Economic Disparity

Earlier today, I mentioned economic disparity in passing. Here’s a more in depth take on the subject:

Economic Policy Institute mentioned it on Wednesday. Morgan Stanley’s Stephen Roach mentioned it on Friday. The Washington Post mentioned it on Sunday. All three have touched on the topic of economic disparity.

From EPI:

Living standards not keeping pace with productivity   
“The median household income rose just 1.6% between 2001 and 2004 … compared to an 11.7% rise in productivity. Workers aren’t reaping the rewards of their labor: real wages are trailing productivity gains because profits are taking the lion’s share of economic growth Growth in net worth has been equally lackluster, nudging up 1.5%

Even this slight gain has been unevenly distributed because it stems entirely from a run-up in housing prices. The central role played by residential property, which constituted 39% of total assets in 2004 (up from 32% in 2001), means that families are increasingly vulnerable to a downturn in housing prices.

If this downturn comes as a result of rising interest rates, households will be doubly impacted because the value of home-secured debt (for families that had any) rose by 27% over the three-year period.”

From the Washington Post:

“Our Financial Failings” by Neil Irwin
“It has about $3,800 in the bank. No one has a retirement account, and the neighbors who do only have about $35,000 in theirs. Mutual funds? Stocks? Bonds? Nope. The house is worth $160,000, but the family owes $95,000 on it to the bank. The breadwinners make more than $43,000 a year but can’t manage to pay off a $2,200 credit card balance. That is the portrait of the median American household as painted by the Federal Reserve Board’s Survey of Consumer Finances. Blown away yet?

No? There’s more: “Only 49.7 percent of American families even had a retirement account in 2004.”

From Mr. Roach:

Globalization’s New Underclass:
“An increasingly integrated global economy is facing the strains of widening income disparities – within countries and across countries. This has given rise to a new and rapidly expanding underclass that is redefining the political landscape and stoking protectionist fears.” From his “conclusions”, (we edited to focus on the US; footnote is mine as well):

“The United States and China exemplify the full range of pressures bearing down on the global income distribution. (1) *Gini indexes show both nations with relatively high degrees of income inequality. (2) Courtesy of an IT-enabled arbitrage, real wage compression in the United States has moved rapidly up the value chain – sparing an increasingly small segment at the very top of the occupational hierarchy. (3) This sharpens the contrast between America’s elite and the rest of the US workforce.”

Joanie notes what the bottomline is:

Don’t know about you, but I don’t have the stomach to stop and linger on any of this stuff for more than an instant. It’s that distressing. Worst of all, it’s been that obvious for some time. John Q is up the creek. If he has anything besides debt, for the most part, it’s his house. Oh, my. And not a sou in the bank for a rainy day or worse, for retirement. And as has been pointed out in this space on numerous occasions as just one example: the deal-makers make billions making the deals that makes John Q. unemployed or underemployed and thanking his lucky stars for a $15 buck an hour job installing sensor alarms on some M&A honcho’s 5,000 acre starter hacienda out in Bozeman.

This is what happens when the tail wags the dog, i.e., when the market drives the economy. Things’ll be different come the Revolution.

Next case.

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  1. trader75 commented on Mar 11

    This goes back to that goofy businessweek article, “Unmasking the economy / why the economy is a lot stronger than you think,” which in turn goes back to the “we think they sweat” iPod economy arguments. Competitive pain for non-IP-centric workers is the other side of the coin in an integrated IP-centric world.

    Bullish pundits focus on the globalization benefits for knowledge based companies–which are real–and then try to pretend that the United States has a knowledge based economy, which it does not.

    On the whole the world is becoming more meritocratic, as huge swathes of the global population (China, India, Eastern Europe) are getting their chance to fight for a piece of the pie.

    But global meritocracy and entitlement-based notions of western democracy–especially fat, bloated, welfare-state democracy–are deeply and irrevocably at odds with each other.

    So now we (in the west) get to choose between a return to rampant protectionism (which would be disastrous) or the slow but sure destruction of a long-held, entitlement-based societal model (the notion that one is entitled to success and prosperity simply because they are a citizen of X country). For the past few years we have attempted to sustain the illusion of continued prosperity-equality via deficit spending… which was never more than a temporary solution. Like the line worker who refuses to adjust his lifestyle to a sharply reduced income, making up the difference with a home equity loan / Visa / Mastercard, reality can be postponed but not denied.

  2. terry commented on Mar 13

    Full scale protectionism would not be good, but allowing markets to operate without restriction is equally disasterous and is a virtual guarantee that protectionist sentiment will grow. The US is getting jobbed right now by any number of countries with China’s support of the dollar being example number one. The economists can do the graphs to demonstrate that trade is good, but it the benfits of trade are benefitting capital at the expense of labor. The previous comment is right–the current system is not sustainable, but the end game will not be the destruction of the social welfare state, it will be the enhancement of that state because all but a tiny fraction will need it. It is no surprise that the Great Depression lead to most of our social insurance programs or that it was triggered in large part by the excesses of the 20’s and the protectionist Hawley-Smoot tarriffs. Either we take steps to protect American standards of living–assure fair trade, increase taxation of income at higher levels, reduce the costs of employing Americans etc, or we will repeat the experience of the 30’s

  3. B commented on Mar 13

    The revolution appears to be here. It’s the backlash to globalization. Will it be more? That depends on the actions of the proletariat. Will they unite against the “Corporatism” which lines the pockets of Democrats and Republicans at the expense of worker rights? Will they demand change from their lawmakers? Will they band together to demand better from corporations stiffing them while making record profits?

    When the pain becomes severe enough, crisis will force the masses to unite as they have throughout history. Personally, I believe our “leaders” of industry and government are beginning to resemble royalty from too many angles. That is forgiven when the majority are also doing well. Not forgiven with so much fear and angst over their very future. Nixon, a Republican, also ended up presiding over a protectionist government because of globalization. Long wave cycles……..behavioral cycles……..behavioral finance. It ain’t measured in an economist’s statistics. The bad news is likely God help us all if this gains momentum.

  4. trader75 commented on Mar 13

    Whatever socialist “steps” America takes to milk their productive citizenry like cash cows–which they will have to do ever more aggressively to preserve an unsustainable social model–will simply encourage capital flight, and eventually physical flight.

    Costa Rica, Nicaragua, New Zealand, Switzerland, Estonia, Hong Kong… there are plenty of places for an expat to escape the grasping hand, thanks to proliferating rule of law and the miracle of modern communication technology. And there are plenty more potential places with quality of living built in–white sandy beaches, friendly locals and whatnot–who will embrace tax competition and rule of law with open arms when they see the advantages of doing so.

    Ah, the fair-minded patriots reply, but what if we make all those capitalist ingrates stay home to be milked like good little cows? What if we restrict their financial mobility, make it impossible for them to leave the US with little more than the shirt on your back?

    That’s certainly an option… a Berlin Wall / Stalin Lite option that leads to more even more urgent capital flight (via back channels) and even faster social decay.

