Populism and the Economics of Globalization [pdf]

It is too easy to forget that when a person is employed at $100k-$200k per year in the Bay Area, you want things like stopping climate change, more parks, more air, fair treatment, and above all, peace and prosperity.<p>When making $30k with absolutely zero hope of real increases in Atlanta being a warehouse worker for an industry that&#x27;s disappearing, the same person would burn all those things down, I would have said to get $10k more per year. Today I would say, getting an extra year at $30k is enough to justify the burnings.<p>We should think a bit more about Maslow&#x27;s hierarchy. If you can&#x27;t give people a decent living first, they will revolt if you try to &quot;make them matter&quot; or try to reach these lofty goals. You might think that wage improvements don&#x27;t matter if we don&#x27;t fix the climate, but the exact opposite is true.<p>I&#x27;m not making the point that the climate isn&#x27;t worth saving, racism doesn&#x27;t need solving if we can&#x27;t fix poverty and &quot;underemployment&quot;. I&#x27;m saying that we won&#x27;t succeed unless we fix that ... first.<p>Globalism produces beautiful iPads. But global average wage is $2k ... not per month. Per year. If you&#x27;re average, working in a non-booming industry, and of course most people are exactly that, that is a terrifying prospect. The sad part is ... yes killing globalization will make us all worse off, in terms of the country&#x27;s GDP. But it will lessen the gap between the 1% and the 99% (note that 2% is $97k per year, and as such anyone working in the Bay Area in IT is likely at least in the top 2%). Of course, mostly by making the 0.1% - 50% a LOT worse off (that&#x27;s anyone making less than about 2.6 million per year and more than $56k. Even in the Bay Area, that&#x27;s probably C-level wages).

The trouble with economic globalization is that we assumed that markets work and work well all over the world. That there would be an inevitable stable middle class built from the sheer power of market forces.<p>It turns out that those in power around the world have every incentive to keep the gains to themselves and keep their population desperate -- desperate people have to weigh their economic decisions against their physical well-being and continued existence and play the game not to gain power but not to lose everything. And our answer in the US seemed to be that the market is always right; if parity can&#x27;t be achieved by lifting the poor around the world up to a near-US level of middle class, then it must be reached by pushing the middle class in the US down to desperation level and reducing our overhead to compete on a world stage where other leaders in power can more easily ignore the negative externalities that they push on their population.<p>It was, in a word, stupid.<p>It is too easy for the wealthy of the greater world to ignore the problems they create at home by being &#x27;citizens of the world&#x27;.<p>I don&#x27;t agree with Trump on much but I do agree that relying upon the market to fix all ills hasn&#x27;t worked. We need to flex the economic muscle we have and tie trade to political reforms or find a way to bypass the powers that be and pull up the people directly. Otherwise, we are stuck in a race to the bottom.

The discussion on 4-9 is worth looking at. Among policymakers on both sides of the aisle, there is this reflexive recitation that trade increases economic efficiency. While that&#x27;s true, that assumes the purpose of national policy is to increase economic efficiency. To the contrary, the mandate of politicians in a Democracy is to improve the welfare of the majority of voters.<p>Likewise, the discussion on 13-15 is important. People don&#x27;t like the idea of valued social progress being undermined by unfair competition. There is an intuitive appeal to the idea that workers in America or Germany shouldn&#x27;t have to compete with workers in countries where child labor is accepted and environmental standards are non-existent.<p>People wonder why boring trade policy becomes such an emotional thing, and the article does a great job of explaining why. The reason is not just scapegoating, as apologists of globalism assume. Rather, there is a deep-seated belief that citizens of the world types simply don&#x27;t share our most basic values: that the government exists not to advance ideals, but the welfare of the polity; that social advances that are widely celebrated in the western world are worth more than economic efficiency, etc.[1]<p>[1] There is a reason even Trump campaigned on cleaning up the air and water. Even Americans who think the EPA or OSHA or DOL are out of control wouldn&#x27;t tolerate the labor and environmental standards that exist in Bangladesh or China.

