"Deficit Hawks are Like Protectionists"

Things are different when the economy is operating inside the production possibilities curve:

Deficit Hawks are Like Protectionists, by knzn: Everybody knows that, in the aggregate, trade increases welfare. ... But protectionists argue that the redistributive effects of trade can often be bad enough to outweigh the aggregate advantage. Trade can hurt certain parties that one may wish not to hurt. The overall pie is larger, but someone’s share may be smaller.

When an economy has slack resources, as the US economy – as well as the world economy – clearly does now and likely will even more in the immediate future, there is no aggregate welfare cost to using up those resources, so any benefit society receives is, in the aggregate, free. In an aggregate welfare sense, slack resources are a free lunch, and that lunch is wasted if nobody eats it. Deficit hawks talk about the cost to taxpayers and the cost to future generations and all that. But let it be noted that fiscal stimuli during times of slack resource use make the overall pie larger, and any objections must rest on the premise that the new division of the pie leaves some particular party with a smaller slice despite the larger pie. It’s pretty much analogous to the argument for protectionism. ...

[J]ust like the protectionists, the deficit hawks must be concerned about the redistributive effects of deficits, since the aggregate effect is to increase welfare. But while the protectionists actually have a pretty good argument (at least at the national level, in developed countries) as to why the redistributive effects are bad and might be expected to outweigh the aggregate effects in terms of importance, the deficit hawks’ arguments seem pretty lame to me.

The main issue would seem to be redistribution from future generations to the current generation. Here’s a point I made a couple of years ago, but I’ll repeat it: in the history of capitalism, there has been a consistent long-term trend of increasing welfare, by pretty much any reasonable measurement. You can complain about some of the things that have gotten worse, but the fact is, the19th century really sucked for most people, and the 18th century sucked even worse. And compared to the 1990s, the 1920s sucked, too. Unless we expect the trend to suddenly reverse itself, the likelihood is that future generations will be, in the relevant sense, richer than the current generation. So the deficit is a transfer from relatively rich future generations to the relatively poor current generation. I would hope that those future generations could spare a few extra pennies for such miserable folk as we. Especially since it is our blood, sweat, and tears that will have made them so rich. It is through no merit or toil of their own that they will come of age using microprocessors that run 1000 times faster than the ones we use today. ...

Comments

[a]

"I would hope that those future generations could spare a few extra pennies for such miserable folk as we. Especially since it is our blood, sweat, and tears that will have made them so rich. It is through no merit or toil of their own that they will come of age using microprocessors that run 1000 times faster than the ones we use today."

What a morally bankrupt argument, all dependent on the idea that the future always has it better than the present. There have been long periods in Western Civilization where times have been worse, e.g. consider the Dark Ages versus the Roman Empire. We will have left future generations a depleted stock of oil, a polluted and overcrowded planet, nuclear waste, a diminishing number of species and eco-diversity, and so on and so on.

[ddt]

I guess they are dumb stupid jerks just like those idiots who were skeptical of the first bailout plan, huh knzn?

"So, while there is (in theory, at least) quite a large risk to (future) taxpayers (a risk of up to $700 billion – plus the meager interest that the government has to pay), the expected return is not only positive but rather large. And since the interest paid on Treasury securities is quite small, that return, if it materializes, will be a huge windfall for whatever future taxpayers get the benefit."
http://knzn.blogspot.com/2008/09/bailouts-for-fun-and-profit.html

knzn = fail

[Richard H. Serlin]

"But while the protectionists actually have a pretty good argument (at least at the national level, in developed countries) as to why the redistributive effects are bad and might be expected to outweigh the aggregate effects in terms of importance"

But they don't really have a good argument, because you could just have free trade make the pie bigger, and then redistribute the bigger pie with more progressive taxation, etc. You could redistribute some of the gains of the winners in free trade to the losers, so that no group loses.

Making the pie smaller with protectionism is a next best solution to inequality, a way next best solution. You could alleviate inequality just as much at a far lower price, in fact at a negative price to the total size of the pie, other ways. I discuss this in my post, "Globalization and next best solutions" at:

http://richardhserlin.blogspot.com/2008/11/globalization-and-next-best-solutions.html

[reason]

You can complain about some of the things that have gotten worse, but the fact is, the19th century really sucked for most people, and the 18th century sucked even worse. And compared to the 1990s, the 1920s sucked, too. Unless we expect the trend to suddenly reverse itself, the likelihood is that future generations will be, in the relevant sense, richer than the current generation.
The chances that the trend will suddenly reverse in the near future are better than have been in a long, long term. Not certain but certainly possible. Jared Diamond Collapse. We need to take Hermann Daly more seriously.

Richard H. Serlin
while I think your argument is true with a static equilibrium model, I'm not so sure that it works dynamically when uncertainty, and cost of adjustment, and a disfunctional international financial system are taken into account.

[reason]

Besides which I don't understand, why a sovereign state with its own fiat currency can't simply print money when threatened with deflation. It doesn't need debt at all.

[bakho]

The Republican war against redistributing the wealth from "free" trade will eventually kill "free" trade.

The Republican "me generation" philosophy has underinvested in the future. When people make their own decisions about spending money, more of the money goes to short term wants than long term needs. There is also a loss of efficiency gained from bulk purchases. In health care we spend a lot of extra cash insuring on the basis of small groups rather than insuring everyone. Clearly there needs to be a balance between group investment (government) and individual investment. However, what is wrong with our economy in its current state will not be fixed by more feel good consumer spending.

To bail out the auto industry, why not nationalize some of the health care costs?

[Don Quijote]

But they don't really have a good argument, because you could just have free trade make the pie bigger, and then redistribute the bigger pie with more progressive taxation, etc. You could redistribute some of the gains of the winners in free trade to the losers, so that no group loses.

But that isn't what has happened. What leads you and all the other luminaries that it's going to start happening anytime in the near future?

Why should the average person who gets minimal to no benefit from free trade support it?

[Ryberg]

KNZN makes selected comparisons. The 1990s were better than the 1920s for most Americans but we had to go through the 1930s and 40s to get there. We may be entering another period like the 1930s.

It was not the blood sweat and tears of the 1920s generation that made the 1990s possible. It was the blood sweat and tears of the 1930s and 40s generations. In contrast, irresponsible policies of the Roaring 20s created the conditions for the 1930s.

Poor KNZN must borrow from his grandchildren to sustain more consumption than he can produce. Because of all the debt, the future generation will have to produce more than it can consume in odrder to pay it off. That is the generation that will experience the blood sweat and tears, not KNZN's generation.

