The Free Trader's Hard Choice
The PPI tells us something but it isn't what you think. The headline numbers show a sharp plunge in prices - crude, intermediate and finished - driven by even sharper falls in energy prices. However we can sum this up in three words: Katrina and Rita. 2005 and early 2006 were in the shadow of a great inflation spike driven by the shutting in of production from the 2005 hurricane season. This season was not anywhere near as active - 2005 was an epic year for Atlantic tropical cyclones - and the activity was no threat to oil. That the Eastern Pacific has gotten to Sergio is a worry for resorts in Mexico, but not for oil rigs.
However, the same data shows that the conditions that Katrina and Rita exposed, are still in place. We are in a cyclical drop in inflation, but we are still in a secular inflationary environment. Europe recognizes this, with both the Bank of England and the European Central Bank preparing increases in interest rates, and even the Bank of Japan readying to open fire to stop inflation. The Fed, however, is not.
And there in lies a tale.
First let's do the numbers:
Finished goods over the last year have dropped -1.6% on the wholesale level. That you, the consumer, aren't seeing a drop - you can bet that when the October CPI comes out it will show an increase year on year - means we are in an inflationary environment, that's what inflation is - someone having pricing power to sell the same thing at a higher cost. It gets worse if you look at finished consumer goods - which dropped by -2.3% over the last year at the whole sale level. Again, you can bet that CPI isn't going to show a 2.3% drop in prices.
Where has this money gone to? Profits of course.
But as important for the future is to look at the chain from crude to intermediate to finished. Crude materials fell by 45%, but that is energy driven. Taking energy and food out, one finds that materials prices are 20% higher than last year. Intermediate goods show the same pattern - 16% drop, but 6% rise less food and energy. Finally consumer goods rose .6%, but .9% less food and energy.
What this should tell us is that the inflationary pressure is still in place, and that at each stage of processing, manufacturers are choosing to push the costs on to someone else. Since profits have not dropped, and executive salaries have gone up, this means that wages have born the brunt of the adjustment.
All of this might seem contradictory - on one hand sliding energy prices, on the other hand rising everything else prices, but the costs are not being passed on as costs. Doesn't energy drive inflation? People think so, and times where energy inflation leads ex-energy inflation have, over the last 30 years, been indicators of bad economic times coming. So what's up here?
The first part of the story is that the spike in energy prices over the last year was driven by the supply disruptions, but it was as large as it was because the overhead of supply versus demand was very low. Now that the supply disruption is easing, the top is being blown off a speculative market.
However, that blow off is not a general drop in inflation, as we can see from the frantic pace of crude materials. The Federal reserve would like to believe that where energy has gone, the rest of inflation will follow. This contradicts their earlier theory that energy rising doesn't drive inflation.
Europe sees things differently - it sees the rises in materials prices as being a sign of continued inflationary pressure, and the large growth of global monetary supply as being indicative of continued inflationary pressures going forward. The US has wanted Europe to inflate the way the US has, and save less. This is not in Europe's long or short term interest, and it points to a renewal of monetary policies at cross purposes.
The view from the financial press is that this shows a monetary policy from the fed which was just strict enough to hold off inflation, without sending the economy into recession. In one sense, this is right, in another, it is off base.
It is probably right if you assume that the middle class of the developed world is wiling to continue to be the designated losers of the economic world, that they are willing to watch the gains of the last two generations destroyed, that they are willing to give up on medical care, their pensions, and their personal retirement savings, that they are willing to watch their children graduate from college a house in debt, and not able to find upwardly mobile positions in the work force. In short, it assumes that all of the benefits from the economy are going to continue to flow to about 1% of the population. Forgive me for pointing this out, but while one can run a macro economy with people paying half a billion dollars for paintings, it is very , very unlikely that the conditions which create it will continue to be allowed. That's why mercantilism, or neo-mercantilism, invariably collapses, because at a certain point the target economy falls apart, or its population closes the doors.
