There’s nothing wrong with neoliberalism (a rant)
I am seeing more and more articles, even at respectable outlets such as the Economist and the Financial Times, suggesting that the rise of right-wing and left-wing populism shows that something is wrong with the neoliberal model. Nothing could be further from the truth. The past two decades have been by far the best two decades in human history, and that’s what really matters.
Naysayers will sometimes acknowledge that hundreds of millions of people have recently risen out of poverty, but then claim that living standards have stagnated in America. That’s also nonsense, as I explained in this post. The next fallback position is that while real incomes in America have risen, the gains of gone to corporations, not workers. That’s also nonsense, as I explained in this post. The share of national income going to workers today is the same as it was 50 years ago, the supposed heyday of the working class.
The next fallback position is that while wages have done fine, even in real terms, wage income is becoming less equal. Bingo! Finally we get to an accurate statement. Fifty years ago, blue-collar workers at General Motors often made more than college professors. People with short attention spans sometimes act like this period was “normal”, ignoring 10,000 years of human history. They seem to suggest that our most pressing problem is that young men who don’t study in school and just shoot rubber bands across classroom should be able to earn an income that (in relative terms) was never possible in any period of world history before the 1950s and has never been possible in any period of world history after the 1970s. It reminds me of when farmers used to set the “parity” of farm prices with other goods prices based on the relatively high levels of 1909-14, treating that ratio as normal for purposes of farm subsidies.
Don’t get me wrong; I have nothing against blue-collar workers. I’m relatively intellectual, and even I found the public schools to be mind-numbingly boring. I could hardly stay awake. I can’t even imagine how students less interested in ideas than I am could’ve gotten through the day. Nor am I one of those conservatives that will trash low-income whites for their lifestyle choices. As far as blue-collar workers are concerned, I wish them well. But I wish everyone well (except Trump), and the unfortunate truth is that the set of economic policies that is best for the world right now is probably not optimal for a subset of American blue-collar workers.
When I point out that the most important factor in trade policy is the impact on the poor in developing countries, some of my commenters tell me that the US shouldn’t have to import from China or India, they have lots of other countries to sell to. As Marie Antoinette might’ve said “let them sell to Canada.” That’s right, progressives ease their conscience by claiming that other developed countries won’t follow the same evil trade policies that progressives like Sanders want the US to follow, so things won’t actually be that bad for poor people in Bangladesh. More often, they entirely ignore the issue.
I know that progressives like to think of themselves as the good guys, but the honest truth is that on trade they are increasingly becoming the evil ones, right along with Trump.
And here’s what else people don’t get. Not all the problems in the world are caused by neoliberal economic theories, for the simple reason that not all economic policies reflect neoliberal economic theories. Even if everything people say about inequality quality is true, there’s nothing wrong with the neoliberal model, which allows for the EITC, progressive consumption taxes, and sensible reforms of intellectual property rights, occupational licensing, and zoning laws.
I can’t help it if Democratic politicians oppose reforms of intellectual property rights. I can’t help it if progressives that once favored progressive consumption taxes now oppose progressive consumption taxes. I can’t help it if Democrats voted to repeal the luxury tax on yachts soon after having enacted a luxury tax on yachts. I can’t help it if progressives suddenly feel that a $15 an hour minimum wage is not a loony idea.
The simple truth is that neoliberal economic policies work, as we’ve seen in Denmark and Switzerland and Singapore, and socialism doesn’t work, as we’ve seen in Venezuela. So I’m asking all those wavering neoliberals in the respectable press (Thatcher called them “wets“) to stop your handwringing and get out there and boldly defend the neoliberal model. It’s not just the best model; in the long run it’s the only model that really works.
PS. And don’t anyone insult my intelligence by telling me that Sanders favors the Danish model.
PPS. And don’t tell me the GOP is just as bad—I know that. But right now they aren’t the biggest critics of neoliberalism (except for Trump, obviously).
PPPS. The Huffington Post thinks Kasich will be the nominee. In other words, they think the GOP is a non-insane political party. Meanwhile the betting markets currently assign a 5.3% probability to the GOP being a non-insane political party. (BTW, I don’t like Kasich; I want Ryan.)
Meanwhile, Drudge has linked to a copy of next year’s Boston Globe:
Tags:
9. April 2016 at 10:09
It seems that many people evidence care about the poor only in the context of trade. They are otherwise against policies which would help the poor. I am NOT saying this is true of Scott.
I can’t help it either if Democratic politicians favor corporate interests regarding intellectual property rights. At least they sometimes favor policies other than cutting taxes on the best off, cutting regulations which protect ordinary people, letting infrastructure crumble, suppressing voting rights, etc., etc. Their monetary policy isn’t exactly ideal. In other words, the GOP isn’t just as bad, they’re worse.
9. April 2016 at 10:18
Free Trade Qualifiers:
1. War Scale manufacturing. US must subsidize the ability to win a World War without nukes. Whatever is needed for steel, iron, rubber etc. This doesn’t end with Drones and Robots. If we suddenly get cut off from supplies, if trade is cut off… we have to be able to beat China-Russia flat out.
2. Govt / Academic wages cannot grow relative to private sector. We cannot allow loss of private sector jobs in the name of Free trade to drives more of our best and brightest to public sector. Simply: Government employees do not pay income taxes. This means FORCING the academics like Scott to spend most to their time arguing for slashing not “Regulatory Slate” but “Govt wages.” about something they don’t worry about to get their precious. This isn’t the thing you want to do Scott, but it’s the thing we can tell private sector labor to refuse Free Trade and they will happily latch on to it, so GET LOUDER ABOUT CUTTING GOVT SALARIES.
Immigration Qualifier:
1) Maintain Western Cultural Hegemony. This means adopting policies that use behavior modification to determine who is allowed in…. This is a coming discussion for Econos Scott, bc you are goig to end up being sad and angry that immigrants can’t get in.. so you’ll BEND OVER and agree to policies that assure the natives they get to control the culture. You can’t prove everyone can be Westernized by just letting them in. You can’t guarantee it, but I can GUARANTEE they are… as such, my methods will get you more immigrants – and that’s all that matters to a utilitarian!
2) Property rights in Mexico. This is EASILY gettable now, Mexican govt is totally FREAKED OUT, they knowTrump isn’t a one off… Scott you should scream for this
over at Econlog.
9. April 2016 at 10:44
Morgan, We are never going have to fight another WWII, and hence we don’t need to protect manufacturing. It’s all high tech today.
I prefer Eastern Culture to Western Culture
9. April 2016 at 10:45
“[T]he set of economic policies that is best for the world right now is probably not optimal for a subset of American blue-collar workers.” It’s also not optimal for *me*. For example, it would be better for me if the government would adopt the policy: Give Philo lots and lots of money. But, perversely, from my point of view, they have not done so. I am aggrieved; maybe I’ll vote for Trump just to spite them!
9. April 2016 at 10:46
Mexico is much freer than China and Vietnam, according to Heritage Foundation — yet, it is the sick man of Latin America. The Venezuelans are not failing because they are “Socialist”, they are failing because they are Venezuelans and always will be (things were so bad and the people got so desperate, they elected a Donald Trump who wore fatigues and had attempted to seize the power in a coup). Blame Socialism for East Germany’s relative poverty or the fact Hungarians used to sell water bottles buyers were unable to open (until a shrewd capitalist started selling a special opener), but blaming Socialism for Latin America perpetual economic ills is a little too much. Brazil was poorer after the 90’s free market reforms and privatizations than it had been before they started https://goo.gl/ikhpx2 Argentina got ruined by a right-wing dictatorship, then got ruined by a right-wing Peronist backed by the USA, after that, got ruined by a populist couple. Brazil got broke under a military dictatorship, got broke under American-backed neoliberal reformers and now is getting broke under leftist populists (at least, thanks to the easy credit of recent years, Brazil will be able to, if I am allowed to quote the observation about 1930’s America usually attributed to Will Rogers, go to the poorhouse in an automobile– it is great progress, as Brazilian things go). Chile’s didn’t achieve the proportion of the average Latin American GDP per capita they had before Pinochet’s coup until after the end of his USA-backed 17-year rule. Truth is, the Third World countires that prosper (China, Vietnam, Chile, Mauritius, Cabo Verde and a few others) are the ones that would prosper under any regime that don’t demand people to wear Mao suits (althought I must say they are really elegant)or kill people that wear glasses or play classic music.
9. April 2016 at 10:47
Foosion, The GOP is worse on many issues, and the Dems are worse on many issues. It’s a no-brainer to vote for Gary Johnson.
9. April 2016 at 10:49
Thiago, You said:
“Mexico is much freer than China and Vietnam, according to Heritage Foundation — yet, it is the sick man of Latin America. The Venezuelans are not failing because they are “Socialist”,”
You lost me right here, I stopped reading.
I mean seriously, Mexico is the sick man of Latin America, and Venezuela is not failing because of socialism? Are you crazy?
9. April 2016 at 10:54
except Trump
-Aw, come on, man. That shows Trump is anti-poz, but not anti-Semitic. That just makes me respect him more.
Also, Singapore’s neoliberal? I just thought it was a tax haven populated by conventionally capitalist Chinese.
Also, the luxury tax on yachts didn’t make much money. That’s why it was repealed.
The problem with your post is that it’s addressed to people like yourself. It’s not addressed to the progressives.
9. April 2016 at 10:55
that young men who don’t study in school and just shoot rubber bands across classroom
Don’t get me wrong; I have nothing against blue-collar workers. I’m relatively intellectual, and even I found the public schools to be mind-numbingly boring. I could hardly stay awake. I can’t even imagine how students less interested in ideas than I am could’ve gotten through the day. Nor am I one of those conservatives that will trash low-income whites for their lifestyle choices.
The first statement is what you believe. The second is spin.
My great-great grandfather founded several businesses. He had six years in a country school house, about six months with a tutor, and an apprenticeship as a turner. Public policy has been to make schools the locus of sorting the labor market (see the GI Bill, the higher education subsidies enacted in 1965, and Griggs v. Duke Power) and then insisted that everyone get stuffed with half-assed liberal education. Some people do not benefit from this system.
9. April 2016 at 10:59
“I mean seriously, Mexico is the sick man of Latin America,”
-It is, and has been since the 1980s.
“and Venezuela is not failing because of socialism?”
-It’s failing because of its economic policies, and these are not just “socialism”.
“Are you crazy?”
-Thiago’s not crazy; maybe misinformed.
“It’s a no-brainer to vote for Gary Johnson.”
-Well, I already knew you were a fan of people being forced to make Nazi wedding cakes.
“I prefer Eastern Culture to Western Culture”
-I dunno, man. Romania was richer than North Korea. At least the Eastern countries generally have sensible immigration policies. Libertarianism came out of the West, not the East.
9. April 2016 at 11:00
The problem with your post is that it’s addressed to people like yourself. It’s not addressed to the progressives.
You don’t trash progressives in the faculty rathskellar. They don’t like it and they’re your audience.
9. April 2016 at 11:02
-It is, and has been since the 1980s.
It is nothing of the kind. It has perfectly ordinary living standards for that region and perfectly ordinary crime rates.
9. April 2016 at 11:04
We are never going have to fight another WWII, a
Kinda dumb to make categorical statements like that.
9. April 2016 at 11:08
I prefer Eastern Culture to Western Culture
You could always self-deport. A couple of the Crooked Timber twits improved the quality of life in this country by burdening the people of Singapore with their persons.
9. April 2016 at 11:11
And don’t tell me the GOP is just as bad—I know that.
It’s amusing how faulty libertarians are Above All That until someone suggests the immigration laws be enforced.
9. April 2016 at 11:19
” I mean seriously, Mexico is the sick man of Latin America, and Venezuela is not failing because of socialism? Are you crazy?”
Venezuela was so failed and its people so desparated before Chávez that they elected a Donald Trump who wore fatigues and had tried to take over in a coup. Venezuelans are not failing because they are Socialists, they are failing because they are Venezuelans and always will be. Venezuela always was Bangladesh with oil.