    The 20th century social-equality democratic model is done like a dinner, as our friends down under would say. Efforts to preserve it will be futile, just as efforts to preserve the USSR were futile. There is no such thing as pure free market capitalism, but capitalism itself is based on a meritocratic, competitive ideal. Billions of Asian workers willing to toil at one-tenth of Western compensation levels are directly leveraging that meritocratic, competitive ideal. They are tired of eating tree bark soup, they want a piece of the pie, and we cannot deny them without destroying the heart and soul of free market capitalism itself.

    See ya on a sandy beach somewhere…

  5. KirkH commented on Mar 13

    If productivity is increasing doesn’t it stand to reason that jobs are getting more difficult? Take databases, they can make people enormously productive but you limit the labor pool to people who have the capacity to work with SQL. I teach people this stuff and some people just don’t get it, others know there’s money in it but are turned off because of the mental exertion required.

    So productivity may still be linked to wages but only for the shrinking pool of workers able to work with the complicated tools that allow that productivity growth in the first place.

    Everything else gets automated, realtors are next. We’re running out of brains in America hence the brain-mining expeditions in India/China, etc.

  6. me commented on Mar 13

    “but capitalism itself is based on a meritocratic, competitive ideal.”

    or corruption.

    Anyone that thinks we worked a lifetime to lose pensions, healthcare and jobs under the guise of”free markets” or “capitalismn” is dreaming.

    Labor arbitrage is destroying this country and you better be on a beach somwhere far becuase this will get very ugly here. Remember poor Rosty when Congress passed that catastrophic healthcare and those old ladies were rocking his car? You ain’t seen nothinbg yet baby.

  7. Steve commented on Mar 13

    The US appears to be on the superhighway to becoming like the Europe we used to poke fun at – Socialist, High unemployment, and taxes up the wazoo for anyone productive enough but not smart enough to leave or hide.

    Watch out for Directive 10-289 :P

    See you on the beach, or in the valley…but for now I gotta get back to work so I can afford to…

  8. trader75 commented on Mar 13

    “Labor arbitrage is destroying this country and you better be on a beach somwhere far because this will get very ugly here.”

    Hey, no argument here. When those old ladies come a rockin’, I’ll be reading about it from somewhere far, far away.

  9. paul commented on Mar 13

    Glad you picked this up. I used 2 of the 3 quotes in a book I finished last week.

    Those who are currently benefiting from globalization and the “brutal compression of wages” Roach mentions will defend the system. When the inevitable happens and their tier get outsourced and starts to experience the brutal compression, then it will become a social problem; govt will have to do something about it ‘for the good of the country and our future.’

    I’m willing to recognize exceptions: anyone out there experiencing downward mobility who wants to defend the trends??

  10. B commented on Mar 13

    You know blogging should be taken with an air of lightness. I love writing and have a frustrated writer inside of me. So, I can relate to the frustrated Ted Kazynski within Trader75.

    I feel like I am reading the Unabomber Manifesto on industrialism. I don’t usually disagree with someone to the point of stating so but your facts are highly disputable at best and factless at worst. There are not billions of Asians willing to work for a dollar. The majority of those billions don’t even have a house to live in. They live in a cardboard hut and live from day to day hoping to survive. McKinsey had a research report six months ago that said China’s growth would be gated by the lack of skilled labor. Does that sound familiar? The same dilemma in the US and India. There aren’t Mongolian Hordes waiting in the wings to destroy America any more than was the fact when the misguided were calling for us to bomb Japan again in the 1970s because of their cheap labor and unfair trade practices. It is every human being’s God given right to a better life. You know, as is stated in some sorts in our Consitution. But, I guess when the rest of the world was living in squalor, you felt better? Come on!

    Education is the answer to wage disparity. Not shutting down borders. Fair access to global markets is an ongoing process we continue to negotiate. It doesn’t happen overnight but it does continually improve. A relatively more open China, India and Russia is such a benefit to you and the human race as a whole. There will always be haves and have nots. When the haves get too much, we see a reversion to the mean. This will always exist for reasons beyond our control. You should be looking for our government to assistance with short term dislocations and retraining, which they are falling down on. You should be demanding your Congressperson push for intellectual property rights in foreign countries. You should be looking one step ahead and constantly (re)educating yourself. You should be writing your Congressionperson for continued opening of foreign markets. Because every person in the world should have a right to work their way out of a shithole of misery.

    And all of those places you want to retreat to, are only desirable because of America’s prosperity. America is stronger now than ever. Imbalances? Sure. Problems? Yes. When haven’t we had them? Not too often in our history. We are still the absolute envy of the world in every sense. As bad as it may seem right now, it doesn’t get any better any place else.

    Finally, America’s wage disparity is a highly complex topic. It cannot be boiled down to foreign competition by people making a buck. If it were, Caterpillar wouldn’t be paying UAW wages and destroying all foreign competitors in their own markets. And nor would Toyota be paying UAW equivalent wages in the US while GM moves its factories to Mexico.

  11. PC commented on Mar 13

    1) “assure fair trade”

    This, from an American? Am I the only one who sees just a smidgen of irony in this comment?

    Hmm…profit massively from unfair trade for 60 years, then start mewling for “fairness” when others decide to have a go at it and threaten a “way of life”. Excuse me, this is not meant to be malicious, but please…

    2) “The US appears to be on the superhighway to becoming like the Europe we used to poke fun at…High unemployment”

    Uh, you already do. Read a truly great fellow American, the economist John Williams (Shadow Government statistics). Putting away +2 million of your fellow citizens also helps with those unemployment stats…

    At the risk of sounding like a dyed in the wool anti-American (which I’m not), I have to agree with HS: “amazing comments!”

    On a more general note, keep up the great work Barry!

  12. JoshK commented on Mar 13

    I grew up as what was commonly called poor. Today, I see how poor people live, and I can’t beleive we use the same term. Standards of living and quality of life are rising.

    I read somewhere that the median house now is about 50% bigger than 20 years ago. I think that’s consistent with most of what goes on in the US.

    Someone above complained about the elimination of pensions, as a sign of the poor getting poorer. I don’t think that’s fair in any way. As the economy and standards of living have grown, lifespans have shot ahead. This makes providing a typical pension to an employee retiring at 55 much more expensive than ever before.

    It’s easy to pretend that we can just tax away at the top and pay for all kinds of benefit programs, but there are not that many rich people out there. (Or rather there are hundreds of millions of people who aren’t rich).

    One of the big shifts is organized labor loosing its grip. People try to paint that as harmful to the average working person. The reality has always been that unions just transfer income from non-unionized working people to those who are unionized. This is at the same time as the unions fight against productivity boosting innovation.

    I can’t imagine anyone I know (outside of a union employee) pining to return to how things were 10,20,30,40 years ago.

  13. GRL commented on Mar 13

    I went to the EPI website linked to here, and, in rooting around, I found the following very interesting link to a discussion of federal government interest payments to foreigners:

    Given the stupidity shown by our elected representatives on the “Ports Deal,” can Congressional efforts to limit foreign receipt of interest payments be far behind?