The warning shot was the failure of the Vietnam normalization bill to pass by the 2/3rds required to do so without debate. This bill will pass, but it will do so only after having received more scrutiny. In itself - normalization of trade and US backing for Vietnam to join the WTO - is not controversial. But the larger picture of trade, and more importantly who benefits from that larger picture - are controversial. There are three positions.
The first, the Republican position, is to continue to run a regime of Thatcherization - trade being used to undercut wages in the home country and produce development arbitrage, that is buying up assets in developing countries while they are still cheap.
The second position is the protectionist position. which is to force wage and labor standards into trade provisions, and reduce the over all volume of trade.
The third position is for continued expansion of trade, but for higher public investment to generate more jobs in the home country. This position is the position of free trade Democrats.
Until now the first and third position shared enough of a common cause that they have been able to move the trade debate and pass legislation. However, a series of factors are intervening to make that alliance less tenable and, indeed, unpalatable.
The first is the failure of the Republicans to run the budget properly - high fiscal deficits, high directed spending, shifting of resources from external to internal production - all undermine the benefits from trade. The second is the high trade deficits. These are a direct result of Republican monetary policy. It is necessary to shift 5% of US GDP to export from internal consumption. If other nations are a guide, this will mean the loss of about 5% of GDP during the transition, which will procede at the pace of about 1% per year. The third is the failure of the Republicans to follow through and produce Free Trade agreements that are genuinely free trade. CAFTA is a good example - can someone tell me what kind of a Free Trade Agreement with Central America doesn't liberalize sugar?
These combined reasons lead to the fourth reason. The fourth is the realization that the current trade regime does not distribute the benefits widely. It helps production centers in low wage exporters, resource production and the corporate structure that runs the supply chain. This is a small slice of the global population. These groups have seen astonishing gains in wages and wealth. Everyone else has not. Since some of everyone else votes, and must vote for the continuation of the current structure, everyone else will do so only as long as they are stupid, or hope to get some of the gravy.
This has lead to the fifth reason - voters are tossing the current trade regime out on its elephantine ass.
This leads to a very simple choice for free trade Democrats. One they can keep trying to work with an embattled Republican minority, one that is going to be pressured from its own business wing as Detroit and other large corporations that are getting hammered push for concession to protect themselves. This would lead to attempts to pass trade legislation which is less and less valuable, and more and more likely to be overturned as soon as more voters put more wage oriented members in Congress, or they can realize something fairly simple: there is very little actual committment to protectionism in the abstract.
Instead there many groups that are suffering economically, and slamming the door shut is the only move they think they have politically. If ones options are "go under" or "pass the costs on to others" people will pick passing costs on every single time.
This leads to a simple realization: the solution for a pro-trade Democrat is to reduce, not increase, the amount of protectionism. Right now there are three industries whose being protected is distorting the economy: housing, health care and the defense budget.
The defense budget is swollen from a fake "War on Terrorism" and a very real pair of wars in Iraq and Afghanistan - we are losing both of those wars and making no progress in our war against the monster under the bed.
The housing and health care markets, however, are not yet on the agenda. But they could be. Trade Democrats can hit health care immediately by pushing for Medicare D overhaul and universal, single payer, health coverage. This will free up 3% of GDP immediately and end the inflationary spiral of health care costs. Health care is a trade issue, because health care is largely a protected industry.
The housing market has just taken a large slide, because much of it was monetization of low interest rates. Those rates are not coming back, in fact, the view from the bond markets is that while interest rates will be lower in future, they are not going to be that much lower. The housing market will bottom sometime next year, but it will not come roaring back.
There will be pressure to get the housing bubble going again - but that housing bubble is both inflationary, and devaluationary. Reving it back up again will be popular with home builders and upside down home owners - but it won't help many home owners who will only see higher property taxes.
The solution is to push for income tax overhaul that moves more incentives to investing for retirment in stocks and bonds, and far less in housing. Again this is a trade issue, because we neither ship houses to the outside world, nor can the reduction in global labor prices alter the housing market here by very much. And to the extent it does, it will produce more anti-immigrant sentiment. Since that is how low labor costs help bring down housing costs - by having foreign contractors and day laborers come to the US.
