Cynical Nation

None of them have ever once dipped so much as a tentative toe outside the roped-off wading pool of liberal orthodoxy.

I like the term you use "liberal orthodoxy'. I am now wondering if I am myself orhodox or not. Regarding Malkin, she has one good quality: she is willing to criticize occasionally Bush and his incompetent associates. But she has a major problem. She is too far to the right to be rational. I have considered including her in the "list of certified lunatics" I have composed. However, at the end she did not qualify :)

You nailed this one Barry. The objection to Mrs Malkin from the left is purely political -- the left wants all the bananas either on the plantation or silent.

Malkin is not one of my favorite reads either, but I believe her opining is thoughtful and usually interesting. She also has the one ability I value above all others in a pundit: She knows how to incite an ideological donnybrook.

No, I don't think that she got a bum rap on this one, Barry.

While the President certainly has completely botched the PR side of this debate, he was still right. This is about free trade, not about arab terrorists buying out our ports.

She was quoted here saying:
"The issue is not whether day-to-day, on-the-ground conditions at the ports would change. They presumably wouldn't. The issues are whether we should grant the demonstrably unreliable UAE access to sensitive information and management plans about our key U.S ports, which are plenty insecure enough without adding new risks, and whether the decision process was thorough and free from conflicts of interest."

And one has to wonder what has demonstrated the unreliability of the UAE, and what the UAE government has to do with a private firm.

So maybe she isn't a Bush ass-kisser. But I'm sorry, she's one of many that came out with a knee-jerk, xenophobic-sounding response to this that completely goes against any ideas of free trade or, well, knowing your facts.

I mean, christ, are we not going to let foreign companies buy anything having to do with transportation, because they might smuggle terrorists into the country?

Anyway, I don't mean to rant, but I happen to think that she hasn't exactly covered herself with glory on this one.

Now, to the other hand:
She is too far to the right to be rational

Oh, Blue. Will your charmingly dehumanizing rhetoric never cease? :D

Adam,
I dont think I wrote something that bad :)

By the way Adam,
The Dubai deal is simply shameful... 62% of the country agrees with me and Barry on that. Only 28% agrees with you and your friend George W. Bush.

Adam, I'm not putting this forward as an example of MM's greatness, but merely as evidence that she's not George Bush's "house slave," as Kos et al would have her.

Blue, yes, you and I are soundly in the majority. That does not necessarily mean we're right, however. ;)

How on Earth is the "Dubai deal" shameful? A British owned terminal operator is being acquired by a UAE terminal operator. The operating contract for nine terminals at six ports will, technically, change hands. How does that bring shame on anybody -- except maybe the longshoremen's union that drove domestic operators out of business?

"How on Earth is the "Dubai deal" shameful?....How does that bring shame on anybody -- except maybe the longshoremen's union that drove domestic operators out of business?" (WF)

BINGO!

Not one American firm bid on the contract won by POSN Co back in 2000.

Moreover, some 80% of U.S. ports are now run by foreign enterprises and THAT'S not "Bush's fault," it's been going on for a very, very long time.

And YES, the Longshoreman's Union has driven most U.S. port operators out of business and it's that Union that first sought to scuttle this deal. Apparently DPW wants to use fewer Union workers in their operations....Boooo-Hoooo!

The only "shameful" thing about the "controversy" is how naive folks like BW are on the issue.

"By the way Adam,
The Dubai deal is simply shameful... 62% of the country agrees with me and Barry on that. Only 28% agrees with you and your friend George W. Bush."

And today we found out that more Americans can name the members of "The Simpsons" than those on the Supreme Court.

Can you really believe that a) the public fully understands the ramifications of this, BW? and b) that the pollsters asking the questions do and posed the questions fairly?

I will happily admit that I do not as yet. Can you tell me that you somehow do?

BTW, Blue Wind, how do you feel now about the attacks on the New Jersey state police for profiling carjackers?

It would seem that the cat is now out of the bag for your party, i.e. it's OK to profile and prejudge arabs but never blacks and Hispanics.

Is that about it?

Can you tell me that you somehow do?

Adam,
I somehow do :)

It does not take much. I simply like Americans running our ports. I dont like countries that recognized the Taliban and helped in the cover-up of Bin Laden's accounts have anything to do with our ports. I also dont like countries that do not recognize Israel and consider Israel their enemy running our ports (in any way). It is even worse in the case of UAE, as the same ruling (fascist) regime that recognized the Taliban is still in power there. Adam are you sure you are not soft on terror somehow? or do you believe anything that this incompetent administration attempts to sell to the country. They can not and should not be taken at their word. They lie all the time.

I just realized that was addressing my response to the last post to Adam, but it should had been addressed to Mal.

Sorry Adam :) Please disregard the references to your name in my previous post. Cheers.

Dually disregarded.

But are you seriously for nationalizing everything in the US and ditching free trade? It's hard to tell what's tongue in cheek with you sometimes, Blue.

Where did you get that from? All I said was that I want American companies running our port. A very simple and important concept in a post-911 world.

Where did you get that from? All I said was that I want American companies running our ports. A very simple and important concept in a post-911 world.

"All I said was that I want American companies running our port. A very simple and important concept in a post-911 world." (BW)

No U.S. companies even bid on the contract won by POSN Co and sold to DPW.

Maybe we've got to make it worth their while!

The Longshoreman Workers Union seems to be the promblem here, just as the UAW is the anchor around our auto industry.

Globalization/Free Trade is tough on working people, as it forces 1st world workers in places like the U.S to compete with workers in developing countries, BUT a DEm Congress expanded GATT in 1991 and passed NAFTA in Januray of 1994, so we've got to deal with the effects of that globalization now.

