Specialization is a feature of global trade. Regions focus on specific industries to gain expertise and increase efficiency.
Specializations change over time. The US, specifically Silicon Valley, has different specializations today than it did in the 60's. A lot of the semiconductor specialization moved overseas, costs came down, and in general the world is richer. Other specializations include things like China and injection molding, Japan and mechatronic technologies in the 80's and 90's, Thailand and lenses, etc
Obviously the protectionist crowd would take issue with all this, but free trade theory is studied and applied all over in trade agreements, specialization zones (like Shenzen), etc. Generally speaking though, the cost of attempting to be self sufficient in everything (like semiconductor manufacturing) means closing borders to competitors outside, which eventually leads to inferior product. With robust competition, the consumer usually wins on both quality and price. Obviously there are other consequences, such as job migration etc. In general though, everyone is lifted up and made richer over time (evident by the fact that there is quantitatively less poverty in the world today and the 1960's and even the most poor can enjoy things like cellphones, leather jackets, and shoes that fit well that even the kings of a century ago could not). The system isn't perfect, but atleast in my eyes it is the one that does the most good for the most people.
Really? In the 1970's in the US it was possible to own a house and support a family of 4 on a single income in the manufacturing sector. It was also possible to work your way through college and exit with a degree and no debt, in a job market which made that worth it.
Yes global poverty has decreased, but the material standard of living has decreased for most people in the working class in the developed world, while wealth has skyrocketed for a select lucky few.
It's more complex than saying "everyone is made richer" - it seems what has happened is that a few people have been made much richer, and everyone else is somehow equalizing somewhere closer to the bottom.
>the material standard of living has decreased for most people in the working class in the developed world
Who told you that? Both inflation adjusted median personal and household income have increased by double digit percentages over the past 50 years. In the case of household incomes that still happened even with the shrinking average household size (i.e. number of people in a household).
You're not focusing on the other side of his statement, where costs for housing, healthcare and education have also skyrocketed, along with the development of the two income trap.
What he said isn't controversial for most academics studying this.
The average home size in the 1970s was 1,500 square feet. It’s around 2,700 square feet today. And the percentage with air-conditioning, two car garages, pools, dish washers, etc have increased significantly as well.
Go price out a 1500 sqft house built in the 1930s-1970s today and you'll see that it's still significantly more expensive than it's inflation adjusted price back then, especially in the larger cities where there are jobs. And that 1970s house today is less valuable than it was back in the 1970s too, but that is harder to evaluate in aggregate. Jobs also used to be more distributed, so the need to move was less back then.
AC & Dishwashers are also only a few thousand dollars of value, mostly on the AC side. The rest are relatively luxury items.
If 1,500 SF homes cost more now than they did in the 70s, how is the average person affording 2,700 SF homes today?
And low end AC & Dishwashers can be had for only a few thousand dollars NOW. Back in the 70s the cheapest ones were still expensive enough to require an upper middle class income.
> how is the average person affording 2,700 SF homes today?
They're not. Home ownership is currently at about the same level it was in the 90's, declining from a boom in the 2000's driven by sub-prime lending, but if you look at generational differences, everyone younger than baby boomers is basically owning homes at much lower rates.
Large TVs in 2020 cost just as much as small TVs did in the 70s (if not less), adding air bags to a car costs mere hundreds of dollars, and is ammortized over 20 years, and cancelling your phone plan is not going to let you support a family of four on a single blue-collar income. Shit, cancelling your phone plan won't even compensate for the annual growth in your health insurance premiums - which is something that compounds every year.
"Air bags is amortized over 20 years" Cars don't last 20 years, generally... 5-10. And airbags are one of hundreds of "improvements".
TVs are an example of the plethora of technology that most homes have. From microwaves to air conditioners to cell phones...
"Canceling one thing isn't going to support your family" Which is why I didn't mention one thing... I mentioned a handful of things. A host of "modern conveniences" that add up.
Education, health insurance and other things cost more? Those are also things that the government has stepped in to make more affordable as well... which is a massive topic in of itself.