  14. trader75 commented on Mar 13

    “You know blogging should be taken with an air of lightness. I love writing and have a frustrated writer inside of me. So, I can relate to the frustrated Ted Kazynski within Trader75.”

    Dear ‘B’: That is an unnecessary low blow, sir. I don’t recall railing against technology or advocating violence of any kind. If anything I am an anti-Kazinski, just calling it like it is.

    Furthermore, I think you might be conflating my view with someone else’s. Protectionism makes me sick. When I point out that hundreds of millions are joining the ranks of capitalists, I see that as a good thing, not a bad one. Just so happens that the reality of globalization is going to destroy the western welfare state.

    This is not because globalization is bad… it is because the western welfare state was built on a temporary anomaly. For a very long time, a small portion of the world’s citizens had cheap access to all the world’s resources. Now that the other four-fifths of humanity are getting into the game, that access isn’t so cheap anymore. When I hear a factory worker bitching about losing his $30 an hour job to an overseas worker making $1 an hour, to be honest, my sympathy goes to the guy overseas. Working for $1 an hour is better off than starving, and I see no moral reasons why Americans have the right to “protect” their jobs from competition if they are simultaneously blockading entrants to the marketplace.

    The America first attitude is disgusting in a lot of ways. For example, look at what labor and farm lobbyists have done to Africa as a country. The two export products Africans could use to pull themselves out of poverty–agriculture and textiles—are basically off limits because of rich world lobbying interests. A similar story applies to all these fuzzy headed activists who bitch at Nike for creating low-paying jobs where no jobs of any kind existed before. Its backwards.

    So just to clarify, I completely agree that everyone deserves a better chance at life. I just happen to extend that position to everyone, not just Americans. That is what meritocracy and competition are all about. In casting me as some luddite protectionist, you seem to have confused your posts.

    Furthermore, you can continue to believe that America is the cock of the walk — and I can continue to believe that people like you are smoking plastic. No offense.

    It is fairly obvious what we are doing. GM is a microcosm for America’s woes. As a whole we are no longer competitive on a labor cost basis, thanks to legacy costs, and the competition is getting ready to run rings around us. The iPod economy is a nice feature, but it’s like one profitable division of a huge flailing conglomerate. GM might do well selling Hummer H2s, but that won’t save the beast.

    Caroline Baum had a good piece today on how foreign purchases of treasuries are not economically stimulative. She is half right: those purchases are credit-stimulative, allowing us to borrow more as our consumption of imports go up. This is not the modus operandi of a healthy, thriving economy. It is the MO of a country going down the tubes and trying to pretend nothing is wrong.

    I am not a bitter guy. Personally I have nothing to be bitter about. I don’t own any US real estate, I have the ability to work from anywhere in the world, and I plan to relocate when the time to relocate is right. You will notice that veiled threats have been made in this very thread–not by me, but directed AT guys like me, who don’t see themselves as cows to be milked and have the capital / physical mobility to do something about it.

    What we are witnessing here is bigger than you or me, bigger than any politician, bigger than any political party. Globalization is changing the came completely, turning it upside down. The world is about to go through hell so we can come out with something better on the other side. That ‘something’ is the rise of knowledge economies unencumbered by the onerous burdens of a bloated welfare state. There will be winners and losers, as there have always been in every great paradigm shift of capitalism and commerce. It just so happens that 20th century western welfare states will be on the losing side this time. End of story. T’ain’t sour grapes or apoclyptic prophecy of doom, just an objective view of what’s coming next.

    As a cool cat once said, It is what it is.

  15. Lord commented on Mar 13

    America isn’t running out of brains, it is being flooded with them. As a result brains aren’t worth what they used to be. Higher productivity doesn’t mean jobs are becoming more difficult; it means more expensive employees are being eliminated. Education isn’t the answer. Education is a readily exportable good and one that can’t compete with that in an emerging market. Everyone wanting to get their own and move to a sandy beach is a sign of the problem. The hell with everyone else, I’ve got mine, crowd will find declining economies are subject to increasing corruption and violence, even on sandy beaches. Especially on sandy beaches.

  16. Movie Guy commented on Mar 13


    You are correct about the growing economic disparity in the United States of America.

    There are no readily available solutions based on existing U.S. trade policy, WTO allowable trade practices, and lack of global labor, production taxation and environmental minimum standards, and weak currency valuation oversight by the U.S. Treasury and IMF.

    We have embarked on trade merchant and production factors journeys that have significant consequences for the American economy, and the ability of the lower fifty to sixty percentile of consumers to stay in the economic game at existing levels of purchasing power.

    Whether such growing U.S. household income disparities will ultimately cause a deflationary pricing cycle remains as an issue of significant concern.

    The existing U.S. economic base and employment environments are failures by economists, policymakers, and some analysts to fully appreciate the implications of implementing U.S. and WTO trade policies as depicted in the following global economic analysis that I developed last year:

    Economic Hydrology Theory

    The Future of Domestic Production versus Offshoring and Outsourcing to Foreign Locations

    Once the WTO and national governments improved the opportunities for corporations to invest in the least expensive global production locations, the stage was set. Coupled with continually improving transportation and communications efficiencies, the successes of offshoring and outsourcing corporations which led the way were met by competitive desires of other corporations to also seek new lowest cost production sources. At present, over 450 of 500 top U.S. corporations have operations in China, as an example.

    Unimpeded and with regard to available skill levels and technologies, corporations will seek out the lowest cost blue collar and white collar production sources on the planet and will create new production empires in those locations as fit their market needs. Currency manipulations and other foreign and domestic government incentives that improve foreign-based blue collar and white collar production opportunities increase the rate of flow or transference to such locations.

    The larger concentration of global production in lowest cost production environments results in a convergence of foreign direct investment (FDI) monies targeted toward achieving greater scales of production at these locations. This effort, in turn, minimizes the need for investment and development elsewhere by such corporations which further eliminates the logistical and technical support chains that previously existed for duplicate operations at facility locations in other nations. The results are reduced overall investment costs, reduced production costs, labor substitution, and reduction of related supporting logistical and technical support services and employment in other nations.

    Plan A is well underway. The implications are clear.

    We need a Plan B.

  17. CDizzle commented on Mar 13

    Lord’s comments = bulls-eye.

  18. trader75 commented on Mar 13

    “The hell with everyone else, I’ve got mine, crowd will find declining economies are subject to increasing corruption and violence, even on sandy beaches. Especially on sandy beaches.”

    Let the spin begin!

    I’m not trying to pick fights here guys, really I’m not… but this was another barb directed at my comments.

    I have a feeling we’ll be seeing a lot more rhetoric like this in the next few years — the “selfish” crowd, the “hell with everyone else” crowd yada yada yada.

    It’s one thing to be a tax cheat and go out of your way to avoid reasonable taxation. It’s another thing to protect your family and your assets when you see confiscatory tax rates and vicious protectionist rhetoric coming down the pike.