The Unions here are going to have to accept some cuts to make their workers more "globally competitive."

Big Labor should say, "THANKS Democrats!"

I don't even remember why I decided she was a nut. Do people really think she's just a W worshipper? But I just choose to ignore her.

JMK hits the bullseye, Blue: it's all about competition. Emphasizing national ownership (which, by the way, is what I meant by "nationalizing") just means that less competative companies that happen to be American will be given an unfair advantage, and it will such for just about everyone but them.

"JMK hits the bullseye, Blue: it's all about competition. Emphasizing national ownership (which, by the way, is what I meant by "nationalizing") just means that less competative companies that happen to be American will be given an unfair advantage, and it will such for just about everyone but them." (Adam)

OK, I see where you're coming from Adam, but here's another case where well-meaning people often need a standard dictionary - a common definition of terms.

"Nationalization" in the formal sense, usually means "government take-over," or government-run commerce, which, of course, runs counter to everything America stands for - "Life, Liberty and the pursuit of happiness/property."

But perhaps giving American industries an "advantage," over foreign competitors, who often have an ACTUAL advantage in that they are unburdened by such things as EPA, OSHA, and other kinds of government regulations and are all too often non-Union shops.

When we allow workers in "developing nations" to compete directly with American workers, the American worker cannot compete in terms of cost - not only labor costs (salary and benefits), but in the many forms of regulation evaded by these foreign competitors.

It's one of the many hazards of "globalization" and the "Free trade" over "Fair Trade" doctrine.

Yeah, actually, I have to say, that occurred to me after I said it.

Stupid words. Always coming back to bite me in the ass.

However, I will save some face by adding my own criticism:

When we allow workers in "developing nations" to compete directly with American workers, the American worker cannot compete in terms of cost - not only labor costs (salary and benefits), but in the many forms of regulation evaded by these foreign competitors.

This is a myth. I suggest reading up on Ricardian trade economics.

Yeah Adamh, I just wanted to point out how easy it is for people to misunderstand each other, as I would've probably misunderstood your use of "nationalization" if you hadn't defined it in your post.

I'm sure a lot of that goes on, especially across the "ideological divide." I'm certain there are times that folks have fewer differences than they actually think and others when they mistakenly believe there is common ground that doesn't exist.

The varied use of words is fascinating.

As to the problem I pointed out with globalization, here's the problem, yes, many economists claim that "eventually a balance will be reached and everything will even out." They also say things like, "Well, just as farmlands within 50 miles of places like NYC are no longer viable as farmlands (their residential value is so high, it's foolish to use it as farmland any longer), some jobs (namely manufacturing, etc) are just not viable for American workers, which will eventually be retrained to do higher skilled and higher paid jobs."

Admittedly, there is at least some "lag time," before the "new economy" catches up with the old. Of course few professionals, few economists, for instance, are generally caught up in such awkward transitions and it's a lot easier for them to advise folks to "wait until things even out."

Sometimes that lag time can seem like forever.

It's both a dilemma and makes for an easy target for anti-globalists.

For workers, as with everyone else, there is always a certain amount of "fear of the unknown" when it comes to moving to such a new economic paradigm.

JMK: I think you may have misunderstood Ricardian economics.

During the transition, the 3rd world is already growing wealthier than it has ever been. It isn't about lag times and old economies, it's about a huge new market that's open to a poor country's businesses.

Poorer countries can outcompete wealthier countries in certain industries not because their labor is cheaper--as the Kling article explains, cheaper just means that they are less productive than a worker from the welathier country.

No, they can do it because in the wealthier country it is suddenly much more profitable to work in an industry that is much, much more productive than what the poorer country is capable of doing. So those businesses expand out, buying out a lot of the capital that the other industry would have used within the wealthy country.

Why? Because that way, the wealthy country is able to provide a massive amount of their product, not just for home markets but for markets overseas, at a price that can be afforded in the poorer nation.

Meanwhile, since that big industry is pushing out others within the wealthy country, it gives the poorer country a "comparative advantage" in another industry.

The result is not that we lose jobs and they get exploited. The result is that we both make money, but more importantly, we both provide one another with a regular supply of affordable products.

There is no "lag time". What there is is development, as a country grows wealthier and productivity increases.

The hilarity of the "cheap labor" myth is that if you look at the countries that are supposedly being exploited, particularly in South America, nine times out of ten they have more rigid economic restrictions than the wealthy countries.

So while Mexico and Brazil went through a big boom in the 90's, it was not due to their lack of regulation by any means--and their overbearing government policies contributed to the crash of their currency.

I agree with you on the "fear of the unknown", however, as I believe that it is the number one element at work here. After all, with all the bitching about the dangers of globalization, the fact of the matter is that we have near universal employment here, and we're as globalized as ever. So this isn't about day-to-day living in the United States. This is, in my estimate, about pundits poffering abstractions without doing their homework.

No Adam, the problem I have with David Ricardo’s paradigm is that it assumes perfect competition and a single factor of production; labor, with constant requirements of labor per unit of output, which is exactly like doing a physics problem “assuming a perfect vacuum.”

Both assume something that simply does not exist in reality.

We do not have anything like “perfect competition,” anywhere between nations. China still employees slave, sweat-shop labor, Mexican workers average something like $11/week in U.S. dollars. The Mexican economy is much smaller than ours and their standard of living far lower.

So of course there is the imperfect competition between well-paid American and other “1st World workers” and lower paid foreign labor. But there’s still more, in the form of less regulation that makes outsourcing American jobs preferable or advantageous to American companies. Most developing countries have nothing like OSHA and FDA regulations, EPA standards, worker health care and pension costs that would make foreign, developing venues more attractive even if/when workers in those venues became as well paid as their American counterparts.