My main point stands... quality of life and cost of life has risen with hundreds of costs that add up (a mere 100 for an air bag... a mere couple bucks a month for data on your phone... a mere 5 for text messages... a mere 100 for a microwave... etc.etc.etc.etc).
Remove all the "extra" stuff that's standard today compared to 50 years ago and even with outliers (IE Health Insurance), you'll still be much closer to being able to afford the same quality of life as "way back then".
The numbers don't add up. This is essentially the math which blames avocado toast for why millennials aren't buying homes. If the price of university has doubled relative to median wages in the past 50 years, you're going to have to buy an awful lot of smartphones every year to account for that difference.
What do you mean? The home ownership is on the decline, especially among younger people, and "one unit of education" (i.e. a bachelors') hasn't changed. Yes more people are going to university on average, but the price of higher ed is not regulated by scarcity.
Compare the output of an inflation calculator vs the price of health insurance, collage, or the average new home in 1960’s USA vs now. Different prices don’t move in lockstep with inflation.
So, inflation as calculated on a basket of goods divorced from living expenses gives inaccurate comparisons. Yes wholesale food prices for example got really cheap, but overall food is still a significant fraction of people’s budgets.
There is more to quality of life than income. Despite rising incomes, younger peopple lagging far behind in terms of wealth accumulation[1]
This may have something to do with the fact that the cost of housing has risen drastically as compared to median income over the past few decades[2]
While the cost of education has also more than doubled for men, and increased by 20% for women relative to median income (despite a 73% increase in median income for women) since the 70's[3]
Yes income is increasing, but the costs for the markers of a middle-class existence are increasing much faster.
I always figured that was because WW2 destroyed Europe, Russia and Japan, forcing the entire world to buy from us for 30 years. I don't think it's anything that can be replicated.
History definitely played a factor in the US's ascendance, but the current state of the US economy isn't just something which happened by accident. We could have implemented an economic policy designed to optimize the benefit to the middle-class, and to protect strategic interests (like the capacity to produce PPE for example) but that's not what we did.
Even Pearl Harbor caused minor damage, all things considered. I think many of the facilities were repaired and rebuilt within 1 year while many of the ships were actually recovered. The carriers weren't even there during the attack.
For the US it was a huge shock, for a country like Poland it was Tuesday.
> In the 1970's in the US it was possible to own a house and support a family of 4 on a single income in the manufacturing sector.
Modern expectations mean that this isn't what people think it is. You also owned one car per family in the '70s; new houses often have to build two parking spaces. Housing prices were held down because public housing was still being built; today it's unmaintained and often torn down. Old houses were built on small lots; suburbs today require a quarter-acre. Colleges received way more public funding as a proportion of their income than they do today, and enrollment was lower.
Housing has gone from subsidized to restricted and college has gone from subsidized to free-market while demand keeps rising. It's not surprising that the price increased. (And the protectionism lobby is now also the anti-housing lobby!)
You're arguing income inequality has worsened in spite of free trade, which is fine, but I think the original comment's point was that free trade carries some benefits, which is a separate argument altogether (that is, they are not asserting free trade is a panacea). It could be the case that some other cause has led to increased income inequality, which then would not affect the free-trade-has-benefits argument.
> Really? In the 1970's in the US it was possible to own a house and support a family of 4 on a single income in the manufacturing sector. It was also possible to work your way through college and exit with a degree and no debt, in a job market which made that worth it.m
This is more of a feature of the transition from a Bretton Woods/Treasury/politics-based monetary policy to neoliberal/central bank/finance-based one no? At 10% inflation, the creditors just ate most of your mortgage debt regardless of whether you worked in manufacturing or not.
Probably it was a combination of factors, but I imagine the transition to a service-based economy and the outsourcing of entire sectors of jobs relying on large pools of organized labor didn't help the situation
> Really? In the 1970's in the US it was possible to own a house and support a family of 4 on a single income in the manufacturing sector. It was also possible to work your way through college and exit with a degree and no debt, in a job market which made that worth it.
Since the 1970s, physical house size has increased from around 1600 sq.ft to around 2600 sq.ft. At the same time, house occupants has dropped from about 3 to about 2.5 [0]. In addition to that, the building requirements and safety features have increased costs significantly per square foot.