[paine]

this surprised me at first
made some horse sense
then this...
"..So the deficit is a transfer from relatively rich future generations to the relatively poor current generation.."

of what ??

the burden of any foreign owned
federal debt
up to
the total value
of the full deficit binge

hey i'm a cosmopolite
so i say ...so what ...like i do about
domestic vs foreign owenership shares of anything

my economy is always closed
its the whole earth's economy

now on the other side
we could assume who pays the debt service from here on out too

ie
the aggregate
final x billion paying *
marginal tax class
may be very different
over the future horizon
from that class today

* lots to assume here

i'll take a stab:
assume all else expended
in the federal budget
for each year on out
is first borrowed
by some assumed fraction
that will indeed be borrowed that year
and then the rest of the revenue
as paid
by tax revenues
in order of tax base
as chosen
up to the point where
what remains to be paid
is the real change in the value of last fiscal years federal debt stock....

lots a room to fudge this up
enough to make any future tax class
the fall guy
of today's folly
and the gimp
of any and all
self annointing
prior generations

[paine]

"the future generation
will have to produce more than it can consume
in order to pay it off"

pay it off or service it's real interest charge
by sending tax cash to who??

other members of that global generation eh ???

[paine]

"It (the gub)doesn't need debt at all"

yes it could fund any
slack closing expenditures
by monetizing the corresponding
t bond issue

any amount of debt held by gub itself
is equivalent to no debt
but the money stock is now larger

if that money stays circulating thru
the asset markets fine
but to the extent this new money
increases the fall of money
out of the asset ,markets down into
the real product economy

if capacity is fully utilized ....

lots of optimal this and maximal that
needed here
but the darkening danger cloud
of monetizing exists
however nebulous
so long as
the poli econ laissez faire
"half assed " spasmodic department
can come off the bench
and into the play

[paine]

dick serlin under estimates
the grasp of others ...sometimes
and over estimates
his own grasp ...often

money you might give me
would surely help me thru the dark night
but you won't give it to me
will you dick

most of us losers
getting job and or pay wacked
by the induced effects
of cross boundary trade
are in the same boat
vis a vis
bountiful uncle sawbuck
and
his corporate ownership tax base

[disgusted]

What a craven coward.

You hae no way of proving the trend will ocntinue, but you want to stiff them for the bill anyway.

I hope that we go through an even greater depression that the 30's just to teach you a lesson.

[kharris]

I would add to reason's objection to Serlin's argument. "Compensate the losers" is one of those pie-in-the-sky notions that some economists hand out glibbly to answer the distributional objection to trade. Examples of anything like full compensation are rare. This is really not and answer, certainly not a sufficient answer to justify the bald assertion that protectionists "don't really have a good argument..."

On kznz's assumption that things just keep getting better, I would offer two points. One is to observe that since kznz is correct about the extent of progress so far, additional progress in material wealth seems a far less urgent goal than when governments first began to tend to the business cycle. There are non-budget costs to making and consuming ever more stuff. That needs to be added to the budget cost that we will impose on future generations. We may be poor relative to future generations, but we are not poor. We are rich. We need to examine whether growing richer is the highest good.

And we may not be poor relative to future generations, as reason said. Extending trend-lines and smiling over the result is not always a good approach. There are serious questions as to whether the recent trajectory of resource use can be sustained. Continuing to grasp after ever growing output just because we decided on that course decades ago seems small minded.

[jimbo]

I'll agree with any of you that we are stealing real production from future generations if you give me a ride in the time machine you are using to make the transfer.

Until then, you really need to think a bit more about aggregate financial flows.

[ken melvin]

Ah yes, if we can only do as well as the 18th, the 19th, the 1920s, ... Let me off in the next town. There, I'll look for the man who can see a way ahead.

[swells]

Everyone decries the practice of debt slavery when they see it operating in, say India, in the present where a man who must feed his family today indentures his progeny's tomorrows. This is immediate and can be clearly seen as morally reprehensible even though substantively the same arguments could be made in respect to debt slavery. This gentleman needs to make a substantive argument that making the process more obscure makes it morally correct.

[What Type of Pie?]

"...fiscal stimuli during times of slack resource use make the overall pie larger..."

Will the extra GDP be useful? During the Great Depression farm price supports resulted in more food being produced. However, domestic demand for food is relatively inelastic, so the extra food (GDP) was pretty much wasted. In addition, those producing useful products had goods/services taken away from them to pay for the price support. This was not a win/win situation.

[Bruce Wilder]

knzn: "The main issue would seem to be redistribution from future generations to the current generation."

knzn really stepped in it, in this one.

He was really doing quite well, too. Failing to use resources productively in the present is a loss certain: use it or lose it, folks.

There are ways in which we can reliably transfer economic welfare to/from future generations, but none of them involve blood sacrifice. Or, unemployment.

He should stop there. Indulging people in their most lurid fantasies about the effects of government debt is not helpful. For commenters, who are certain that people in breadlines would improve the moral order, and that those of us concerned about the effects of unemployment and consequent poverty more than deficit financing lack moral integrity, let me offer that I personally, would be willing to see massive increases in public spending financed by confiscatory inheritance taxes, whose collection could accelerated by judicious use of the guillotine. Let past generations of thieves sacrifice something for youth and the future. Hank Paulson -- almost certainly one of the undead as a result of some tax avoidance scheme -- should probably be staked as an additional precaution.

[Jon]

This is incorrect.

When we talk about resources, we're talking about productive factors, which means labor or capital ("idle men and idle machines"). However, there are two possible causes for slack resources.

The first is coordination failure. This occurs when, for some reason, the Economy is failing to properly match labor to capital. In this case, there is a strong case for government intervention in order to overcome this failure.

However, it is also possible that slack resources exist because the Economy is going through a process of restructuring, during which contracting industries shed labor. This results in a painful transition period, as well as a destruction of capital (both physical and human) through disuse. However, the Economy is ultimately the better for it (paging Dr. Schumpeter).

Of course, in any Economic downturn it is likely that both causes come into play, since realignment leads to transitional coordination failures, and since hard Economic times accelerates realignment. Given that the current downturn is due in part to a credit crunch, there is a strong argument in favor of coordination failure as the dominant cause. Nevertheless, there is doubtless some much-needed restructuring going on, and certainly failing industries are hit hardest (I'm looking at you, GM).

So, in conclusion, government spending to mobilize slack resources is not costless, because it interferes with restructuring. It is valid to the extent that coordination failure is the cause, and invalid to the extent that Economic restructuring is the cause.

