Would be more interesting if someone came at this debate from a game theory perspective with bad actors ignoring IP laws, manipulating currency values and implementing tariffs through policies that aren't directly taxing products but restricting who can play in markets. Yes tariffs are bad in a vacuum and I am not saying this article is false even when it's strawmanning some arguments to make it's case but it's seems a bit one sided and possibly nieve without including the context in which these policies are being made so I still remain on the fence as to whether tariffs can be used as leverage.
rootjknak · 57m ago
It mentions it in the article, which technically references Lighthizer's book passage:
" ‘A crucial mistake,’ according to Lighthizer, had been to let China into the WTO and treat it as just another country like America’s free-market allies. The result was that millions of well-paid jobs in US manufacturing disappeared, as more and more work was outsourced and offshored. "
A close examination of the passage appears to be correct: accordingly, China only met about 50% of the WTO entry requirement in the last 20 years. They were in essence, acting as a bad actor. Not only that, now they were seeking, prior to covid, to replace the current rule based trading system, with one where they got to have unlimited export to other countries, while the government suppressed wages and consumer spending internally, in order to strengthen the state. All other countries production be damned. The low wage low cost export would destroy all of the production capabilities in other countries.
And now with China openly claiming to Europe that Russia must not fail, they are blatant in their desire to destroy the western democracies, in support of authoritarian dictatorships in the world.
schmidtleonard · 54m ago
The "bad actor" strategy in question has been known for ages: it's called mercantilism. It's so old that it convinced Alexander Hamilton away from "free trade laa dee dah" so that he could enact the protectionism which eventually industrialized America.
More recently, China has been running the same playbook to great effect. It's really funny to watch the free trade crowd laud/fear the rise of China with one breath while calling the mercantilist playbook old and outdated with the next.
FirmwareBurner · 36m ago
> It's really funny to watch the free trade crowd laud/fear the rise of China with one breath while calling the mercantilist playbook old and outdated with the next.
"You dare use my own spells against me, Potter?!"
churchill · 2h ago
I read the book referenced - Robert Lightizer's No Trade Is Free: Changing Course, Taking on China, and Helping America's Workers - and it was eye-opening, if somewhat misguided.
In it, the author blames China's industrial ascent for America's deindustrialization, the hollowing out of cities like Detroit, the fentanyl crisis, the looming challenge to American power in the Pacific, the intimidation of America's allies, etc. Basically: China bad, turned into a political doctrine.
My rebuttal is simply a rehashing of what I said in an earlier comment [0] which is simply logical, no matter how you see it:
For most of human history, everyone lived at a subsistence level because we all had to farm our food, bake our bread, sew our clothes, build our own houses, etc.
Specialization is what makes the luxury and wealth of the modern world possible: you do one thing all day long and convert it to cash, then exchange value with people who do other stuff to get what you want. And since they're operating at scale, they can build more houses, make more stuff, etc. that you ever can if you did it yourself. So, you pay less for more stuff.
International trade simply takes it to the next level. For instance, the average American will not bend over to pick cocoa beans for chocolate for even $100k/yr. Many of you will argue, but all I'll say to you is that there's a reason agricultural work is referred to as back-breaking work. There's also a reason why farmers have the highest rate of suicides. Even if the American eventually agrees to do it, the cost will be so prohibitive that buying chocolate will be out-of-reach for everyone but the rich. Abundance ended; the end.
If you believe China is stealing American jobs by making things cheaper an at scale, then tractors stole farmers' jobs by making it easier to consolidate; cars drove much of the horse rearing business into bankruptcy; mobile phones have driven countless industries into extinction, but we're not trying to regulate them out of existence. Why does the logic fail when a nation of 1.5b wants to make stuff cheaply and send it to you for affordable prices? How does it hurt you?
I have this belief that one of the reasons why inflation has been under control despite the QE experiments undertaken by the Federal Reserve, ECB, etc. is because of the impact of 600M Chinese workers, leaving their farms to work in manufacturing, making products cheap enough for the average Westerner to afford, despite dumb government fiscal policy.
If you take that away, your political system becomes even less stable and you have to keep reaching for ever more outrageous stunts to stay relevant or get voted into power.