Average house price in 1975 was around 42k [1]. That is a little over 200k in 2020 dollars [2]. Doing some math with 200k/1600 vs 380k/2600 gives $125/sq.ft and $146/sq.ft or roughly a 14% increase in relative cost. In 1975, median income was around 12k [3] while median income in 2018 was around 63k [4]. (EDIT: I'd note that I'm being generous as home prices dropped significantly this year and I went with the higher numbers)
SHOCK!!!!
An average house in 1975 is 16.5x the yearly income while an average house in 2020 is only 6x yearly income despite being 40% bigger and 15% less occupied while being safer to live in as well.
I'll give you college debt, but for all the wrong reasons. The government artificially incentivizes bad loans. They insist that kids CAN'T get that 380k house loan (even though the house is collateral), but also insist that kids CAN get that same 380k for a piece of (often useless) paper without any collateral backing. Get rid of the stupid laws and you'll watch that problem go away all by itself. Get rid of the pressure to have a degree to sweep floors and you'll watch college prices fall even faster.
The government not only incentivizes bad loans, they also exempt college debt from the bankruptcy process. And these are loans people are supposed to agree to when they are 17-18 years old. It's an insane system if you ask me.
As a side-note, lately I've been curious about what's actually been driving the cost of higher education. I know it's often cited as "administrative costs", but what does that actually mean? Where does the money actually go?
> As a side-note, lately I've been curious about what's actually been driving the cost of higher education. I know it's often cited as "administrative costs", but what does that actually mean? Where does the money actually go?
If you're asking about tuition? A few places.
Marketing, sports stadiums, student services (Counselling, mental health, etc), bureaucratic waste (Middle managers overseeing operations people), overbuilt facilities that serve no pedagogical value (Stained glass windows and large, pretty university grounds don't maintain themselves).
But that's just the half of it. In addition to tuition, most universities force you to pay for room and board, by living on-campus. Those fees go into paying for overpriced, poor-quality catered food, and overpriced dorm rooms.
It is with the "cost" of hosting and medical care.
The world in general has a huge incentive in driving up asset prices. And Housing is one of the biggest asset.( Correct me if it is not the biggest ) And rent is the biggest expenses in living cost.
What needs to be done is fixing housing prices / supply.
I agree - I think housing functioning as an asset and also as a functional human need are conflicting interests. Like if food were also subject to speculation, this would cause a lot of suffering.
> Obviously the protectionist crowd would take issue with all this,
"We" (the US) still lives in a violent world, or at the very least a slow, soft violent world where soft power might cut us off from Taiwan.
I find the fact that one half of the "techno-elite" crowd thinks that giving up on hard problems is a long term feasible position. We must be able to manufacture and produce the absolute best fundamental technologies from a strategic standpoint, even if it isn't a core, market efficient concern.
The rest of the world is modernizing, dealing with modern problems (disease spread, high end technical manufacturing, green technology), and we can't even get out of our own way. Frustrating.
Agreed. We are the country that designed, created, and operated the SR-71 Blackbird, put a man on the moon, and built the Hoover Dam, among other incredible feats of organization, engineering, and manufacturing.
I fear as a country we are not capable of that type of thing any more and I am not only frustrated, I'm saddened.
BTW if anyone has any examples of more recent (post-2016) successes of a similar magnitude and impressiveness, I could definitely use a mood boost.
I would say Elon Musk via his development of Tesla (first modern viable electric car) and of SpaceX (first almost fully reusable low cost space solution). They are different "type" than the ones you quote, but the sheer magnitude and long term impact of both those companies will likely reverberate for decades to come.
Agreed, there are strategic complexities, more so now than ever before. I'm not attempting to make a pure argument for free trade vs protectionist - I'm merely making an argument why we should strive towards free trade policies rather than protectionist policies in the long run.
Also historically speaking, America (compared to some other governments and policy bodies in the world) doesn't generally over regulate or adopt policies on young industries. This is generally in the spirit of not quashing broad innovation too early.