[Gene O'Grady]

For what it's worth serious scholars of the period tend to argue that the so-called Dark Ages were better for the bulk of the European population than the Enlightenment's beloved second century.

And, speaking strictly as a non-economist, could you people deep six the pie metaphor once and for all and speak to reality?

[bakho]

Jon
What about government spending that is transformative? instead of propping up dinosaurs?

What about government spending to transform our transportation system to something more energy efficient so that there are future energy savings?

What about government spending to transform uneducated unskilled potential workers into educated and skilled workers capable of higher productivity.

Just because the Bush administration was all about propping up crony capitalists, the "old energy", housing bubbles, financial bubbles and steel companies does not mean that spending going forward cannot be transformative.

Republicans may have derided Al Gore for championing the internet and supporting its funding by Congress when Gore was a senator. But few disagree that the internet has been a great initial investment of taxpayer money that has transformed the economy.

[Dave Johnson]

The problem is, there isn't anyone who is actually "against trade."

I'm a proud Protectionist. I believe in FAIR trade. I want to see MORE trade, but I want trade policies that benefit us and our trading partners, rather than just making a few CEOs rich while triggering a race to the bottom.

[Jon]

Bakho,

I was responding to the statement that government spending to mobilize slack resources is a free lunch that necessarily and always increases aggregate welfare. The 'free trade' analogy is false, and the intergenerational inequality argument is a straw man.

[Robinia]

Fascinating discussion. Misallocation of government resources would look, to me, to be the heart of the problem. Extending a trend line and announcing that we will all be richer in the future, so, why not borrow, entirely discounts one of the main industrial trends of the past 150 years-- displacing renewable resources (human power, animal power, biomass) with fossil fuels. In a long-long view of human history, figuring out how to eliminate the need for human effort by substituting coal and oil is the rough equivalent of happening upon a huge store of beans and grain. Chow down, be happy.

Now, if we can harness renewable energy resources, prosperity can continue apace. Our decidedly minor interest in same comes and goes in sync with the price of oil. But, not every scenario of energy descent works out as prettily as a T. Boone Pickens ad. Some predict that we will just use old weapons, old animosities, old habits and old thinking to squabble and kill one another over what fossil fuels remain. The Iraq war is not a comforting bit of data in that fulmination.

While, all the while, telling ourselves that the good times will never end. What bubble? Isn't the business cycle dead, now that we have rapid microprocessors? Why wouldn't future US citizens continue to consume a disproportionate share of the earth's diminishing store of fossil fuels, we always have, right?

Which is not to say we should eschew deficit spending. Just to say that the things we actually invest in are really, really important. Go, infrastructure, energy conservation, renewable energy alternatives, sustainable farming, environmental preservation, human capital investment. Enough blood and money for the stealing of oil reserves.

[Patricia Shannon]

Human beings are truly amazing. Just a few months ago many were saying that housing prices wouldn't fall because they never had before. Now they say humans will continually progress because they always did in the past (which is not even true, as some have pointed out).

When will they ever learn? When will they ever learn? (From "Where Have All the Flowers Gone", words and music by Pete Seeger)

[a different chris]

>pay it off or service it's real interest charge
by sending tax cash to who??

Brilliant question. The very, very wealthy, who else?

I have a very specific way to meet the logic, if not the spirit, of knzn's model: The people who, given the trends that everybody is so sure of, will be weathier are mostly in Asia. Who convienently hold most of our government debt.

So we go on for awhile with massive deficits, and then we default.

See? I've pulled up the current slack and handed the bill to people who are certainly going to be much richer at that point.

Don't like it? Me either - but what else is kznz actually picturing? He must have some serious beer googles on if he thinks this won't hurt somebody.

[Julio]

The whole "stealing from future generations" strawman always gets in the way of the argument, big time. Too bad knzn derailed the thread by introducing it...

reason:

"Besides which I don't understand, why a sovereign state with its own fiat currency can't simply print money when threatened with deflation. It doesn't need debt at all."

Right. One of the advantages being that it doesn't introduce the future-generations canard.

paine:

"hey i'm a cosmopolite
so i say ...so what ...like i do about
domestic vs foreign owenership shares of anything

my economy is always closed
its the whole earth's economy"

OK; and in this closed economy there is a whole class of owners, which does NOT include grandma or our pension funds; and printing money will cause inflation and stiff them. And our problem is?
(I guess I'm going tribal here!).

paine:

"lots of optimal this and maximal that
needed here
but the darkening danger cloud
of monetizing exists
however nebulous
so long as
the poli econ laissez faire
"half assed " spasmodic department
can come off the bench
and into the play"

Could you explain this? Is "monetizing" the "danger cloud"?
Or the benchers? (who don't seem to be sitting at all, but that's another discussion!).

[kthomas]

Having read this article, I don't know why I feel like slapping someone over the head!

We can all feast, with pleasure, on Shit Pie.

[Bruce Wilder]

Jon: "So, in conclusion, government spending to mobilize slack resources is not costless, because it interferes with restructuring. It is valid to the extent that coordination failure is the cause, and invalid to the extent that Economic restructuring is the cause."

I see Bakho has already objected, but I will second his objection. Public investments are such a large part of the structure of the economy, I would think it obvious that there is a very real possibility that a faltering economy is faltering, precisely because of a deficit of public investment, and public investment to restructure is in order.

Certainly, the history of the Great Depression is one that featured massive public investment, while the Crash, itself, reflected limits on the effectiveness of private investment in extending the scope and scale and the modern (auto+electricity) economy, while draining the agricultural economy of resources smoothly.

[btg]

"You can complain about some of the things that have gotten worse, but the fact is, the19th century really sucked for most people, and the 18th century sucked even worse. And compared to the 1990s, the 1920s sucked, too."

Except for two things - environmental degradation, and resource depletion. A future generation inheriting a world with all the oil and gas already sucked out of the ground, and with global warming and various other environmental costs, is bound to be poorer.

In fact, the fact that the 19th and 20th centuries were so prosperous by comparison is because of the stored energy/natural capital we have been using - at first coal and the steam engine, then oil & gas.

There is also soil depletion and the decline of speicies - look at Italy in the 1000 years until about 100 AD - or Easter Island, or various other civilsations that when into an inevitable decline after being short sighted.

[don]

Me, I'm just thankful that HP has come to realize that wealth maintenance (buying up the bad debt) is too expensive - the Treasury is not big enough for the task.
I think those who argue that default on Treasury debt is an option (whether outright or by monetizing it) would be greatly surprised at the kind of world such an event would usher in.