    Heck, we’re already seeing the escalation of scary rhetoric in this very discussion. ‘Terry’ advocates back door socialism and protectionist policies, ‘me’ threatens violence to those who are seen as the bourgeoisie (sp?) when the shit hits the fan, and now ‘Lord’ paints the expatriate crowd as greedy bastards saying “hell with everyone else, I’ve got mine.”

    I love America. I love what America has done for the world, what America has given the world in terms of freedom, prosperity, technology, inspiration, and so on. But my love for America doesn’t mean I have to let some populist politician reach inside my shirt and squeeze me til I’m purple. There is nothing patriotic in going down with the ship, and nothing deplorable in looking out for your own. If the country I love abandons its meritocratic ideals and threatens my pursuit of happiness through quasi-socialist confiscatory policies, then you’re damn right I’m going to pack my bags. Since when is submitting to armed robbery a moral obligation.

  19. Suresh commented on Mar 13

    I must confess some confusion as to the debate here. Does anyone realistically think that globalized trade is stoppable? I don’t. I think the best that those of us in the West can do is to limit our exposure to the unhelpful effects of globalization, e.g., average per capita income compression. How do you do that? In your professional life, get a job in a nontradeable product/service industry. That may involve high level design work, regulatory work, or a customer-facing position, for example. If you choose not to do so, there are consequences. In your personal financial life, limit your liabilities and expenses to insulate yourself from rising interest rates in a depreciating dollar environment, and acquire capital-appreciating and/or income-generating assets to diversify yourself away from job-related income. Why? Because lower average per capita income likely means higher taxes on the upper end of the income spectrum. Again, if you choose not to do so, there are consequences.

    What else can be done, and what’s the point of crying about a phenomenon that won’t be turned around?

  20. B commented on Mar 13

    All I can say to this never ending nonsensical thread is thank God George Bush gets something. He gets this. And thank God the protectionists and doomsayers aren’t running our country. Although many seem to be running Congress.

  21. JoshK commented on Mar 13

    If you look back throughout industrial history, there has always been panic over the outsourcing of labor and the erosion of good paying jobs to foreigners who will work for a few pence. And of course, doom is near with the collapse around the corner.

    People rioted against the Irish immigrants in England not so long ago as they were the threat to entrenched middle class prosperity.

  22. me commented on Mar 13

    It always amazes me how the free lunch crowd that pushes labor arbitrage just keeps saying the same thing.

    Education? Education in what? Even Forbes has said that a college education probably won’t pay for itself anymore. The more education you get, the cheaper the cheap foreign labor is in comparison. And we are not talking quality; IBM and Intel sit down and look at cheap.

    Education at what? When you are mid-50s, now I am reading that grad schools won’t let them in because where are you going to get a job? Who will hire you?

    I also love that part about how workers play by the rules and now all that deferred compensation is just too expensive, we can’t afford it. Well it was earned. It’s not a gift. Why don’t the Gerstner’s and Palmisanno’s and Fiorina’s give up anything? Oh we can afford them.

    You have never convinced me how it is a good thing when I Delta pilot, or Auto worker, or IBM or Intel worker works their entire life with a financial plan, pension + healthcare+ social security+ savings = retirement. Now, its well baby, whatever you saved because we are making the rest disappear.

    So to those of you that think this is a great system I will tell you this. 40 years ago when I got drafted and served, if I knew it would turn out like this I would have gone to Canada and never looked back.

    When the only rules become there are no rules, especially at the end of peoples working careers when their peak earning years are lost is not any free markets or globalization I was taught or looked forward to.

    Its not any different than working your way up from $8 and hour to $10 an hour at Walmart and then getting fired becuase you cost too much. So you are replaced with another $8 per hour person.

    Work hard and be rewarded is not a statement that applies to this country anymore.

    Me, I am bitter. I spent a lifetime, an entire career working so that I would not be in the position of mid-50s and unemployed. I have 4 years of grad school.

    So keep on partying and glorifying globilzation. But remember this, the next war the republicans start you may have to have Indians design you weapons and buy them from China. Not that is a secure thought.

  23. tom commented on Mar 13

    An American company today, a global company tomorrow, will global conglomerates have company interests or national interests at the decision table ? (not including China).

  24. trader75 commented on Mar 13

    In his book “naked economics,” Charles Whelan does a great job covering both sides of the equation.

    Among other things, he discusses how globalization is good for everyone in the broad sense — but then points out that for many it is a permanently raw deal. He gives the example of shoe factory workers in Maine who, because of globalization, have seen jobs lost that will never return. Ever.

    What does a disenfranchised western worker care about globalization’s long run benefits, if the net effect on his life is a permanently reduced standard of living. The frustration is understandable, and logical from an individual’s perspective.

    That doesn’t take away from globalization’s merits, however. And in regards to “fair,” what about those people who were living in real poverty before the advent of globalization.

    How fair is it that, for most of the 20th century, being born in a western country was the equivalent of winning the economic lottery because the rest of the world was so destitute.

    Can you imagine how western cries of “not fair” sound to an Indian or Chinese capitalist who saw his parents and grandparents eke out an existence as subsistence farmers? How “not fair” sounds to an African who is still eking out a subsistence living because the developed world refuses to buy his crops?

    When you consider that our standard of poverty (two color televisions, three squares, heat and AC) is most of the developing world’s standard of luxury and prosperity, western cries of “not fair” seem all the more hard to take.

    At the end of the day there is no intrinsic fairness in markets and no intrinsic fairness in this world. There is only reality. We can do what we can, and try to be on the side of right rather than wrong as the landscape changes, but there’s no use pretending things aren’t the way they are. Creative destruction means great opportunity for some and great pain for others. Where you stand depends on where you sit.

  25. B commented on Mar 13

    You speak of issues that are not rooted in fair trade. They are societal issues. And we can all relate because there but for the grace of God go I.

    The issues you are referring to may come from the same cloth or may not. But they are rooted in greed, loss of morality and other rather perverse human traits of our generation. Our ethos.

    It is the price individuals have paid because our government sucks at the hind tit of corporatism. Both sides have for a long time. That is one reason why I would love to see their reign as kings and queens broken with a new party. But neither one wants that so they work together to defeat such changes with attempts to bamboozle us all. I don’t know if that will ever change but many of the things you have spoken of are criminal IMO. Working under and implied work contract and someone pulls the rug out from under your pension through a loophole is about as sickening as it gets. The only thing more sickening is your Congressperson is so attached to that tit that they turn a blind eye. Grandfathering something new in because people are living much longer is legitimate. Companies cannot be expected to provide for someone who has worked thirty years and will live another forty.

    These are things which will drive changes to our ethos. The next generation of young workers already have a different mindset. And so will their society when they become old enough to dominate it as our generation currently does.

    And if someone is telling you that you won’t be admitted to school because you are too old, maybe you need to do a little manipulating yourself and hire an attorney.