To your point though, we are indeed struggling with modern problems. Many of our modern problems though are partially due to modern marvels. I for one am optimistic we will make progress in some of these areas.
If by the 'American Way' you're referring to capitalism, is there another substantially different system that has produced as much innovation, wealth, and prosperity over such a short period in human history?
Don't get me wrong, I understand the cynicism here. There is no perfect system, but I just don't know of one that has empirically produced better results. Certainly not socialism or communism.
War. Wartime has always been a fantastic generator of innovation. It unfortunately destroys mass amounts of capital and kills and wounds many people in the process.
> wealth, and prosperity
Charity and taxpayer-funded government investment. The Marhshall Plan dramatically improved the prosperity and efficiency of much of Europe and was paid for by US taxes. The Green Revolution was funded by the US, UN, and Rockefeller Foundation.
Capitalism is a valuable tool, but too many accolades are laid at its feet these days.
I am sick of 'communism is worse', it's a platitude that demonstrates poor understanding of economics.
Capitalism is not a singular thing, economic policy of the 30s, 60s and 2020s is very different. There are various schools of though: Shumpeterian, kensyan, neoliberal, austeian, etc. Lately neoliberal system has been dominant, and delivered remarcably poor results for most of us.
I'll be the first to admit that capitalist systems have had their failures, but communist systems have never had a success. Communism was tried in more than a dozen countries across a century, in different cultures, in different geographic regions, in societies with very different levels of technological development. Not once did it create a success like Japan or Singapore or the USA or Hong Kong. Heck, we even split two countries down the middle and ran one side communist and one side capitalist (Germany & Korea). In both cases, the communist side became a hellhole and the capitalist side wasn't a bad place to live.
oh my god, the entire point of my post is that bringing up communism is a red herring that totally derails the conversation and has no relevance.
We should be discussing the economic system we currently have and various ways it is / was / can be structured. Even the justice system, the cornerstone of civilised society, has been corrupted.
For example why is it that we have publicly funded police but not publicly funded lawyers that can actually hold firms to account for contract violations? Why do companies that pay no taxes enjoy priority when it comes to public prosecution over regular Joe. Why is it, that if I owe the state a few grand, I will be hauled before a court within a day, but if BigCorpX owes the state a few billion they get to negotiate a special tax deal with massive 'discounts'? The list is truly endless.
Very ironic mentioning semiconductors, when it was the protectionist US-Japan Semiconductor Trade Agreement pushed by Reagan that propped up the American semiconductor industry, while leading to the decline of the Japanese industry
Thank you for drawing my attention to this slice of US foreign policy history w.r.t. to high-tech.
“At the insistence of the United States, in 1986 Japan agreed to limit its exports of semiconductors, mainly the "dynamic random access memory" (DRAM) chips, to America. These chips are used in high-tech consumer electronics equipment like computers and video cassette recorders. The agreement expires this July 1, and the Bush Administration thus soon must decide whether to renew it. Doing so would make Washington a hypocrite in its free trade efforts to open markets abroad for American products. The 1986 chip agreement, after all, restricts trade, ostensibly to help some American segments of the semiconductor industry. The agreement in fact has harmed American computer manufacturers, who have found themselves paying higher prices for computer chips. This makes American computer manufacturers less competitive and drives up computer prices for all Americans.” [by Bryan Johnson, published January 24, 1991 – 20 min read]
!! @ “high-tech consumer electronics equipment like […] video cassette recorders”
It would be an interesting couple of evening's research to compare and contrast the competitive rise of Japan in the 80's and the rise of China in the 10's and how the US reacted to both and how both reacted back.
The trade war with Japan in the 80's really helped Samsung jumpstart their DRAM business -- South Korean companies, Samsung and SK Hynix, account for 80% of global DRAM production today.
> global trade ... everyone is lifted up and made richer over time
Are you sure about that? "Total global trade" seems unstable to me. Look at the coronavirus, and countries mostly unable to produce their own masks, having to import instead from far away countries — but that country sold to the highest bidder primarily. Here were I live, I couldn't buy any masks (back in April and May).