A very basic question is, “Do we even need a manufacturing base any more?”

It’s not a very simple question to answer despite the fact that many Free Traders seem perfectly willing to reflexively answer in the negative.

Steel production, for instance is vital to our national defense and thus to our national security. Milton Friedman, whom I admire, might well ask, “Look, if the Chinese are willing to produce steel for us, far cheaper than we can produce it for ourselves, why shouldn’t we take advantage of that reality and use our would-be steel workers in more productive (for our economy) pursuits?”

Well, one reason, might be that you don’t want to depend upon a country, who might one day be an enemy, or at least one which you might well find yourself at cross-purposes with down the road, for your steel.

A Free Trader will say, “Why waste our valuable labor on things, like manufacturing, that our labor force, or more aptly, OUR standard of living, makes too expensive to do here any more? Why not move on to more productive and more profitable pursuits?”

Again, two very good questions and they’re not as easy to answer as they first appear. For one thing, there is most certainly a lag time between the new jobs created by free trade and those lost to it. Much of that lag time is due to the retraining time required to retool workers for the new jobs being created.

So, yes, I do have a number of problems with David Ricardo’s analysis of free trade ramifications, particularly it’s assumptions of perfect competition and a single factor of production, as those are not the variables we’re dealing with in the current trade debate.

JMK, I see where you are coming from, but I guess I'd have to ask where you see free trade making things worse for any particular part of the equation.

These nations were already poor, or already exploitive. All free trade can do is make them less poor and expose the exploitation to the international community; as well as employ their labor in American companies who are bound by American laws to behave a certain way (after all, Cisco, Google, and Microsoft were just brought before congress because of suspicions about how they're behaving in their Chinese trade).

So...what risk is there in free trade, and what is it that would improve if we didn't have it?

Here’s my problem, with the “Free Trade versus Fair Trade” debate, Adam.

I can argue both sides (and often do) and always find many valid points on either side. It’s a complex issue and it’s not the easiest one to come to terms with, for me.

Same with the current Ports deal, that also involves some Free Trade issues, at its heart. It’s more than “do we give up on splitting the Islamic world into Pro-Westerns (like Saudi Arabia, Pakistan, Kuwait, Qutar and the UAE) versus pro-Islamicists (like Afghanistan, Iran, Iraq, Syria, etc), it’s also about Free Trade – do we allow foreign competitors to come in here and circumvent our work rules and put American firms out of that market as they can’t compete for being the only side that has to obey the work rules set down by our Unions and enforced by our government?

A part of me, a large part of my heart, sympathizes with those low skilled workers who are going to get displaced and very possibly hosed in the transition to a new economy.

In the not too distant past “good paying factory jobs” allowed many low skilled people to rise out of poverty and enter the middle class where their children could aspire to bigger and better things.

I’ve always thought that a lot of the crime and cultural (isolation) problems we face within our inner city and increasingly within our burgeoning trailer park populations is the lack of just such a vehicle. Today's working poor are often left without a bridge to that better life.

The advantages of Free Trade, of course, are lower priced goods and services. A very tangible advantage that Liberals try desperately to ignore.

No offense to those folks, but guys like Blue and DBK probably can afford to sneer at Walmart, but the poor cannot! To the working poor among us, Walmart is a savior.

The problem is with our standard of living.

As we’ve become more prosperous, our standard of living has gone up across the board. Workers haven’t merely enjoyed higher salaries, but paid medical benefits, paid vacation leaves and pension benefits. To boot, the government has imposed a costly and complex maze of regulations on all our businesses so they protect worker safety (OSHA), don’t overly pollute the environment (EPA), and a host of others from FDA to SEC (the current Oxley-Sarbannes regs are a huge albatross around the neck of American business and industry).

When American companies are allowed to build their products in places with lower standards of living, thus lower cost/cheaper workers, with no benefits and few of the array of costly regulations we have here, we are, in effect, dooming the workers in any field that can be so outsourced.

The only way American workers can compete is to voluntarily accept a lower standard of living to compete. The airlines have forced their workers from pilots to baggage handlers to accept lower salaries and fewer benefits to stay solvent. Ford is laying off over 30,000 workers and GM and Chrysler look like they’ll follow suit. The claim from the car makers is that “the UAW has killed the American auto industry.”

That’s only half true, and maybe not even half.

Yes, in a Free Trade world, where Japan can come into America and build their cars with non-Union workers in Right-to-work states, they have a competitive advantage right here in our own country! A less expensive and highly motivated home grown labor pool, that they are better poised to make use of.

And when you add into the mix that any company can often simply build their goods/products elsewhere and not pay tariffs on the importing of those goods, then they not only get the advantage of a lower cost labor pool, BUT the absence of health care and pension benefits and an easy route around the maze of regulations that make American business so much more expensive.

If tomorrow, America could become “computer programmers to the world,” and these new jobs paid a lot better than the ones they replaced, I’d still argue that we are, as a nation, diminished.

Here’s why, just because China, using slave, sweatshop labor can make steel (at this point) far cheaper than we can, doesn’t make that a “good deal” for us, in the long run.

We need a steel industry and we need to know how to make steel in case we’re ever cut off from our suppliers, or if Chinese steel becomes drastically more expensive. In fact, you could argue that we need a general manufacturing base in order to be at all self sufficient.

I know, Free Traders and many Libertarians will tell us, “A Free Trade world is a connected and interdependent world, where commerce trumps everything else.”