Meanwhile Mexico’s wonderful neoliberal economy has spent the last 10 years walking sideways.
9. April 2016 at 11:27
No, Art, I think Sumner is doing just fine trashing progressives, I just think he’s talking at them, not to them.
9. April 2016 at 11:53
I just think he’s talking at them, not to them.
You’re pre-supposing some sort of dialogue on anything about which they might care. The whole point of the exercise is to avoid those topics.
9. April 2016 at 11:53
Venezuela always was Bangladesh with oil.
I’m not sure you’re capable of uttering a non-false statement.
9. April 2016 at 11:58
If we allow Sergei Brin to own a billion zero wage workers, we are all screwed. To paraphrase Hoover: A robot in every housing plot!
Also weren’t early GM workers semi-skilled in the sense that they knew how to troubleshoot fidgety imprecise equipment and tools? Kind of like network techs today. Once the process is perfected, there’s nothing left to do, other than pure repetition, or moving to design. In a lot of ways, the decline of manufacturing jobs is just the first wave of casualties in the robot invasion.
And educational pedigree isn’t everything. There are lots of degree programs nowadays that are the functional equivalent of ‘shooting rubber bands across the classroom’.
9. April 2016 at 12:10
I like Bernie Sanders for precisely one reason: he is the true face of Democrat policy rhetoric. For years we have heard about income inequality, living wages, unequal health access, and unequal opportunity (education). Along comes someone who actually proposes to act on that rhetoric, and the Democrat establishment flips out that the numbers don’t work, too many vested interests get hurt, public choice, blah blah blah. Their con job is exposed!
Democrat thought leaders all live in bedroom communities with 200k household incomes and upper 6-figure houses. They want to redistribute from someone else, either the top 0.1%, or the middle class, but not from themselves.
9. April 2016 at 12:34
“I’m not sure you’re capable of uttering a non-false statement.”
Only 5 % of Venezuelan exports are non-oil. I am sure if in Bangladesh only economic options were a magic liquid everyone wants and God buried there and anything Bangladesh were able to create themselves, they would have to go ahead with the magic liquid thing.
Venezuelans are Venezuelans and it has little to do with “Socialism”.
9. April 2016 at 13:30
I suppose I should be glad that Scott linked to my comment in a blog post, if only to trash it. Thanks, and I don’t mean that ironically.
A couple of corrections: I am not a “progressive”, nor am I a Democrat (I am not even American). In fact, in the comment you linked to, I was criticizing Clinton.
Let me repeat my point in a slightly different way. There are two views of what NAFTA was about (it can be extended to trade agreements generally, but let’s be concrete)
The first view is that it was a free-trade agreement. In that case, one has to account for the intellectual property rights, the lack of tacking of occupational licensing, and related initiatives like Operation Gatekeeper, supported by the same people who supported NAFTA. For instance, Pete Wilson, who was instrumental in Proposition 187 in California, was also a supporter of NAFTA. Is restricting immigration from Mexico free trade?
The second view is that NAFTA was an investor-rights agreeent, written mostly in secret by lobbyists, which had only the most incidental connection with trade. The political fight is about who gets the gains from trade.
Here is Jagdish Bhagwati on NAFTA (http://reason.com/archives/2009/11/18/jagdish-bhagwati-globalization/print)
“When you look at a trade agreement like NAFTA, it’s about that thick (holds his hands about two feet apart). When I debate people like Lori Wallach of Public Citizen, she arrives with a lot of books, and among them is this NAFTA treaty she carries for effect. I hope she gets a hernia from doing this often enough, because it looks pretty heavy to me. I wouldn’t be carrying it around. Anyway, she shows this book and asks, “Is this free trade?” And mad as she is, she’s right to raise that issue. You should be able to say maybe in 10 pages that in these sectors we are going to liberalize and so on. But nine-tenths of what’s in these agreements are things which have nothing to do with trade. Labor standards, environmental standards, intellectual property rights. If I were Jane Fonda, in order to sell more workout tapes, I could put into the agreement a clause that the president of Mexico has to do his exercise to my tapes. And it would go in, because ours is a lobbying culture and nobody really would know that it’s there. Because who opens these things except the lobbyists?
So many developing countries are now waking up to the fact that they’re being sold a bill of goods in the form of trade agreements.”
9. April 2016 at 14:57
Finally a political post by ssumner I can agree with. The attack on Neoliberalism is cleary coming from the Left. They started the attack and continue to do so. And not just since yesterday.
9. April 2016 at 15:11
As a college student at a famously liberal California college it’s incredibly irritating the way terms like “neo-liberal” and “keynesian” are abused in many of my friends’ humanities classes. They’re basically left-wing signals now that broadcast that the speaker has no idea what they’re talking about.
9. April 2016 at 15:48
I agree with Scott Sumner.
But it should noted Cruz has embraced Trump’s trade and immigration policies and Kasich’s militarism towers over Trump’s.
Also it is regrettable that the topic is always the evils of trade impediments, but never extensive property zoning, criminalization of push-cart vending or a $1 trillion a year “national security” complex.
BTW in 2020 the minimum wage in California, adjusted for inflation, will be the same as 1970. So 50 years flat.
But the price of housing has soared due to property zoning and socialist preservation of single-family detached housing districts—where in free markets you would see forests of high-rise condos.
9. April 2016 at 15:56
The newspaper would be accurate if there was any chance of Trump winning a general election, but fortunately there doesn’t seem to be. The only question is how much damage he does to the Republicans.
The GOP, for all its faults, has traditionally been pretty good at avoiding this kind of illiterate, innumerate populism, probably because the grassroots tend to revere people like Hayek and the bozos get weeded out at the state level. Trump just happened to show up on the national stage at a moment when 35% was enough to win.
Trump doesn’t appear to understand that these trade deals are positive for both sides. The US tends to be under a lot more pressure to make concessions because we are richer than virtually all our trading partners, usually significantly so, our electorate understands the benefits of comparative advantage better, and we are a consumer-driven economy that likes to consume cheaper goods with foreign labor inputs.
Fifty or one hundred years ago, you could maybe be forgiven for being protectionist, but in 2016? Come on, the wiki is right there.
https://en.wikipedia.org/wiki/Comparative_advantage
But try explaining anything to a guy who in the same breath insists that he’s really good at this stuff and that he can wipe out federal debt in eight years with better trade deals, presumably via bills signed by the Supreme Court, and perhaps selling several trillion in needless government buildings.
9. April 2016 at 16:06
As for Venezuela, all I can say is touching how neoliberals seem to think human beings are just interchangeable gears in the economic machine, and if only Bangladesh lowered its taxes, it would be Singapore. God gave Venezuelans oil, the economists’ failed prescriptions gave them Hugo Chávez, the gift that keeps on giving.As Delfim Netto, “Economy Czar” during Brazil’s 70’s Economic Miracle warned, international trade since the early 90’s dramatically impoverished Brazilians (and the free trade experience in the late 40’s wasted the foreign currency reserves Brazil had accumulated during WW II). The same can be said of the Argentines, whose industrial base was trashed under the military dictatorship free trade policies, and Mexicans, whose economy is simply stagnating– the same economy that boomed in the 60s and 70s before the neoliberal reforms. Venezuela and Bolivia’s neoliberal policies were so disastrous they begot Chavism. Mexico became a failed state, with illegal immigration being the last safety valve. Only Argentines and Brazilians’ political maturity prevented the worst from happening– and yet what happened was not beautiful.
9. April 2016 at 16:31
Scott,
Strictly speaking off-topic. Came across this episode of NHK Asia Insight about how individuals and small businesses in China are using apps, largely in the absence of regulations. It’s only 28 minutes. Worth watching.
http://www3.nhk.or.jp/nhkworld/en/vod/asiainsight/20160408.html
9. April 2016 at 17:59
But it should noted Cruz has embraced Trump’s trade and immigration policies and Kasich’s militarism towers over Trump’s.
You’re not living in Depression-era Japan. Stop talking rot.
9. April 2016 at 18:00
The newspaper would be accurate if there was any chance of Trump winning a general election, but fortunately there doesn’t seem to be.
Since he’s within striking distance of Hellary, this is just wish-fulfillment on the part of business Republicans and libertwittians
9. April 2016 at 18:02
The GOP, for all its faults, has traditionally been pretty good at avoiding this kind of illiterate, innumerate populism, probably because
Trump is neither illiterate nor innumerate. Neither are his supporters, by and large. They do have different priorities than business-as-usual Republicans (esp bad attitude business-as-usual Republicans), and, in general better ones.
9. April 2016 at 18:09
Art, You said:
“Kinda dumb to make categorical statements like that.”
I never said we’d never have to fight a WWIII. We may well have to do so. But we won’t lose because of a lack of steel and rubber.
Harding, You said:
“It is, and has been since the 1980s.”
Is some sort of disease that affects the brain impacting all my commenters? Mexico is far better off that Central America, Venezuela, Brazil, Bolivia, Ecuador, Colombia, Paraguay, and lots of other Latin American countries. It’s like saying the Netherlands in the sick man of Europe, because it’s poorer than Germany and the US. It’s an absurd metaphor. Mexico is not rich, or particularly successful, but the sick man of Latin America? Don’t be silly.
Anand, You said:
“I am not a “progressive””
I’ve had plenty of other commenters say the same thing.
Thiago, You said:
“Venezuela and Bolivia’s neoliberal policies”
Venezuela has never adopted neoliberal policies. It’s always been crony capitalism. But even crony capitalism is better then socialism, as the Venezuelans are finding out.
You might not know this, but just because leftists in Latin America call a government they don’t like “neoliberal”, doesn’t mean it’s neoliberal.
Steve, You said:
“There are lots of degree programs nowadays that are the functional equivalent of ‘shooting rubber bands across the classroom’.”
Yup.
Chargercarl, I’ve noticed that too.
Ben, You said:
“But it should noted Cruz has embraced Trump’s trade and immigration policies”
It should be noted if it were true, but in fact it is false.
Absolutezero, I’m told the internet is really transforming life in Chinese cities, although I have not been there since 2012.
9. April 2016 at 18:13
But we won’t lose because of a lack of steel and rubber.
You’re not in a position to speak authoritatively on that subject.
9. April 2016 at 18:14
Kimberly Strassel has a piece on the Wisconsin Republican who fought off the ‘John Doe’ attack on free political speech, and now is gunning for Trump at an open convention;
http://www.wsj.com/articles/the-case-for-a-really-open-gop-convention-1460154691
———–quote————-
Eric O’Keefe is here to say: whoa. The veteran Republican grass-roots activist sees a contested convention as a once-in-a-lifetime opportunity for the delegates of a private political party to assert their power. The results of the GOP primaries are hardly representative of the party’s will, Mr. O’Keefe says, because state parties have been wrecked by domineering state legislatures. Why should Republicans bow down, for instance, to the results of state-mandated open primaries that allow liberal and independent voters to bum-rush what is supposed to be a private poll?
“There’s nothing that special or even good about the government-run primary process,” Mr. O’Keefe says. Relishing the opportunity for Republican delegates to stand up for themselves, he is gearing up a campaign to educate and encourage them to exercise their prerogatives at the convention and to ignore specious insistence that they follow some imaginary obligations.
“The delegates have been going to conventions for years and treating them like Super Bowl parties because there was nothing else to do,” he says. “But this year they have the opportunity to practice a great national tradition, to exercise their legal, historical right to defeat a man who opposes most of what they believe in, and instead nominate a candidate who represents them.”
As you might suspect, the “man” Mr. O’Keefe referred to is Donald Trump.
———-endquote———-
9. April 2016 at 18:16
Only 5 % of Venezuelan exports are non-oil. I am sure if in Bangladesh only economic options were a magic liquid everyone wants and God buried there and anything Bangladesh were able to create themselves, they would have to go ahead with the magic liquid thing.
