Samstag, Dezember 23, 2006

Democratic Stupidity ... or the pride of ignorance


Over here at the Schizoid Mansion (apologies to Jerry Pournelle) we're packing the goodies. We've got all sorts of goodies - it's been not a bad year, albeit not the best year. There've been worse, there've been better.

But we find this particular piece of stupidity here, hat tip Greg Mankiw.

So let's fisk this.

Fewer and fewer Americans support our government's trade policy. They see a shrinking middle class, lost jobs and exploding trade deficits.

First of all, where's the basis for this? Fewer and fewer? Because the Democrats were elected in this election cycle? Second, the middle class isn't shrinking: it's growing. Third, jobs haven't been lost in net, but rather have increased. The only thing that is "accurate" is that the trade deficit has increased: but the proper metric isn't an increasing trade deficit, but much rather what is the proportion of net exports as a % of GDP? Further, you have to take a look at why a trade deficit is happening.

Yet supporters of free trade continue to push for more of the same -- more job-killing trade agreements, greater tax breaks for large corporations that export jobs and larger government incentives for outsourcing.

Sigh. Supporters of free trade become the bogeyman: trade agreements that "kill jobs" (That's right, Mr. Lin, I'll get a discount if I fire 10,000 people? Sign me up!), tax breaks (which part of the tax code covers that one? I can just see the schedule: for every 1000 jobs exported, you get 12.4275% reduction in taxes on profits in excess of 1.2342 times your average profits over the last 10 years, exclusive of tax deductions, up to 12000 jobs exported, thereafter a 6.4456% reduction up to 100000 jobs exported; over 100000 jobs there is a uniform rate of 3.8379%...), and I guess I missed that issue of the Federal Register that covered the legislation that provided for subsidies for outsourcing.

Last month voters around the country said they want something very different. They voted for candidates who stood up for the middle class and who spoke out for fair trade. They did so because they understand what's at stake.

I'll grant the first point: they sure did. But given the first, that means that the vote was a vote of "vote the bums out". But that means that people didn't vote for, they simply voted against: that means that the Democrats are trying to read the granting of a mandate into a protest vote. And since when did the Democrats ever assume that the voters really understand what they did? We've been hearing for decades from Democrats about how stupid voters have been for voting in people like Reagan, Bush I, Bush II...

Over the past 100 years, Americans have built a thriving middle class. It's the envy of the world, and it didn't come easily.

No, it didn't come easy. The Democrats have been trying to stop it for decades, increasing the taxes of the middle class whenever they can get it through: getting your tenterhooks into the middle class is the best way of raising revenues for whatever boondogle or pork you're going to foist onto the nation.

At the turn of the 20th century, child labor was common; working conditions were often abysmal; there were no enforced workplace health, safety or environmental requirements; no unemployment insurance; and no workers' compensation. Workers were attacked and killed for the sole reason that they wanted to form a union; there was no 40-hour week, minimum wage, job security, overtime pay or virtually any other limit on the exploitation of employees.

List of nasty stuff that hasn't been around for a really long time: so what? No Republican has ever, ever called for anything like a turning around of any law pertaining to any and all of these developments. None.

America was split dramatically between the haves and have-nots. It was a harsh work world for many: nasty, brutish and, too often, short.

Ohhh, Hobbes! They can quote Hobbes! What does Calvin say? Seriously, America was split dramatically between those who owned land and slaves: the Georgists were the closest thing that the US came to in developing a theory of the proletariat that would have led to socialism. But there are a myriad of reasons why this didn't happen: guess what, Georgism doesn't work.

Worker activism, new laws and court decisions changed all that during the past century. As they did, a middle class grew and thrived. By mid-century, it became the engine that drove an ever-expanding economy in which benefits were shared by tens of millions of Americans. The American Dream of a secure, well-paid job with benefits, a nice house and a high-quality public education seemed within reach of everyone who worked hard and played by the rules.

The first is wrong: new laws and court decisions changed all of that. Worker activism didn't change any laws, didn't force any court decisions. Worker activism can affect legislature via lobbyism; court decisions can be influenced by elected judges. But worker activism isn't a key part of the legislative and judicial parts of the government.

And what is the middle class anyway? Something that these idiots never define or try to properly describe. The middle class is first and foremost a statistical contruct, defined as a set proportion of the population with certain charachteristica: in reality, the middle class refers to those whose income exceeds their cost of living, allowing the acquisition of capital via savings. That is how a middle class develops. Now, how does this happen? How can anyone start saving?

Simple. It's the difference between skilled and unskilled labor. In a primitive economy - i.e. non-industrialized - unskilled labor is never paid more than the marginal cost of labor, since the individual can be replaced by someone who will be willing to work for that cost. Adding skills to the equation results in wage differentiation, since that particular worker can no longer be replaced by anyone, just by someone with a similiar skill set. That only happens in an industralizing society: in a fully industrialized society, job skills become the key motive to acquiring free time in order to further improve job skills via education.

This is beneficial to anyone who can become skilled: further, it creates capital, and is fundamental to the development of capitalism as we know it today.

And people, fill me in here: when did the American Dream become a secure job with well-paid benefits, a nice house and high-quality public education? Talk about defining the field! The American Dream is nothing more than giving people the freedom to achieve what they set out to do, whatever that may be, and not to keep them under control, as is still the case today in many countries.