Do you really believe that’s true?

Can you look at the fanaticism, the unmitigated evil of certain Arabic and African regimes and say that with a straight face?

It can’t be said, because real evil does exist in this world and commerce doesn’t trump everything, not when Socialist thugs and tyrannical dictators hold the lives of the citizens of those countries as mere afterthoughts.

Moreover, not everyone can be trained for the high tech jobs that are replacing the old, low skilled ones.

It’s easy to say, “Well, that’s their own fault.” It probably is.

It’s easy to say “F*^k the doomed,” in some instances it’s even necessary to say that, for they’ve surely f*^ked themselves, but a low skilled manufacturing base would certainly have the potential to ameliorate a lot of the problems we see in the inner cities and in trailer park America.

Now, you’re right, in so far as the current unemployment rate which now stands at just under 5% is a great one and it’s been accomplished in the midst of all this outsourcing, etc.

Well, I’ve looked at the numbers closer and they are interesting; for those with at least a Bachelor’s degree, the unemployment rate is a paltry 2.1% (virtually full employment). For those with some college it’s 3.4% (awesome, really), and for those with H.S. degrees it stands at 4.4% (still, very, very good). The group with the worst rate, of course, is those without H.S. diplomas – that rate is 7.1% and yes, you could argue that one might have thought it to be even higher.

My argument concerning the current economy to our old world manufacturing one, is that the new one gives few opportunities and almost no lucrative opportunities to those who used to be able to rely on “good paying factory jobs” to forge a decent life.

Sure, I can also argue that, “Well, that’s just like that farmland located forty miles outside of NYC. It doesn’t pay to eek out a living Dairy farming on acreage that’s worth $5 or $6 million today, and just as we can’t afford to use that valuable land for farming, we can’t afford to use our valuable labor for manufacturing any more either.”

I could argue that, but then it’s a lot easier for me to argue that, since I’m not trying to eek out a living in a low skilled job...and I’m not a Walmart shopper.

It's a very real dilemma on a number of fronts.

do we allow foreign competitors to come in here and circumvent our work rules and put American firms out of that market as they can’t compete for being the only side that has to obey the work rules set down by our Unions and enforced by our government?

See, this is what I've been trying to say: This idea, right here, misses a few key things.

1. That being beaten by non-Union conditions is a bad thing.

Unions do not improve the standard of living for anyone other than a select few who are already employed. You can see this in Europe, where the Union is king, and workers may have nice, cushy jobs, but there's perpetual double-digit unemployment.

2. That crappy, exploitive regimes are more productive and more profitable than liberal democratic countries that believe in human rights.

When you're in a country that works you to the bone, pays you less than your market value, and doesn't allow you to quit and search for another job, then you have the Soviet Union--and you can't compete economically with anyone.

The reason that countries like China start to have an economic boom is precisely because they've allowed their workers to have more choices. Now, they are not consistent about it--but I think that you'll find that the areas that prosperity has reached, the big cities--this is very much the case.

If they didn't make it easy to leave a job, or fire a worker, and then get another job, or hire a new worker, then their economy would become static and their productivity would plummet. There would be no competition.

So if a country is outcompeting us in a particular area, then they probably have a more liberal, options-based model than we do--OR, the Ricardian model comes into play and while they're beating us in one industry, we're doing much better in another industry than we ever had before. Or both.

The point is, trade can only increase productivity, and encourage a better lifestyle for the workers in both countries.

And finally, I'd like to tie in what I thought was a most ironic point given the discussion we're having:

I’ve always thought that a lot of the crime and cultural (isolation) problems we face within our inner city and increasingly within our burgeoning trailer park populations is the lack of just such a vehicle. Today's working poor are often left without a bridge to that better life.

And yet, if you look at nine out of ten inner cities, they have the most overbearing regulations on the level of what you've been saying we would lose to free trade. They have regulated it to a point where the economies in those areas becomes more and more static.

The answer is not for the government to provide a vehicle of any sort. The answer is to facilitate a more competitive environment, on a number of levels--so that anyone losing a job in one field has several other options when looking for employment--and not just within the same field.

And the only way that that can be facilitated is through exactly the opposite model of which you speak--less caving to Unions, more emphasis on flexibility. Lowering unemployment might mean allowing initial salaries to be much lower than we'd like, but a job's a job and if you make it less expensive to bring new people into a company, you open the door for much more opportunity to move up the structure of management.

You mentioned Walmart, so I recommend reading this article, which compares the GM, Union-friendly model to the Walmart, flexibility-first model.

To quote a good passage:

Yes, Wal-Mart does not pay high wages or provide healthcare benefits to all employees. But not all workers today want full-time jobs (they may want to be home when kids return from school) or health insurance (many are covered by a spouse's policy or Medicare). And Wal-Mart promotes from within: You can work your way up from the store floor to management ranks. GM and the UAW, in contrast, insist on a sharp line between labor and management, with all employees working full time and getting full benefits. That made sense when almost all workers were men supporting families. But it is a poor fit with a labor market in which many workers are women, teenagers, or retirees seeking extra income.

So sorry, I don't see any economic risks from Free trade--there are security ones, of course, and those are serious and should be taken into consideration when considering the terms of trade. But there are security risks within a country's economy as well; that's just the way of things. The easier it is for people to interact, the easier it is for bad people to hurt others--but conversely, there are also more ideas exchanged dealing with how to catch or stop those people.

But where employment, business, and standard of living are concerned, I am sorry, I simply do not see the "real dilemma".