I can never quite tell if your utterances are a consequence of stupidity or gamesmanship.
When Chavez appeared on the scene in 1992, Venezuela’s per capita output exclusive of extractive industries exceeded that of Bangladesh by a factor of 8.
9. April 2016 at 18:18
“There are lots of degree programs nowadays that are the functional equivalent of ‘shooting rubber bands across the classroom’.”
Yup.
Which did you have in mind?
9. April 2016 at 18:23
Mexico is far better off that Central America, Venezuela, Brazil, Bolivia, Ecuador, Colombia, Paraguay, and lots of other Latin American countries.
Better off than the four lower-tier Central American republics, not Panama or Costa Rica. Bracketing out natural resource rents and the hypertrophied share of personal income accruing to the most affluent decile, Colombia, Brazil, and Mexico are pretty similar in their income levels. Colombia’s improved it’s security situation quite a bit in the last dozen years or so; Brazil and Mexico have not.
9. April 2016 at 18:27
Pete Wilson, who was instrumental in Proposition 187 in California, was also a supporter of NAFTA. Is restricting immigration from Mexico free trade?
IIRC, Proposition 187 concerned public benefits for non-citizens, not trade or immigration.
9. April 2016 at 18:29
Eric O’Keefe is here to say: whoa. The veteran Republican grass-roots activist sees a contested convention as a once-in-a-lifetime opportunity for the delegates of a private political party to assert their power.
Who are Trump delegates but people who volunteered for that task or people recruited by Trump’s campaign? Why does this chap fancy they’ll be easy meat for the likes of him?
9. April 2016 at 18:44
a $1 trillion a year “national security” complex.
The ratio of military expenditure to domestic product is less than 0.04. It’s currently just north of $600 bn, not $1,000 bn. The ‘security assistance’ budget adds an increment of $12 bn. The CIA budget is confidential but supposed to be around $45 bn. Homeland Security is an assemblage of federal law enforcement and civil defense agencies, nearly all of which existed prior to 2002, so it’s not properly placed in your contrived category. (It’s budget is $45 bn).
9. April 2016 at 18:46
Trump doesn’t appear to understand that these trade deals are positive for both sides.
The content of the ‘trade deals’ is so voluminous that no one understands what’s in them.
9. April 2016 at 18:59
The only unrealistic part of that paper is “soldiers refuse orders to kill ISIS families”. No non-Muslim refuses orders to kill ISIS families.
“Mexico is far better off that Central America, Venezuela, Brazil, Bolivia, Ecuador, Colombia, Paraguay, and lots of other Latin American countries.”
-It was far more so in 1980 (except in the case of Venezuela).
9. April 2016 at 19:28
Art Deco,
“When Chavez appeared on the scene in 1992, Venezuela’s per capita output exclusive of extractive industries exceeded that of Bangladesh by a factor of 8.”
Come on. “The petroleum sector dominates the economy, accounting for roughly a third of GDP”– CIA Fact Book 2000 (data from 1999, the year Chavéz took office).
Venezuela GDP (PPP): US$ 8,000– CIA Factbook 2000
Two-thirds of the population below the poverty line
Bangladesh’s GDP per capita (PPP): GDP – per capita: purchasing power parity – $1,470
So Venezuela’s per capita output exclusive of oil industry was smaller than four times Bangladesh’s per capita output. Bangladesh being Bangladesh, it is pretty underwhelming. In fact, Vennezuela’s non-oil per capita income was smaller than Paraguay’s income is nowadays, and anyone who knows Paraguay knows what it means. Venezuela always was little more than a glorified gas station.
Scott Sumner,
I guess the old joke about Socialism (“it could work if someone tried it [the supposedly real one]”) applies to Neoliberalism. Meanwhile, actually existing Neoliberalism’s failures keep pushing nations into the arms of demagogues like the late Chavéz and the Kirchners (I still remember when President Menem’s reforms were pointed as a model for Latin America and Argentina was dreaming about being accepted by NATO– after the whole thing blew up, the Argentines were abandoned by their new friends faster than a sick Spartan child.
9. April 2016 at 19:49
“Mexico is far better off that Central America, Venezuela, Brazil, Bolivia, Ecuador, Colombia, Paraguay, and lots of other Latin American countries.”
Maybe the World Bank is Communist, but it begs to differ:
http://data.worldbank.org/indicator/NY.GDP.PCAP.CD?page=2
Mexico’s economy has barely moved since 2005, Brazil’s per capita GDP almost tripled. The two countries’ HDI’s are virtually equal. Mexico used to be vastly richer than Brazil (Mexico oil net exports are five times Brazil’s– for a much smaller population).
9. April 2016 at 19:57
Art Deco
National security outlays include the DoD, DHS, VA, black budget and prorated interest on the national debt. That comes to $1 trillion.
The VA alone now spends $161 billion a year, a large fraction of it to operate federally owned hospitals, staffed with federal employees, to provide free health care to former federal employees, at taxpayer expense.
Pure communism, in other words.
But then, when you think of it, our entire national security edifice is composed of socialist or communist organizations.
Understanding the behavior of communist (non-free market, non-private) organizations will help you to understand federal spending.
Yes the civilian agencies, such as HUD, DOL, Agriculture, Education, are just as bad.
9. April 2016 at 20:13
Art Deco 9. April 2016 at 18:00
The newspaper would be accurate if there was any chance of Trump winning a general election, but fortunately there doesn’t seem to be.
…
Since he’s within striking distance of Hellary, this is just wish-fulfillment on the part of business Republicans and libertwittians
There is no stupid like Trump stupid. In the RCP average, at -10.5 Trump is further behind Hillary right now than any losing Presidential candidate ever trailed in the modern polling era — at any point of any race. On almost a daily basis he says something so ridiculous or offensive it dominates the news cycle. His negatives are at 70% and manage to get worse every week, especially among women. At this rate the only scenario in which Donald ever gets within “striking distance” of Hillary Clinton ends in him being tackled by Secret Service agents (can we rule anything out at this point?).
The content of the ‘trade deals’ is so voluminous that no one understands what’s in them.
Except for super genius Donald Trump apparently, since he’s sure we are getting screwed, and is going to negotiate deals that are so much better. Fortunately, we’ll never have to find out whether Trump’s 45% tariffs can Make Amnerica Great again, since Trump is even trailing Hillary in places in Utah.
9. April 2016 at 20:52
“Trump is further behind Hillary right now than any losing Presidential candidate ever trailed in the modern polling era — at any point of any race”
-Wait until Trump has actually gotten the nomination before you begin spouting such nonsense.
“On almost a daily basis he says something so ridiculous or offensive it dominates the news cycle. His negatives are at 70% and manage to get worse every week, especially among women.”
-Not among the Republican women.
TallDave, are you one of those who claimed Trump wouldn’t even have the remotest shot at winning the GOP nomination? Sumner was one of them.
9. April 2016 at 21:55
Two consecutive sentences I want to comment on.
“Fifty years ago, blue collar workers at General Motors often made more than college professors.” That might have bothered college professors but so tf what? Maybe, just maybe, the country as a whole, did just fine at that point.
“People with short attention spans sometimes act like this period was ‘normal’, ignoring 10,000 years of human history.” Are you kidding? For how many years over the last ten thousand have productive workers not been paid more (or valued more, if not exactly paid) than teachers as a group? What does your statement show other than a class bias against the actual people who provide the labor part of everything we consume?
Please don’t give me bad history lessons when you are so much better at economics.
10. April 2016 at 00:05
Scott Sumner (or anybody else): Ted Cruz has indeed embraced the trade and immigration positions of Don Trump.
Here is the link to the recent TIME magazine interview:
http://time.com/4283539/ted-cruz-interview-economic-populism-working-class/
“There’s no doubt Donald Trump has energized and excited a great many people. And I’m grateful to him for doing so. The issues that brought those voters into the political world, the need to secure our border, stop illegal immigration, stop the failed immigration policies that have driven down wages and taken away jobs from struggling Americans.
The need for a common-sense trade policy that doesn’t continue to ship jobs overseas and force Americans to compete on an unfair playing field.
Those issues will continue to resonate. And they are issues on which I am fighting and leading every day. If you look at the states that have voted, Donald Trump is turning out a significant number of new voters, first-time voters.–Ted Cruz
–30–
Well, I guess we can argue the meaning of the word “embrace” but it sure looks to me like an “embrace.”
In some ways Cruz’ position is worse than an embrace.
Trump is specific, and says he will place tariffs on Chinese imports, and a wall across our southern border (btw, we already have a barrier for more than 600 miles of the southern border, which evidently is not a controversial policy).
Cruz gives no specifics, just an embrace. They say Trump has no policies, but he has more tangible positions here than Cruz.
I actually am not much of a Trump fan. I just think the other candidates are worse.
I may actually vote for Bernie Sanders. He is a socialist and says he is a socialist. The only honest man in the race.
The other candidates are socialists or socialist-nationlists, but wrap themselves in the flag and say they believe in the Constitution or other jibber-jabber.
I cannot detect Hillary Clinton’s position on anything.
10. April 2016 at 00:57
Sumner: “The past two decades have been by far the best two decades in human history, and that’s what really matters.” and “I prefer Eastern Culture to Western Culture”
So according to Sumner, 1996-2016 are the best years ever in the history of humankind, and, East is better than West when it comes to things like women’s rights, foot binding, the South China Sea dispute, Asian insularity and non-kindness to strangers, excessive use of sugar and MSG, and action movies, to name a few.
Just think about that reader. The Rush Limbaugh of monetarism indeed. Or the Monte Python.
10. April 2016 at 01:25
I feel honored that my post is adjacent to Ray Lopez’. Our own Ray Lopez has become the recurrent touchstone for Tyler Cowen.
I am starting a new company offering Ray’s services, named “Consult-a-rama.”
10. April 2016 at 01:44
http://www.bloomberg.com/news/articles/2016-04-07/yellen-says-u-s-close-to-full-employment-some-slack-remains
I’m surprised to not see any comments on Yellen admitting that they tightned while still below their congressional mandate on their TWO objectives
10. April 2016 at 05:27
Art, Mexico is richer than all the countries you mention except Panama, and the gap with Brazil is widening.
https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_capita
So how does that make Mexico the “sick man of Latin America?” I would add that Mexico has moved ahead of Venezuela since this 2014 data came out.
Ray, You said:
“So according to Sumner, 1996-2016 are the best years ever in the history of humankind, and, East is better than West when it comes to things like women’s rights, foot binding, the South China Sea dispute, Asian insularity and non-kindness to strangers, excessive use of sugar and MSG, and action movies, to name a few.”
So which 2 decade period was better?
And yes, John Woo action movies are better than western action movies, surely even someone like you knows that? And foot binding, in 1996-2016? Aren’t you a bit out of date? If we are going back into history, why not mention American slavery, or the Holocaust? I suppose those are Western examples of “kindness to strangers”. And then there’s Trump.
And you forgot that westerners stink. Surely your friend told you that?
Thiago, Brazil in in the middle of a deep depression. Haven’t you heard?
If you know anything about the history of South America it’s that virtually all the countries rejected neoliberalism and went with crony capitalism. Chile is the only exception, although a few other countries had brief experiments in neoliberalism such, as Argentina 1990-2001 (which was a disaster due to tight money). But Venezuela never even dabble din neoliberalism. And wait, didn’t you tell me that Venezuela was not socialist? And now you say it was? I don’t get it.
Ben, I’m afraid you’ve been out of the US too long, and forgot what American politicians sound like. That sort of meaningless vague statement is exactly what they say when they don’t want to “embrace” the other guy’s policies. Come back here when Cruz proposes 45% tariffs.
Jerry, You said:
“That might have bothered college professors but so if what? Maybe, just maybe, the country as a whole, did just fine at that point.”
Of course it did fine, it did great. I’m constantly amused by the fact that my critics (including you and Art Deco) lack even the most basic skills of reading comprehension. Try reading my post again, with your brain, not you emotions.