These four steps - moving to a balanced budget, more public investment and less military waste, universal single payer health care, and shifting retirement savings from housing to investment - will, by themselves, correct the current balance of trade problems. There will be dislocations, as people in the affected industries are moved, but that can be buffered by normal stimulus means and other forms of incentives and cushioning. The result on the other side - a stronger dollar, lower inflation, more job growth, more productivity, less distortion from protectionism - will benefit the very people who are pushing for restrictions on trade now.
But there isn't much time for pro-trade Democrats, and the odd honest pro-trade Republican - to come down on the side of virtuous saving and investing, rather than borrowing and squandering - and make the case to the people who have seen wages stagnate, risks rise and retirement evaporate while opportunities close. The Republicans still pay lip service to free trade, even though, measured objectively, they have been the most protectionist party in power since McKinley at the turn of the century. It's time to stop reading their lips, and follow instead, how they have their hands in the American people's pockets.
But sitting and waiting isn't an option, because something will be done, of that you can be very sure.
thanks for talking economy again Sterling!
November 14, 2006 9:57 AM | Reply | Permalink
The last time the Congress fooled with the tax code to penalize real estate, 1986, my career was almost destroyed. However, I would seek a change in the tax code if there was also a change to put earnings from work more on a par with that from investing.
This is not directly on point but don't you find it interesting that Cemex (Mexican) is making a hostile bid for Rinker (Australian) in order to gain a larger position in the cement market in the United States.
It always worry me that the walls can be erected to slow trade, especially at the the shores of the largest consumer nation in the world, the United States, so much gloablization is going on off the front pages it seems this might be the proverbial horse that has left the barn.
Daniel A. Greenbaum
November 14, 2006 10:31 AM | Reply | Permalink
>The last time the Congress fooled with the tax code to penalize real estate, 1986, my career was almost destroyed.
What hammered real estate in the late 1980's was the S&L bust, brought on by misinvestment from an oil boom plus a healthy dollop of corruption. The marginal effect of the 1986 tax code did little to the real estate market compared to this.
Stirling Newberry http://www.bopnews.com
November 14, 2006 10:37 AM | Reply | Permalink
A recession in 8 months is almost inevitable -- and that will blow away any political support for trade deals.
The yield curve inverted a few weeks ago --and today's spread between 3month and 10 year rates shows probability of a recession in 8 months is around 40%. Even if the Fed starts cutting rates, it's too late-- the drunk has skidded off the road and is headed down the enbankment.
Hence, the rush to get the Vietnam deal through.
The Republicans leaving Congress have just handled incoming Democrats a very big bag of shit --the news media just hasn't smelled it yet.
No one seems to have noticed that the recent increase in stocks is a sucker's rally -- the stocks have not so much increased in real value over the past 6 months as the dollar has fallen. When your currency is headed down the mineshaft because the Chinese are moving out, you're losing big money if the dollar value of your assets just stays level. As the recession becomes more obvious,watch for the rats to start hopping off the ship.
My estimate is that the Dow heads south NLT March 1.
We are so screwed. Bush's "economy" is a Potemkin village. As the housing bubble collapses, construction workers are being shedded like fleas -- hence, Walmart's recent price cuts. Our gigantic federal corporate welfare program -- aka the defense budget -- brings a lot of hot money into a lot of communities which gets magnified by the multiplier effect. But defense spending is consumption -- and defense pork is a Ponzi scheme. Our $500 Billion/year defense budget is unsustainable --it almost equals the rest of the world's defense budgets COMBINED.
That's why the federal debt for 2008 will be almost $3.8 TRILLION more than what Bush projected just a few years ago. The Chinese are getting ready to cut up the credit card. But when the Democrats are forced to make defense cuts, the multiplier will work the other way --remember how many local businesses --real estate, retail,auto,etc tanked with the defense cuts of 1991-92?