On the other hand, I bet a lot of people in Detroit wouldn't mind paying more for the goods they consume if that meant having stable jobs and living in a city that is not bankrupt.
The QE point you're making is interesting. In addition to that I think it should be noted that the money that was "printed" disproportionately went to the richest, just as the benefits of globalization did.
In conclusion, while globalization has increased global economic growth and made us all richer on average, it has also exacerbated economic inequality. That's fair to criticize.
tonyedgecombe · 1h ago
Did Detroit loose out to China or automation?
geysersam · 1h ago
Not sure. The specific example is less important than the idea that even if total economic output increased there may be a large minority (or possibly a majority) who did not benefit from it because the profits were distributed unevenly
The US unemployment rate currently stands at 4.2% - despite all the hundreds of millions of jobs that have been outsourced to Chinese workers. Why isn't this gap larger? The reason is simple: as jobs move to places where they can be done cheaper, the market reorganizes itself! That's why horses, telegrams, and zeppelins are not missed. Better tech. has replaced them; these Americans got better jobs, mostly by moving out to other parts of the country.
That's why unemployment is so low.
>The QE point you're making is interesting. In addition to that I think it should be noted that the money that was "printed" disproportionately went to the richest, just as the benefits of globalization did.
It's not anyone's fault that Western governments decided to dilute their people's purchasing power and transfer it to the wealthiest. China (and Vietnam, Ethiopia, etc.) is actively helping those who have been so robbed by producing low-cost goods they can buy and enjoy in abundance, despite the constant erosion of their wealth.
geysersam · 1h ago
But many of the jobs "lost" were replaced by jobs that produces less value and has worse salary. That's only natural. If there was a higher value job that could be done, it would already have replaced the "lost" job before it was lost.
We can turn and twist and look at it from many different angles but the conclusion is the same:
Global economic output increased and economic inequality in rich countries increased.
I don't think it's meaningful to blame any other countries like China and Vietnam for this development. But critique against globalization/our current system of trade should be taken seriously.
mathiaspoint · 1h ago
What you're looking for is called "labor participation" not unemployment. After six months people stop being counted as unemployed.
somanyphotons · 2h ago
The difficulty is that while we can move the job to where the cheaper (or specialized) labor is, we can't (currently) easily move the people around to where the job is.
So lower skilled people living in areas surrounded by high skill/cost people can't easily find a better Cost-of-Living balance. They get trapped with no job to match their skill.
To put it more bluntly - the people of Detroit simply aren't allowed to move to the surrounding areas of the BYD factories in China.
mtrovo · 2h ago
I think the idea would be that you can train people to move up the ladder into more productive roles, think about how China grew by eating the supply chain of western companies upwards.
IMHO a bigger problem is the whole MBA mentality of stripping companies down to the bones, lots of huge companies are now just trademarks and vendors, to the point that's hard to prove what exactly is their advantage besides the brand.
diputsmonro · 1h ago
Which is exactly why strategies like UBI are so important. Eventually the average American with no specialized skill will find that they cannot produce value when competing on a global scale.
Our strategy so far has been to let them starve and tell them to "learn to code" or "become a machine operator/technician", but that strategy can only help so many people. We do not need as many technicians as laborers that the machine replaced.
And when you have a mass of people who see that the future globalist economy is moving in a way that has no place for them, or plan to make sure they don't starve, you get the globalism backlash like what's happening in the US and UK over the last decade, and nationalistic pandering politicians taking advantage.
The only solution is to tax the billionare owners of the job-displacing machines to provide basic living UBI to the people they replaced.
twoodfin · 1h ago
For this claim to work, you have to demonstrate why this time is different, why standards of living and disposable income have been rising in the West and all over the world for 50 years or more—all while technological progress was as fast or faster than today.
FirmwareBurner · 10m ago
> standards of living and disposable income have been rising in the West and all over the world for 50 years or more
Standard of living has been steadily declining in most of Western Europe post 2009: stagnating wages, exploding costs of living, declining public healthcare, pension and welfare funds, etc.