I’d love to see blue collar workers make as much as college professors.
As for your knowledge of history, please tell me all the other times that blue collar workers made more money than college professors. Be specific.
MFFA, That’s old news, she’s targeting the forecast.
10. April 2016 at 05:52
Scott: “It reminds me of when farmers used to set the “parity” of farm prices with other goods prices based on the relatively high levels of 1909-14, treating that ratio as normal for purposes of farm subsidies.”
“Used to?” That’s how the farm bill still works. Typical farm bill cycle:
1. Time to renew the farm bill. Are current farm product prices historically high or low?
2a. If high, prefer “crop insurance” type programs in the farm bill that pay more money the lower prices go. Base them off current high prices and argue that this saves money over the length of the bill.
2b. If low, prefer fixed payment programs in the farm bill that pay the same no matter the price. Argue that this saves money over the length of the bill compared to the crop insurance programs that are currently paying out huge amounts due to historically low prices.
3. Watch as prices tend to return to their historical average. If prices were high and fall, the crop insurance programs cost more than the direct payments they replaced. If prices were low and then rise, the direct payments cost more than the crop insurance programs they replaced would have.
4. Repeat every five years as necessary, always boasting about how the new farm bill will save money (and the CBO estimates will agree!) despite actually costing more each time when all said and done.
I’ve seen otherwise intelligent economist professors (I remember Miles Kimball) fall into the hype with various farm bills.
10. April 2016 at 06:13
Why don’t you like Kasich? I like Ryan too, but it seems he’s followed a similar path in Congress to Kasich, being the wonky guy who puts forward the long term balanced budget plan. Ryan’s seem to rely more on the magic asterisk of unspecified health savings than Kasich’s. And Kasich’s actually balanced the budget, unlike anyone else of the past half-century.
Off topic, I was wondering if you were going to do a post on the most important election of this year:
http://www.nytimes.com/2016/04/10/world/europe/as-britain-contemplates-exit-boris-johnson-prepares-his-entrance.html
10. April 2016 at 06:46
“And wait, didn’t you tell me that Venezuela was not socialist? And now you say it was? I don’t get it.”
No. Do you see? This right here is the problem with not reading what people wrote because they don’t agree with your prejudices and yet having strong opinions on what you think they may have written. Venezuela is “Socialist” (not Marxist, but very statist- so is post-Deng China), but this is not why it is failing. It is failing because it is peopled by Venezuelans, and Venezuela is a little more than a glorified gas station. Again, people are not interchangeable gears. I know Economy’s first law says they are, but they really, really are not. Venezuela is not Singapore with oil and high taxes. Mexico is not China with a freer economy.
As for your other points:
1) Chile was already richer than the average Latin American country in the early 70’s (it would only achieve it again after the end of Pinochet’s rule– this is how terrible Allende and 1970’s Pinochet’s recession was). Chileans can prosper under any economic regime, except crazy ones like Allende’s and early Pinochet’s. People are not interchangeable gears.
2) Yep, Brazil is facing a deep recession. So was it in the late 80’s (ask an older economist to tell you about the Brazilian moratorium on external debt payments– the country after 20 years of an anti-socialist military regime was broke and had no credit) and the early 00’s (unemployment rates were higher back then). Brazil was pooerer after the 90’s privatizations and the lowering of tariffs than it had been before they started. https://goo.gl/ogZueK (again the former minister that warned about the international trade impovereshing Brazilians was not a Communist politician, he had been the “Economy Czar” during the Brazilian rightwing dictatorship’s Economic Miracle). In fact, this was how the leftist Workers’ Party rose to power (their candidate, Lula, had been soundly beaten three times in a row by neoliberal candidates, but fourth time’s the charm if your adversaries collapsed the economy and destroyed the voters’jobs).
3) Since 2004, Brazil’s GDP per capita more than tripled (this is more than neoliberal Mexico, the teachers’ pet of Latin America, did since 1991). https://goo.gl/ogZueK
4) Yep, Argentina’s money was tight… “… if the prayers were answered, and a miracle occurred, and the yen did this, and the dollar did that, and the infrastructure did the other thing, we would still be dead (…) You know, at one time there must’ve been dozens of companies makin’ buggy whips. And I’ll bet the last company around was the one that made the best goddamn buggy whip you ever saw.” http://www.americanrhetoric.com/MovieSpeeches/moviespeechotherpeoplesmoneydevito.html
Picture Argentina as a buggy whips maker and you will understand their problems.
10. April 2016 at 07:26
Scott re Cruz:
Maybe you are right.
BTW even Trump is something of a cupcake by global standards. A certain Southeast Asian nation has a junta that appears to be entrenching itself, while the largest Asian nation appears to be rapidly regressing in terms of political freedoms. Some places it is not a matter of libel laws, it is a matter of the media being told it is a megaphone of the party.
Maybe a few years in the wrong environment makes Trump look more quirky than threatening. If you want to see some bad dudes, you are in the wrong country.
10. April 2016 at 07:44
National security outlays include the DoD, DHS, VA, black budget and prorated interest on the national debt. That comes to $1 trillion.
Yeah, if you throw in the budgets of agencies whose functions are vaguely cognate, you can meet your goal. I’ve addressed your contentions concerning DHS; your definition is nonsense and the budget in question amounts to $45 billion. The VA is a welfare agency for which a history of military service is the screening criteria for beneficiaries. They do almost nothing in the realm of ‘national security’ per se. Adding the military budget, DHS, posited sums for the CIA &c, overseas security assistance, and the VA, you’d still have to attribute over half of federal debt interest to amortized military expenditure. Bracketing out federal debt interest, there has been no time in the last 40-odd years where the U.S. military accounted for more than 1/3 of the federal budget.
10. April 2016 at 07:49
“Trump is further behind Hillary right now than any losing Presidential candidate ever trailed in the modern polling era — at any point of any race”
Not true, as can be seen if you consult polls conducted in 1976, 1980, and 1988.
10. April 2016 at 07:52
@Sumner: [Sumner claims 1996-2016 were the best decades in history] “So which 2 decade period was better?” – how about 1945-1965? World growth was better. If you have 0.1%/yr growth in a matured economy is next year the best ever? What if you have 10%/yr growth in a dynamic economy that’s got a lower base than the mature economy? Surely the latter is better than the former, even if the former has a higher baseline. (Note to self: why waste pixels with this guy? Talking to a wall.)
Sumner: “And yes, John Woo action movies are better than western action movies, surely even someone like you knows that?” – no, I’ve never seen a Woo action movie. Please recommend one. I find Asian action movies too hard to follow, like squirrels fighting. Let me Google this…Oh god, that guy. I’ve seen Broken Arrow (pretty good, as it had a western plot), Mission Impossible (was OK), and Face Off (amusing) All three of these were ‘western’ themed movies BTW. Now here’s a Woo fan on an ‘eastern’ movie: “What can I say about Hard Boiled? Crowds of people are gunned down without explanation and the smallest things explode for little or no reason. The bad guys are massively exaggerated cutthroat caricatures and the good guys never miss. Scenes of Fat and Leung running down corridors are inexplicably shot in slow motion. And, for all of these reasons, it is amazing. It’s fast, it’s exciting, and it never lets up.” – pass. Sounds like a film cliche without any sense of self-awareness. The western action movie “Deadpool (2016)” is better than this dreck.
Sumner: “And foot binding, in 1996-2016?” – ok, scratch that. How about the Great Firewall of China, is that better?
Sumner: “And you forgot that westerners stink. Surely your friend told you that?” – Africans have more oil glands than Europeans, who in turn have more oil glands than Asians. Hence the smell. But, from a primate point of view, the stronger, most dominant animal has the greatest stench, since it signals to predators that it doesn’t care that it stinks, will not try and hide it, because it fears nobody. Hence when walking down the street, who do you fear most? Crazy ghetto black? First. Tattooed cross-eyed crazed white? Second. And the smiling, clean smelling Asian who is fast as a squirrel? Last, but you just might die from this last guy…die laughing. You Sumner smell like my little rare Philippine monkey, which smells very nice, since you wish to offend nobody but your readers. If the Fed were to call you up however, you’d be all sweetness and nice. Hypocrite! {Ray breaks wind and lives the room…}
10. April 2016 at 07:57
Come on. “The petroleum sector dominates the economy, accounting for roughly a third of GDP”– CIA Fact Book 2000 (data from 1999, the year Chavéz took office).
Yes, and when you bracket out the share attributable to extractive industries and the analogous share for Bangladesh, the residuum (per capita) for Venezuela exceeds that for BanglaDesh by a factor of 8.
10. April 2016 at 08:06
Art, Mexico is richer than all the countries you mention except Panama, and the gap with Brazil is widening.
You said ‘far better off’. Mexico’s domestic product per capita exceeds that of Costa Rica by about 15%. That’s ‘somewhat more affluent’, not ‘far better off’. Nor did I contend that Colombia or Brazil was more affluent than Mexico. I said when you applied some useful fudge factors, they had similar standards of living.
So how does that make Mexico the “sick man of Latin America?” I would add that Mexico has moved ahead of Venezuela since this 2014 data came out.
You should address that question to E. Harding or Thiago Nutcase, who made that contention. I disputed them.
10. April 2016 at 10:00
“and when you bracket out the share attributable to extractive industries and the analogous share for Bangladesh, the residuum (per capita) for Venezuela exceeds that for BanglaDesh by a factor of 8.”– Art Deco
No. 2/3 of 1999 Venezuela’s US$ 8,000 is a little more than US$ 5,000. Bangladesh’s GDP per capita (PPP) is about US$ 3500. Even compensating for the dollar’s lost purchase power since 1999, pre-Chávez’s non-oil Venezuela was a little better than today’s Bangladesh. It doesn’t mean he didn’t things worse, but he was an Army guy, he had never been a gas station attendant before.
“You should address that question to E. Harding or Thiago Nutcase, who made that contention.”
In fact, it is written “Ribeiro”, but it is pronounced the same way. And Mexico hasn’t “moved ahead of Venezuela”, Venezuela has moved behind Mexico and almost everyone else. It is embarassing having to keep stressing this point, but they are Venezuelans.
10. April 2016 at 10:08
http://www.moonofalabama.org/2016/04/boston-globe-anti-trump-scaremongering-he-would-continue-obama-policies.html
10. April 2016 at 11:09
Come on, Mr. Harding. Trump to continue Obama’s policies? Is this what all the ado is about? You believe it as much as Mr. Sumner really believes that Argentina’s currency voodoo. You want votes for Trump, and it is all right, it is how democracy works, but…
10. April 2016 at 11:29
Ray, You said:
“@Sumner: [Sumner claims 1996-2016 were the best decades in history] “So which 2 decade period was better?” – how about 1945-1965?”
I’m surprised that even you were foolish enough to walk into that one. So 30 million Chinese starving to death is no problem, as long as Ray is doing OK. How many people rose out of abject poverty in 1945-65? Now compare than to 1995-2015.
Negation, Yes, I’ll do a post on that issue.
Ben, You said:
“If you want to see some bad dudes, you are in the wrong country.”
On that we agree. But don’t overstate the regression in China. They just relaxed the one child policy, and there have been many other political reforms in recent years. On free speech they are certainly regressing. But there is far more to freedom than speech. On balance, China is getting freer, despite the reduction in freedom of the press.
10. April 2016 at 11:32
Thiago, You said:
“Venezuela is “Socialist” (not Marxist, but very statist- so is post-Deng China)”
Yeah, China is an economy totally reliant on oil exports, than can’t put toilet paper on the store shelfs due to price controls. Excellent comparison.
10. April 2016 at 11:38
Thiago, One other thing. Don’t link to graphs showing current dollar value of the GDP of other countries if you expect to be taken seriously over here. You are merely advertising your ignorance.
10. April 2016 at 11:47
No. 2/3 of 1999 Venezuela’s US$ 8,000 is a little
I’m referring to chained dollars, PPP, which the World Bank provides to all and sundry in convenient formats.
