Mankiw on Globalization: People Should Move

Greg Mankiw offers advice on dealing with globalization:

An Evening With (Economic) Champions Published, by Benjamin J. Salkowe, The Crimson: A week after strained relations with the faculty led to his resignation, University President Lawrence H. Summers was on his academic home turf last night, moderating ... N. Gregory Mankiw and Gene Sperling in a debate on the “Challenges to American Prosperity”... While the president spent much of the two-hour event staring into the audience, Summers occasionally prodded the scholars to a more aggressive debate on issues of tax policy, budget deficits, and globalization.

Summers urged the economists, who kept returning to nuanced policy discussions, to come up with more practical political advice. Referring to Flint, Mich., where workers’ jobs are being outsourced, he challenged the academics to come up with a realistic suggestion for the Buick-city mayor.

“That’s the political reality,” said Summers, pointing to former Senator Bob Graham D-Fla. in the audience who was nodding in agreement. ... “...Maybe the answer is [to] put an economics course in every high school and we’ll be OK,” said Summers, taking a jab at Mankiw who earlier suggested that introducing economic principles to Americans in high school would help people better understand globalization.

“I don’t know about the mayor, but I know what the people should do,” Mankiw said, “The people should move.”

Summers countered, “Where do you think the people in Flint should go?”...

Mankiw's answer was not reported. Here's a bit more from the Harvard Gazette:

Top economists take a close look at U.S. budget Discuss how to keep the good times rolling, by Doug Gavel, Harvard Gazette: Two of the nation's top economists, Gregory Mankiw and Gene Sperling, offered their perspectives on how to keep the American economic engine revving ...

"I would say the question is not whether we're going to have growth or productivity, because I believe we will have both, but whether or not that will lead to a strengthening of the middle class or a hollowing out of the middle class," said Sperling...

Mankiw ... said the economy looks "terrific" at the moment, although he warned of the looming federal budgetary squeeze... "the U.S. budget is on an unsustainable path" as a result of a combination of tax cuts and rising levels of promised government benefits.

Summers asked both economists how they would respond to the political pressures facing lawmakers in communities that are losing jobs as a result of globalization. Mankiw remarked that "our policy should be based on people, not on places," while Sperling noted the need for more substantive economic transition programs to help those communities and residents harmed by plant closures...

Update: I should have added this from a recent post on the work of Edward Glaeser who is also at Harvard:

Glaeser had already been thinking about the relationship between housing and urban poverty when one day he and Gyourko began to discuss ... cities like Philadelphia and Detroit... Why didn't everyone leave, Gyourko wondered, and go to a place like Charlotte, N.C., that had a fast-growing economy? This question addresses a puzzle of urban economics. ... Glaeser and Gyourko determined that the durable nature of housing itself explains this phenomenon. People can flee, but houses can take a century or more to finally fall to pieces. "These places still exist," Glaeser says of Detroit and St. Louis, "because the housing is permanent. And if you want to understand why they're poor, it's actually also in part because the housing is permanent." ... It is not just that there were poor people and the jobs left and the poor people were stuck there. "Thousands of poor come to Detroit each year and live in places that are cheaper than any other place to live in part because they've got durable housing still around," Glaeser says. The net population of Detroit usually decreases each year, in other words, but the city still attracts plenty of people drawn by its extreme affordability... The resulting paper, "Urban Decline and Durable Housing," caused a stir among urban economists ... (It was initially circulated with a subtitle along the lines of "Why Does Anyone Still Live in Detroit?" until the authors, thinking it politically insensitive, removed it.)...

Comments

[anne]

Mankiw ... said the economy looks "terrific" at the moment, although he warned of the looming federal budgetary squeeze... "the U.S. budget is on an unsustainable path" as a result of a combination of tax cuts and rising levels of promised government benefits.

Notice the cleverness, notice, for I am not so clever, the problem, we find, is tax cuts and promised government benefits. Yes; the problem is promised government benefits, always those promised government benefits for Social Security and Medicare, always.

[anne]

Those who are not so clever, who are not clever enough to find the problem programs in surplus as Social Security and Medicare, might even be so bold as to mention spending for the war in Iraq and even for the military, but we are not so clever as to know the real problem is those darn old people and the money they have been pouring to Social Security and Medicare all these years.

[anne]

Rather comical really that the guns and butter metaphorical trade that economists were using so broadly a short while ago, has become butter and allowing sneered at old people, who might even now and then be parents, to live decently. Well, I had a birthday lunch with a 90 year old Divinity School Rabbi today and I wonder about the question.

[me]

"Mankiw" haS once again proven he is brain dead.

Earth to Mamkiw. Our fucking jobs went to India and we couldn't move there if we wanted to.

Every time this guy opens his mouth he reminds me of George Bush, incoherent and lost. How do people who have lost thier jobs, pensions and healthcare move from a depressed area to WHERE? Cna they afford the real estate in the "new" place.

This Mankiw never has the answer what to train for, where to move to, just smirky, vague, meaningless utterances.

[dk]

Mankiw managed to make Larry Summers look compassionate.

[ken melvin]

Wish I had been there ...