You argue that there are few opportunities for those who used to rely on decent paying jobs to forge a decent life, and I must confess I don't understand what your argument is. There are more jobs available to people on the whole now than there's ever been, and if you want to stay in one field, you not only can, but chances are, you'll get to a far more affluent position within that field than you would have in the old days.

So, one last time...I really don't see a problem here.

Adam, you miss my point about Unions and worker benefits.

It’s NOT that Unions “created higher wages and better work conditions for workers,” BUT that our companies (American companies) have to live up to the deals they made with American Unions and foreign competitors DON’T.

That’s BAD because it puts U.S. companies at a competitive disadvantage, thus putting the engine of our economy (American business) at an extreme disadvantage.

That’s why the Longshoreman’s Union was one of the first opposed to the ports deal, they knew that DPW was even more “streamlined” in its operations than POSN Co. was and that their take-over would almost certainly mean a loss of jobs for both the Teamsters and Longshoremen who work the docks.

Now I’m not going to agree with your stance that Unions “do nothing to improve the plight of workers.”

In fact, and I’ll probably have to shower after saying this, as it will sound so...”Liberal,”...but as imperfect as Unions are, they have been a necessary counterweight to the natural tendency toward labor/worker abuse, by business and industry.

But before Liberals think I’m fully on your side, it’s not that business or industry are innately anti-worker, THEY’RE NOT, it’s just that common sense will tell you, much as poor Bailey Hankins (who used to post here) would disagree, that from the vantage of the business model, all Labor is just another commodity.

Saying that, do I think that without Labor Unions, we would slip back to 90 hour work-weeks and child labor?

Well, I don’t think we’d see it next week, but I think we’d tend in that direction. In fact, I think we’d tend in that direction so much so, that within five (minimum) to ten (maximum) years we’d be getting very close to 19th Century conditions, only in 21st Century workplaces – instead of eight year olds breaking coal with hammers, perhaps eight year old apprentices making coffee and learning the ropes of stock trading and insurance sales.

Here’s the other problem I have with your basic analysis. Government regulations, OSHA, EPA, Oxley-Sarbannes, etc, have been put in place by a democratically elected process. Now, I’d like to see some of them, perhaps many of them modified or scaled back, to make us more competitive, BUT one of the problems with Free Trade is that foreign competitors DON’T have to abide by the same regulations that our own companies do, and that even our own companies can get around these costly regulations simply by building their products offshore/outside the U.S. and bringing them in sans tariffs of any kind.

I agree with Henry Ford, that you really can’t overpay a productive and motivated workforce. Higher worker pay and benefits increases consumer spending and creates greater demand for the goods and services produced by business and industry and conversely lower wage rates diminish that demand and harms business.

When Henry Ford quadrupled the prevailing wage rate for Ford employees, he DID NOT harm the economy, nor Ford’s bottomline, he actually increased the demand for his own products by creating a larger group of people who could afford that product!

It was sound business then and it’s still sound business today.

Relating to that point, once again, my statement, “I’ve always thought that a lot of the crime and cultural (isolation) problems we face within our inner city and increasingly within our burgeoning trailer park populations is the lack of just such a vehicle [a manufacturing base that provides good paying, low skilled jobs]. Today's working poor are often left without a bridge to that better life,” is not about over-regulation, but about the loss of the manufacturing base that once created many low skilled, high wage jobs and that allowed the U.S. economy to be more self-sufficient.

You answered by assailing government regulation, “And yet, if you look at nine out of ten inner cities, they have the most overbearing regulations on the level of what you've been saying we would lose to free trade. They have regulated it to a point where the economies in those areas becomes more and more static.

"The answer is not for the government to provide a vehicle of any sort. The answer is to facilitate a more competitive environment, on a number of levels--so that anyone losing a job in one field has several other options when looking for employment--and not just within the same field.”

The government CANNOT provide opportunities. On that we agree. We probably even agree that much of our economy today is over-regulated, BUT that does not touch on the LOSS of a manufacturing base.

Where we’d probably disagree is over the trend in NYC, which moved from a heavy industrial base around 1964 to a more cultural, arts based center and information based and service oriented economy over the last forty years.

I agree it’s been more profitable/lucrative, but I disagree that we should’ve or needed to jettison the manufacturing base that provided so many low skilled jobs that forged that “bridge to a better life” for many of that city’s working poor.

Opening up our manufacturing base, with our costly over-regulation and high worker costs (high salaries, and high cost health & pension benefits) to international competition exposed that sector to competitors with whom it could not compete, with their lower labor costs and far lower regulatory costs and constraints.

For ALL those American manufacturing workers THAT competition was an unfair one and much of it was outside their control. After all, they couldn’t unilaterally reduce the U.S. regulatory burdens on their employers!

And we all have to ask ourselves, if we want foreign competitors who don’t have to abide by our EPA, OSHA, SEC, and FDA regulations to be able to compete here, then why not simply scuttle those regulations so that our companies can compete on an equal footing?

And, if we really value the safety and other benefits of all that regulation, then shouldn't we protect our economy from the ravages of unregulated and lower cost foreign competitition?

As for the impact on those workers - the former factory worker who could once support a family on that single factory wage, was far better off than the retail service sector worker of today who works for a lower comparative wage (that is, a lower wage adjusted for inflation) and low or no benefits...so that worker and that segment of our society has been harmed by the removal (loss) of that “bridge to a better life," that our old manufacturing base provided.

The other problem with unbridled Free Trade is the one I explained using Chinese steel as an example. Even if foreign competitors are ready, willing and able to supply some things, say steel, much cheaper than we can make it, due to our higher labor and regulatory costs, that doesn’t necessarily make that a “good deal,” except in the short-run.