10. April 2016 at 11:57
“Picture Argentina as a buggy whips maker and you will understand their problems.”
I like to think of them more for their steaks, wine, and dulce de leche ice cream. Accepting Capitalism, is not intended to suggest a guarantee against performance volatility and bad times even under the best of management. Argentina was hit with the perfect storm in the late 90’s. Falling ag prices, massive move away from risk particularly emerging market risk (post Russia and LTCM), and then maintaining that stupid peg to the dollar at the moment credit spreads are widening against you and your GDP is falling is just rarely going to end well.
10. April 2016 at 13:54
Mr. Sumner,
“Yeah, China is an economy totally reliant on oil exports, than can’t put toilet paper on the store shelfs due to price controls. Excellent comparison.”
My point exactly. China, the factory of the world, with its stunning advances in education, science, infrastructure and living standards IS a very statist economy, you can ask the Heritage Foundation if you were not aware of this. China’s economy isn’t free, its policies are supposedly much worse than neoliberal Mexico’s ones, and yet it is a economic powerhouse (maybe tight money is preventing Mexico’s free market fairies from doing their thing, but any time now…). It must be a miracle. Or maybe it is as simple as China not being peopled by Mexicans or Venezuelans. People are not interchangeable gears, it doesn’t matter how much economists want to believe their own voodoo. Bangladesh is not Singapore with a bad tax code. Venezuela is not China with oil exports.
Mr. Art Deco,
I really don’t know what you want. Venezuela’s GDP per capita (PPP) in 1999 was 10,981.4 Bangladesh’s per capita GDP (PPP) was 1235,1. Both are measured in the same unity. The ratio between them is 8.89. One-third of Venezuela’s economy was made of oil– it means the ratio between non-oil Venezuela/ Bangladesh was 5.92 (ignoring the fact the oil sector provides almost free capital the Venezuelans could have made good use of), surely not 8. But if it makes you feel better, Venezuela was not Bangladesh with oil (it is called exaggeration) the same way the Soviet Union was not just “Bangladesh with missiles”, but it kinda drove the point home, right?
10. April 2016 at 14:04
Mr. Derivs,
“I like to think of them more for their steaks, wine, and dulce de leche ice cream.
So do I (also learning, according to legend, there were more bookstores in Buenos Aires than in Brazil– I find it easy believing it), but as business lines go, theirs is buggy whips making.
“Accepting Capitalism, is not intended to suggest a guarantee against performance volatility (…) massive move away from risk particularly emerging market risk (post Russia and LTCM), “and then maintaining that stupid peg to the dollar at the moment credit spreads are widening against you and your GDP is falling is just rarely going to end well.”
Classic Argentintine behavior. This is why I say much more important than economic freedom (beyond an indispensable minimum of course) is sensible economic management.
10. April 2016 at 14:05
Scott,
I’m not sure why you’re dividing anti-neoliberalism between Trump Republicans and liberals in general. The establishments of both parties have been much more neoliberal than most of the rest of the developed world since the 90s. There’s no doubt that both have been proponents of generally freer trade, more open borders, and, at times, deregulation, mixed with some new regulation at other times.
It was the Bush administration and Republican Congress that in the 00s gave us new steel tariffs, and cancelled the phase-out of farm subsidies signed into law by Bill Clinton. They also gave us Sarbanes-Oxley, which even many proponents acknowledge is overly onerous and an overreaction to corporate scandals in the early 00s And, despite what many of them actually believe, if you believe their past statements and some past votes, they failed to pass immigration reform to make it easier for foreign workers to come here to make a living.
Clinton, before that period, signed onto some deregulation in the banking and investment banking sector, refused to regulate certain new derivative products, deregulated the structure of media conglomerates, etc. Of course, there were also new regulations, such as the Family Medical Leave Act, which represented more regulation.
The Clintons initially tried to socialize practically the entire healthcare sector early in Bill’s term, and Republicans countered with essentially became known as Obamacare.
I think you’ve over-generalized tremendously. I don’t think there’s much understanding of what neoliberalism is among liberals or conservatives, and poll after poll continues to show that Americans of all political persuasions support social welfare programs for people like themselves, but not so much for the truly poor. This would help explain why even when Democrats are in charge of both Houses of Congress, easily solvable problems the poor face aren’t even addressed.
I would point out that the fact that many conservatives are rhetorically laissez faire seems to have little to do with their revealed attitudes about actual neoliberal policies, and why they’re vulnerable to the rise of someone like Trump.
I know of very few conservatives who want to get rid of any social welfare programs, but I know of plenty to want to deny it to “others”. I think that’s the key difference between liberals and conservatives.
Liberals rhetorically support helping the poor, but in practice they actually do very little to help the poor at all, unless the primary beneficiary of that help will actually be the middle class.
10. April 2016 at 14:12
Scott,
And I know this post focuses on present trends, but I don’t know why the rise of Sanders is more important in your mind than the rise of Trump. It’s clear the consensus that’s supported freer trade and immigration among many liberals and conservatives has been breaking down for some time now, and that was accelerated by the mismanagement of the economy by both liberals and conservatives since 2007. The establishment has too long taken support for these policies from certain segments of our society for granted, not doing a great job in recent years of explaining the benefits of such policies.
Is it possible that you’re a little to sensitive to certain issues concerning liberals, like economic illiteracy, given your position as a professor and constantly exposed to ignorant liberal college students who want to shut down free speech, and some of the more annoying liberal commenters here?
10. April 2016 at 15:24
Scott,
I think it’s useful to simply highlight again what we got when Republicans last controlled the White House, both houses of Congress, and most state governments. We got Sarbanes-Oxley, steel tariffs and a reversal of phasing out of farm subsidies, Medicare Part D(with no ability of the government to negotiate drug prices), and nation-building attempts on large scales that have shown to be worse than failures.
The reason Republicans can’t govern, is because they know that what the American people really want are benefits for the non-poor, and they get busy trying to serve those interests, along with those of their donor class, while trying to balance the need to do those things with the deranged desires of the fringe of their base, which is over-represented in primary contests that scare the Hell out of them.
10. April 2016 at 17:03
I’d just like to show my support in favor of your pro neoliberal rant. I’ve found your arguments in favor very convincing!
10. April 2016 at 18:13
I think it’s useful to simply highlight again what we got when Republicans last controlled the White House, both houses of Congress, and most state governments. We got Sarbanes-Oxley, steel tariffs and a reversal of phasing out of farm subsidies, Medicare Part D(with no ability of the government to negotiate drug prices), and nation-building attempts on large scales that have shown to be worse than failures.
We had a split legislature, not a Republican legislture, in 2002. Sarbanes-Oxley was passed almost unanimously. The steel tariffs were enacted pursuant to extant legislation, not by Congress, and were in effect for all of 21 months. About 2/3 of the House Democratic caucus and 85% of the Senate Democratic caucus supported the 2002 farm bill. The share of Republicans so supporting was lower. Your tendentious tripe about ‘nation building’ is no more historically literate than the rest of what you said.
10. April 2016 at 18:15
I really don’t know what you want.
I want nothing from you. You want the last word, and are very persistent in refusing to acknowledge a discrete, commonsensical, and verifiable fact. That’s your pathology, not mine.
10. April 2016 at 19:34
“Trump is further behind Hillary right now than any losing Presidential candidate ever trailed in the modern polling era — at any point of any race”
—
Not true, as can be seen if you consult polls conducted in 1976, 1980, and 1988.
Wrong. You are confusing single polls with poll averages. And you can’t really even do a poll average before 1992 because there aren’t enough polls, but sure, Donald might be competitive with Mondale, who won one state.
Going to back to 1992, Trump currently trails the polling averages of EVERY major-party candidate, at any point in their campaigns — even the losers. There is essentially no chance he will a general election, and the idea he could win is just another of the many delusions Trump’s gullible supporters have been conned into believing.
10. April 2016 at 20:49
@TallDave
Polling averages before the nomination don’t matter. The fact remains that every successor of a two-term President (e.g., Grant, Bush I, Cox, Nixon, Gore, McSame) has lost vote share relative to that two-term president’s re-election (with the sole exception of Monroe), Democrats more than Republicans (on average). Clinton is a really weak successor. Trump is an extremely divisive frontrunner, but potentially a very successful one, who is most willing and able to spray a can of Bush-Be-Gone onto the GOP’s image and attack Hillary Clinton with the persuasive powers of a decade-long reality TV star. Remember, Trump criticized the Iraq war less than half a year after it started, and was extremely public in calling for a pullout in 2007 (when it was highly inadvisable). Clinton only recanted on her super-strong support for the Iraq War (not Trump’s “I guess so”) in 2014. Trump also managed to change his position on Libya much faster than Hillary will.
What sounds better?
Make America Great Again
or
I’m With Her
It’s easy to say “I’m not with her”. It’s not easy to say “I don’t want to make America Great Again”.
10. April 2016 at 20:50
Also, answer honestly, TallDave. Were you saying, like Sumner, Trump couldn’t ever come close to getting the nomination?
10. April 2016 at 21:00
“The persuasive powers of a decade long reality TV Star”
LO fricking L! Trump/Kardashian 2016 – unbeatable combo!
11. April 2016 at 01:47
[…] […]
11. April 2016 at 04:25
Wrong. You are confusing single polls with poll averages.
No, I’m not wrong. Polls are much more numerous than they were 30 years ago. They’re also less reliable with the evaporation of the landline network.
11. April 2016 at 04:32
“That’s your pathology, not mine.”
Well, you are the one delusional enough to believe in the Venezuelan econonomical model, one-third gas station, two-thirds gas station store.
11. April 2016 at 04:45
Polling averages before the nomination don’t matter. The fact remains that every successor of a two-term President (e.g., Grant, Bush I, Cox, Nixon, Gore, McSame) has lost vote share relative to that two-term president’s re-election
I’ll restate that slightly. Since the advent of popular balloting, a given political party which wins re-election to the Presidency experiences it’s peak performance on it’s second contest after which it’s plurality declines monotonically for however long it holds the office – smaller the third time than the second, smaller the fourth time than the third, and so forth. The qualification to this rule is that the presence of a vigorous 3d party candidate can confound your observations. It’s not a hard and fast rule, but about 80% of the time the incumbent party’s losses from one election to another are severe enough to wipe out the sort of plurality that Barack Obama won in 2012. The occasions wherein the incumbent party gained or suffered only small leakage were in 1880, 1904, and 1944. Partisan Democrats and Republican hypochondriacs have been chuffering on and on as if something which is fairly atypical is a sure thing this year. People aren’t that bright when they’re emotionally invested.
11. April 2016 at 05:10
“It was the Bush administration and Republican Congress that in the 00s gave us new steel tariffs,”
Scott Freelander:
Surely you know that those steel tariffs were canceled very shortly after they went into effect, as soon as the WTO ruled against them? And you know that they were only adopted as part of a deal to get Congress to vote for trade deals? (Trade deals that more Republicans voted for than Democrats.) I always assumed at the time that (as Mankiw claims here: http://gregmankiw.blogspot.com/2016/03/who-are-free-traders.html) that the tariffs were intended to be found in violation by the WTO so that they could be removed.
When I hear someone harping on the steel tariffs, it sounds like either ignorance or partisan excess. The bipartisan (vetoed by Bush, even) farm bill during the GWB presidency, OTOH, was a terrible and lasting thing.
11. April 2016 at 05:59
Art Deco 11. April 2016 at 04:45
Sure, the fact that Donald Trump trails everyone except David Duke in favorability doesn’t make him unelectable because monotonic something or other plus 1880. Some people certainly aren’t that bright when they’re emotionally invested.
11. April 2016 at 06:03
E. Harding — As I’ve said before, I don’t find your views intriguing and I don’t wish to subscribe to your newsletter.
11. April 2016 at 06:26
Sorry, I guess Art is really arguing against the above proposition.
Still, anyone who thinks Donald has a chance doesn’t understand the polling.