Hence why so many people are mad and see globalization as one of the main factors. They feel rug-pulled: those with inherited wealth can relax and benefit from this new status quo, those without now have to compete with Asia as they no longer have a moat that guaranteed a good and stable paycheque from basic low-skill jobs.
hgomersall · 1h ago
It's not a UBI needed but a job guarantee. Those people that no longer have a job need to be made productive, both for society and for themselves. It's not like there aren't plenty of things that need doing!
simonh · 48m ago
Now you need to move and re-house the people to when it needs doing, train them, invest the capital costs needed, build out the administrative overhead, and tax the productive profitable economy to pay for it all.
If there are things that need doing, you need to consider is it better for the government to do it, or to pay the private sector to do it. In principle the latter will still need to employ people.
maxerickson · 58m ago
All you people doing Detroit discourse need to also explain why the county just to the north, Oakland County, is one of the richest large counties in the United States.
I guess they have a lot of Pizza Huts or something?
cvwright · 37m ago
Are you trying to imply something racist? Just come out and say it.
maxerickson · 13m ago
No, not being racist.
Southeast Michigan still has plenty of manufacturing is the point.
Avicebron · 2h ago
That's not really the point though, it's not "we can't get Americans to pick cocoa for pennies on the dollar". It's that being able to leverage arbitrage of different countries labor is disproportionately a wealthy "man's" (corporation) game, and just because we can get cheap chocolate in the USA doesn't mean that the salaries relative to housing costs and the thousand other grievances are increasing at the same rate that the "gains" of this vast network would suggest.
EDIT: wording
worldsayshi · 1h ago
> Specialization is what makes the luxury and wealth of the modern world possible
Specialization is not the key here. Although it certainly is one of the major methods that we have used to attain the actual key feature - productivity. Less work per thing produced. Specialization is one enabler for this. It is easier to optimize when the scale is huge. But specialization is not a requirement.
We used to have one device per technical problem. Now we have fewer and more general devices. A smartphone or a pc does what a multitude of devices used to do. The same transformation can happen in industry as well.
jncfhnb · 1h ago
Farmer suicide rates are generally attributed to the brutal financial struggle of it. A lot of farmers are just digging themselves into a hole.
I find the idea that difficult physical labor is the driver of suicide rates to be silly.
Terr_ · 2h ago
There are some important wrinkles in there though, such as the externalities of pollution. Imagine two countries on each side of a river, identical except one of them can make Product X more-cheaply because it allows toxic waste to be dumped into the shared river.
Less-tangible--but even more morally-fraught--might be the case where one country's competitive advantage comes from chattel slavery.
Specialization may confer advantage, but not all advantage is specialization.
supportengineer · 1h ago
"Break your back" or "Do without cocoa beans" is a false choice. When the price gets to a certain point, full automation becomes feasible.
UncleOxidant · 2h ago
> I have this belief that one of the reasons why inflation has been under control despite the QE experiments undertaken by the Federal Reserve, ECB, etc. is because of the impact of 600M Chinese workers
Definitely. The other way to look at it is that we were exporting our inflation to places like China. But that's (for various reasons political and otherwise) starting to change which means we can expect to have higher inflation than we had for the 30 years or so between 1990 and 2020.
pkaye · 49m ago
Another reason is the Chinese population is becoming older and starting to decrease. Their median age crossed the US a few years ago. The one child policy allowed for lot more workers (fewer parents) in the past but its going to hurt them going forward.
xterminator · 1h ago
I think we should live a more fulfilling life even if it costs luxuries. Less globalization, more localization. Economics should stop having the final say on everything.
churchill · 1h ago
Taken to its natural conclusion, your idea is that we should farm our own wheat, thresh it, grind it into flour, make our own bread, and build our own homes. Should we do that?