We NEED to be capable of making our steel, in case we’re either cut off by would-be suppliers, or the costs of foreign steel begin to escalate. And that’s just one example of an industry we probably don’t want to lose, no matter how much cheaper our foreign suppliers could make steel for us.

So there are actually quite a number of dilemmas we face with this issue.

It’s NOT that Unions “created higher wages and better work conditions for workers,” BUT that our companies (American companies) have to live up to the deals they made with American Unions and foreign competitors DON’T.

That’s BAD because it puts U.S. companies at a competitive disadvantage, thus putting the engine of our economy (American business) at an extreme disadvantage.

You are wrong. It is very, very good.

Creative destruction is the GOOD thing about open markets. If a foreign company is putting one of our companies at a competitive disadvantage, then the American people have benefitted from the transaction--because they were formerly held to the high costs of an inefficient business model.

I agree with Henry Ford, that you really can’t overpay a productive and motivated workforce.

Yes, you can. Because if you pay them too much, then you have to sell at a much higher price in order to be able to afford to keep them. Or, you have to hire fewer workers, thus reducing your overall productivity. Either way, people on the whole will be worse off--including those workers themselves, albeit indirectly.

When Henry Ford quadrupled the prevailing wage rate for Ford employees, he DID NOT harm the economy, nor Ford’s bottomline, he actually increased the demand for his own products by creating a larger group of people who could afford that product!

And then they wonder why inflation exploded in the seventies.

Overpaying workers, resulting in higher prices, resulting in an increase in wages so that workers could afford those new prices, resulting in yet higher prices...

...do you see where I'm going with this?

The value of money is not static. If you combat market flexibility because you feel that it's disadvantageous to one group, in the long run all you will end up doing is making money worthless.

When things are less costly, it means that the money that a Walmart employee is making can actually buy a lot more than the money a GM worker caught in the tailspin of inflation could afford.

We have foreign competition to thank for helping to debunk that model of business.

And say what you will about the Japanese, a lot of their manufacturing is actually done in America--so it's not like we're talking about unseen sweatshops in a far off corner of the world. And do you think that our workforce is being harmed by this in some way?

I think that a lot of the misunderstanding regarding trade, competition, and labor management stems from an instinctive, but wrong, notion of how money and valuation work.

Actually, not only can “Creative Destruction” be very BAD - it’s certainly personally disastrous for those businesses and the workers involved and it can be even worse for the country that loses its manufacturing base to nations with non-regulated industries, but even worse than that, at least from a political standpoint, it’s highly unpopular as well.

The overwhelming bulk of the people in the West, even right here in America, are either Corporatists (if they’re Republicans), or Socialists (if they’re Democrats). True Libertarians probably number in the low single digits.

Even in America, where anti-Socialist feeling runs much higher than it does in most of Europe, upwards of 85% to 90% of the folks are going to support things like EPA regulations, OSHA regulations, SEC regs, etc. The issue for most, isn’t support or don’t support, it’s merelt a matter of “dosage” or degree or extent of how regulated they want the economy. The primary reason for this, I believe is that most folks seem to believe they provide at least some consumer protection. For instance, most people seem more than willing to pay more for “FDA inspected foods,” and why not encourage that if you’re the government? It’s good for the State, as it inspires public confidence in the government and it makes consumers feel safe.

So, it really doesn’t matter whether FDA inspections are more effective than “the honor system,” or not, it’s what consumers “FEEEL,” that counts. Bureaucrats know this, idealists don’t

Moreover, people in most 1st World nations not only support, BUT demand that companies compensate their workers, deliver what many consider to be “basic benefits” and, of course, comply with all government regulations. Sure, back in 1981 Reagan was able to shear the PATCO workers (the air traffic controllers) from the ranks of “other workers” by pointing to their much higher than average salaries and insinuating they were not worthy of protection. PATCO’s real problem was that they had earlier refused to support a strike for airline maintenance workers and that hurt their chances of getting other Unions to support them in their time of crisis.

But most Americans tend to support such protections for workers, so long as they don’t “go too far.” They accept the Unionization that exists in most professions – two of the most powerful and often abusive Unions are the AMA and the American Bar Association. Both those Unions have been extremely adroit at limiting access to those fields by maintaining control over the entrance standards for Medical & Law schools and making sure that there is always a shortage relative to demand for the services of the workers in those Unions. The AMA makes sure so few physicians are graduated from American Medical schools each year, that the country actually needs to import a number of physicians each year. Immigrant physicians must go through a long process of accreditation and because of that often stay in public health type facilities, leaving the more lucrative private practices to the native born members of that Union.

Has that hurt the economy?

OK, people probably pay a lot more for medical care and legal services than they should, but those working in those professions would argue that they’ve worked long and hard to develop those skills and that warrants much higher than average compensation.

Certainly they haven’t crippled the economy, the AMA & ABA have merely done what they were set up to do – protect the members of those Unions from open and unrestricted competition. All Unions do that, in a sense, or at least try to.

How much do American support government regulation and Unionization? I’d dare say that it would be far easier to convince most Americans to support a ban on any imports from businesses that don’t comply with what they consider “important regulations,” and don’t treat their workers “fairly,” or even to support some sort of international regulating body, than to convince them that these regulations and the Unionization of some sectors of their workforce are largely ineffective drags on the economy.

It may well be right, both economically that the people would be, in general, better off, under a completely free market and it may well be that the free market is also more moral – it certainly is, but the former has always been a very difficult case to make and the latter rarely sways people who’d rather be “fair,” especially to the less competitive, then to be moral.

I was once very devoted to the Free Market cause, and would still acknowledge today that, IDEALLY, the free market works best.