11. April 2016 at 07:29
Answer honestly, TallDave. Were you saying, like Sumner, Trump couldn’t ever come close to getting the nomination, using the same evidence you’re using now? The fact you refuse to answer this question is a great indictment of your foolish claims.
And Sumner endorses Ryan! LOL! He lost 2012!
11. April 2016 at 07:43
Still, anyone who thinks Donald has a chance doesn’t understand the polling.
I understand the polling adequately for the purpose of this discussion. I also understand you’re blowing smoke.
11. April 2016 at 09:35
-This is the same guy!
I was right:
https://againstjebelallawz.wordpress.com/2016/01/02/nobody-in-america-really-believes-in-democracy/
11. April 2016 at 11:41
Professor Sumner, thank you for the reply to my comment. You are right that it is better to read with your brain than your emotions, and I want to apologize for the tone of my comment. I feel badly about that and will try to avoid such in the future.
I also agree with you that more highly educated people have tended to have higher incomes than unskilled workers, whether industrial or not, throughout human history. What set me off was the time frame of 10,000 years that you mentioned. Blue collar jobs have arguably only existed since the beginning of the industrial revolution. College professors have probably been around somewhat longer, but certainly not for a majority of that ten thousand years. But I am no history expert either.
I don’t know the correct answer, but would guess that people engaged in production through that time span of 10,000 years did tend to have higher incomes than a class of educators or researchers not affiliated with the political or religious powers of their particular societies.
11. April 2016 at 13:29
Thiago my head hurts trying to read your posts. A few paragraphs wouldn’t go a miss. Also you seem to share a trait with our other resident headbanger Ray; linking to data that doesn’t show what you say it does. Mexican GDP has grown at a trend of about 5% in the last 20 years.
“There are lots of degree programs nowadays that are the functional equivalent of ‘shooting rubber bands across the classroom’”
And those are the types of people who camped on Wall Street demanding the people who did a useful degree pay for it.
11. April 2016 at 16:08
“Ray; linking to data that doesn’t show what you say it does. Mexican GDP has grown at a trend of about 5% in the last 20 years.”
http://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?page=2
No, it hasn’t, the real number is probably around 2% (since the neoliberal reformes got Mexico broke in 1994, Mexico doesn’t experience decent economic growth), but I am sure the tight money fairies are at fault here, not whatever it is that makes China and Mexico (the freer economy between them) so different in first place. I am sure lots of people are making money with Mexico’s neoliberal reforms, they just happen to not be Mexicans. Mexico and China prove that the “free market” ideology is just it, an ideology.
11. April 2016 at 16:59
Thiago, Mexico was broke for 13 years before 1994. Mexico began climbing out of its hole in 1994, but way slower than necessary to keep up with the U.S. I think NAFTA has been a success in Mexico, as it has led to an enormous amount of export diversification, but it shows free trade isn’t a huge economic boon.
11. April 2016 at 17:18
“Thiago, Mexico was broke for 13 years before 1994”–E. Harding
Except for a few years just after the 1995 Crash, Mexico’s growth has been disapointing and much lower than what should be expect acordingly to neoliberal reasoning, which doesn’t mean I am not aware of the painful limitations of Mexico’s pre-1994 economic model. One way or another they will always be Mexicans.
“I think NAFTA has been a success in Mexico, as it has led to an enormous amount of export diversification, but it shows free trade isn’t a huge economic boon.”
It is close enough for Mexican work (yet much less than what China, with much less “economic freedom” achieved).
11. April 2016 at 17:41
Fuck Neoliberalism… https://www.academia.edu/23908958/Fuck_Neoliberalism
11. April 2016 at 18:18
And those are the types of people who camped on Wall Street demanding the people who did a useful degree pay for it.
Again, I’d be fascinated to know to what he’s referring. People who graduate from college generally manifest academic performance which puts them in the top 1/3 of their high school class. Some goof offs and cut ups are to be found in the college-bound set, to be sure, but that’s not the rule.
If you examine the breakdown of college degrees, you find that 14% are in the academic humanities or fine and performing arts. Are the guy shooting rubber bands coffee house poets and theatre club denizens? C’mon, students of the fine arts and humanities are predominantly female.
Some courses of study are notorious, or should be, e.g. teacher training (‘education’), social work, and library administration. The thing is, these credentials are commonly necessary if you want to work in these fields (absolutely necessary in New York). Please note, public employment is generally the order of the day for all three, so it’s not competing employers making that decision on credentialing. About 6.7% of all BA degrees are awarded in one of these three. And, again, these degree programs are dominated by women.
About 10% of those awarded BA’s receive them in history or social research disciplines (which does not include psychology or statistics in the federal government’s taxonomy). That would mean history, human geography, cultural anthropology, palaeoanthropology, economics, economic history, demography, sociology, criminology, social psychology (?), political science, or linguistics. American history, cultural anthropology, sociology, and social psychology have gotten wretchedly politicized. Those which are resistant to quantification are also impractical. I’m not sold on the idea that Sumner regards students of economics or quantitative sociology as goof-offs disrupting the class.
About 1.3% study ‘family and consumer sciences’. I think that’s mostly nutritionists and dietitians. Predominantly female and an occupational credential.
That leaves communications and allied trades (4.8%) and athletics and allied trades (2.2%) as possible collecting pools for Sumner’s rubber band shooters. Not really a big part of the collegiate population (and, again, the latter is more a vocational discipline and the former incorporates vocational subjects).
11. April 2016 at 18:20
BTW, about 0.5% major in victimology programs. The big problem with these programs is the opportunity cost of hiring the faculty and the damage to institutional culture caused by the emperor’s-new-clothes insistance that these disciplines are not spurious. The students avoid them.
11. April 2016 at 18:49
Thiago, China is poorer than Mexico, but I agree it will become richer at some point. It is more market oriented than Mexico in some respects and less so in some respects. China has a far superior education system (or at least its citizens are better educated (perhaps the system is not the reason, IDK), which also helps to explain why it grows faster than many other similar countries. Based on what I’ve read, Mexico’s educational system is horrible.
But China has done better in almost exact proportion to its willingness to adopt market reforms. It started booming when it moved away from communism. The most neoliberal parts of China (Zhejiang, Shenzhen, etc) have done best. If the rest of China were as neoliberal as Zhejiang, it would be doing even better.
Scott, You said:
“And I know this post focuses on present trends, but I don’t know why the rise of Sanders is more important in your mind than the rise of Trump.”
What!!! Haven’t I made it clear that Trump is 10X the threat that Sanders is? I have no idea what you are even talking about here. I’ve been much tougher on Trump than Sanders. Trump is the problem, Sanders is a footnote.
I agree with most of your comments on the Dems and the GOP, not sure why you assume I don’t.
Jerry, OK, there was some hyperbole there, with 10,000 years. But let’s find the closest equivalent to college profs, say 4600 years ago. Maybe Egyptian priests? And how did their pay compare to the workers who dragged the stones up the pyramids. Yes, a silly example, but my point is that throughout almost all of human history, highly educated people have made more than unskilled workers. Now there are also some highly skilled workers in factories, but those guys are often still doing well, even today. I was talking about the unskilled—the 1960s was their golden age, in relative terms. But even then, it wasn’t all of them. Poor blacks in the South were worse off in the 1960s than today.
11. April 2016 at 19:05
“Based on what I’ve read, Mexico’s educational system is horrible.”
-Puerto Rico’s is the same.
Also, see
https://en.wikipedia.org/wiki/Chinese_immigration_to_Mexico
11. April 2016 at 19:34
I wish you wouldn’t use words like “explained” to refer to a post that was quite unconvincing (living standards). You even agreed that the imperfect statistics aren’t improving the way they did for the first ~190 years of the nation. Sure, smartphones, but I’d gladly trade mine for the home prices. Your viewpoint is typical Old Economy Steven. Boomers (smh).
You’re far from alone here, but I wish everyone would stop crediting technological improvement to their pet policies. Techn growth was superior under the American System, and the Post-war Consensus. I’m not 100% sure either of those regimes *caused* faster tech growth, but it’s strange to cite the lackadaisical contemporary tech growth in *credit* of neoliberalism. You’ve agreed with me before that tax policy clearly isn’t the major determinant of growth. Let me make the same assertion about trade. Moderately controlled trade is just a cheap way to buy some self-determination (option value, if you will) and social cohesion.
Also, can we quit it with the Danish/Swiss/Singaporeans? We’re too big to survive on tax/finance specialization, we can’t do Danish socialism cause we have a military and multiple underclasses to support, and trade calculus is totally different for tiny economies. We can learn things from those countries of course, but narrower like how are Swiss trains so perfect or how do the Danes avoid waste/corruption with all that public spending.
Lastly, no I don’t owe a Chinese national remotely the same kind of concern I owe a working-class American. The extreme case (it would’ve been rational for us to pay X to reduce >X from the economy of 40s Germany/Japan) demonstrates how much this can vary. That’s just reality and I’m tired of internationalists not even constructing an argument, just skipping straight to the self-congratulatory moralizing. There is no such body corporate as “humanity”, not yet at least, and probably not until something really scary changes the compete/cooperate calculus.
11. April 2016 at 19:49
Scott, RE education and Egyptian priests. Elites buy education for socio-cultural purposes, the causation is the other way. Historically the marginal economic value of scholarly education was pretty low. See Diocletian’s Edict.
11. April 2016 at 20:21
Scott, you said:…but then claim that living standards have stagnated in America. That’s also nonsense, as I explained in this post.”
But in that post you clearly state that wage inequality is obvious. So when you talk about living standards being so good you are speaking with the doublespeak of Jamie Dimon.
Jamie Dimon is a sucky criminal who should be in prison. I don’t think he is a guy you want to pattern your thinking after.
11. April 2016 at 20:41
Yes Scott, I do see the equivalence between Ancient Egyptian priests and modern day economic professors. Just kidding. Yes, I concede that more educated people have been more likely to be more highly compensated than the typical unskilled worker has been.
But I don’t know if the Egyptian priests actually would have “made more” outside of state sponsorship. It is very possible- religious services and explanations have had appeal since the beginning of history. They must have provided a large proportion of ancient GDP statistics. The providers of those services maybe were the most productive people of their time.
But I think you would probably agree that their higher compensation had a lot to do with the existing religious and political authorities in Egypt at that time. I am not sure how highly compensated they would be if they set up their own “college” to study and educate others outside of that framework. Even today it seems to me that a whole lot of colleges and universities in the U.S. began as either religious institutions or state sponsored institutions.
12. April 2016 at 04:06
Never reason from a change (reforms), levels are what count here. Evidently, China had to change a lot since the Cultural Revolution (they don’t even worship Mao’s mango there anymore, I am told http://www.bbc.com/news/magazine-35461265 ), but it is still a much less free economy than Mexico and other economist’s pets are (meanwhile Mexico has benefited from oil, easily syphoning off American jobs and sendind its excess of works throught the border and centuries of non-crazy governments–China could enjoy none of those advantages).
China proved that the optimal economic system is a lot less “free” than free market economists would like us to believe. I am sure Mr. Trump will make international trade work for America again instead of the other way around.
12. April 2016 at 05:47
myb6, You said:
“Elites buy education for socio-cultural purposes, the causation is the other way. Historically the marginal economic value of scholarly education was pretty low.”
And that obviously has no bearing on my claim, which was about correlation, not causation. So what’s your point?
Gary, Try to learn how to read, and then stop back here when you have done so. Or better yet, don’t stop back here.
Thiago, You said:
“China proved that the optimal economic system is a lot less “free” than free market economists would like us to believe.”
Surely this is a joke? China is an “optimal economic system?”. China is poorer than Mexico, and far poorer than all other ethnic Chinese economies. Indeed Singapore and Hong Kong are number one and two in the world in rankings of economic freedom, and are far richer than the mainland, even richer than the US. Taiwan is also far freer, and far richer. I find it hard to believe you’d point to China with 100s of millions of poverty stricken peasants, as more optimal than Switzerland, the US, Germany, Singapore, Australia, Japan, Sweden, or a couple dozen other countries. Please tell me you are joking.