The Fed is in a dilemna similar to 1929. It can't cut rates to avert recession if the dollar is losing value. But the Chinese are not stupid --they are not going to prop up the dollar by continuing to give us loans.
Keynes' policy can work for young nations --but not for old.
Young people can be irresponsible -- they have 40 years of work life to make up for screwups. But the US population is aging --the baby boomers are ready to start retiring. What banker is stupid enough to give a 30 year mortage to a 60 year old spendthrift if the 60 year old has a shaky job and no collateral?
November 14, 2006 11:51 AM | Reply | Permalink
Daniel
I go tilt on your last para. You start by
"worry"ing that walls can be erected but then
in effect say there's no need to worry(" the horse has left the barn").
Personally , I'm anti free trade and I'm curious whether you're for me or against me. Either way
I'd like to understand the point you're making.
November 14, 2006 1:20 PM | Reply | Permalink
As usual, excellent big picture analysis, Stirling. I too am concerned about the overcapitalization of the housing market, but I'm pretty convinced that trying to mess with the housing exemption would make Social Security privatization look like a cakewalk. The only change I can see any room for is just to decouple the exemption from inflation and let it dwindle down to where it belongs, which is as a prop for letting lower-middle income folks afford housing.
The larger problem is that it's very, very hard to get the public to understand the connections you've drawn. So while a proposal to help pay for healthcare by reducing the tax exemption on housing sounds terrific to the wonky types here, it's hard to explain to others why exactly that kills two birds with one stone.
Another deep problem with reducing the glut in housing is that while it would reduce reliance on foreign labor, it's one of the few sectors (next to healthcare) capable of absorbing workers with lower education levels. So while the long term interests of domestic workers lie in diminished reliance on housing for jobs, presently it entails pain.
A productive view on protectionism is to use it as a temporary measure, in order to allow time for needed economic dislocations and adjustments to proceed with minimal trauma. In this area, I think real engagement with unions could be helpful. Unions presently lead the charge for protectionism, but what they really need to keep their eye on is opportunity for their members in a changing economy. I live in Pittsburgh, and I can tell you that this distinction is not easily illustrated - there are a lot of ex-steelworkers who have yet to adapt a full 20 years after the Burgh's steel industry went belly-up. But once built a consensus for well-managed changed could really help improve unions' image and standing.
November 14, 2006 1:27 PM | Reply | Permalink
I'm not sure that this is true because I went to health care forums around the state of Minnesota (set up by the state) and participants were asked to flag the "top three" solutions to health care and "single payer" was the most popular one in both rural and urban areas. The ironic part: the panels never talked about it and favored "market based approaches" instead.
Just to give an example: I've had "older Republicans" tell me that they can't get jobs because employers want to keep their health care premiums low-- so because of penny pinching, businesses refuse to employee very capable individuals and the community at large loses.
ummm, I think construction workers would be upset with you! Have you read about what happens when the work isn't done right? I recently read an article by someone who made a living "fixing up bad work" by home builders.
the more skill ANY worker has, the better it is for the product they produce!
Home Depot, for example, seems to hire people who understand how to use their products. When I'm there, I'm amazed at how knowledgeable some of their workers are! And that benefits the entire community because, quite literally, Home Depot is able to help the community implement better building and maintainence practices.
I've heard union members make the opposite claim! Specifically, some union members told me that they disliked their union because it preferred to protect jobs instead of their futures!
Industries do need to die and/or transform themselves and the union members I talked to seemed to think that their unions should have been at the forefront of the transformation process because continued viability leads to a protected future. Specifically, they wanted the union to market their labor as being "in step with" the next business phase.
I think you note this though.
I think this stance is rhetorically aligned with their marketing. If I remember correctly, Bill Clinton's NAFTA had the support of key labor leaders, perhaps because they'd get rich off it.
Had the arbitrage been used to transform the affected communities, life in Detroit might be different these days!
November 14, 2006 5:14 PM | Reply | Permalink
I can't speak for Stirling but your use of the term "free trade" implies that you would prefer protectionism.
My understanding of what Stirling wrote was that the market doesn't allow nations to survive very long on protectionism.