Still, saying that, I’d also have to admit that the free market is far too unstable for most people’s tastes and that’s why most modern Western nations have turned to Corporatism as a means of both regulating who enters the market and who doesn’t, and more importantly saves the established (read “jobs creating enterprises”) from being supplanted by a number of smaller, more aggressive start-ups that either don’t hire as many workers and/or don’t pay as much as the enterprises they’ve supplanted.

Government has come to love Corporatism because it tends to maintain the status quo and keeps the people happy, or at least happier than they presumably would be under a more open, less stable economic system.

J. P. Morgan, Bernard Baruch and company were brilliant (nefarious, but brilliant) when they sought and succeeded in regulating the once free American market, starting around 1913, when both the graduated income tax was instituted and the Federal Reserve established and proceeded with a jumble of other regulations, until the entire economy was Corporatized after the Great Depression. They sold it as a cure for the “boom and bust” cycle that left both business and their workers in a highly unstable environment. What it did, for those two and the very wealthy folks they represented, was to solidify the early industrialists control over that market and each evolving market by granting them (via government regulation) a de facto control over who could enter any given market. Energy companies were able to control who entered that market, or at least make the entry process so formidably expensive that new start-ups were vulnerable to buy-outs and take-overs once they showed any signs of success, auto makers could control who entered that market (and did with Preston Tucker in the 1940s).

It’s hard to argue that Corporatism is “bad,” except in an ethereal or philosophical way. Sure, a less open society is less dynamic and most likely far less prosperous than a highly regulated one, but it is also far less stable and exposes workers who tend to be far more “risk averse” to risks they generally want no part of. That’s why Libertarianism will probably never flourish within a democracy.

I interviewed Walter E Williams back in 1993 and he acknowledged pretty much the same thing when he said, “Look, if someone like myself (Professor Williams) became President, there’d be riots in the streets and not in the poorer areas, because if anyone tried to strip away the vast array of freebies that the middle class relies upon, from small business loans, to student loans to the home mortgage deduction, to the maze of federal regulations they believe are in place for their benefit, THEY’D riot in the streets. But it would never come to that. For even if a Libertarian were elected President, he, or she would never get anything past a Congress with both Parties aligned against the White House.” (the full interview appeared in a small publication called Destiny Magazine that year)

I was somewhat more idealistic then and didn’t want to believe him, but I am now almost certain that Professor Williams was right.

The major flaw in Libertarian theory is demonstrated by the simple fact that the people don’t/can’t miss what never comes to fruition.

Who cares if a myriad of alternative fuels, some cleaner and cheaper than gasoline could’ve and would’ve already been brought to a real free market? Who cares if more real competition in the auto industry would’ve made the car industry almost as consumer friendly as today’s computer industry? Imagine a $500 Chrysler? Yeah, most consumers couldn’t imagine that either.

The people don’t miss it because they’ve never had it and if told that it could be so, the vast majority would not allow themselves to believe it could ever be that way.

Because of that basic reality, I can say that I’m no longer a Libertarian. I suppose I am a reluctant, albeit dedicated Corporatist. A typical, fairly well-paid American worker who doesn’t want to see the most economic freedom and the most human energy and vitality, but instead an economy that promises nothing too revolutionary and delivers nothing more than “providing the most prosperity to the greatest number.” I merely disagree with other Corporatists as to the manner and degree of public regulation.

The economy that “promises nothing too revolutionary and delivers nothing more than “providing the most prosperity to the greatest number,” is a Corporatist one. Corporatism works, where Socialism (the absence of private ownership) fails, but it too, does not shy away from taking from the most productive (the Corporate owners) to provide for a greater common good – higher salaries, greater benefits, in exchange for somewhat lowered profits. An array of corporate taxes, income taxes, fuel taxes to provide for a network of subsidies to both businesses and individuals.

Ironically it’s Corporatism that defeated Socialism (including Nazism), as both America and England where both Corporatist economies before WW II.

That was the big fight, as the “war” against the free market was won much earlier by men like Morgan and Baruch using only brief cases and the people’s fears of the unknown and the government’s fears of the people against them both.

It was an easy victory. Socialism put up a much tougher fight. There are even some Corporatists today, who believe in the wider dispersement of Corporate profits to deliver everything from more lavish welfare benefits to those unable/unwilling to work to free (rationed) health care, who mistakenly call themselves “Socialists,” when they are actually merely more Left of Center Corporatists arguing only over the extent and the use for the dispersement of Corporate profits.

I think the argument that a well paid workforce (or prosperous working class) is good for everyone, is a sound one. Now, you can overpay mediocre workers, BUT a productive and highly motivated workforce increases the productivity and efficiency of that enterprise and makes it more profitable in the long run. Sure, you can “overpay” them too, but the key for business is managing productivity (output) with compensation, so that the business still (1) sells quantity and (2) makes a profit.

Now, what you say about the Japanese, “say what you will about the Japanese, a lot of their manufacturing is actually done in America - so it's not like we're talking about unseen sweatshops in a far off corner of the world. And do you think that our workforce is being harmed by this in some way,” is true, BUT (1) I did mention that the Japanese hire Americans (mainly in Right-to-work, non-Union states) giving them a competitive edge over American companies right here in the U.S. and (2) never said they relied on slave or sweatshop labor – I said China does that.

Again, I don’t think what Japan is doing here is bad at all. I do have a problem with the fact that most American companies are unable to get out from under the oppressive contracts that make them uncompetitive.

Would it be a “national disaster,” if America were to lose its auto-making industry?