  26. terry commented on Mar 13

    Well I see that I aroused Trader 75’s ire. Here is my point. Trader 75 and likely everyone on this blog would be working for one of a couple of dozen people today if the antitrust laws had not been enacted in the late 19th century. Those laws interfered with the free market capitalism of the day and helped produce the greatest economy on earth–an economy which as several posts point out unfairly consumed and continues to consume, a disproportionate share of the world’s resources. I am sure the business folk of the day were not happy with the laws and pointed out that it was punishing those who through hard work, ingenuity etc had managed to become the dominant seller in the marketplace. I am sure many suggested it was the first step toward communism or some similar anti-capitalist system. Despite large numbers of socialists and communists in the first years of the 20th century in this country, the US did not turn toward these alternative models, in large part because folks had a chance to work for themselves rather than the monopolists and the rise in labor unions gave the average guy some clout. Even during the Depression, FDR managed to damp down some rather serious social unrest, by providing the average worker a New Deal–one I might add that the average worker paid for and still pays for with dollar one while the well to do clip coupons and pay a lower percentage of total tax then the guys whose jobs gets outsourced. We are not and never have been a “welfare state”. There is no question that the standards of living in this country have consistently ranked quite high by world standards, but the poorest people in this country have infant mortality rates rivaling those in Asia and Africa, a good number of children go to bed hungry every night, despair is rampant and violence is as everpresent as it is in Haiti. The glue has been a large middle class which I grant you has its excesses, but those excesses have been fueled by Trader 75’s friends who have successfully marketed all those goods made in Asia by folks working 16 hour days for a dollar or two. As that middle class shrinks and edges ever closer to the poor, the political climate will change as well. The shell game played by the current politicians can only last so long. It is at that point that Trader 75 will want to leave for his/her imagined sandy beach and that presumably will be his/her right. Personally, I have a bit more affection for my native land and would prefer to see solutions to problems rather than let the entire world sink into a dystopian nightmare where a tiny fraction live in opulent splendor presumably with extensive security arrangments to keep the masses away. Trader 75 seems to think that he/she is paying taxes to support a bunch of ner do well slackards, without the brains or ambition to support themselves. From everything I can find, most of the taxes I pay–and I may well pay more than Trader 75 -goes to pay for things like the military, interest on the national debt, income and health care for my aged father (who made enough money during his working life to feed,clothe and educate 10 children, all the while paying taxes at a rate much higher than anything Trader75 pays today) and a tiny bit to try to educate, house and feed my less fortunate fellow citizens as well as provide all manner of subsidies to corporations. Locally, I pay a hell of a lot in property taxes, but I have police and fire protection, my garbage gets picked up, and the school system that educated my children is why people want to live in my community and why I can sell my house for a lot more than I paid for it. Do I like paying taxes? Of course not, but I am not so pathologically concerned about paying taxes that I would not be willing to pay more if it made this country a better place to live. I guess I also wonder when Trader 75 is living the life of an expatriate whether there is going to be any demand for his/her service. Everyone can rail about how America is falling behind in this or that or the next thing, but we still lead the world in consumption. As the original post noted that is not sustainable with current trends–those Asian kids are going to be out of work again when all the home equity is gone and no one can afford a pair of Nikes. Even Henry Ford saw the link between paying workers so they could buy his cars and he was no socialist. So Trader 75, you can be your island and you can dress up your posts with comments about the welfare state and socialism, but at the end of the day you are the problem, not part of the solution.

  27. trader75 commented on Mar 13

    “Personally, I have a bit more affection for my native land and would prefer to see solutions to problems rather than let the entire world sink into a dystopian nightmare…”

    You and me both Terry. If there were clear solutions to this mess, I would be all for them.

    Got any suggestions?

    No one is rubbing their hands with glee here. I would “personally rather see a solution” too. Wouldn’t everyone?

    It just so happens that protectionism is not a workable solution to the problems of globalization. Nor is continuing to expand the trade deficit forever, spending borrowed money as if an infinite credit line were part of America’s birthright. Nor is trying to sweep the reality of global competition under the carpet, denying others the right to compete in the name of economic patriotism. Nor is trying to pretend “we are all winners” in this process. Clearly there are losers. Such band-aids are “solutions” in name only.

    I am just calling it like it is here: the west’s current path is not sustainable, and there is no way to avoid the massive dislocation that is coming. Evolution is inherently a messy, chaotic and sometimes violent process. Such has always been the case. Such is the case with markets and globalization.

    Most Americans were happy to poke fun at anti-competitive Europeans crying about the breakdown of their unsustainable social welfare system and the American assault of ‘jungle capitalism.’ Now the shoe is on the other foot. It’s natural to be mad when you get the short end of the stick. But it’s not very sportsmanlike.

    Nor am I “pathologically concerned” with taxes as your strawman betrayal suggests. In fact I stated the opposite: I specifically said I would be leaving my country if / when tax rates reached CONFISCATORY levels… which, by definition, is a very different state of affairs than reasonable taxation for services rendered.

    As for America continuing to lead the world in consumption… do you realize that many view that type of statement as a form of blackmail? Larry Summers once called it “the balance of economic terror.”

    As in ‘Hey Asia, you better continue extending credit to us mass consuming Americans, or things will be pretty terrible for you.’ Is it any wonder that Asians are resentful of this view, and committed to building up domestic demand as quickly as they can? What happens when they succeed in making the transition from an export-dependent region to an internally consistent one? How will they feel then about America’s argument that “you better gimme more credit, I’m your biggest customer?”

    I may have come across as mean and callous in this thread… but I don’t see the virtue in pretending a situation is better than it is. Facing up to reality is better than pretending there is some noble deus ex machina that heretofore hasn’t been discovered.

    We can talk all we want about how great our historical heritage is, how important fairness is, how important the glue of society is, and so forth… but if there are no solutions, there are no solutions. Our friends in China, India and the middle east will not cry for us when the piper’s bill comes due. They will shake their heads and say “business is business,” just as we’ve said to them all these years.

    I may be a part of the problem… if telling the unvarnished truth as I see it is a problem. There’s just no way to get off the pain train here. Maybe if people were more fiscally responsible… but they aren’t, and it’s a day late and a dollar short for fiscal responsibility anyway. Maybe if our elected politicians were sensible, moral people… but they’re not. There is such a thing a “tipping point,” such a thing as “too late.” We are past the tipping point, and I think it’s too late. I could be wrong…. but once again, it is what it is.

    End of rant. And my last post on this thread.

  28. Movie Guy commented on Mar 13

    There are plenty of solutions to this situation.

    “God” didn’t reach out and create the advanced globalization problem. Nations’ governments did.

    It’s simply a matter of thinking it through and applying solutions that you are willing to implement at the national level.

    The head in the sand mentality isn’t a viable approach. There is plenty of “we can’t do anything” thinking among the inexperienced crowd, but that’s total BS.

    If some of you are still convinced that nothing in the whole world can be done to a manmade economic creation (little more than a thought written down as trade policy), then think about this scenario:

    1. An advanced society (Alpha 1) hidden deep in the planet, above and beyond the planet surface, has the resources, technology, and means to produce all finished goods and food products at prices cheaper than available anywhere in the world.