You mean exporting the middle class and then undercutting upward mobility was doomed to face a political backlash? What a surprise.

For those who don&#x27;t want to click, here&#x27;s the abstract:<p>&gt; <i>Populism may seem like it has come out of nowhere, but it has been on the rise for a while. I argue that economic history and economic theory both provide ample grounds for anticipating that advanced stages of economic globalization would produce a political backlash. While the backlash may have been predictable, the specific form it took was less so. I distinguish between left-wing and right-wing variants of populism, which differ with respect to the societal cleavages that populist politicians highlight. The first has been predominant in Latin America, and the second in Europe. I argue that these different reactions are related to the relative salience of different types of globalization shocks.</i>

It wasn&#x27;t only predictable, but, in the US, its not even <i>new</i>; it&#x27;s been a significant, powerful feature of the political landscape and since almost precisely the time the Democratic Party leadership was conquered by the neoliberal&#x2F;DLC Third Way movement led by Bill Clinton. (Remember H. Ross Perot and the campaign that launched the party under whose banner Donald J. Trump would launch his <i>first</i> Presidential run in 2000?)<p>It&#x27;s had limited <i>policy</i> impact because the electoral system limits the scope of viable alternatives and both major parties have leveraged other divisive issues to keep the wide opposition to neoliberal policies from being electorally decisive.<p>The only real question given the durable and strong opposition in the electorate (cutting across the usual left&#x2F;right divide) to neoliberal globalization, was which major party would, rather than diverting from that, harness the opposition by nominaing a candidate willing to at least rhetorically reject the neoliberal globalist elite consensus first.

I don&#x27;t like the use of the word &quot;predictable&quot;.<p>I would qualify this populist uprising as a Black Swan[0], and as Taleb describes in his book, one of the common reactions to a black swan is to rationalize it&#x27;s obvious predictability after the fact.<p>Were there logical reasons to believe this populist uprising would occur? Of course (and this paper does a good job exploring them). Was it predictable? I don&#x27;t know. By and large most of us did not predict it, so I&#x27;m not so sure. Only with hindsight is this outcome &quot;obviously&quot; predictable.<p>0: <a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Black_swan_theory" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Black_swan_theory</a>

1. Labor has no pricing power.<p>2. All the spigots for cheap labor &amp; goods have been on full blast with no real sign of slowing - at all.<p>3. We can&#x27;t have a mature conversation in this country about adjusting the pace of change in society. It&#x27;s basically whatever capital wants, capital gets.<p>4. Since productivity gains were decoupled from labor&#x27;s wage increases in the late 1970&#x27;s, the notion of &quot;getting ahead&quot; by working &amp; providing labor is ultimately an exercise in irony.<p>5. Ameliorating these concerns by replacing them with race antagonism is deeply stupid.<p>6. Fundamentalism of all religious stripes is a conservative reaction against encroaching modernity, globalization &amp; cosmopolitanism - which upsets local power hierarchies &amp; is a threat to the status quo.<p>7. We need labor power with continued, but this time <i>measured</i> international engagement. Isolationism won&#x27;t work and is an over-reaction.

The biggest problem with Globalisation is that it doesn&#x27;t contribute to global economic development. It merely outsources manual labour and less profitable&#x2F;desirable work from rich countries to less-developed countries because of the price difference in labour.<p>Growing up I always imagined a world where the big cities of Africa could be just as developed as those in Europe, Asia or America. Instead we&#x27;ve been given a new form of colonialism where developed countries take the best minds from the developing world, and outsource all the work we don&#x27;t want to poor countries.<p>This of course hurts our working class, as well as contributing nothing to the actual development of poor countries. So it&#x27;s really no surprise that our working class is rebelling, as well as creating unrest in the developing world.

just a minor gripe: <i>was</i> predictable is lame. you either predict the future or you dont. you dont say that you could have predicted it. i get the point of the article, but its lame when people try to act like the &quot;could have predicted&quot; something, because they are using the fact that it happened.