> the cost of attempting to be self sufficient in everything (like semiconductor manufacturing) means closing borders to competitors outside
Can that be done differently? A country can have a small amount of domestic production, to keep knowledge and tech available in the country. Whilst importing most things from abroad, because of the benefits you mention with global trade. — Then you get both stability in case of crisis, and global trade efficiency? And more local jobs
In regard to the masks, examples exist and the world isn't perfect. No doubt it will be a business school case study for decades to come.
As far as personal anecdotes (because seeing numbers and seeing it with your own eyes are not the same), I have been traveling for more than three decades to developing countries and have seen the changes, the access to medicine, clothing, school supplies, food availability. From the developed world, we would still call these people poor, but the quality of life for the same class of people over a few decades has changed dramatically.
> Can that be done differently? A country can have a small amount of domestic production, to keep knowledge and tech available in the country. Whilst importing most things from abroad, because of the benefits you mention with global trade. — Then you get both stability in case of crisis, and global trade efficiency? And more local jobs
Just run through the thought experiment. It can be done, but that small amount of domestic production needs to find either subsidy or a customer that must have things made domestically (like maybe a government). Subsidy means the taxes you and I are paid are allocated to create sub-efficient industry. Domestic production needs, while real for purposes of national security etc, are tricky. We have seen in recent years Trump (his predecessor too), using executive power to force things to happen on the basis of national security. Some are fine with it, other call it abuse of power. My point is just, it is messy.
> Obviously there are other consequences, such as job migration
This is an interesting issue. The existence of national borders and the restriction on the free movement of people reduces the efficiencies achieved with specialization. Imagine how more efficient it'd be if Taiwan had easy access to US semiconductor talent. Similarly, it'd be more efficient if the seasonal migrations that help agriculture didn't happen and those people actually lived near the crops they help maintain.
>Similarly, it'd be more efficient if the seasonal migrations that help agriculture didn't happen and those people actually lived near the crops they help maintain.
I mean it's more complicated than that, most seasonal migrations of agriculture workers happen in large part because the seasonal workers come from areas with lower standards of living and lower cost of living. Partially, they are attractive as workers because they are able to take lower wages than the people who live where the crops are grown.
The act of extracting that labor more efficiently levels the gradients, though, which self-limits the problem.
When I first started my career in software in 2000, you could hire 6 Chinese engineers for the price of one American engineer, or even 2 for the price of an American high-school student. Nowadays, the good software engineers in China (the ones who work for Google etc.) get paid just as much as their American counterparts. Similarly, the good American engineers have largely maintained or improved their salary - hell, L7 compensation at Google (and the equivalent at Facebook/Snapchat/Apple/Lyft/etc.) is ~4x the highest compensation I remember seeing 15 years ago. Wages for mediocre software engineers (say those whose only skill is building PHP webapps by copying code from StackOverflow) have marginally improved in China and have fallen significantly in the U.S. We replaced a geographic wealth gradient with a skill-based one, which IMHO is significantly more fair but probably doesn't feel like it if you were on the losing side of the gradient.
> The act of extracting that labor more efficiently levels the gradients, though, which self-limits the problem.
Not necessarily, or indentured servitude would have been impossible.
> Nowadays, the good software engineers in China (the ones who work for Google etc.) get paid just as much as their American counterparts
This seems to be more of a result of the low friction of hiring a good remote developer. It's also not completely true - a top developer in Berlin or Dublin (which is where I live) makes less than the same developer would in the valley (I know that because I was offered to move) and a lot more than a developer makes in Brazil (where I'm from). I am not aware of any remote developer who gets paid what they'd be if they were living in London or San Francisco.
> the good software engineers in China (the ones who work for Google etc.) get paid just as much as their American counterparts
That's not true. I can provide a data point: a Googler who works in Beijing, 3 years into his career with 2 years at Google[1], get paid roughly 72k USD per year. I don't think this is even comparable to the compensation level in Valley. That said, if you compare with the Japan or Europe (except Switzerland) counterpart, it does seem to be on the same level, so the outlier here is US.
[1] To be fair this does not matter because he is stuck at L3 due to works nullified by internal protests.