[JIMB]

If modern finance creates credit that funds the outbuild of the world's biggest ball of string, it *** should *** be left idle. So should GM and Ford. There is a lack of real resources available so that production can self-sustain. That means less valued production (which consumes resources in the act of production) during the correction must be left idle until the economy finds a sustainable path where resources are available for growth. That IS the recovery process. That economists put out this tripe is immensely frustrating - especially since these economic fallacies were countered 100s of years ago.

(re: When an economy has slack resources, as the US economy – as well as the world economy – clearly does now and likely will even more in the immediate future, there is no aggregate welfare cost to using up those resources, so any benefit society receives is, in the aggregate, free.)

As far as deficit hawks, just how is spending financed? Either by selling to the Fed (devaluing savings) or internationally (reducing exports) or domestically (raising interest rates) or by raising taxes (reducing trade and incomes). In other words, there is no free lunch even in recessions. Simply amazing.

[A.Citizen]

Uh...just one word for all you 'responsible' folks. The folks who are so concerned about our mounting 'deficit'. And that word is....

Iraq.

Yer sittin' around here whining about chump change. 1 Trillion bucks, Stiglitz wrote an entire book about how Iraq would end up costing 3 Trillion and he was assuming best case scenario. Which, in case you did not notice, we don't have.

Until you are ready to address the rat in the cupboard why don't you 'deficit hawks', more like 'deficit brains', just STFU! and let the adults fix things.

[roger]

Richard, must say I've had enough of this:

"But they don't really have a good argument, because you could just have free trade make the pie bigger, and then redistribute the bigger pie with more progressive taxation, etc."

The economy is not and never will be like a pie. Pies don't know anything. They respond to ingredients put into them from the outside, and have no sayso about the temperature they are baked at or the servings that are made from them.

Since the economy, instead, is largely based on knowledge, and it is from inside the economy that we make choices on ingredients and environments, I think we should toss the pie. Although it is interesting for showing that, once again, Marx was prescient about mainstream economics, which, on the one hand, likes to emphasize the abstract individual, the heroic entrepreneur, and, on the other hand, treats the economy as a supra-human entity with which one can't "interfere" for human ends.

Far from restricting the "pie", protectionism has worked, at various times, as a buffer to help create industries - the American auto industry, for instance, owes everything to prohibitive tariffs that allowed Ford, GM, et al to get going in the 10s and 20s - and sometimes has worked malignly, to preserve dying industries. When the U.K., in response to the Slump, followed a policy of protectionism, raising tariffs, it did the economy good - domestic industries began to recover, and preferred trading pacts with dominion countries fed the recovery. To decide for or against protection depends wholly on the situation of the economy in question. Sacrificing - in the form of higher prices - might be worth it for the future advantage of industrialization. On the other hand, a country that is industrialized might suffer from protection. The people in the pie have to decide this themselves.

[kharris]

A. Citizen has, of course, no idea where most of the commenters here stand on Iraq, whether they have communicated their views to their elected officials, campaigned in support of candidates that share their view on Iraq, contributed funds to candidates who share their view on Iraq,... Make up you own examples of things A. Citizen has no idea of.

There is a generic form of conversation stopper which runs along these lines: People are having a discussion about an issue other than the one you wish they were discussing. You interrupt them to chastise them for discussing issues other than the one you want them to discuss. The implication that they are unconcerned about your issue because it isn't what they are talking about right now is hollow, but it feels good to say. Not a valid form of complaint, but very widespread.

[kharris]

A. Citizen has, of course, no idea where most of the commenters here stand on Iraq, whether they have communicated their views to their elected officials, campaigned in support of candidates that share their view on Iraq, contributed funds to candidates who share their view on Iraq,... Make up you own examples of things A. Citizen has no idea of.

There is a generic form of conversation stopper which runs along these lines: People are having a discussion about an issue other than the one you wish they were discussing. You interrupt them to chastise them for discussing issues other than the one you want them to discuss. The implication that they are unconcerned about your issue because it isn't what they are talking about right now is hollow, but it feels good to say. Not a valid form of complaint, but very widespread.

[kharris]

Oops.

[Fred]

Jon: "So, in conclusion, government spending to mobilize slack resources is not costless, because it interferes with restructuring. It is valid to the extent that coordination failure is the cause, and invalid to the extent that Economic restructuring is the cause."

Mild inflation (2%) lubricates the economy and thus promotes any needed restructuring. Deflation and consequent high real interest rates impedes restructuring. Deflation must be fought by running massive deficits. But that doesn't imply we need massive increases in government spending. The correct approach is a big tax cut on the working class. As in rebating the payroll tax entirely (close to a trillion right there) and cutting income taxes for everyone making less than $100K (another trillion), thereby driving the budget deficit towards $3 trillion. That is the honest way to stop the deflationary spiral downwards, while still allowing restructuring to take place. (GM does indeed need to go bankrupt.)

We do NOT need more government infrastructure projects. Put enough money in the hands of the working class, and the capitalists will build whatever infrastructure is lacking (high-speed telecom, electrical distribution networks, windmills, electrified and otherwise more effecient freight railroads).

As for the comment about why not just print money instead of taking on debt, the answer is that government printed money is simply another name for government debt that has infinite maturity and pays zero interest. I have long been of the belief that all government debt (as well as all FDIC bank deposits) should be abolished in favor of interest bearing checking accounts at the Fed. Aside from being more efficient and eliminating the problems of moral hazard with FDIC, such a system would eliminate a lot of the stupidity in these discussions about debt and money and deficits.

[Fred]

Followup: if the US runs a massive budget deficit but the Japanese and Germans and other big exporters don't, then it's time for a protectionist wall to crush these mercantilists. Nothing stupid about protectionism when the other side is practicing mercantilism.

[S]

This is such an unserious post it does not dignify a comment - retarded

[Richard H. Serlin]

Some of the commenters have been skeptical that the pie increasing benefits of free trade have been redistributed, or can be redistributed.

Certainly with strong Republican opposition there has been little redistribution of free trades benefits so that no group loses, although in the third world, the poorest people have benefited awesomely. As Harvard Economist Dani Rodik writes, "...according to World Bank calculations, the number of people in extreme poverty fell (in absolute terms!) by 400 million people?", at: http://rodrik.typepad.com/dani_rodriks_weblog/2008/09/alter-globalization.html. Compare hunger and the middle class in China and India today to before globalization.

In the US, although the Republicans have blocked all but a little of the redistribution of free trades gains, let me tell you how it is still possible to redistribute, or more than redistribute, the gains of free trade for most unskilled workers -- Universal healthcare, Universal preschool, virtually free higher education, and remedial and trade schooling, including living expenses, Schoolfare, much more progressive taxation, and much more spending on public health and safety and basic medical research.

