Sunday, March 02, 2008


Answering this post from Competitive Notes:

1- It's code for "I care about the US worker".

2- If it's more expensive to move jobs outside the borders, companies will be less willing to move them away. Is that desirable is another question. Globalization is happening, with or without the US. We can ignore it and bankrupt ourselves. Or we can instantly embrace it on all levels and bankrupt ourselves. Or we can nudge our way into it, not by lowering ourselves to the standards of the rest of the world, but by gently pressuring the rest of the world to rise to our standards.

3- Mexico is the donkey, we're the Great White Father sitting on its back dangling a carrot in front of it to make it walk.

4- Exporting our pollution and sweatshoppery to second and third world nations could be considered worse than not trading with them at all. I don't know. It seems ethically sound from an "ends can't justify the means" standpoint. Maybe fewer Chinese are starving to death because they are assembling our lead and PCB filled coffee grinders and christmas lights, but are they making a deal with the devil? Are they taking our shiny quick money, ignoring the long term externalities? So, we, as a rich nation, say that we're not going to buy your stuff if it will result in more harm to people and the environment than other nations or building it ourselves. We'll pay $29.99 for a shitty coffee grinder made in a slightly less horrible manner than the $19.99 one. Or at least I think that's what he means.

Or call it a Monroe Doctrine of human rights and environmental impact.


At Sunday, March 2, 2008 5:35:00 PM CST, Blogger cljo said...

1 - I know. I was being smarmy. Perhaps too smarmy for my own good.

2 - If we embrace globalization fully, how will that bankrupt us? I content that we are largely embracing fully in our current condition. We don't prevent companies from investing overseas. Our immigration policy is probably one of the most open in the world. Our rigorously protected sectors (agriculture, textiles) are so small at this point as to be meaningless to the overall economy, at least from an employment standpoint.

3 - But there is no government policy of dangling that carrot and making them walk. There are absolutely no incentives for US companies to go to Mexico short of their own economic advantages. I'm saying its not as top-down as you imply here.

4 - I just plain disagree with you here. Its not "maybe fewer Chinese are starving." Its a fact: fewer Chinese are living on less than a dollar a day then a decade ago.

In addition, economic growth is the only proven method of wealth expansion. If they weren't putting together these products what would have them do? After all, we (the West) dealt with and are dealing with these externalities too. I don't know how we can skip this point in development.

At Sunday, March 2, 2008 7:00:00 PM CST, Blogger gc said...

2- I admit to plenty of ignorance on this. To put my point in other words, we shouldn't encourage policies that move jobs outside the borders. And/or increase the flow of dollars out of the country. I am uncomfortable, perhaps unreasonably so, in the theory that increasing trade imbalances are OK since all those dollars come back in the form of investment. That pattern seems unsustainable. How do we build wealth if increasing chunks of our profits have to go back our to our foreign investors? I'm really not trying to be xenophobic, because I agree that free trade and economic development are good for everyone. As long as we're not shoveling wealth out faster than we're taking it in.

3- What I meant was that if we were to "export" our higher standards, that would be the effect.

4- (But what about in real dollars? HA!) But is it ethical of us to continue unfettered trading with them, knowing that we are complicit in bad things to come? Since we've already "been there, done that, and have the Superfund sites to prove it", our information horizon for rational actions is longer than theirs. So we [should] know that cheap toasters might not be the best allocation of our spending, knowing that the coming nightmare will cost everyone far more than we saved. If we don't buy blood diamonds (and the diamond industry changed), why can't we say "if you don't protect your workers and environment we won't buy"? It doesn't have to be immediate or drastic. Just simple things like "by 2009 you have to start setting up and enforcing OSHA style laws".

At Sunday, March 2, 2008 7:07:00 PM CST, Blogger gc said...

Correction to that last line:

Just simple things like "by 2009 you have to start setting up and enforcing OSHA style laws or we'll start taxing your imports to us". They'll comply, their workers will benefit. We just caused the tide that raises all ships to rise a little faster.

At Sunday, March 2, 2008 7:47:00 PM CST, Blogger cljo said...

In no particular order (just because its easier for me):

Is it moral for us NOT to trade with them knowing that they have no chance of getting out of a subsistence existence without us.

Yes, their workers will benefit with top-down OSHA regulations enforced from abroad IF foreign capital continues to enter into their country. You say you don't want to export our capital aborad, but at the same time you are also saying that you want our capital to go abroad under specific constraints (labor regs). Which is it?

I think the only "policy" that encourages jobs to go overseas is our cost of labor. And, of course, our cost of labor is our standard of living. Reduce one and reduce the other. (Some argue that corporate taxes encourage jobs to be sent overseas, but I believe I've read that that effect is relatively small. But I can't prove it.)

Your toughest argument is the "shoveling wealth overseas" argument. We were discussing this in class the other day. Those dollars don't just come back in the form of investment ... foreigners also buy our services. (The goods deficit is such a stupid red-herring. America has had a services surplus for years ... it doesn't quite close the gap, but its close.)

This is all good stuff. And I think my "Communicating Economic Ideas" essay is going to be on this very subject. This is a good start and I will probably need your help as a sounding board after spring break. You just signed up as my "angry skeptic!"

At Sunday, March 2, 2008 9:19:00 PM CST, Blogger gc said...

Confound it!

Angry Skeptic

PS- You are communicating your economic ideas effectively. Kudos!

PPS- I think we're on different facets of the same side of the issue, with a philosophical difference. That being: which is worse- harm from action or inaction?

Finally, how much of that services surplus is fixing infrastructure that we paid to build, paid to blow up and are now paying to rebuild? (This is rhetorical/sarcastic, I'm sure it's hardly even 10%)


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