And I think that Stirling, quite consistently, argues that what is known as "free trade" isn't really free trade.
Essentially, he seems to argue that if a country really does have an advantage at producing something, it can export that product and create a situation of arbitrage. The kicker, as he implies, is to spread the windfall around the producing nation rather than to squander it by letting a small fraction of people enjoy it.
IMO, that's important because advantages aren't forever and a nation has to keep evolving and making progress. To do this, the middle class must have access to capitol to help insure that the nation's evolution is diverse and, therefore, fruitful.
November 14, 2006 5:31 PM | Reply | Permalink
The only question I have about this statement is that when John Edwards' wife was here in Minnesota, she noted that the cost of health care was "most closely" indexed to the performance of the stock market.
Intuitively, I see the same association between the cost of college and the stock market.
If this is true, then how can the middle class combat the cost of going to college? I've wondered how it can be done?
More specifically, education is a labor intensive task and if you pay professors well, then the system has to be expensive and out of reach.
Other economic outputs aren't labor intensive-- take Microsoft's high gross profits on its software-- and thus, they make a killing.
Currently, I'm not sure how to combat education inflation other than extend projects like MIT's "Open Courseware" initiative so students can learn things (grow their literacy) without charge and only go to college if they are truly gifted.
November 14, 2006 5:47 PM | Reply | Permalink
In case you wanted to know why I would accuse unions of not protecting jobs, you might want to look into the book The Selling of Free Trade: Nafta, Washington, and the Subversion of American Democracy
The book discusses who supported NAFTA.
I enjoyed the book because I found out that automation wasn't being used in Mexico because "cheap labor" produced better "hand built products."
That situation contrasted to the US where labor was relatively expensive so companies tried to use more automation.
I found this comparison very, very interesting.
November 14, 2006 5:59 PM | Reply | Permalink
Whatever the general arguments might be re protectionism , the question is whether they
actually apply to the US with its particular assets .
I've boringly repeated a 1929 quote from Keynes when he gave up his life-long defense of free trade and advised Parliament: "The virtue of protection is , it does the trick ."
So let me trot out a later quote. He was he said "not persuaded that the economic advantages of the international division of labor are at all comparable to what they once were ."..... "Experience accumulates to prove that most modern mass-production processes can be performed in most countries..with almost equal efficiency"...."We each would like to have a try at working out our salvation. We do not wish therefore, to be at the mercy of world forces working out, or trying to work out ,some uniform equilibrium according to the ideal principles of laissez-faire capitalism."
I'd like to see this country work out it's own salvation.
November 14, 2006 6:38 PM | Reply | Permalink
Of course, shifting saving for retirement from investment in real assets like the housing stock, into "investment" in financial assets, does not do anything to improve the productive capacity of the economy. However, for the top 1%, it has the signal appeal that measures to "encourage saving" do tend to benefit people with more money, since people with money to save tend to have more money than people that do not have enough money to save (JK Galbraith).
However, it is true that the policy of slowing down the economy will help the current account deficit ... after all, depressing national income tends to depress imports. However, it also undermines investment in real productive capacity, as it reduces the prospective return from owning productive capacity.
November 14, 2006 8:41 PM | Reply | Permalink
the only thing I can say is "he was talking to parliament."
the US government gives corporations the right to produce anywhere and then, subsequently, sell their products in the US marketplace under favorable terms.
if, on the other hand, a US citizen does this, it's a crime, I think-- I'm thinking about the case where a US resident buys medicines or books in Canada.
Now, if Americans could import their own medicines from Canada, then they would personally benefit from the arbitrage instead of the corporations.
Another example: parents now hire Indian tutors across the Internet. Again, in this situation, the parents benefit from the arbitrage since they aren't paying a markup to a middle man.
I agree that Americans and Indians can produce tutoring services with the same efficiency but if I hire directly, I get the best deal.
With regard to medicines, the American consumers wouldn't be forced to pay huge amounts for marketing.