Sure, there are still some workers left who never made the effort to get even a highschool diploma who are making over $100,000, due to some unions, but this is unfair anyway. It discourages effort to become far more productive through education, and if allowed on a wide scale would turn us into Argentina.

The fact is, it is possible to make most people in any group, by and large, better off through free trade, making the pie bigger, and we should do it.

With regard to infant industry arguments, which one commenter brought up, they've been disproven in economics. There can be other side problems with free trade, but it is best to deal with them like with distribution, by allowing the free trade, and then adding side legislation to address them -- redistribution measures, environmental measures, government research and education support, etc.

[paine]

"Hank Paulson -- almost certainly one of the undead as a result of some tax avoidance scheme -- should probably be staked as an additional precaution"

yes bruce
mr p
looks just like
the bipedal exhuman
morphed critters
in will smith's "i am legend"

[calmo]

"S", then, for Self-Snuffing?
But mercifully Short...too.
Possibly Seriously indignant.
But that's a Stretch.
"Sorta"
It iSn't.

Ok, time to read the post now that it has this Stupendous promo...Scrolling up (my goodness, all the heavy hitterS are here S...you can B my bird dog from now on (the pointing gesture learned in reverse, leads to...the armpit).

[wjd123]

But let it be noted that fiscal stimuli during times of slack resource use make the overall pie larger, and any objections must rest on the premise that the new division of the pie leaves some particular party with a smaller slice despite the larger pie. It’s pretty much analogous to the argument for protectionism. ...--knzn

Perhaps for an economist but not for me. I'm worried about the social effects of how redistribution is done. I'm worried about the social effects of how deficit finance is done.

We have had free trade redistribution where the gains went to the top while most of those at the bottom lost out. It is my contention that they lost out because of a change in the political economy. Power become much less balanced. That imbalance of power made it much easier for those at the top to continue with policies that kept corrections to the power balance in our political economy from righting itself. As a result the economy went out of kilter.

The economy didn't come in for a soft landing. How could it with the rich getting richer and the rest of us getting poorer. A virtuous economic circle has to be restored. This election has made this possible. Unlike China the power elite that control the political economy here can be thrown out of office. We don't have to wait till they come around to a new way of thinking. In a democracy they can be cast aside to make room for a new creation.

Just as the economic protectionist were right in predicting what kind of society we would have if our economic rights were undermined by a global economy, the deficit hawks are right in believing that if we are going to get back to a virtuous economic circle, the new guard can't allow the rich to consolidate their gains. Obama promised to make taxes more progressive. Waiting to make the change until the economy improves sounds to me like the old guard fighting a rear guard action.

Raising taxes in an out of whack economy to keep the deficit from ballooning more than necessary isn't something that is never done in an economic downturn. Rahm Emanuel is right in believing that a crisis is something that should never be wasted. Tax reform now is easier politically than if we wait till we are out of recession. For now it's a matter of redistributing dollars to the areas of greatest stimulus. Later it will be a matter of greater balance.

Greater balance means less stops and starts. less ups and downs. Less ups and down means means a more stable society. A more stable society is one where wealth is spread more evenly and one with fewer social problems. The fewer social problems the more opportunity for everyone. Hence the need for a political economy that promotes a virtious circle now. A virtious circle now is worth more to parents for the future of their children than shot in the dark.

For now deficit spending will have to be part of the answer to getting our economy back in balance.

BTW: The wife just told me that she saw a picture on the television of the Pierre Hotel here in NYC. The Pierre is is hiring and there is a line of applicants stretched around two blocks of the city. It is under new management and is't taking job applicants through the internet. She told me they shed their union, so these applicants probably aren't new hires but replacements that won't be making union wages.

There is a lesson here for the rebalancing of power. The easier the government makes it for unions to sign up members the less union breaking activity there will be. You don't want to go through the trouble of sheading your union if the union can walk back in the door the next year. And you don't want the union that walks back in the door a pissed off union.

[jimbo]

"For what it's worth serious scholars of the period tend to argue that the so-called Dark Ages were better for the bulk of the European population than the Enlightenment's beloved second century."

No, they don't. For a serious scholar's take on recently fashionable "no dark age" nonsense, see:

http://www.amazon.com/Fall-Rome-End-Civilization/dp/0192807285

Fred -

You seem refreshingly "in paradigm". Do you ever hang out at mosler-economics.com?

[paine]

julio :

de-tox-ed version

we all know to look
only where the paper economy and the real economy
are transacting with each other
not within themselves ...right ???

the paper economy can threaten to rain down money
on the real economy ...eh ???
but so what
if the rain starts to increase
uncle just acts
but
laissez faire in the face of that is a bum-er

as to the bench

laissez faire types get benched in bad times
but their just one election away from the helm again

if uncle is to command the credit heights
he's gotta never give em back up
not if
since we went to a full court press credit economy

face it
this big global contraction
is serious not because
households aren't spending enough right now
in the product markets
give em the credit and they'll still spend

its corporations
the laissez faire boys
that aren't spending enough
not in the jobs markets
or the product markets

nor are corporations
borrowing or lending enough
on the credit markets

they have half way at least
shut down
household credit
and for that matter
credit to small bidnezz too

uncle's agents
need to take the corporations place
are and will more so
take the corporations place
out there on the field --the market place--
even when it comes to other corporations
like AIG and GM

but these bastard laissez faire guys
at all times are no more then
one election away from retaking the heights
and balling up the works again

in fact
that's the plan anyway

[paine]

"Nothing stupid about protectionism when the other side is practicing mercantilism"

fred

the imperial dollar is killing us

but wall street dictates our forex rate
not china
no not china for all their fiddling
they get to fiddle bbecause wall street
wants flint and toledo and high point to burn

conclusion:

somebody right at the main power switch
up there on the Street
must be doin' just fine
as we go into decade 4
of post industrialization

my thought before we appoint
so bastard
to be the designated hammer of peking
we go to full employment
by way of maximal fiscal budget gap
first

since our robust import leaks
along the way
will have helped refloat the globe
then ....then and only then
we can righteously and effectively
call for a new planet wide
compulsory balanced trade system

the ever more borderless world
is the best possible dynamic world
but step by step
each nations job force must gain
and gain in cash each year year after year
or its a rook

[paine]

"let me tell you how it is still possible to redistribute, or more than redistribute, the gains of free trade for most unskilled workers -- Universal healthcare, Universal preschool, virtually free higher education, and remedial and trade schooling, including living expenses, Schoolfare, much more progressive taxation, and much more spending on public health and safety and basic medical research"

fine so long as its ALL
paid for with taxes on property profits and pure rents
(or at least
all debt serviced
by same )