    2. The society’s finished goods and food products enter the global marketplace and displace all other goods and food products in terms of net price to middlemen and retailers.

    3. The society tackles global financial and other services not requiring physical on site presence to perform work tasks. Again, the society’s available service products displace all global services in terms of net price to end users.

    4. Alpha 1 eliminated all production of goods, food, and provision of services for end users by other global sources.

    Q: What do you and all other individuals intend to do for a living to pay for the goods and services each week and month? You’re left with merchant jobs and very little else.

    Alpha 1 bills at the end of each month.

    What’s your plan?

    (this is no different than offshoring and outsourcing bumped up a few levels.)

    Solve your problem.

  29. Mr. Sammler commented on Mar 13


    I agree with your take on the issues. I see the growth of populist politics, and view it as a ploy by our rulers to simply increase state power.

    Unfortunately, family responsibilities will keep me planted here in the US for the time being.

    What might be some defensive actions one might take to preserve wealth if leaving the country is not an option?

  30. Mr. Sammler commented on Mar 13


    Of course Henry Ford was not a socialist.

    He was a fascist and a state corporatist. He thought Hitler was just swell, and he believed in what JK Galbraith would later call “the New Industrial State”.

    You know, that planster’s vision of the Good Economy in which a wise council of Knowers carefully adjusts the price of zinc or demand for grommets through raw coercive power, and summary executions of noncompliant merchants if need be.

  31. CHRIS commented on Mar 13

    As i read all these responses i have to wonder what happened to England when they were put second with a booming U.S.A. manufacturing economy.How has England lasted all these years without being competitive in manufacturing or services?

  32. Rahul Virmani commented on Mar 13

    US Trade Deficit is on tract to hit $900 Billion.

    The Physical Economy of the US is deteriorating, the tool and dye infrastructure will soon be gone (with the Automotive Industry).

    Basically the US is being sold off piece by piece.

    Talking about “helping”the billions of China and India, is beside the point. The current IMF/WTO system is the problem. It is unsustainable.

    Dollar Hegemony creates the curious problem in all of the countries with current account surpluses (they have to put them into Central Bank Reserves to avoid inflating their economies).

    This entire system is hardly “free trade” you have to be a complete moron to not see this.

    Enjoy Dollar Hegemony, but don’t pretend that this is “free trade” it is not.

    India and China need to import Capital despite their large foreign reserves (Because you cannot invest US dollars in anything by US Securities).

    Possibly Barry could shed some light on how our present US Dollar based Global trade system really works.

    This is a highly contrived system, and it is enforced by the IMF/WTO/World Bank and linked to the Federal Reserve also.

    It is not designed to be beneficial for the vast majority of the inhabitants of this planet.


  33. George commented on Mar 13

    Anyone care to put a number on exactly what tax rate would constitute “confiscatory”? There are middle class wage slaves getting clipped with regressive fica, flat state and local rates, and marginal federal rates not much different than mine, and they don’t enjoy the sweet deal I get on divs and cg. In some of the discussion above, I detected a whiff of the “I made my fortune all by myself and don’t owe anybody nuthin” school of thought. Of course, as most of you obviously are aware, the societies and markets without which we could not make our money cost something to maintain.

    In the corporate environment that I once inhabited, the most highly compensated individuals had more in common with playground bullies and thugs than with people who actually generated value. IMHO our country would be a hell of a lot better off if we got rid of some of our income inequality. Let’s not turn America into Brasil, because I don’t want to mess up my landscaping with machine gun towers and razor wire.

  34. SoCal Chris commented on Mar 14

    “John Q is up the creek.”

    Maybe it’s the Mexicans’ fault for hoarding our newly won low-level service jobs …

    — Excerpt from CNN’s In The Money (3/11/06) —

    MARK KRIKORIAN, CENTER FOR IMMIGRATION STUDIES: Well we have some research coming out pretty soon … what we have found is that there has been a pretty consistent working increase in the number of working age Americans who are dropping out of the labor market all together.

    ANDY SERWER, EDITOR AT LARGE, “FORTUNE” MAGAZINE: Yes but what is the connection to immigrants?

    KRIKORIAN: It seems to be pretty clear. My researchers looked at it in a variety of different ways … It does seem to be driven by the continual increase in low-skilled immigration.


  35. kennycan commented on Mar 14

    Since Henry Ford thought Hitler’s policies were “swell”, and Hitler was a fascist, and fascism is a left wing socialist system, wasn’t Henry Ford, in fact, a Socialist?

    Somewhere around 40% starts to become confiscatory and above 50% is definitely confiscatory. In the 30% range it depends on what one gets for their taxes to determine. How’s that for a rough definition in the current environment?

    Of course 1% could be confiscatory if nothing is given in return.

    Where did you get the capital to get such a sweet deal on cg and divs, George? Did you work and pay taxes along the way, and then save rather than consume, so that one day you had enough capital to invest in businesses that produce growth and income? Or did you inherit it?

  36. Eclectic commented on Mar 14

    Imagine the earth has no oceans and only one continent, and that all population is evenly divided across one perfectly straight line.

    In other words; there’s only an East and a West, and every citizen on either side is edged so closely to the line that they can feel the breath of their counterpart across the line.

    If at one exact point on one side of the line, workers make a decent wage and have fair working conditions, have a clean environment, are respectful of human rights, observe reasonable contract and intellectual property law… and have personal freedom…

    … then, how on God’s earth can the persons at that point exchange goods and services with those persons immediately across the line, when those across the line work for 10 cents and hour, live in squalor, are oppressed by their governments, ignore patent and contract law, and abuse the environment?

    Such a point can not be sustained in equilibrium. Either the squalor and oppression will be sustained, and spread… or the freedom, lawfulness and fairness will.

    That line, which only appears to shield your vision from your unfortunate counterpart across the line, is the stack of loaded containerized freight units waiting for port entry… and the corresponding stack of empties waiting to be loaded for export.

  37. brian commented on Mar 14

    There will soon be another novel entitled “The Beach”. It opens with the self congratulatory acolytes of Ayn Rand, (reading ghandi in paperback) stuffing and sunning themselves in lavish well-guarded tropical seclusion……Hungry eyes watch from the foliage….

  38. Eclectic commented on Mar 14

    There’d be a chapter in “Beach”… with Ayn Rand holding a copy of “The Wealth of Nations” and arguing with Adam Smith about capitalism.

    She’d be upbraiding Smith for losing his faith when he’d written in “Wealth” about dealers [my emphasis would be import dealers] and their conflicts of interest with their fellow countrymen… and she’d be pointing at this passage:

    “It [rules arising from the interests of dealers] comes from an order of men whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.”

    Smith might then reply with an imaginary retort that, “meaning no disrespect to you Madam, nor to Bush, Greenspan or the near-nightly idolic praises given me by Larry Kudlow, I have never endorsed unrestrained free-market capitalism in the way that you and they believe I have.”

  39. Mr. Sammler commented on Mar 14

    I prefer the upcoming novel titled, “The Shop”, in which a humble merchant sells goods and services to the townspeople for a small profit.