12. April 2016 at 06:41
Scott, that was the crux of the whole discussion. The 1950s were not historically unusual by having skilled production workers compensated comparably to scholars. That’s the historical norm.
12. April 2016 at 07:25
myb6, The problem we face today is not the compensation of skilled workers, it’s the unskilled workers who are doing poorly.
12. April 2016 at 07:42
I don’t think so. You said “blue collar”. Most of them have skills, just not degrees, and they’re hurting.
12. April 2016 at 07:54
“I find it hard to believe you’d point to China with 100s of millions of poverty stricken peasants, as more optimal than Switzerland, the US, Germany, Singapore, Australia, Japan, Sweden, or a couple dozen other countries. Please tell me you are joking.”
You can as wells say that if Obama puts forth a economic policy that destroys 25% of America’s GDP and freezes the economy for 10 years, his policies would still be better than China’s or Mexico’s (after all the USA would still be richer than China or Mexico).
Truth is, after centuries of decadence, chaos and poverty, decades of unequal treaties and imperialist opression and years and years of worshipping Mao’s mangos, China has become the fastest-growing big economy. Unless your suggestion of optimal behavior for a poor but eager kid is “find a rich uncle, kill him and make it look like an accident”, China’s economical system is optimal–for the Chinese, if not necessarily for their foreign competitors. Economies, like nature, do not make jumps, but the Chinese one has made some big strides. Neoliberalism has failed in Mexico (but their schools are bad), in Argentina (but money was tight), in the 90’s Brazil and it is failing in the USA (which is good anyway because those uptight blue-collar works must be kept in their place).
A new, kinder, gentler, stronger, fairer and more prosperous America is been born in 2016. The moneychangers will be driven from the Temple, the American people will retake its country.
12. April 2016 at 09:13
Scott,
You missed my point. Perhaps I didn’t express it well. Why are you focusing on liberals and Trump?
Of course Trump and Sanders are economic ignoramuses, but what is new about either of them? Both parties have long had their anti-free trade wings, and a zero-sum perspective has always been the intuitive default viewpoint. These points of view are gaining note due to economic insecurity and loss of faith in elite opinion.
The evidence over the last 30 years or so seems to indicate that non-neoliberal perspectives are very much a bipartisan phenomenon, even if the US is relatively neoliberal compared to most other developed countries.
And, when it comes to The Economist, and celebrated economists on both the left and right, economics education just isn’t very good. You’ve commented on this yourself.
Not everyone’s fortunate enough to have people like you or Nick Rowe as professors.
12. April 2016 at 10:41
I agree with making it much easier for people to immigrate but BUT seeing that:
There is a large percent of voters who are anti-immigration and a larger percent who are against illegal immigration.
It seems absurd to have a law that you have no intention of enforcing.
The illegal immigrants who have been here the longest are better off than those who would have wanted to come but did not come because they did not want to come illegally.
The illegal immigrants who have been here the longest are better off because they have had a chance to earn more money than those in Mexico.
The illegal immigrants who have been here the longest are better off because they have had a chance to learn some English which might help them get a better job in Mexico.
Why is deporting deport illegal immigrants worse than keeping would be immigrants out?
12. April 2016 at 12:28
Thiago. We’re both wrong. In your own data the average growth rate has been about 3% in the last 20 years. In the data I used it was closer to 4. Either it has not been stagnating as you stated.
Also we get this nonsense about China being a new model we can imitate from left wing politicians in the UK all the time. It comes from a woeful lack of knowledge. It comes from the idea that Chinese growth rates have been without precedent. Not only have other countries grown as fast as China there are countries in the same region that have grown faster and for longer. In these countries the people have a good standard of living unlike the abject poverty many Chinese still live in.
12. April 2016 at 16:06
1) Ok, let’s part the differencce and say 3.5%. It is too little for a poor country (that should have a lot of low-hanging fruits and desparatedly needs all growth it can get) which, if we are to believe Heritage, has a much better economic policy than China.
2) “Not only have other countries grown as fast as China there are countries in the same region that have grown faster and for longer.”
For example… Any of those works sport American-like trade deficits?
There is a economic system that has worked everywhere it has been tried (China and Vietnam) and there is one that has failed everywhere it has been tried for diffent local reasons (the Argentine Currency Board sucked, Mexican students suck, Brazilians like soccer, Americans are ungrateful, etc.). I say we should try what works, for a change.
12. April 2016 at 17:33
Yeah it probably is a bit low. More liberalization is the answer not less. As you mention low hanging fruit is the reason China has gone from one of the poorest countries on earth to now just a very poor country.
Chinas growth rates are nothing we haven’t seen before; Taiwan, South Korea, Japan, Singapore and Hong Kong. All with systems that don’t lend themselves to endemic corruption and human rights abuse. I don’t know or care about trade deficits.
I’m beginning to suspect you might be trolling. No one could possibly think we need to copy countries that are so so soooo much poorer than us. If you do then all I can say is thank god you will never be in charge. I mean at least Sanders points to countries that are richer than us? But Vietnam? C’mon!
12. April 2016 at 22:01
“Why is deporting deport illegal immigrants worse than keeping would be immigrants out?”
Simple, most people’s sensibilities are whacked about by death marches. Death marches to the border are not nice. They are actually gross, and mean spirited and most people don’t want them.
And Scott, I am not for Keynesian stimulus which doesn’t seem to be lasting, but I want the damn roads to quit messing with my car’s suspension!!! Perhaps you have plans to go Amish? Lol.
13. April 2016 at 01:54
“More liberalization is the answer not less.”
Except for Mexican schools being bad, the money being tight, the Mexicans liking bullfights.
“As you mention low hanging fruit is the reason China has gone from one of the poorest countries on earth to now just a very poor country.”
Considering its growth rate, it is already virtually as rich (or as poor) as Mexico and Brazil are now, but it took China much less time to get there.
“Chinas growth rates are nothing we haven’t seen before; Taiwan, South Korea, Japan, Singapore and Hong Kong. All with systems that don’t lend themselves to endemic corruption and human rights abuse.”
Are you serious? Taiwan’s and South Korea’s dictatorships (it was their years of fastest growth) not lending themselves to endemic corruption and human rights abuse? Singapore ranks not so far from China and worse than Myanmar, Jordania, Palestine and Congo on the Reporter Without Borders Freedom of Press Index. Both Mexico and Brazil performed (for some time at least) better under undemocratic systems than they do now. At least Sanders points to countries that are as free as the USA or freer.
“I don’t know or care about trade deficits.”
You probably should if you are sincere about growth. All countries you mentioned are (or at least were in their high growth days) strong exporters.
“I’m beginning to suspect you might be trolling. No one could possibly think we need to copy countries that are so so soooo much poorer than us. If you do then all I can say is thank god you will never be in charge.”
I believe we must leave aside sterile ideology and go with what works. No country struggling with slow growth and social issues, be it America or Mexico, can ignore China’s achievements (Americans should know better, the Chinese stole their jobs). In fact Deng’s China was imitating its richer cousins, the Asian Tigers, and all of them followed the basic recipe Mr. Trump wants to follow in America. Evidently their lessons must be adapted to America’s democracy as surely as they had to be adapted to China’s Communist despostism, but they have the power to make America great again.
13. April 2016 at 04:26
I’m not going to argue about human rights because it’s totally beside the point but all those countries (yes even Singapore) perform way better in Freedom House’s Freedom of the World rankings that measures civil liberties and political rights.
Secondly, we do not use GDP growth rate to measure how rich a country is. That wouldn’t make sense. Chinas growth rate was 14.2% in 1992 a year when it was objectively still one of the poorest countries on earth. We use GDP per capita. On this measure China is still significantly poorer than both Mexico and Brazil.
Thirdly, I don’t know or care about trade deficits because they don’t matter. A trade deficit just means we’re wealthy enough to be able to afford lots of nice imports such as cars.
13. April 2016 at 05:40
myb6, Of course everyone has skills, but the relatively unskilled are doing far worse. If you know how to operate sophisticated machinery the labor market is fairly strong.
Or look at Germany, where blue color workers tend to be more skilled than in the US. Their export industries are quite strong, despite high wages.
Thiago, You obviously know nothing about China. First of all, it’s not one system, there are different systems in Shenzhen and Zhejiang than in the Northeast. So which system is optimal? Your claim is both are optimal? That doesn’t even make sense. How can more than one system be optimal? China would be far better off if the entire country had a Shenzhen-type economic system.
And what about the state banking sector, or the SOEs? Are you seriously claiming those sectors are “optimal?”
As far as growth, I recall a few years ago when North Korea had fast growth. Growth is better than decline, but you need to consider levels as well, catch up growth is much easier than growth when already at the frontier.
Scott, You said:
“The evidence over the last 30 years or so seems to indicate that non-neoliberal perspectives are very much a bipartisan phenomenon, even if the US is relatively neoliberal compared to most other developed countries.”
Yes, and I criticize both parties. I don’t see your point.
Floccina, How do you go from “enforcing the law” to expelling 11 million residents. A much better punishment would be to let them stay, but deny them government welfare programs. Perhaps make them pay a $100 fine, as the damage from their action is trivial.
Thiago, You said:
“Not only have other countries grown as fast as China there are countries in the same region that have grown faster and for longer.”
For example… Any of those works sport American-like trade deficits?”
You do know that South Korea ran large deficits during its years of fastest economic growth (1960s-80s), don’t you? Or maybe not. It’s growth rates exceeded 10%/year.
Alexander, I agree that China is poorer than Mexico, but it will pass Brazil this year.
13. April 2016 at 11:05
“China would be far better off if the entire country had a Shenzhen-type economic system.”
Even if it did, it would not change facts such as “protection of property rights continues to erode as foreign multinationals feel pressure to transfer their intellectual property to do business in China”, “the overall regulatory framework remains complex and arbitrary” “the state continues its tight control of the financial system as its primary means for managing the rest of the economy. The government owns all large financial institutions, which lend according to state priorities and directives.” (Heritage Foundation). All those things Latin Americans were told to fix or else the sky would fall. Forget it, Jake; it’s China. They are different from feckless Latinos, they don’t care about silly Western finger-wagging.
“And what about the state banking sector, or the SOEs? Are you seriously claiming those sectors are ‘optimal?'”
Given the circumstances… It would be nice if they could get rid of the SOEs (but it is not essential, Brazil was way richer than China when the Americans convinced us to sell the state companies, now it is poorer) and clean their banking act, but they can’t yet for the same reason Uncle Sam keeps buying tanks the Army says it doesn’t need, it is necessary to keep social stability. America’s system has its own inefficiencies, lobbyists, waste and corruption. And evidently there is no reason to imitate the Chinese flaws, which are the product of a very peculiar, specific and frequently sad history.
“Thiago, You obviously know nothing about China. First of all, it’s not one system, there are different systems in Shenzhen and Zhejiang than in the Northeast. So which system is optimal? Your claim is both are optimal? That doesn’t even make sense. How can more than one system be optimal?”
In fact, what I claimed is, “the optimal economic system is a lot less ‘free’ than free market economists would like us to believe”. The optimal system may be freer than China’s, but it is surely more closed than what the USA and most of Latin America have nowadays. Anyway, given the limitations history places on us all, China’s system– and for practical effects we can say it’s one system, is probably optimal for the Chinese. The essentially correct leadership of the Chinese Communist Party is allowing the Chinese regions to achieve their true economic potential. http://www.china.org.cn/business/2016-01/28/content_37684792.htm
I tend to expect more from America, though, and I think we will see great things next year with Mr. Trump in charge.
“As far as growth, I recall a few years ago when North Korea had fast growth. Growth is better than decline, but you need to consider levels as well, catch up growth is much easier than growth when already at the frontier.”