The poor chasing jobs is analogous to offshoring and undocumented labor in that each forces down wages for American workers and none of them create new jobs. Offshoring and undocumenteds differ in that they actually reduce the total number of jobs available American workers.

[save_the_rustbelt]

“I don’t know about the mayor, but I know what the people should do,” Mankiw said, “The people should move.”

Arrogant, pompous SOB. No connection with reality whatsoever (no wonder he worked in the Bush administration).

[save_the_rustbelt]

Is there anyway to get the rest of Mankiw's answer?

I can just picture 950,000 Detroiters showing up in Charlotte next Wednesday.

Are we going to recreate the flight of the Okie's to California? (my family was too poor to go to California so they stayed and got really poor).

This does happen, e.g. Pittsburgh, but it took the better part of 2 decades and is still playing out. Is that Mankiw's idea of economic and urban policy?

[RW]

One would think an economist of Mankiw's stature would at least be aware of the basics of psychology, anthropology, psychobiology, etc. Isn't economics supposed to be a human science? We recapitulate our enviroment in flesh and behavior; locale has power even if we hate it; reasons to stay are inherent, departing requires an act of will; it takes many departures on many levels to create a 'global citizen,' whatever that is.

[Tom]

Come on folks, it's just transaction costs, and everyone knows you can ignore them.

[A Sprinkling of Clouds]

MT filed this one under "economics," "international trade" and "unemployment." It puzzles me why there's no "red meat flung into the cage" category.

[pongo]

Such a soothing moniker, 'A Sprinking of Clouds', and not without some poetry to arrest your attention.
So, ASoC, you figure we should just let Mankiw and Summers let fly with their cleavers?
Or do you know what to do when you hear the 'ping' in table tennis?

[Stormy]

And how do you like your blue-eyed globalization now, Mr. Death?

For a long time, many of us have pointed out what is happening, but the economists busy with their nuances busily sharpened their pencils.

[Bruce Webb]

“I don’t know about the mayor, but I know what the people should do,” Mankiw said, “The people should move.”

Can I take Gramma? and her ventilator too? And all my friends and my church? And the guy that has fixed my car for the last twenty years? How about Bill? Bill and I meet each week during the fall and eat brats with sauerkraut and wash them down with Bud while cheering on the Lions. Can I bring him too?

For the record I no longer have Grammas, I don't go to church, I don't have a car, and I am not a Lions fan. But I did exactly what Mankiw suggested thirteen years ago. And believe me moving away from everything and everybody you know and dropping yourself in a community where everybody knows everybody and their cousins and grandparents is not as easy as Mankiw makes it out to be.

I don't know how to get to it but there is a casual cruelty buried there: "Go to America! Sure you will never see your parents, or your village again. Never celebrate the holidays in the same way. Have people laugh at you because of your accent! But your income with be 11.79% higher than it is now!!"

Hmm. Well maybe I love my nieces and nephews and want to see them on a regular basis. Sue me.

[save_the_rustbelt]

Bruce: Amen

Some of my family suffered through the Oklahoma dustbowl and when they later left to find opportunity - to this day I can't find dozens of my first and second cousins.

Are academic economists so completely removed from reality they could even wonder about shutting down Detroit? Do they know any real people? (other than the illegals who clean their college offices and mow their lawns)Do they have any sense of the ebb-and-flow of people who are not tenured professors? Is there any connection with the reality of real people who do not have lifetime job guarantees, and easy, interesting jobs to boot?

[save_the_rustbelt]

Detroit update:

Why aren't people fleeing Detroit wholesale?

According to the Free Press they cannot sell their biggest investment, their homes.

No real estate bubble here.

[dryfly]

Is there anyway to get the rest of Mankiw's answer?

I can just picture 950,000 Detroiters showing up in Charlotte next Wednesday

Rust - I think they should all show up in Mankiw's neighborhood & live in boxes on the street up and down his block. Until these assholes have to deal with the poor everyday it's all theory to them, equations, high concept... When he & his like have to claw their way past hungry desperate panhandlers, urine, garbage, etc., every morning then it won't be 'theory' to them anymore. Then maybe they'll have a better answer than 'leave Flint'...

[cm]

save_the_rustbelt, dryfly: It's nothing new, this is just the usual phenomenon of people perceiving themselves sitting on the high horse (of course because of their own merit and virtue). If and when they are thrown from the horse, the rhetoric will reverse within a minute.

You can observe a similar phenomenon e.g. in corporate environments where some people think they have "arrived" and look down on unions, "commodity" lower-rung occupations and "underperformers". When, and only when, e.g. a layoff or "cost management" cuts close to their own ranks, the mentality will suddenly change. Not necessarily for the better, but the arrogance of sitting above all else will be gone.

[save_the_rustbelt]

dryfly:

In one perverse sense, maybe Mankiw is right, at least at the individual level.

After all, he has pushed policies to hasten the demise of American manufacturing in the name of more trade, and in the process indirectly advocated hollowing out the center of the country.

At a national level though, the idea that we should just let urban areas in the center of the country go to seed so everyone can work as a waiter in Orlando is fundmentally idiotic, which I suppose made Mankiw a perfect fit for the Bush administration.

Mankiw is completely isolated from real people, except perhaps if he watches the illegals who manicure his lawn (I doubt he gives them a glass of water or anything).