In general the reason for migration as a lifestyle instead of being sedetary is because they can't stay in place. The "jet-set" or even "RV lifestyle" are deep anomalies of those who don't have that concern.
If there was a year round harvest they wouldn't be migrant workers. It brings to mind a "silly stopgap" solution mix of paying people in low wage countries to operate farming drones to subsitute for the AI in spite of the cost of building the body being higher and the infastructure and tools required to control a bot not corresponding with migrant farm worker origins.
> Specialization is a feature of global trade. Regions focus on specific industries to gain expertise and increase efficiency.
This is very comforting to regions that are specialized in high-cost, high-margin, high-technology products, and not very comforting to regions that specialize in low-cost, low-margin, low-technology products. The countries growing the bananas that go into your smoothies have specialized in growing bananas, but they aren't making any money from it.
They technically gain some with the niche over other options but certainly not the lion's share as they are very commoditized and not the bottleneck of scarcity at all. Shippers and retailers make more and it is far more expensive for them to get into it than to run their own local banana farm. Credit is also less accessible.
Low capital banana growers would do far worse if they tried to compete by growing grain crops in the region as they have to contend with high capital mechanized and chemical using operations with massively better yield and closer markets.
Specialization is at least a local maximia to them even if there are other options better in the long term. Take say West Virgina's coal mining vs a more diversified industry.
That’s a great point, but I don’t think theory says that you have to stay at the base level of your specialization. While not as high margin as the other industries, they could go up the value chain and start producing smoothie packets to make more money.
If they made great smoothies (in addition to growing bananas), then they wouldn’t be leaving that market to blond Californian influencers living in Bali.
Well, some of them tried to diversify but the country of the blond Californian sent tanks and the CIA to make sure that the correct parties get their slice and keep everyone else down.
This happened for bananas going into the smoothies, rubber going into tires (at the time), coffee going into lattés, oil going into tires (at a later time), etc
The world isn’t quite that rosy which is why Trump won elections. Free trade will often boost the most affluent at the expense of the working class.
With free trade you put more workers in competition with each other pushing down salaries while capitalists can move their investment to a wider variety of places to get increased return.
Even for poor countries it is not always a good thing. China before WWII got screwed over by western capitalists owning all the industry. That is why they have the required local partners now.
I am not saying free trade is inherently bad. Just that you can have too much of a good thing. I think we are way past that in the current world and should be scaling back, not ramping up.
Yep, generally agree. Might disagree on what's too much and what not, but your point that free trade (and almost anything in life) taken to the limit will have dire consequences in other places is important. Free trade is a framework.
I find a lot of people in the US are quick to point out the problems with free trade, but tend not to look at examples of places that took strong protectionist positions and how that played out over the span of decades. Point being, there are examples to be made for either argument being taken towards a limit.
This all works fine right up until China invades Taiwan.
As we've seen with Brexit and Trump, nationalism trumps economics. America is having a hard time tolerating a growing China, and frankly, China is worth opposing. It had been hoped their growing middle classes would lead to demand for a more liberal government, but that hasn't happened, and instead the CCP sees Western liberal ideas as a kind of alien mind virus which must be extirpated. Another cold war with local hotspots looks almost inevitable.
It'll be interesting to see how this evolves over time.
Nationalism in its modern (post-1865) form is a product of technology + economics. The U.S. before 1865 was a relatively lose confederation of states: this is enshrined in the 10th amendment (now largely forgotten, but which reserved all powers not explicitly delegated to the federal government or people "to the states"), and indeed in the word "state". Same thing in other nations like Germany and Italy: before 1871 these were independent states like Prussia, Bavaria, Saxony, Hanover, Brandenburg, Westfalen, Bohemia, Sardinia, Tuscany, Venetia, Florence, etc.
The driver for national unification was largely industrialization. New technologies like the railroad, telegraph, steel-making, mass production, etc. gave large advantages (particularly on the battlefield) to larger political unions that could draw on the labor of many regions and specialize. Political bodies that didn't adopt these technologies got rolled. The North likes to view the American Civil War in terms of slavery, and the South likes to view it in terms of states rights, but fundamentally it was a clash between the industrial system in the North vs. the plantation system in the South. And just like Brexit and Trump are doing now, the South fought viciously to preserve their self-determination and way of life, but the industrial system was just more efficient.