[paine]

"However, it is also possible that slack resources exist because the Economy is going through a process of restructuring, during which contracting industries shed labor. This results in a painful transition period, as well as a destruction of capital (both physical and human) through disuse."

sure if you worship the sacred debt harness

but you fail to consider the result on real restructuring of full figured debt restructuring

the cuts can be in relative p
not absolute q
so long as debt is rescaled
to reflect the sudden systemic demand shift shocks
if such would occur in a system where credit flows didn't perversely re act to a sudden bevy of sectoral restructuring tasks

frictional output loss
thru real time opportunity losing
redeployment
hardly accounts for the lion's bulk
of what goes on
during a crisis like now

[Patricia Shannon]

Sure, there are still some workers left who never made the effort to get even a highschool diploma who are making over $100,000, due to some unions, but this is unfair anyway. It discourages effort to become far more productive through education, and if allowed on a wide scale would turn us into Argentina.

Where are these workers "making over $100,000"? The hourly figures someone posted for workers in the auto industry included health insurance. That's not what most people mean when they talk about how much people are paid.

I do agree with much of what you said about using some of the profits from trade for things like better health care and education. This will help our country, as well as indiduals.

[Patricia Shannon]

Of course, there are musicians and athletes w/o degrees making over $100,000/year.

[paine]

want to know who might
get hurt by gub borrowing
for tranfers to consumers
it ain't future generations

its existing holders
of existing bonds

if bond prices fall
ie if market borrowing rates rise
thru increased supply of bonds ....

this pool of hippos are often forgotten
and they live right here among us today

[paine]

"But that doesn't imply we need massive increases in government spending. "

exactly

"...a big tax cut on the working class.
As in rebating the payroll tax entirely
(close to a trillion right there) "

whamo

"and cutting income taxes for everyone making
less than $100K (another trillion),"

blamo

"thereby driving the budget deficit towards $3 trillion..."
boffo

sing it fred sing it

in fact
we could get rid of the gub
entirely from the peace economy

except for
wall to wall credit functions
and compulsory insurance systems

most public goods are aunty crap
anyway
for pointy heads
and most public bads
just nannyish horse apples

pollution is our way of telling mother nature
" take a flying leap you old hag-nag"

[One Salient Oversight]

Geez I'm glad a whole bunch of you saw as much red as I did.

What are you trying to do Mark? Get us angry or something?

[OhNoNotAgain]

I think it's going to come down to one simple thing that Bruce alluded to. We're soon going to realize that the only people with any wealth left, i.e. the rich, are going to have to pony up for a major infrastructure investment. It's either that or they're simply going to write-off the US and move elsewhere. The current situation, however, cannot be sustained. The middle and lower classes are tapped out and have virtually no wealth to speak of, and are also looking down the pike at some serious employment issues.

Of course, my opinion is that the wealthy will make out fabulously from such an investment, far more than they would make in any other country with a similar investment. But, as always, they'll most likely be dragged kicking and screaming into prosperity.

[Winslow R.]

Thanks for stirring the pot Mark and Knzn.

Posters should have an economic IQ test score posted next to their names.

[im1dc]

This high level discussion of deficit hawks being like protectionists is above my level of competence but the following ought to be of interest to the discussion, imo, nonetheless.

From BusinessWeek magazine online yesterday:

Maria Bartriomo: "Should there be a national commitment to energy self-sufficiency similar to the one for the Space Program?"

CEO of Chevron O'Reilly: "You know, people don't realize how energy self-sufficient we already are. We're the No. 1 nuclear producer; No. 1 ethanol producer; No. 2 producer of coal, natural gas, and wind; No. 3 producer of oil. We are very close to being energy self-sufficient. We can become closer to being energy self-sufficient, but I'm not sure it's entirely necessary to be totally self-sufficient as long as we're strong."

If it is not necessary to be "totally self-sufficient" as O'Reilly said regarding oil and energy (critical imports), then it follows that it is not wise to try to be totally self-sufficient in other commodities either.

A balance that let's the USA remain strong is what is needed, not an abandonment of trade or its accounting equivalent of Deficit Hawkism.

I'm with knzn on this.

Chevron's O'Reilly on Oil Prices and Energy Policy
November 12, 2008
http://www.businessweek.com/magazine/content/08_47/b4109000648624.htm

[bakho]

On the topic of economic restructuring, the GI Bill (plus military technical training) was an absolutely huge transformation of the US economy. The GI Bill triggered a huge expansion of our universities and trained the workforce for skilled managerial and entrepreneurial jobs to replace the jobs in the Ag sector that were declining due to mechanization.

GI Bill was done in the name of our troops, but it was an absolutely huge government investment stimulus over an extended period.

says...

"Everybody knows that, in the aggregate, trade increases welfare. ... But protectionists argue that the redistributive effects of trade can often be bad enough to outweigh the aggregate advantage."

What everybody really knows is that the Ricardian theory of competitive advantage shows that trade increases welfare.

But I'm pretty sure that the Ricardian theory implicitly assumes that the prices of the traded goods and the resource inputs used to produce them are set by free markets. In the current environment, that is not the case.

Exchange rates formally pegged or otherwise manipulated so as to consistently undervalue resources on one side of the trade can subvert economic decision-making so greatly that trade decreases overall welfare.

An exchange rate pegged or manipulated to give the producers in one nation a 25% pricing advantage against those of a trading partner is equivalent to a 25% tariff (perhaps even to a 25% tariff combined with a 25% export subsidy). To characterize an international trading regime with such distortions as one of "free trade" in which comparative advantage has optimized welfare is ludicrous.

[Gene O'Grady]

Jimbo -- I'm well aware of the recent reaction against the transformation as opposed to decline hypothesis, largely coming out of England. I still find at least some of the arguments of the Peter Brown school (and the Italian archeological school) persuasive, and I think most scholars in the US and continental Europe would not say that Wallace-Hadrill et al have carried the day.

Interestingly, perhaps because of the influence of Moses Finley, who was personally a most charming and gracious man but perhaps given to being overly dismissive of his scholarly opponents, economists tend to be less aware than they should of the evidence for continuity vs. disaster in what is sometimes called Late Antiquity.

By the way, I tried to phrase my comment in a way that indicates both my own lack of expertise and the uncertainties of the situation ("tend to argue") and a dismissive comment based on an Amazon review is not only sub-scholarly it's poor manners.

[ken melvin]

Surely the five that own ninety benefit the most, so let them pay for almost all. All taxes should fall to property and unearned income.