That is what's at stake when we talk about trade policy: America's middle class and the American Dream.

Uh, no: what is at stake in trade policy is whether people as stupid as these two are going to try and recreate the same situation we had in the 1920s and resurrect Smoot-Hawley. Which would be mind-bogglingly stupid, but seems to be exactly what is being argued here. Just in a different name and in a different form.

The new mobility of capital and technology, coupled with the revolution in information technology, makes production of goods possible throughout much of the world. But much of the world at the beginning of the 21st century looks a lot like the United States did 100 years ago: Workers are grossly underpaid, exploited and abused, and they have virtually no rights. Many, including children, work 10, 12, 14 hours a day, six or seven days a week, for only a few dollars a day.

Blah blah blah. Now, if industrialization can move anywhere - which it can't, or we'd see advanced industries in Africa, given cheap labor and proximity to raw materials - then you'd see the development of the middle class in those countries as well.

And sure, most of the Third World has really shitty working conditions. But you know what? The alternative is for those people, working their tushes off, to not be employed and to be condemned to further abject poverty, of having only their muscle power to sell.

And what these two are really complaining about is that the rest of the world isn't like us: duh.

The result has been a global race to the bottom as corporations troll the world for the cheapest labor, the fewest health, safety and environmental regulations, and the governments most unfriendly to labor rights. U.S. trade agreements paved the way for this race: While rejecting protections for workers or the environment, they protected investors and corporate interests.

Right. By not being just like us here Americans, them people overseas are being downright...

Unamerican. By gum!

The results of such trade agreements are skyrocketing trade deficits -- more than $800 billion this year alone -- and downward pressure on income and benefits for American workers. Why? Because these agreements enable countries to ship what their low-wage workers produce to the United States while blocking many U.S. products from entering their countries.

Duh. The reason that the US is running a trade deficit is that the US imports more than it exports. Any sort of trade is going to put downward pressure on income and benefits for US workers: after all, given comparative advantages, those other countries produce more efficiently that US workers. And the argument that US exports are being blocked is an old one of the protectionists: the GATT works very well in addressing these problems.

Equally important, by enabling this kind of trade, the agreements force U.S. workers to accept cuts in their pay and benefits so their employers can compete with low-wage foreign producers. And those workers are the lucky ones. Millions of others have lost their jobs as corporations moved overseas to build the same products with cheap foreign labor. It is no coincidence that salaries and wages today are the lowest percentage of gross domestic product since the government began keeping track of this in 1947.

Uh, competition of any kind does this. This is pure protectionism: those damn foreigners are the fault of everything. And the idea that salaries and wages are my income is laughable: what about my benefits? This is stupid: these two lash out about the dismantling of the benefits of the middle class, but ignore them when benefits would destroy their argument.


It took a century to build a thriving middle class and economic security here in America. We need to protect that for which we have sacrificed.

Ah, they actually say it! We want to protect... but not the interests of the American consumer, but rather the interests of our own sacred cows.

We must insist that all trade agreements have labor, environmental and other protections so that American workers can compete on a level playing field. Trade agreements must also be reciprocal. The American market is the most desirable in the world. Every country wants access to it. That gives us a great deal of leverage, if only we'd use it. Barriers to U.S. products overseas should not be tolerated.

Insist all you want. Then the Europeans will demand that American workers should not be allowed to work more than 35 hours/week and take 30 days of vacation, and that no one can be fired except for extreme cause. Welcome 10% permanent unemployment as a fact of life that no one is willing to change, and let's make sure that we don't let in too many foreigners either. The reason that everyone wants to sell here is that we are the largest single country market in the world: but put up barriers, and prices will rise, meaning that domestic makers will no longer be exposed to competition, allowing them to raise their profits. Who loses? The consumer: your choices will become limited, you won't have recourse to alternatives, innovation will slow significantly and you, the average consumer, w i l l b e p o o r e r.

What shouldn't be tolerated are these idiots.

Free-trade agreements have protected drug companies, international investors and Hollywood films, yet failed to protect our communities, our workers and our environment.

Free trade agreements have lowered prices, increased diversity of product choice available, and have led to domestic innovation in the face of foreign competition. And how the hell is the environment helped by making less productive use of limited resources???? What they are saying here is that protected industries, industries that due to union restrictions in deciding how to put their workers to use are having difficulty competing, that those have not been protected. Oddly enough, that's the user base of the as usual, pandering to their masters.

We believe there is a better way. Fair trade is not the enemy of more trade. It's how we expand international trade without reversing U.S. economic progress.

Fair trade is just another way of saying: we control it and decide if it is fair or not. Given that, it's not free any more. And their effects, just as Smoot-Hawley's effects, would be just as stupid.

If Dorgan-Brown were to get their way, the effects would be of the same dimension as Smoot-Hawly: Dorgan-Brown, the new Smoot-Hawley!

Sigh. Both Smoot and Hawley were Republicans, and it took decades to drive that nonsense out of the party. Guess it's now the Democrats' turn to learn those lessons: but it will be, just like it was back then, the consumers and workers, who will pay the bill for the pride of ignorance.

Merry Christmas...

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