Right now, we're seeing protectionist lip-service. My iPhone is still made all over the world, my employer still makes a majority of its money in foreign countries, I still have to compete with foreign buyers when buying a home (though it's better now than it was in 2015-2018). It'll be interesting to see what happens if there's a serious threat to that. We had a previous era of globalization in 1900-1914 that ended with WW1 - but arguably that was because the world wasn't ready for it, and globalization was entwined in the lives of the rich but not the common people. Now there's a significant number of people who are largely unaware of how dependent their lifestyles are on globalization, and I'm curious what'll happen if it's actually threatened.
> The North likes to view the American Civil War in terms of slavery, and the South likes to view it in terms of states rights
Minor nitpick, but the Confederacy viewed slavery as the cornerstone of their government[1]. Those who now claim the Civil War was about 'states rights' are engaging in simple, brazen revisionism.
> In what’s now known as the “Cornerstone Speech,” Stephens told a Savannah, Ga., crowd in 1861 that “our new government is founded upon exactly the opposite ideas [as those of slavery foes]; its foundations are laid, its cornerstone rests, upon the great truth that the negro is not equal to the white man; that slavery, subordination to the superior race, is his natural and normal condition. This, our new government, is the first, in the history of the world, based upon this great physical, philosophical, and moral truth.”
Beautiful observation, I for long claimed, and been looked upon like a madman too for that, that the universal access to communication will for the first time allow for creation of a "supranational" state, and obsoletion of nation states.
Take a good look. Back in 2012, people were genuinely thinking that Zuckerberg was going to run for the election. And they rightly though that if facebook was for example post "Go Vote Zuck" on the frontpage, he might've well won.
This was a very fascinating read and elegantly generalizes some truths that I've been only vaguely aware of. History and warfare is more often in effect a brutal and bloody competition between societies' efficiency.
This has implications for how the future could look that go far beyond what seems most "reasonable", what looks most like the past and what will make each individual person feel best. It doesn't necessarily have to be war - it could also happen through peaceful but intense competition and trade.
The flaw with this whole line of thinking is that it treats workers and jobs as interchangeable. A 40 year old, low intelligence factory worker is not going to become a software engineer.
And even if you take the rewards of comparative advantage and redistribute them to account for this, you are still destroying the social fabric of families and communities. Vitality, self-respect, and good values come from being engaged in productive work.
My bank account tells a different story. Only very few people got richer. General purchasing power fell off like cliff in the US after the 70s when all the outsourcing happened. There is nothing positive about globalization. The bad effects are somewhat mitigated by a massive amount of technological progress.
> closing borders to competitors outside eventually leads to inferior product.
There is no proof for that. With close borders you can simply steal the intellectual property of your competitor and match the quality within a year. The Chinese are doing this for decades.
> In general though, everyone is lifted up and made richer over time
This is quantifiable wrong. Maybe you have to get out of your filter bubble. If anything globalization leads to more inequality. The statistics about how the top 1% make all the money whereas everybody else loses are neither controversial nor new.
Would this be a US-centric view/"filter bubble", specific to American-specific business regulation/deregulation, tax codes, and outsourcing strategies?
In Asian countries, i.e. Taiwan, China, SK, Japan, Vietnam, as well as, say Mexico after NAFTA/NAFTA 2.0, what are the numbers regarding general purchasing power?
I think it's inarguable that globalisation has put downward pressure on wages in a lot of industries. It's also made cheap products widely available to people who could never have afforded them before, and raised hundreds of millions of people out of poverty.
On the other hand wages in China have shot up and the huge pool of cheap rural labour is mostly tapped out. Low end manufacturing is moving to other countries, Samsung now does most of their smartphone final assembly in Vietnam but those countries are smaller. That trend is playing out it's end game. Employment in the US and Europe was rising, and came close to 100% before the Pandemic.
