seems to be based on a longevity over 100. I’ll explain that. Part of the federal pension is considered pay back of the premiums one put in. This used to mean zero taxable for six or seven years. Then (probably under Reagan/O’Neill) that was changed from upfront payback to averaging over the projected lifetime. Since 97% of my pension is taxable and I’m 72… You do the math.
Why would SS calculations in the early 1980s not have been based on longevity at that time and projections not have included living longer in the future from that 1980 baseline for all groups?
In 1980 the middle income baseline for men was 77-78 years. The projection for 2010 would have been 77-78 plus. Say a conservative one year per decade which would have set it at 80-81. As it turned out, middle income men have exceeded the projection by three years. Now what proportion of the total population are middle income men? 25%?
Even if the proportion of middle income women were similar to that for middle income men (it’s lower for women, but to keep it simple let’s say it’s the same). They too would have been projected to gain three years over three decades. Their gains were zero; so, for the middle income group, men and women, it’s a wash.
The profile for the combined upper middle men and women is similar to that for middle income.
Lower middle men have gained a year. As longevity and income are intertwined, let’s say that lower middle men were projected to add 1.5 years over three decades. So, they fell short by half a year.
Lower middle women lost two years from the baseline. Combined with a projected 1.5 year gain, they are short of the projections by 3.5 years.
Perhaps the projections for the poorest were only a one year gain over 30 years. That would set the shortage at 2 years for men. As the poorest women were at 83 years, maybe no gains were projected, but they lost 4-5 years.
On the plus side, the ratio of senior women to senior men is shrinking. On the minus side, the gains (and therefore. more years collecting social security) for middle-richest men, is being covered by poorest-upper middle women and poorest men.
“it was between 81 and 84 years for all four groups” in 1980 That quite surprised me. If true, SS should have adjusted its tables 35 years ago.
What makes you think they didn’t?
Again, I don’t know if the actuarial tables SS uses are available to the public and if they are, it would be an exhausting task to study them. So, my comments here are based upon the numbers are presented by FT and generically how actuarial numbers are constructed. FT’s numbers may be wrong and SS may not have been doing proper actuarial calculations. But I doubt SS has been asleep at the wheel. The “economy” alone doesn’t explain why SS has continuously had to reset the date when SS taps into the trust fund and the date when it will be exhausted.
I guess I’m confused by statements about “the total spending on health care” being “consumed by 5% of the population”. Total spending by whom? And “consumed” just seems an odd turn of phrase. There may be some sort of standard economics jargon here that I never learned.
I’m in the process this calendar year of forking over many thousands of dollars for my retired spouse’s medical care. Surgeons and oncologists, especially, do not come cheaply. Surely I’m spending, and surely my spouse is consuming, but…what’s that even supposed to mean?
In this calendar year, your wife would be in that 5%. In prior years she wasn’t and hopefully in future years she won’t be either. It means nothing more than that every year 5% of the population accounts for 50% of the aggregate spent on health care. Or in countries with socialized medicine, 5% of the population received 50% of the medical services delivered. I was merely nothing that this ratio 5%:50% is consistent across countries that provide, in some way, modern medicine to their populations, and therefore, that pie chart didn’t present something unique and unconscionable about the US.
At least in Sweden, a study the other year showed that a large part of those 5% have multiple, chronic illnesses. This is a combination of: 1) it is chronic so you are never going to be cured 2) you have more then one illness that can trip you up and 3) they interact in ways western medicine with its structure of one speciality per body part is ill equipped to handle. Absent advances that cures illnesses that are currently chronic I think the third part is what needs to be adressed with better collaboration in medicine in particular when it comes to patients with more then one chronic illness.
Still, even in this group of patients with multiple, chronic illnesses who is spending more time in a hospital in a given year varies. With the right treatment you can be quite healthy despite chronic illnesses and spend years with just follow-ups.
In the US 32% of all health care spending is spent on hospitals. 7.3% of US Citizens spend one night in the hospital.
Not all hospital care is inpatient, but you can see how a small portion of the population consumes a large portion of health care spending.
https:/www.cms.gov/research-statistics-data-and-systems/statistics-trends-and-reports/nationalhealt
hexpenddata/downloads/highlights.pdf
https:
/www.cdc.gov/nchs/fastats/hospital.htm
I did a comparison some years back about life expectancy after 65. There was little difference between the US and the European Countries. This was because the increased obesity in the US was offset by the higher prevalence of smoking in Europe.
The US was earlier and more aggressive in public campaigns against smoking. This difference is declining significantly – and so the European advtange should be expected to grow.
Worth remembering: Those over 65 have a single payer system similar to some in Europe.
From the authors of the study cited in the article:
Cool tool for closer looks…
http://www.healthdata.org/data-visualization/us-health-map
http://www.healthdata.org/data-visualization/us-health-map
http://www.healthdata.org/us-county-profiles