[someguy]

They don't sell 150 year bonds.

We are mostly borrowing from ourselves. At trillion dollars in deficit spending gets you what? A 100 billion in slack resources? I doubt it.

And what will be the real interest payments on that trillion. 1 - 2 percent? Which means you pay back more in interest than 100 billion.

Now maybe we can say that 100 billion compounds at the real GDP growth rate.

But I am not sure we should.

Anyway we are mostly borrowing from ourselves not from future generations in flying cars.

That borrowing has real costs. Maybe it is worth it and maybe it isn't but claiming it is ok because grand nephew Tom on Mars will pay the cost is wrong.

[D. Malcolm Carson]

Massive government spending on public infrastructure and education/training, funded with debt or by printing if necessary, seems to answer both the present and the future. In the present, people have jobs, contracts, spending money. In the long run, we have the fundamentals of a prosperous economy: well-developed transportation, energy, health systems, and an educated, skilled labor force.

The beauty is that both of those can be accomplished almost as effectively with almost no reference to the strength of our currency. 80-90% of the costs associated with infrastructure and education are salaries and contracts for US-based people, with the vast majority of that destined to be spent within the domestic context. The costs are relatively immune to a weakening of our currency.

So my vote goes for massive deficit spending (or printing) in areas with real potential for long-term benefit, so that we are not screwing over our grandchilden, but instead making an investment in their future. If we go a bit overboard and undermine the strength of the dollar, I'm OK with that. As pointed out elsewhere, a weak currency acts as a tariff on imports and subsidy for exports, another good thing.

[kthomas]

yo, Winslow R.

Since you're so darn smart, maybe you can tell me how this article jibes with Prof. Thoma's statement: "Things are different when the economy is operating inside the production possibilities curve". Isn't that like saying "There are no Libertarians during a recession/depression"?

And we don;t need anymore pot-stirring. There's enough refuse to deal with, as is.

[Robinia]

Winslow R. says...

Thanks for stirring the pot Mark and Knzn.

Posters should have an economic IQ test score posted next to their names.

Do you suggest that all posters have an innate capacity for economic thought that can be reduced to a numerical scale, and no amount of reading Economist's View or engaging in other edifying discussion can alter it through that time-honored passtime, learning? If so, why bother coming here to comment?

Me, I hold that people are, in fact, educable... and education is a community effort.

[paine]

robina

what have you learned here in the last 4 months ???

most commenters are here to teach us unwashed
the fastest way to
the sole earthly paradise
all else being hell

s.o.p.:
too few students
too many teachers

nb
i'll admit
i learn lots here
remember nearly nothing
and
enjoy every minute of it

better then
playing par three golf
jazz-or-cising
or
setting rodent traps

[paine]

"I do have a Ph.D. in economics, but aside from that..."

fill in the blank

says...

I don't know. The ol' 20th was pretty much teh suck for a lot of folks. You know, Russians, Jews, Chinese, Poles, Cambodians....

Leaving that aside, it could just be that the reason things have gotten better from generation to generation is because past generations didn't borrow from the future to boost their standard of living dramatically. If you do that, future generations might not be "relatively rich". They might end up relatively poor.

[Winslow R.]

What got me going....

a wrote: "What a morally bankrupt argument, all dependent on the idea that the future always has it better than the present"

Knzn's idea is excellent.

Unemployed labor could be used to create real wealth for future (and present) generations. What is wrong with that?

Employing those resources takes government spending (or financial wealth), as the private sector desires for labor are currently satiated.

Having excess labor offered by willing workers being left underutilized is morally bankrupt. (I am currently employing 4 skilled workers and they are all begging for more hours and I could easily find 100.)

How the government decides to use the excess labor can also be morally bankrupt, but that is a different issue and therefore a different topic.

[Robinia]

Paine-- I learn lots, here, and other places, too. And, damn me, I remember most of it, which makes me keep thinking things are more complicated than those self-assured types with the easy answers say.

Winslow R.-- certainly agree with you that the underemployment of human resources is a sin and a pity, and it is worth running a deficit to put people to work. Just, put them to work doing the things we actually need. But, as far as "econ IQ": really, the differing perspectives (and differing economic theoretical assumptions) are what makes this environment so rich for learning. You just have to reflect some on where others are coming from-- its half the fun.

[dd]

Have learned so much
silence is a gift
but paine brings me out
he saw the future in the past
and knew Geithner's goat
would horn into the ultimate
feedback loop
Labor as always must be saved
but capital resists until
Bastilled
Paulson is staring at the French
Solution restyled as
perhaps a Litvinenko
moment and so makes the
wrong policy choices
to avert certain death on
The horns of a dilemma
Frozen in a
nuclear winter
that finds Dante's hell
little different from
a bush heaven
Perhaps should be silenced now
but wanted to say
Tks Mark for this wonderful forum

[calmo]

Somehow I'd like to salt whatever Robinia is made of onto rdf.
Of course kznz could stand a dash of it too...and the thread at his site might flourish and Mark could feel less like a bandit, you know?
It's too long a thread here now for me...I (short-changed by the past) B overwhelmed...with opportunities to enhance future generations unfairly and can only reach as far as anony: The ol' 20th was pretty much teh suck for a lot of folks. You know, Russians, Jews, Chinese, Poles, Cambodians....( specially Aboriginals anony . ) Come now. Think Internet...fishnets not so much.
Think longevity...but not in Iraq necessarily, or Russia.
Think transportation...and how that is affecting your fatass.
Think understanding (ex McCain species) and how this screen disintermediates the intimacy that once had.
Now that's progress.
Tis.

[Roger Chittum]

KNZN says, “Everybody knows that, in the aggregate, trade increases welfare.” Like any good magician, he puts the rabbit into the hat in the first sentence. Everything after that is an unconscionable waste of electrons.

Among those who don’t accept KNZN’s premise are Dani Rodrik and the economists he quotes in this post. Dani Rodrik says "What makes news nowadays is the growing list of mainstream economists who are questioning globalisation's supposedly unmitigated virtues."

"So we have Paul Samuelson, the author of the post-war era's landmark economics textbook, reminding his fellow economists that China's gains in globalisation may well come at the expense of the US; Paul Krugman, today's foremost international trade theorist, arguing that trade with low-income countries is no longer too small to have an effect on inequality; Alan Blinder, a former US Federal Reserve vice chairman, worrying that international outsourcing will cause unprecedented dislocations for the US labour force; Martin Wolf, the Financial Times columnist and one of the most articulate advocates of globalisation, writing of his disappointment with how financial globalization has turned out; and Larry Summers, the US Treasury chief and the Clinton administration's "Mr. Globalisation", musing about the dangers of a race to the bottom in national regulations and the need for international labour standards.