What gets me upset about the current form of globalism is that the international companies charge the "old prices" (that includes health care, pension and other costs) but manufacture on the cheap.
November 14, 2006 9:49 PM | Reply | Permalink
Re: I'm not sure that this is true because I went to health care forums around the state of Minnesota (set up by the state) and participants were asked to flag the "top three" solutions to health care and "single payer" was the most popular one in both rural and urban areas
While single payor may be the ideal, there's a problem with how to get to there from here. The most direct route to universal coverage would be to simply expan the existing mix of public-private coverage so that everyone is covered by it. There are ways to do this which might lead, after a generation or two, to something very much like single payor evolving naturally.
Re: ummm, I think construction workers would be upset with you
I think he is referring to fact that construction workers do not need lost of formal schooling (college etc.)
November 15, 2006 2:54 AM | Reply | Permalink
Just as information , the second quote was
from an address to an international group
at a conference outside of the UK.
Otherwise economists have been debating this subject for well over a century .(Until 1914 free trade was supposed to have ended war "When trade crosses borders , guns don't" .)
The conventional wisdom is that the free traders are right. I don't agree but I won't take up any more space here on the subject.
November 15, 2006 5:06 AM | Reply | Permalink
I think that way too many people give way too much credit to the college experience: doctors, scientists, etc.. still need to do lengthy post-docs to learn about "real world" problems
And, despite the advent of "college education," we still fight wars, create intractable pollution problems, propagate racism, enjoy class warefare, etc...
In general, I like to focus on "literacy" instead of "education" because I think "literacy" is the currency for success.
I've met many construction workers who are VERY literate. In general, I don't discount people without college degrees and I think that "genuine curiosity" is more important than attending college.
Barbara Ehrenreich, the author of Nickle and Dimed, does a good job, I think, discussing how hard "menial jobs are."
My Grandmother wasn't college educated but she was so smart that she was given "men's work" during WWII and played a major role in new product development.
Perhaps, because of this, I think that it's a bad thing to protect unskilled jobs because I believe people want more out of life.
The literacy rate in America is falling and I blame it on "negative attitudes toward stay-at-home-moms or stay-at-home-dads."
When I did "student teaching," I realized that even with a "college education," it was impossible to reach 200 kids because I could only devote about a minute to each one.
The Los Angeles Times talked about the big tutor bills that schools now have and I blame that on "both-spouses-working" and "college educated teachers" can't fix that problem-- but tutoring might.
In closing, if reading and writing are k-12 skills, then college is just one way using that literacy.
November 15, 2006 7:21 AM | Reply | Permalink
I think that free trade is right but just as Ghandi noted that there is a gap between "what is christianty" and "what people do," "self-interest" surely corrupts our efforts to implement "free-trade."
The current implementations are abominations and need lots of reform.
Stirling's piece is interesting because it asks us to stay focused on a utopia that might never be achieved.
November 15, 2006 7:33 AM | Reply | Permalink
America tried trade protectionism in 1930, and it did not work out so well. Protection sometimes does the trick - for the people being protected. This is why I don't moralize about labor protectionism, because all they are asking for is the same deal being given to several other industries. One can only have "free trade" to the extent ones internal economy is equalized.
This is one reason for the design of the Bretton Woods system - by linking trade balances to gold, it made nations have to make choices bout about trade, and about internal equilibrium. The floating currency era has allowed some nations to escape that problem, at least temporarily. We are almost certainly headed back to an era where trade volumes will be linked to some other areas of performance.
Again - more on this later.
Stirling Newberry http://www.bopnews.com
November 15, 2006 8:14 AM | Reply | Permalink
Free trade certainly works, the Federal Constitution is based on it, as is the New Deal. The Constitution of 1787 created what was, at that time, the largest geographical free trade zone in the world with the most individual political units participating. The New Deal was Constitutionally upheld on free trade grounds of the Interstate Commerce Clause.
Our problems are two fold:
1. We have unequal levels of exposure to trade competition in the economy which benefit some over others, without a corresponding redistribution.
2. We have a misdistribution of purchasing and investment power, which is distorting investment choices and limiting growth.