If jobs can't be exported to specialists who can do it at scale in Asia, Europe, etc. then there should be no specialization at all! Your logic demands that everyone fend for themselves primitively, which will lead to a collapse of the abundance mass production/specialization has created for humanity.
horns4lyfe · 1h ago
You don’t have to take it that far
kbrisso · 56m ago
Free trade along with capitalism has brought more people out of poverty than any other economic theory/system. It's not perfect but you can't deny it's impact.
schmidtleonard · 50m ago
> It's not perfect
See, if anyone who said that took it seriously, or even partway seriously, I would find the prospect of free trade much less offensive. Yet the beneficiaries of "current account deficit equals capital account surplus" squeal like stuck pigs and cry "socialism! communism!" if one even hints at the possibility that they might pay a tax to help counterbalance the extent to which the asset pump / export dump negatively affects employment and drives inequality.
joe_the_user · 1h ago
The thing is, US manufacturing jobs started as fewer and declined more than, say, Italy and Germany [1]. US policies weren't particularly opposed to the decline.
That said, the conception that manufacturing jobs are "good" compared to other jobs is simplistic if not outright false.
The US once had quiet a few relatively high paid, unionized manufacturing jobs. Some of those went to China and some of those went to the South/South-West where wages were also lower and union protections less.
The fuzziness of US political rhetoric creates a real distorting lens. Manufacturing jobs can be substituted for safe, well-paying skilled jobs. The existence of jobs can be sold as a goal rather than (employment, wage and safety) protections for workers, etc. And then what politicians actually do winds-up with little relation to the rhetoric anyway.
I have seen multiple stats and farmers were never on top of suicides. It was either miners or doctors (anesthesiologist the most).
churchill · 1h ago
It's so prevalent that Wikipedia has dedicated pages for specifically American, [0] Indian, [1] and Canadian [2] farmer suicides. In the US, farmer suicide rates are 3.5* the general population. The rate for the general population is between 2-4%, so for farmers it'd be 7%-14%, comparable to the rate for anesthesiologists, at 7%-17%. For physicians, it's just over 1%.
The problem with China is that it is not a level playing field. Not even close. If they were an open market, then you would not see as big of a trade imbalance. They are predatory, manipulative and duplicitous.
The ideas behind globalism was to promote peace through trade and it worked for a while until China used it to try to become an empire.
churchill · 1h ago
If the Chinese want to dilute the wealth of their people and use it to subsidize stuff for Western consumers, the smart thing to do would be to buy it!
Anti-trade activists always agitate about how they'll jerk up prices after capturing markets, but Uber hasn't managed to pull it off, despite >$50 billion burned. The moment a company's margins hike significantly, they attract competitors chasing those same dollars and they have to lower prices or lose market share.
dilyevsky · 1h ago
Pretty obvious counter is it's not smart if in the process you've totally destroyed your domestic production
jncfhnb · 1h ago
Uber prices have been increasing for years now at a rate much faster than inflation
ghaff · 43m ago
So they had subsidized prices. Now a lot of people just go back to taking cabs or public transportation--or rent cars/drive.
nahuel0x · 2h ago
Tariffs wars are the prelude to military wars. Capitalism breeds globalization and then his destruction.
barbazoo · 1h ago
> Capitalism breeds globalization and then his destruction.
Do we have any precedence for the destruction part?
The World Wars? It was after capitalism conquered the entire planet, and the main powers began disputing markets and colonies.
IAmGraydon · 1h ago
>Tariffs wars are the prelude to military wars.
You're basing this on what?
wk_end · 1h ago
Well, the article says:
Trade history is too often a sideline reserved for economic historians, yet any effective study of the past four hundred years ought to move it to centre stage, as a prime generator of war and peace, stability and chaos, prosperity and dearth. As Clausewitz might have said, shooting wars are trade wars carried on by other means. Napoleon’s invasion of Russia, for instance, came after the tsar quit the Continental Blockade.
" ‘A crucial mistake,’ according to Lighthizer, had been to let China into the WTO and treat it as just another country like America’s free-market allies. The result was that millions of well-paid jobs in US manufacturing disappeared, as more and more work was outsourced and offshored. "
A close examination of the passage appears to be correct: accordingly, China only met about 50% of the WTO entry requirement in the last 20 years. They were in essence, acting as a bad actor. Not only that, now they were seeking, prior to covid, to replace the current rule based trading system, with one where they got to have unlimited export to other countries, while the government suppressed wages and consumer spending internally, in order to strengthen the state. All other countries production be damned. The low wage low cost export would destroy all of the production capabilities in other countries.