    The townspeople like his store, and though he works too much, he is a successful businessman. He is a saver. He is able, through budgeting and investing (really, diversifying, since his business itself has huge risks), to accumulate a little wealth.

    But hungry eyes watch from town hall. “Look”, they say, “look at the obscene profits made by Mr. Merchant. There are people who can’t even afford a single gimcrack or widget, and Mr. Merchant’s store is loaded with them!”

    And so they raise this fee, and that tax, and since they put import duties on zinc and grommets, the price of the inputs goes up, too. So the price of the goods hand services has to go up. And they repeal the law prohibiting panhandling on public sidewalks, so instead of Old Joe coming around asking to help clean the store (and getting paid reasonably for it), he now no longer bothers to clean himself up, but terrorizes passers-by (and makes out handsomely for it).

    And the hungry eyes at town hall pass more laws and more taxes, quoting Adam Smith all the while (especially the loopy parts about moral sentiments).

    It continues for a while, and the merchant decides enough’s enough. He closes his shop. His careful habits allow him to live without the income.

    The townspeople see this and, whooped up by the Adam-Smith-quoting bureaucrats, loot the merchant’s house and bank account. “How dare someone do nothing,” they exclaim, “while others slave away?”

  40. Anonymous commented on Mar 14

    “The question whether objective truth can be attributed to human thinking is not a question of theory but is a practical question. Man must prove the truth, i.e., the reality and power, the this-worldliness of his thinking in practice.” –Karl Marx

  41. Des commented on Mar 14

    “…freedom, lawfulness, and fairness…”

    Pick two.

  42. JoshK commented on Mar 14

    Wow, people have a lot of time here to type away.

    My understanding is that Ford primarily liked Hitler because of racial policy. Ford paid for reprinting Protocols of the Elders of Zion here and was notoriously picky about the “moral” characteristics of his work force. He paid more, not so they could afford cars, as one of the conspiracy theorists above conjectured – but to be able to assert a very tight level of control over his employees, including monitoring their personal hygene.

    What I don’t understand about all of the people here who are so against free trade is why they are (I assume ) for free trade amonst US states, or between US cities. After all, if I live in NYC and buy strawberries from Maine, aren’t I destroying good NYC jobs and sending them to a place of lower cost labor?

    And for all of you who decry the free market as inefficient and inherently flawed, how can you possibly make a state controlled system that is any better? At least private enterprises can respond to price signals and go bankrupt. The gvt never does.

    And remember, countries like Brazil and Bolivia only got the way they are by pursuing socialist policies. Strong property rights and the rule of law have a very strong, if not perfect, correlation with standard of living.

  43. me commented on Mar 14

    Talk about apples and oranges JoshK.

    Do the people in Maine pay social security and income taxes to this country? Do they have environmental standards that make it safe to eat thsoe strawberries. Are the workers paid a uniform minimum wage across states? Really.

    From Erik Jones, Bologna, Italy in today Financial Times:

    “The importance of incentives was not lost on Keynes, who noted at the end of his General Theory that full employment is a necessary prerequisite for maintaining support for (and benefits from) free trade. How is it that our ardent reformers have forgotten this insight?”

  44. JoshK commented on Mar 14


    First of all, @4.8, that’s as close to full as you’re going to get.

    2nd of all, for the people working in these other countries, these wages have lifted them out of poverty by the 100’s of millions. Don’t you understand that forcing a min wage would improvrish and disemploy many of these people?

    “Do the people in Maine pay social security and income taxes to this country?”
    So you’re saying that SS and income taxes decrease employment (by creating disincentives) and make it harder to hire and do business? I’m not going to argue. Good point.

  45. me commented on Mar 14

    “First of all, @4.8, that’s as close to full as you’re going to get.”

    BS. When I have a job then it will be full employemet. You are another one that counts “freelance consultants” doing their old job at half the pay and no benefits. Almost everyone acknowledges (but you) that unemployement is much higher.

    “these wages have lifted them out of poverty by the 100’s of millions. ”

    Screw those millions as you say. When it took me to lose my job, my pension, my healthcare, my standard of living, I don’t give two shits about them. Charity begins at home and I don’t ahve anything to give them. I have given plenty.

    It is convenient for people like you to chose what you want to answer. Environmental standards? Hey, no mention in your answer. But in Pittsburgh there is a restaurant chain out of business and 700 people contacted hepatitis A and 3 died from eating green onions from Mexico.

  46. JoshK commented on Mar 14


    “BS. When I have a job then it will be full employemet.”
    That’s not the definition. There will always be someone who is unemployed for some period of time.

    “Almost everyone acknowledges (but you) that unemployement is much higher.”
    That’s not true. These numbers are collected without much change. Some people disagree, but that is a minority of opinion.

    “Screw those millions as you say. When it took me to lose my job, my pension, my healthcare, my standard of living, I don’t give two shits about them.”
    There are many winners and a few losers. You may be forced to accept less. I have had to go through that also. But, markets go up and down. Try to control them and it gets a lot worse. And I think those millions probably aren’t any less deserving than you or I.

    “Environmental standards? in Pittsburgh there is a restaurant chain… 700 people contacted hepatitis A and 3 died from eating green onions from Mexico.”
    Didn’t 15 people die from bad US meat at Jack-in-the-box? Regardless, it is difficult for poor countries to guard their environments as well as rich ones. The only solution is to help them get out of poverty as quickly as possible by extending globalization and employment.

  47. johnkonop commented on Mar 14

    I am posting this for all the people who think we can fix the problem with tort,regulation and tax reform. Plaese comment.

    Rep. Tom Price Digs a Hole to China

    Congressman Tom Price recently held a Telephone Town Hall to discuss the economy and taxes. He opened by calling the economy “relatively strong” and said he was “befuddled” by the media’s negativity regarding consumer confidence.

    The 1st Caller Asked About Trade

    She reminded her Congressman about the rapid and widespread loss of America’s manufacturing base to foreign companies. She reminded him that our national debt is “astronomical” and shared her deep disappointment with the trade deficit. She reminded him that our great nation was based on technology and manufacturing, which we are losing. She concluded by saying: “I’m all for participating in a global economy, but at what cost?”

    That last line is what Tom Price should have been telling her—not the other way around! Unfortunately for working Americans, that’s no where near what he said.

    Tom’s Answer Neatly Summarizes Why He Must be Removed from Congress

    He said: “The fundamentals of our economy—and why jobs move away from our shores—are no different than the economic costs for any business. Primarily, the things that drive economic costs for business are: taxation, litigation, and regulation. And so it’s important that we get a handle on those three things.” That’s it; end of answer.

    Translation: to be competitive America should model its taxation, litigation (i.e. liability/legal), and regulatory systems after the countries that are taking our jobs, such as China and India.

    Tom Price Wants Americans to Win the Race—to the Bottom!

    Let’s ignore for a moment his shocking failure to include wage differences on his list of reasons that “jobs are moving away from our shores”. Does he really believe that an endless supply of $2 per day foreign labor isn’t a factor?