"While these worries hardly amount to the full frontal attack mounted by the likes of Joseph Stiglitz, the Nobel-prize winning economist, they still constitute a remarkable turnaround in the intellectual climate."

[calmo]

Mr Chittum, no waster of electrons, (not like some wastrels I know) [If you are looking for a crisis, the new CoS is looking for you] KNZN says, “Everybody knows that, in the aggregate, trade increases welfare.” Like any good magician, he puts the rabbit into the hat in the first sentence. Everything after that is an unconscionable waste of electrons. And I thought "in the aggregate" meant in the back of the gravel truck...but it was the rabbit into the hat. Well...well.
But I am somewhat gleefully redirected by your bunny...thank you so much.
Imagine this statement, with its imperative overtones, in a slightly wider context:“Everybody knows that, in the aggregate, trade increases welfare.” delivered to any aboriginal people by European traders backed by cannon.

Ok, back to wasting electrons...

[Linda]

We need more protectionists. I see no one in Washington or JP morgan, Citibank, or others looking out for my interests. These companies are run by the infantile children of the elite who can do no wrong.

Good essay by Michael Lewis.

http://tinyurl.com/5s5w2b

[Lafayette]

Hasta la vista, baby

Many parallels are being made to the Roman Empire, both politically and economically.

Calling what America did in Iraq as Imperium Politics is valid. But, that does not make this world one which is even remotely similar to Rome's. Rome's Imperium was exclusive, not inclusive. It beggared the world it dominated through slavery and exploitation of natural resources, for the general welfare of Rome itself. If one presumes that America attacked Iraq to exploit Iraqi oil, then that argument seems justified. But, the oil would have been purchased; lead-head only wanted to assure the supply source in an age when supplies will be getting ever more scarce.

The present day is very different from Rome's, which was uni-polar -- today's is multi-polar. The expansion of free trade benefits all who indulge in it, not just a one-way transfer form the outside to the inside. As the article suggests, it increases the general welfare of the whole -- whilst often, yes, lessening the general welfare of some of its parts.

Protectionism is an argument that rises to the fore most always with the group that feels it is benefiting least from World Trade. That's unfortunate, but there is no guarantee that Global Trade will better every nation equitably, uniformly and at all times -- since it is both risky and highly cyclic.

Besides, America's trade imbalance has allowed it to live high of the hog for a better part of the last century, attracting more of the world's resources to do so than any other one country ... and polluting more of the planet than any other country (except perhaps China recently).

We've done well from World Trade and for a considerably long period of time. But, this last episode shows that we are also capable of putting into power a class of plutocrats, immensely rich, who look upon the world in terms of potential enrichment of America first and themselves secondly.

We've lost a great deal of the Good Faith we had built amongst nations around the globe -- and the fiasco is of such a dimension, that Good Faith will not be coming back for some time to come.

Let's face it, with our ingrained Military-Industrial-Complex political persona, we blew it. A sea change in mentality is required. If anyone may think that this past election shows that such has occurred, they are deluding themselves. The Replicants have gone into regression, biding their time till their day returns once again.

Hasta la vista, baby.

[ddt]

"paine says...
"I do have a Ph.D. in economics, but aside from that..."

fill in the blank"

lol I knew it was only a matter of time until someone picked up on the most cringeworthy blogger description ever.

[ken melvin]

I read the New Yorker's on psychopaths and thought of those before the Waxman to a man.

[Mike]

Lafayette says-

"Protectionism is an argument that rises to the fore most always with the group that feels it is benefiting least from World Trade."

That group is 90% of the American public. All the so called progress they've made has been wiped out. The top 10% have pushed the free trade agenda because it lines their pockets...it lines their pockets....it lines their pockets...

[Patricia Shannon]

says...

I don't know. The ol' 20th was pretty much teh suck for a lot of folks. You know, Russians, Jews, Chinese, Poles, Cambodians....

Leaving that aside, it could just be that the reason things have gotten better from generation to generation is because past generations didn't borrow from the future to boost their standard of living dramatically. If you do that, future generations might not be "relatively rich". They might end up relatively poor.

First you show examples that a large part of the human population might have been worse off in the 20th century then previously.

Then you immediately use the assumption that the human race did progress to make a point, in conjunction with another assumption which I believe is wrong.

Much of past progress did borrow from the future. Especially since people started using resources, including fossil fuels, faster than they are created, and creating pollution faster than it nature can remove it. And farming that causes the depletion of top soil is also stealing from future generations.

[Patricia Shannon]

Lafayette said:

But, this last episode shows that we are also capable of putting into power a class of plutocrats, immensely rich, who look upon the world in terms of potential enrichment of America first and themselves secondly.

Surely you meant the reverse order of what is important to the power elite? I would say they don't care about America at all, just themselves, and perhaps their class.

[Julio]

calmo:

"“Everybody knows that, in the aggregate, trade increases welfare.”
delivered to any aboriginal people by European traders backed by cannon."

I think the statement is usually
"Starting now, everybody knows that, in the aggregate, trade increases welfare. OK?”

[OhNoNotAgain]

"Having excess labor offered by willing workers being left underutilized is morally bankrupt."

Agreed, and isn't each such minute, hour, or day of time also a missed opportunity, never to be available again to our economy ? If you consider the fact that we have time-sensitive issues to confront and solve, such as with the availability of fossil fuels and our renewable energy infrastructure, it really is a crime against ourselves to allow able-bodied people to linger on the unemployment roles. Stop paying them unemployment and pay them a little more to help create the infrastructure that will make us all wealthier.

[Lafayette]

Ike was right

PS: I would say they (the plutocrats) don't care about America at all, just themselves, and perhaps their class.

I suggest that they actually do think they are patriots. That their first concern is the nation. Of course, how they profit from that is through their connections to the companies that serve national customers, often the government itself. I mean specifically the cronyism of the Military-Industrial-Complex.

Their dishonor lies in homogenizing the government's interests and theirs.

Ike was right. He'd seen it in WW2 and knew that the plutocrats would not let go of the bit during peacetime. He saw it all coming very well.

What was despicable was to see them convince gullible young Americans that "dieing for their country" was honorable.

[Roger Chittum]

Sorry the link to the Dani Rodrik piece doesn't work. I'll try in my native language. Go to Dani Rodrik's blog and search for "The Death of the Globalization Consensus" which he posted July 12, 2008. It's also available at Project-Syndicate.org (July archives).