So I actually agree with your criticism, but not that there's nothing positive about it. Things change, overall I think things are changing for the better but that's never a painless process. That's why although I'm a believing market capitalist, I also support social programs and universal health care. If corporations deserve bailouts, so do ordinary citizens. We're all in it together.
> On the other hand wages in China have shot up and the huge pool of cheap rural labour is mostly tapped out.
I would have no problem with that if it didn't happen at the cost of American worker which it clearly did.
> Employment in the US and Europe was rising, and came close to 100% before the Pandemic.
You can thank the "nationalistic" trade policies of Trumps USA towards China for that. In Europe on the other hand (which had no such policies) unemployment especially in the periphery was and is still sky high and the situation was looking pretty grim also before the pandemic.
Here in the UK unemployment was rock bottom before the Pandemic, we only had a couple of hundred thousand people who had been unemployed for more than a year.
As for globalisation, the US became the dominant global economy how exactly? Protectionism, aside from being an autocratic intrusion into the freedoms of citizens, just doesn't work.
Take the US steel industry, a main target of Trump protectionism. Yes blast furnace employment is marginally up, but steel mill employment has been hammered because it largely depends on working imported steel. The domestic furnaces can't expand fast enough to meet supply, and don't produce some of the steels needed by manufacturing anyway. As a result manufacturers consuming steel are facing inflated prices and reduced competitiveness. It's unintended consequences all over the place.
Don't trust employment statistics you didn't fake yourself. I don't know how it is in the US, but here in Germany a lot of effort is put into making unemployment seem smaller than it actually is.
The US still blames the victim for their own unemployment.
We have a long way to go before the US system feels like a a kindly helping grandfather rather than an abusive angry father that blames you for not working harder.
The Chinese masses are much better off today than they were in the 70s.
Globalization does increase inequality, particularly in countries with a lot of capital, but it also makes the very poor better off. What the US calls the middle classes do stagnate, though, and capitalists are the biggest winners - which, don't forget, also includes pension funds as a significant fraction.
Most of the top 1% are wage slaves like everyone else. The top 1% by income isn't what's interesting; it's the top 1% by assets. Wealth inequality is much bigger than income inequality.
But china is pretty nationalistic. They allow other global companies to produce within their borders, sure. But if you try to export something from another country to china you are going to have a bad time.
So the reason why Chinese masses are so much better off today is this very "one-sided" version of globalism. You might as well call it nationalism.
Plenty of people have gotten rich exporting goods to China. They just tend to be concentrated in relatively low income countries like Vietnam, exporting things like clothing and textiles. China actually likes this, because it frees resources to develop strategic industries with higher wages.
Still China controls the borders very well and allows only products to enter when it serves the interest of China. This is the definition of nationalism and one of the reasons why the quality of life in China is rising so fast.
I am not clear, what specifically does china limit imports of? You can sell cars, phones, just about anything i can think of, even loteral plastic waste is allowed, obly recently standards were tightened.
Moreover, even from the West, tons of cultural products are exported to China. That's what gives Beijing the implicit power to censor the NBA, video game companies, Hollywood, etc.
Specializations change over time. The US, specifically Silicon Valley, has different specializations today than it did in the 60's. A lot of the semiconductor specialization moved overseas, costs came down, and in general the world is richer. Other specializations include things like China and injection molding, Japan and mechatronic technologies in the 80's and 90's, Thailand and lenses, etc
Obviously the protectionist crowd would take issue with all this, but free trade theory is studied and applied all over in trade agreements, specialization zones (like Shenzen), etc. Generally speaking though, the cost of attempting to be self sufficient in everything (like semiconductor manufacturing) means closing borders to competitors outside, which eventually leads to inferior product. With robust competition, the consumer usually wins on both quality and price. Obviously there are other consequences, such as job migration etc. In general though, everyone is lifted up and made richer over time (evident by the fact that there is quantitatively less poverty in the world today and the 1960's and even the most poor can enjoy things like cellphones, leather jackets, and shoes that fit well that even the kings of a century ago could not). The system isn't perfect, but atleast in my eyes it is the one that does the most good for the most people.