    He (and too many others in Congress) are willing to move America toward:

    Communist China (which embraces child and forced labor)
    Mexico (with its justice-for-sale legal system)
    India (home to four of the world’s most polluted cities)

    Tom Price will avoid the mess he’s creating by relaxing in his multi-million dollar home and raking in his first-class, tax payer-subsidized retirement and health insurance benefits. The rest of us, however, will be left to fend for ourselves.

    A Formula for Economic and Social Disaster

    Unfair trade policies like NAFTA (and CAFTA, which Price voted for) are forcing American companies to reduce wages; hire cheap legal and illegal immigrants; outsource jobs; move operations overseas; and eliminate medical and retirement benefits—just to survive.

    Every major religion has spoken out against these unfair trade agreements—Tom Price, however, turns a deaf ear in favor of multinational corporations and their high-priced lobbyists.

    We Must Level the Playing Field

    John Konop’s answer is to negotiate fair trade deals that benefit the majority of Americans (not just an elite few). If a trade deal lowers the standard of living for most Americans, why do it?

  48. JoshK commented on Mar 14

    Is it OK for someone to outsource work being done in an NYC office to work being done in Kansas City? People there make a fraction of what we do here.

  49. Lord commented on Mar 14

    Call me an optimist but I believe in democracy, that it works when it has to, and that in the end, things will turn out for the best. It is the intermediate term that concerns me, and whether we are headed in the right or wrong direction.

  50. Mark commented on Mar 14

    After decades of enjoying a relatively free market, many Americans still wish for socialism or some sort of gov’t control. Well, to hell with them. I wish for economic and societal collapse and the freedom to hunt these crybabies for sport, and I think that it’s coming.

    “For what are states but large bandit bands, and what are bandit bands but small states?”
    -St. Augustine of Hippo

  51. Anonymous commented on Mar 14

    JoshK – Labor is free to move from NYC to Kansas. Many workers did just that as manufacturing moved into the South and mid-West over the last 50 years.

    Workers today don’t really have the option of moving to China.

    It’s impossible to have free trade until labor can move as freely as money.

  52. JoshK commented on Mar 14

    ” Labor is free to move from NYC to Kansas. Many workers did just that as manufacturing moved into the South and mid-West over the last 50 years… Workers today don’t really have the option of moving to China.”

    I hope that even the most hardened protectionist will at least admit that there were very few Americans of European descent here four hundred years ago. People did move, at great cost. Today few people would want to b/c they end up with a better standard of living here. But, there are plenty of MD types who go there b/c they do get a better deal with their companies. Our taxes go to pay for a very nice welfare state for many people here that is beyond what they would get in China. It makes little sense to go, even though it is physically pretty easy.

  53. Eclectic commented on Mar 14

    Mr. Sammler,

    Your setting shows us a picturesque merchant, living and working among his fellow townspeople… not an industrial terrorist.

    Your merchant is a lot more capable of providing the mechanism for a fair exchange of goods and services based on allocation of true costs.

    The industrial terrorist, on the other hand, will pile roofing nails 6-feet deep in your town, if he can extract even a temporary economic advantage over his competitors in order to sell them.

    If his business is roofing nails exclusively, and he can extract one additional unit of marginal profit from doing it, he’d melt down the world and employ every man, woman and child available to him, at any wage, and under any working conditions (laws permitting) until he finally exhausted his market for roofing nails.

    To me, capitalism is the much-preferred system, but it has flaws as well as socialism does (less so in my opinion). Its primary flaw is found in the failings of many proponents of unrestrained free-market capitalism to recognize it is not the perfect allocator of resources they often expound with religiosity.

  54. Eclectic commented on Mar 14

    Des: Sorry, but we have no choice of just 2. All 3 are necessary, if we are to keep our society from collapsing.

  55. JoshK commented on Mar 14


    “industrial terrorist”
    That’s like Haliburton, right? This is all part of the global-military-industrial-complex, right? Are there any ethnic groups that play more of a role than others in this? Jews perhaps? I’m curious and would like to learn more.

  56. trader75 commented on Mar 14

    Wow, this thing is still going — crazy.

    Lord said: “Call me an optimist but I believe in democracy, that it works when it has to, and that in the end, things will turn out for the best.”

    Not to throw stones Lord, but the historical precedent for your belief is skimpy at best.

    A more realistic view is that of Scottish historian Alexander Tytler, who wrote these prophetic words in the 17th century:

    “A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largess from the public treasury. From that time on the majority always votes for the candidates promising the most benefits from the public treasury, with the results that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.”

    “The average age of the world’s great civilizations has been 200 years. These nations have progressed through this sequence:

    “from bondage to spiritual faith;
    from spiritual faith to great courage;
    from courage to liberty;
    from liberty to abundance;
    from abundance to selfishness;
    from selfishness to complacency;
    from complacency to apathy;
    from apathy to dependency;
    from dependency back again to bondage.”

  57. JoshK commented on Mar 14

    It’s all those “industrial terrorists”.

    (I love that stuff)

  58. Eclectic commented on Mar 14

    I used ‘industrial terrorist’ as a metaphorical counterpoint to Mr. Sammler’s description of a congenial merchant.

    If there’s an ethnic overtone in what I wrote, I’m unaware of the tangent.

    I suppose ‘industrial terrorist’ is not an appropriate term, except in pure rhetoric. Maybe ‘irresponsible industrialism’ gets the point over without using overly aggressive rhetoric.

    I used a roofing nail dealer purely as an example of irresponsible and faulty allocation of resoures.

  59. kennycan commented on Mar 14

    Allocating resources to roofing nail dealers is irresponsible and faulty? Are they inherently evil? Or perhaps of a particular ethnic or religious group that makes it bad to allocate to them? Are all of them like that, or just most?

    I never knew these things before. Thanks for enlightening us.

    Down with roofing nail dealers!!! Come the revolution, they should be the first against the wall.

    This thread is really scary, actually…

  60. camille roy commented on Mar 15

    I think the solution to outsourcing is to require so-called American multi-nationals to fund and supply and run their own armies. That should be the cost of doing business, if you shaft your home country.

    No more sucking on the tit of the American taxpayer for you, dough boys. Time to get tough to survive in the global market place.

  61. Mark commented on Mar 16

    What if they say “no”. Should they be arrested and if they resist, shot? Will you be doing the dirty work, tough guy?
    I can’t wait for the deflationary depression and the resulting chaos to come so pro-gov’t goons can be hunted down for sport. No one should pay any taxes, unless they want to, especially to fund idiotic foreign wars.

    But I’m glad the US is in Iraq; it just brings the end of this empire sooner, and it kills and maims suckers for the fedgov.

  62. kennycan commented on Mar 17

    I guess my over the top sarcasm wasn’t readily apparent.

    The last deflationary depression the pro-government guys were doing the hunting (not literally – but they did outlaw gold and regulate everything), not the other way around. And that is what I find scary.

    Same thing happened in Russia in 1917 and Cambodia in 1975 (6?). All the people that made the country go were the first ones to go…

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