And now with China openly claiming to Europe that Russia must not fail, they are blatant in their desire to destroy the western democracies, in support of authoritarian dictatorships in the world.
More recently, China has been running the same playbook to great effect. It's really funny to watch the free trade crowd laud/fear the rise of China with one breath while calling the mercantilist playbook old and outdated with the next.
"You dare use my own spells against me, Potter?!"
In it, the author blames China's industrial ascent for America's deindustrialization, the hollowing out of cities like Detroit, the fentanyl crisis, the looming challenge to American power in the Pacific, the intimidation of America's allies, etc. Basically: China bad, turned into a political doctrine.
My rebuttal is simply a rehashing of what I said in an earlier comment [0] which is simply logical, no matter how you see it:
For most of human history, everyone lived at a subsistence level because we all had to farm our food, bake our bread, sew our clothes, build our own houses, etc.
Specialization is what makes the luxury and wealth of the modern world possible: you do one thing all day long and convert it to cash, then exchange value with people who do other stuff to get what you want. And since they're operating at scale, they can build more houses, make more stuff, etc. that you ever can if you did it yourself. So, you pay less for more stuff.
International trade simply takes it to the next level. For instance, the average American will not bend over to pick cocoa beans for chocolate for even $100k/yr. Many of you will argue, but all I'll say to you is that there's a reason agricultural work is referred to as back-breaking work. There's also a reason why farmers have the highest rate of suicides. Even if the American eventually agrees to do it, the cost will be so prohibitive that buying chocolate will be out-of-reach for everyone but the rich. Abundance ended; the end.
If you believe China is stealing American jobs by making things cheaper an at scale, then tractors stole farmers' jobs by making it easier to consolidate; cars drove much of the horse rearing business into bankruptcy; mobile phones have driven countless industries into extinction, but we're not trying to regulate them out of existence. Why does the logic fail when a nation of 1.5b wants to make stuff cheaply and send it to you for affordable prices? How does it hurt you?
I have this belief that one of the reasons why inflation has been under control despite the QE experiments undertaken by the Federal Reserve, ECB, etc. is because of the impact of 600M Chinese workers, leaving their farms to work in manufacturing, making products cheap enough for the average Westerner to afford, despite dumb government fiscal policy.
If you take that away, your political system becomes even less stable and you have to keep reaching for ever more outrageous stunts to stay relevant or get voted into power.
[0]: https://news.ycombinator.com/item?id=44866645
The QE point you're making is interesting. In addition to that I think it should be noted that the money that was "printed" disproportionately went to the richest, just as the benefits of globalization did.
In conclusion, while globalization has increased global economic growth and made us all richer on average, it has also exacerbated economic inequality. That's fair to criticize.
That's why unemployment is so low.
>The QE point you're making is interesting. In addition to that I think it should be noted that the money that was "printed" disproportionately went to the richest, just as the benefits of globalization did.
It's not anyone's fault that Western governments decided to dilute their people's purchasing power and transfer it to the wealthiest. China (and Vietnam, Ethiopia, etc.) is actively helping those who have been so robbed by producing low-cost goods they can buy and enjoy in abundance, despite the constant erosion of their wealth.
We can turn and twist and look at it from many different angles but the conclusion is the same: Global economic output increased and economic inequality in rich countries increased.
I don't think it's meaningful to blame any other countries like China and Vietnam for this development. But critique against globalization/our current system of trade should be taken seriously.
So lower skilled people living in areas surrounded by high skill/cost people can't easily find a better Cost-of-Living balance. They get trapped with no job to match their skill.
To put it more bluntly - the people of Detroit simply aren't allowed to move to the surrounding areas of the BYD factories in China.
IMHO a bigger problem is the whole MBA mentality of stripping companies down to the bones, lots of huge companies are now just trademarks and vendors, to the point that's hard to prove what exactly is their advantage besides the brand.
Our strategy so far has been to let them starve and tell them to "learn to code" or "become a machine operator/technician", but that strategy can only help so many people. We do not need as many technicians as laborers that the machine replaced.