Without question, as it would be a devastating blow to the American economy displacing millions of workers and creating an even larger trade imbalance between the U.S. and the rest of the industrialized world.

Do I think our workforce is being harmed by Japanese hiring in South Carolina and Mississippi?

No, I don’t, certainly not the workforces in THOSE states, but I’m certain that every UAW member would, for once the big American auto makers can use this as leverage, they’ll probably do exactly what many airlines have already done – forcing workers to accept lower salaries and fewer benefits...and that could be said to very much harm the auto workers.

The real question is, do I have any sympathy for what Corporate America would call the “the overpaid, flabby American auto-worker?”

I guess that would depend upon my mood at the moment. A part of me knows that a reduction in the “prevailing wage rate” can be ominous for every single working person and that cheaper labor is the easiest and most effective way to put a persistent downward pressure on wage rates. Such deflation could very easily become disastrous.

Poorer/lower paid workers means less consumer spending, less demand for goods and services and a smaller economy. It also means things like declining housing prices – good for folks looking to buy, bad for folks like me, already heavily invested/leveraged in a real estate market that became overheated a few years ago.

As to real estate, I’d acknowledge that a correction (in some areas more than others) is needed, but NOT any major restructuring of overall real estate pricing, as that would not only be disastrous for most current owners, but also the banks that would soon hold far too many over-valued mortgages.

A banker once told me, “You think inflation is bad, it’s not. For the most part, it’s manageable. It’s deflation that’s disastrous. Once a deflationary cycle starts, it’s difficult to control and once it gets going it’s hard to even estimate the ultimate carnage.

Foreign competition, in fact overall competition is GOOD, in that it keeps business and industry innovating and trying to offer better products at better prices, BUT most Americans, like most Europeans, feel that various regulations from OSHA regs, to EPA statutes, to a host of other consumer protection regs are GOOD “for them,” and the question they’re faced with is this, “If they’re going to let foreign competitors into their market without having to abide by most of these regulations and offer nothing close to the pay and benefits (labor costs) to their workers, then why should American business and industry be saddled with those things that make them unable to compete?

The answer would seem obvious, either they must move to protect their markets, OR force other competitors to compete on an equal footing via increased labor and regulatory costs.

The choice for Americans seems obvious, it’s either higher prices and lower quality, or lower salaries and few benefits for workers and far fewer regulations.

I think I can tell you which way they’re going to tend.

True Libertarians probably number in the low single digits.

And then actual economists are even fewer ;)

Anywho, this has been an awesome discussion and I'm "Looklatering" this page for future reference, but there comes a point, in online discussions, when responses are getting exponentially longer and longer, that I just have to stop and come back to the topic later, after I've had time to absorb everything that's been said by everyone.

Nice doing this with you, though :D It's great to have such intelligent people around to debate things with.

It's an interesting topic Adam and for me, it makes me re-examine many of my own beliefs...and that's always good.

On a theoretical plane there is absolutely no doubt in my mind that the Free Market economy is the best - it works best, it is more dynamic and innovative and it's the only truly moral one that acknowledges that those who create have the innate, natural right to "keep" what they've created - the profits from business and the wages earned from their labors.

Libertarianism's problem isn't a theoretical economic problem, but a practical or political one.

If people knew that the cost of EPA regulations to each American was $1.4 TRILLION dollars between the 25 year period that stretched from 1971 to 1996, most would be apalled (hopefully, at least those with any common sense), but if you ask if they'd support scaling back, say, the Clean Air Act, you'd be hard pressed to make your case over the hysterical din created by the established industries, vocalized by paid shills (the "environmentalist wackos") and amplified by a corporate media in collusion with this "rigged game."

That's why I say it's hard to conceive of any democracy, even a "Representative democracy" like ours, ever embracing the Free Market, due to both a dirth of real and accurate information and personal and governmental fears.

To the good, is that over the past 25 years, we've moved slightly toward a freer market than previously existed here and because of that American workers are now among the most productive workers in the 1st World. Especially compared to European workers with their 32 hour work weeks, eight weeks of paid vacations annually, etc.

The forces alligned against the Free Market aren't so much the people, though most of them care nothing about such theoretical concerns, but they are the government itself and the established businesses and industries that both hugely benefit from a Corporatist economic system.

P.S. SHOULD'VE said "ALL" not "EACH,"

"If people knew that the cost of EPA regulations to (each) ALL American was $1.4 TRILLION dollars between the 25 year period that stretched from 1971 to 1996, most would be apalled (hopefully, at least those with any common sense)..."

Ever read the Skeptical Environmentalist?

If not, I highly recommend doing so. It made me feel like maybe what we need isn't more economists in prominent places, but more statisticians in places where they can be heard.

Seriously, what could be more important than people whose specialty is telling you exactly what the margin of error is and what all these numbers we get thrown at us mean?

Yes, Bjorn Lomborg, right?

Yes, I have it and read it.

Great book and an excellent reference.

The problem again is that every issue is so politicized now-a-days that those opposed simply dismiss that which they disagree with, "Oh, that writer must have an axe to grind."

Lomborg did to the radical environmental movement what John Lott ("More Guns, Less Crime") did to the anti-gun movement - destroyed their every argument.

I've heard lots of sqauwking, BUT to date, no one has refuted either one of those writers with FACTS.

Probably because the facts aren't on their side.

Probably because the facts aren't on their side.

Usually difficult to get around, that.

John Lott, you say. Well, I'll remember that for future reference.

Yes, a great book. Here's the Amazon link;

http://www.amazon.com/gp/product/0226493644/qid=1141608638/sr=1-2/ref=sr_1_2/102-1719954-5268104?s=books&v=glance&n=283155