The reason it was predictable can be explained by examining two concepts used in public policy theory:<p>Pareto Improvement: A change that is an improvement for at least one person and no worse for any other.<p>Kaldor-Hicks Improvement: A change such that those that are made better off could hypothetically compensate those that are made worse off and lead to a Pareto-improving outcome.<p>It turns out that people aren&#x27;t particularly thrilled with hypothetical compensation. Who could ever have imagined that?

Hm... I guess I would have a lot more respect for this author&#x27;s claim about the predictability of the rise of populism if she(?) has predicted it.<p>Perhaps she did, but this paper is dated this month.<p>Not to mention, prediction by itself isn&#x27;t worth much. Seeing it coming isn&#x27;t too useful if you can&#x27;t do something to change course. And being able to change course isn&#x27;t useful if you can&#x27;t find a better alternative to change course to.<p>Globalization didn&#x27;t arise out of policy decisions. It was a natural consequence of improvements in information technology and transportation technology (exponential in the case of IT). China isn&#x27;t some distant land. It&#x27;s our next door neighbor and has a view straight into our living room. Policy can guide or mitigate globalization, but it can&#x27;t stop it. You would have to roll back the changes in information and transportation to roll globalization back and that might be worse than the cure.<p>IMO, we should be focusing on policy that will prevent the benefits of globalization accruing only to people at the top, and not on stopping globalization.

Slavoj Žižek Explains Why He Chose Trump (Jan. 2017) <a href="https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=03k-NhQ3AKg" rel="nofollow">https:&#x2F;&#x2F;www.youtube.com&#x2F;watch?v=03k-NhQ3AKg</a>

&quot;I am convinced that if we are to get on to the right side of the world revolution, we as a nation must undergo a radical revolution of values. We must rapidly begin [applause], we must rapidly begin the shift from a thing-oriented society to a person-oriented society. <i>When machines and computers, profit motives and property rights, are considered more important than people, the giant triplets of racism, extreme materialism, and militarism are incapable of being conquered.</i><p>A true revolution of values will soon cause us to question the fairness and justice of many of our past and present policies. On the one hand we are called to play the Good Samaritan on life’s roadside, but that will be only an initial act. One day we must come to see that the whole Jericho Road must be transformed so that men and women will not be constantly beaten and robbed as they make their journey on life’s highway. True compassion is more than flinging a coin to a beggar. It comes to see than an edifice which produces beggars needs restructuring. [applause]<p>A true revolution of values will soon look uneasily on the glaring contrast of poverty and wealth. With righteous indignation, it will look across the seas and see individual capitalists of the West investing huge sums of money in Asia, Africa, and South America, only to take the profits out with no concern for the social betterment of the countries, and say, “This is not just.” It will look at our alliance with the landed gentry of South America and say, “This is not just.” The Western arrogance of feeling that it has everything to teach others and nothing to learn from them is not just.<p>A true revolution of values will lay hand on the world order and say of war, “This way of settling differences is not just.” This business of burning human beings with napalm, of filling our nation’s homes with orphans and widows, of injecting poisonous drugs of hate into the veins of peoples normally humane, of sending men home from dark and bloody battlefields physically handicapped and psychologically deranged, cannot be reconciled with wisdom, justice, and love. A nation that continues year after year to spend more money on military defense than on programs of social uplift is approaching spiritual death. [sustained applause]&quot;<p>-Dr. King, Beyond Vietnam (1967)<p><a href="http:&#x2F;&#x2F;kingencyclopedia.stanford.edu&#x2F;encyclopedia&#x2F;documentsentry&#x2F;doc_beyond_vietnam&#x2F;" rel="nofollow">http:&#x2F;&#x2F;kingencyclopedia.stanford.edu&#x2F;encyclopedia&#x2F;documentse...</a>

People need to realize there is not enough for everyone. Apple just hit 1 billion iphones. Facebook is close to 2 billion. There are 7.5 billion people on earth. They all want iphones, facebook, AC, food, clean water. You can see where this is going and it&#x27;s not good.<p>I personally think its almost made worse by the internet and people being connected, they see and feel what they are missing. Most Africans, for example, would kill to be in Europe &#x2F; USA.