And when you have a mass of people who see that the future globalist economy is moving in a way that has no place for them, or plan to make sure they don't starve, you get the globalism backlash like what's happening in the US and UK over the last decade, and nationalistic pandering politicians taking advantage.
The only solution is to tax the billionare owners of the job-displacing machines to provide basic living UBI to the people they replaced.
Standard of living has been steadily declining in most of Western Europe post 2009: stagnating wages, exploding costs of living, declining public healthcare, pension and welfare funds, etc.
Hence why so many people are mad and see globalization as one of the main factors. They feel rug-pulled: those with inherited wealth can relax and benefit from this new status quo, those without now have to compete with Asia as they no longer have a moat that guaranteed a good and stable paycheque from basic low-skill jobs.
If there are things that need doing, you need to consider is it better for the government to do it, or to pay the private sector to do it. In principle the latter will still need to employ people.
I guess they have a lot of Pizza Huts or something?
Southeast Michigan still has plenty of manufacturing is the point.
EDIT: wording
Specialization is not the key here. Although it certainly is one of the major methods that we have used to attain the actual key feature - productivity. Less work per thing produced. Specialization is one enabler for this. It is easier to optimize when the scale is huge. But specialization is not a requirement.
We used to have one device per technical problem. Now we have fewer and more general devices. A smartphone or a pc does what a multitude of devices used to do. The same transformation can happen in industry as well.
I find the idea that difficult physical labor is the driver of suicide rates to be silly.
Less-tangible--but even more morally-fraught--might be the case where one country's competitive advantage comes from chattel slavery.
Specialization may confer advantage, but not all advantage is specialization.
Definitely. The other way to look at it is that we were exporting our inflation to places like China. But that's (for various reasons political and otherwise) starting to change which means we can expect to have higher inflation than we had for the 30 years or so between 1990 and 2020.
If jobs can't be exported to specialists who can do it at scale in Asia, Europe, etc. then there should be no specialization at all! Your logic demands that everyone fend for themselves primitively, which will lead to a collapse of the abundance mass production/specialization has created for humanity.
See, if anyone who said that took it seriously, or even partway seriously, I would find the prospect of free trade much less offensive. Yet the beneficiaries of "current account deficit equals capital account surplus" squeal like stuck pigs and cry "socialism! communism!" if one even hints at the possibility that they might pay a tax to help counterbalance the extent to which the asset pump / export dump negatively affects employment and drives inequality.
That said, the conception that manufacturing jobs are "good" compared to other jobs is simplistic if not outright false.
The US once had quiet a few relatively high paid, unionized manufacturing jobs. Some of those went to China and some of those went to the South/South-West where wages were also lower and union protections less.
The fuzziness of US political rhetoric creates a real distorting lens. Manufacturing jobs can be substituted for safe, well-paying skilled jobs. The existence of jobs can be sold as a goal rather than (employment, wage and safety) protections for workers, etc. And then what politicians actually do winds-up with little relation to the rhetoric anyway.
https://ourworldindata.org/data-insights/manufacturing-accou...
[0]: https://en.wikipedia.org/wiki/Farmers%27_suicides_in_the_Uni... [1]: https://en.wikipedia.org/wiki/Farmers%27_suicides_in_India [2]: https://en.wikipedia.org/wiki/Farmers%27_suicides_in_Canada
The ideas behind globalism was to promote peace through trade and it worked for a while until China used it to try to become an empire.
Anti-trade activists always agitate about how they'll jerk up prices after capturing markets, but Uber hasn't managed to pull it off, despite >$50 billion burned. The moment a company's margins hike significantly, they attract competitors chasing those same dollars and they have to lower prices or lose market share.
Do we have any precedence for the destruction part?
WWII was also preceded by tariffs wars.
You're basing this on what?
Trade history is too often a sideline reserved for economic historians, yet any effective study of the past four hundred years ought to move it to centre stage, as a prime generator of war and peace, stability and chaos, prosperity and dearth. As Clausewitz might have said, shooting wars are trade wars carried on by other means. Napoleon’s invasion of Russia, for instance, came after the tsar quit the Continental Blockade.