China has caught up with Mexico and Brazil growing faster than they ever did and, as opposed to them, it is not done growing yet. We can be sure at least that China is better at being a middle income country than neoliberal Mexico is. Tell me when North Korea becomes a better South Korea than South Korea is.
“You do know that South Korea ran large deficits during its years of fastest economic growth (1960s-80s), don’t you?”
I concede the point. I thought that by the late 70s, early 80s the trade balance had turned around, but it happened later. However, the South Koreans imposed restrictions on imports that prevented the balance trade from worsening “the Park Chung Hee regime’s alternative
choice in 1961 thus was to consciously create an industrial base for production of exports that
could be sold abroad to finance Korea’s vital imports that had to include massive shipments of
grain as well as fertilizer (…) the government
introduced the “negative list” system by which the guidelines to exclude imports from automatic
approval are to be stipulated. The main criteria for exclusion were the impacts on the balance of
payments and on the international competitiveness of domestic industries
The bulk of freely importable items continued to consist of crude oil,
intermediate goods for re-exports, and essential components and raw materials for “strategic
industries.” On the other hand, consumer goods imports accounted for only 3% of the total
imports.”–https://kellogg.nd.edu/publications/workingpapers/WPS/166.pdf
13. April 2016 at 14:58
The thrust of this article, if I’m understanding it correctly, is that commentators on the American left acknowledge this but then say things along the lines of: “yeah, maybe global poverty is improving, but the state of American socio-economic health is declining,” and you (in my mind, quite astutely) take that counter-argument down, by pointing out that basing our assumptions of “normal” and “healthy” off of the years between 1950 and 1970 is a misguided thing to do, because those decades were a total historical outlier, and pointing out that American Inequality is simply an unfortunate byproduct of a model that is improving things dramatically on a global level. I.E., that “the unfortunate truth is that the set of economic policies that is best for the world right now is probably not optimal for a subset of American blue-collar workers.”
All of that I completely agree with, but to me, it seems like you’ve left something out: Inequality has not just risen in America, but its increased dramatically on a Global level. See https://www.oxfam.org/en/pressroom/pressreleases/2015-01-19/richest-1-will-own-more-all-rest-2016 (pointing out that this year, 1% of the human beings on the planet will control more assets than the other 99% – a pretty huge and unprecedented phenomenon that Oxfam knew was approaching, but arrived quite a bit faster than expected.)
To me, it comes down to comparing the following two claims:
A) “increasing wage inequality in America, while certainly undesirable for a ‘subset of American blue-collar workers,’ is on balance a desirable trade-off for lifting hundreds of millions of people out of poverty.”
B) “increasing asset inequality globally, to the point where 1% of people own more than the other 99%, is on balance a desirable trade-off for lifting hundreds of millions of people out of poverty.”
Now, I would absolutely agree with claim A, as I think most reasonable people would. And I may actually agree with claim B, too. Lifting hundreds of millions of people out of poverty is nothing to sneeze at. I just think the arguments on the other side are much, much stronger regarding claim B, because the kind of global inequality that Oxfam has documented seems like it poses immense political and sociological complications.
So my question (for Scott, and/or anyone else who would like to respond) is, broadly: does the Oxfam statistical data change your calculus and/or position? If it does, how so? And if not, why not? (Assuming here, for the sake of argument, that the Oxfam data is accurate – if you think its inaccurate, that’s another issue)
13. April 2016 at 15:03
Scott,
My point is that you’re lumping liberals with Trump on these issues, when at least some of Trump’s support on anti-free trade and anti-immigration are the result of bigotry.
More fundamentally though, it’s odd seeing a once calm economics professor, seemingly a very good teacher, going off like this over ignorance about basic economics. Surely you know better than I how counter-intuitive many basic economics concepts are and you’ve remarked at how much ignorance showed its head during the Great Depression, in news publications, the very stories of which you’ve read.
I understand the complaints, by why the partisan focus and why the vitriol?
13. April 2016 at 15:26
So bad policy should get a pass if it’s well intentioned?
13. April 2016 at 16:43
Thiago, You said:
“And what about the state banking sector, or the SOEs? Are you seriously claiming those sectors are ‘optimal?’”
Given the circumstances…”
You really don’t know anything about China, and are just fishing around from . . . I have no idea where—Wikipedia?
The truth is that the areas of China that moved most aggressively away from the SOE model have done best. So, no, China did not need lots of SOEs “under the circumstances”. If your theory of economics was correct then China should be much richer than Hong Kong, instead Hong Kong is 4 times richer. Capitalism works and socialism doesn’t. China is a very poor country that grew fast by moving from horrible communism to a much better mixed economy. If it does better than Latin American countries with similar levels of intervention, it’s probably due to other factors, such as education. You can stick your head in the sand but it doesn’t change reality.
And your list of interventions in the economy is puny. I could create a list a mile long of US government interventions into the free market. Yes, China intervenes even more than us, but your list tells us nothing about the extent of intervention. When you like a country you emphasize all the intervention, when you don’t you tell me it’s “neoliberal” You comments are nothing more than wild generalizations, with no empirical content.
Scott, Again, I’m honestly confused by your “partisan” claim. I’ve often been harder on the GOP than the Dems. The GOP is so brain dead I usually don’t even bother discussing their policy ideas. Their fiscal policy is a joke (although Sanders is even worse). The Dems are at least a somewhat serious party, and are likely to win the election, so maybe I talk about their ideas more. But I’ve said repeatedly that I’d vote for Hillary or Sanders over Trump. How is that partisan? I don’t think I said Sanders was motivated by racism, nor do I believe that. I do believe he is motivated by nationalism.
Hillary and Cruz are also running as modestly protectionist, but I doubt they really feel that way, they certainly favored the TPP a few years ago. Trump and Sanders seem sincerely protectionist, although with Trump who knows what he really thinks. He’s not “sincere” about anything.
13. April 2016 at 16:51
Scott,
It’s not that you’re favoring conservatives over liberals. I know you said you’d vote for Clinton or Sanders over Trump if you were in swing state, just to keep Trump out. The point is, you’re mentioning liberals and conservatives in a context in which I don’t think it matters. It’s really just about ignorance on both sides.
13. April 2016 at 16:53
“Secondly, we do not use GDP growth rate to measure how rich a country is. That wouldn’t make sense. Chinas growth rate was 14.2% in 1992 a year when it was objectively still one of the poorest countries on earth. We use GDP per capita. ”
If you know a better way of getting rich than eonomic growth… We judge policies for how much they make things better, not for how well things are (how would you even do this– Is Mr. Obama a genius for he didn’t make America into Somalia or is he a devil for America is not paradise?).
“I’m not going to argue about human rights because it’s totally beside the point but all those countries (yes even Singapore) perform way better in Freedom House’s Freedom of the World rankings that measures civil liberties and political rights.”
Now, they do. South Korea surely was not a model for American democracy.
“A trade deficit just means we’re wealthy enough to be able to afford lots of nice imports such as cars.”
I see. Those poor, suffering Germans and Koreans with their trade surpluses. Those rich, affluent Brazilians and Mexicans with their trade deficits.
Are you talking seriously, Mr. Hamilton?
13. April 2016 at 16:56
And yes, there is some bigotry that comes into this for Republicans, but if they weren’t ignorant of the economic benefits of free trade and free immigration, they’d presumably not be so against such policies.
Sure, some are actually hurt by these policies, but even some of them might favor a remedy other than opposing free trade and immigration.
13. April 2016 at 18:03
“When you like a country you emphasize all the intervention, when you don’t you tell me it’s “neoliberal” You comments are nothing more than wild generalizations, with no empirical content.”
I neither like countries (except maybe my own, Go Brazil!) nor dislike them (I only dislike real people), and I am not the one– not the important one, anyway– saying such and such countries intervene much less than China. It is the Heritage Foundation itself. It may be education, it may be Confucianism, it may be the mass girl baby killing, maybe it is just a big coincidence that the Chinese perform well while the well-behaved and obedient Latin Americans don’t. Who knows why a country prospers anyway? Not Latin Americans economists and their American puppet masters,it seems.
“You really don’t know anything about China, and are just fishing around from . . . I have no idea where—Wikipedia? The truth is that the areas of China that moved most aggressively away from the SOE model have done best. So, no, China did not need lots of SOEs ‘under the circumstances’”.
Maybe China would be better without all those SEOs (I doubt it, but it is indifferent because Americans don’t have a Maoist legacy of SOEs to deal with), but to quote an expert quoted by those Communists of Fortune Magazine, “SOEs were setup to function as a big brother to the Chinese working class. They provided safety in their guaranteed lifetime employment. That efficiency suffered as a result was of small consequence”, and, in other news, Congress probably will keep buying those tanks (what people in Ohio would do if it didn’t?). Given the circumstances, there isn’t much that can be done except being extremely cautious.
“Capitalism works and socialism doesn’t. China is a very poor country that grew fast by moving from horrible communism to a much better mixed economy. If it does better than Latin American countries with similar levels of intervention, it’s probably due to other factors, such as education. You can stick your head in the sand but it doesn’t change reality.”
It does better than Latin American countries which much lower levels of intervention. Also, it took American jobs. I have nothing against Capitalism, quite the opposite, it is just that, if I were American, I’d rather have Capitalism working a little more for Americans and a little less for the Chinese. This is what Mr. Trump wants to accomplish with his presidential campaign, and it seems to be a very popular idea among American voters.
13. April 2016 at 19:49
[…] Nations (although Lant Pritchett contests that low number). These past two decades are likely the best that humanity has seen. Climate deaths are down 99% over the past 100 years. People need […]
13. April 2016 at 21:45
Scott, come on. You know what the beef with neoliberalism is, and it isn’t the economics: it’s the elites. Neoliberal elites have grown fat, corrupt, and contemptuous of nonelites. This really, really, really pisses people off.
The policy isn’t the problem; it’s the people implementing it. And frankly, for all that they have done a reasonably good job, they have to go. When the mortality rate for middle-aged people starts to fall because of higher-class bullying, you know it’s time to cut your elites down to size.
14. April 2016 at 03:52
I don’t live in Brazil or Mexico. Also you keep getting away with saying Mexico is neoliberalism. It comes in at 62 on Heritages latest rankings. Just behind Romania and just ahead of Portugal. No one would seriously consider these countries neoliberal. You’re totally illiterate when it comes to economics. Your style of argument amounts to saying “Look at this country that’s growing slow! Now look at this country that I like better it’s growing fast!” There’s a reason we don’t do economics that way.
15. April 2016 at 07:53
“Also you keep getting away with saying Mexico is neoliberalism. It comes in at 62 on Heritages latest rankings. Just behind Romania and just ahead of Portugal. No one would seriously consider these countries neoliberal.”
They are “moderately free”. They are much “freer” than China ever was and are failing badly. Meanwhile, China’s peers in the Index are Guiné-Bissau and Liberia. If neoliberal theory is right, why isn’t China a Liberia? Why isn’t the much “freer” Mexico an economic powerhouse? The answer is obvious, economic regimes are, beyond a minimum of sanity, indifferent, good leadership is the important thing. Red China has it, America used to have it, Liberia never had it, Mexico never had it.
15. April 2016 at 18:48
I’m not sure if you guys are serious or not. Arguing about things without defining what you’re arguing about… What is the measure of a good economy that you’re using? smartphones per capita? fraction of consumed food classified as organic? average time sitting in traffic each day?
Is a market economy good by definition? What is the measure by which we’re judging neoliberalism to be so successful? Where is the damn graph with the data?
17. April 2016 at 18:04
[…] Sumner on neoliberalism, progressives, etc. My favorite political post of the month. […]
1. July 2016 at 10:04
Neoliberalism is literally what created Trump. The rise in inequality and private debt make poor people and recent grads feel hopeless and especially when media deifies the ultra rich. Is trade, the way it is structured now a good thing? NO ISDS is a nightmare give away to corporations. There is, however a way to have responsible trade agreements. Like: http://fpif.org/thinking_outside_the_box_about_trade_development_and_poverty_reduction/