Both of these create the ur-problem in the global economy: lack of investment supply.
Trade policy is far less important than monetary policy, fiscal policy, industrial policy - and dare I say it - social policy. Under normal conditions, trade policy is not really a free variable - a country opens up markets to trading partners which it has least advantage in, in return for opening of other markets that it has most advantage in. The idea that Free Trade is an abstract, absent a political union, is not supported by experience, even though it works beautifully in theory.
Stirling Newberry http://www.bopnews.com
November 15, 2006 8:20 AM | Reply | Permalink
As the article points out, there is a protectionist party in the US. The Republican Party. They are with you. So long as you make houses, health insurance, energy or defense goods.
Otherwise, well, you can freeze in the dark and get sick.
Stirling Newberry http://www.bopnews.com
November 15, 2006 8:24 AM | Reply | Permalink
What we need is not 'free' trade--a term which belies a massive amount of costs, to the environment, to workers whose wages and safety are driven down by global competition. I think a better consensus between populist protectionists and more socially conscious free traders could be built around the idea of 'equitable' trade, reducing global barriers to trade at the same time requiring certain basic health, safety and prevailing wage standards for participating countries. This would not only protect workers, but consumers. I'm always horrified to read or WTO decisions requiring the US to allow imports of say, Mecian strawberries which are heavily sprayed with pesticides even we've banned.
November 15, 2006 8:25 AM | Reply | Permalink
"There is a protectionist party in the US. The Republican Party." Yup, and Stirling's prescriptions seem right to me. But the GOP always offers new joys. I got a perverse pleasure in the photo accompaying the Times article on Vietnam, of women in a sweatshop. And here I thought that when women enter the workforce, it's anti-family. I guess that just applies to women becoming uppity lawyers and political leaders, not the kind abroad or described at home in Nickel and Dimed.
John
http://www.haberarts.com/
November 15, 2006 8:47 AM | Reply | Permalink
But again, the underlying issue is that there are very few jobs which pay a living wage and offer even basic benefits available to non-college graduates. Construction is one significant exception (Yes, I know construction workers do not earn what investment bankers do-- but they can at least get by on what they are paid). Once upon a time a non-college bound person graduating high school graduate could opt for a "13th grade" at GM or Bethleham Steel or some other unionized manufacturing plant. Today that option is gone and only the military and construction offer jobs at well above minimum wage. With a construction downturn the non-college bound graduate is looking at resturants or retail and will not be making enough to live on.
November 15, 2006 10:18 AM | Reply | Permalink
agreed. distribution of wealth and respect for each other still escapes us!
November 15, 2006 3:09 PM | Reply | Permalink
Without question , within an homogenous area- the US the original EEC- free trade works if works is defined as generating a surplus .
It doesn't automatically work if the definition is expanded to include the criterion that the surplus is distributed so that there is at least some increased benefit for each of the participating nations. To the extent that's achieved it requires implementing agreements which can produce surplus-depreciating things like the European Community's butter mountain.
Finally , clearly it can't work in the sense of insuring there are no losers. With effort , maybe you come close- as long as we're discussing an homogenous area.
If the area is expanded beyond that , forget about it.
November 15, 2006 5:02 PM | Reply | Permalink
BTW, the reason why I have no problem with "pure free trade" is because I saw an immigrant with no college education kick my ass when building complex electrical circuts. It was a very humbling experience because, for what-ever-reasons, his mind had that amazing ability and mine didn't.
So I decided to find out what I was good at and, ultimately, I found work that paid well.
In general, even though the American Dream is hard to achieve, I try to remember that struggling immigrant and I no longer feel sorry when I fall on my ass and need to dust my pants off.
I know way too many people who are afriad to be curious and risk finding out who they are!
In general, I agree with Warren Buffet that anyone with some smarts doesn't have to use leverage to make money! This world, for sure, needs a few good men and women!
November 15, 2006 5:09 PM | Reply | Permalink
Be careful what you wish for, if "fair" were enacted, the first thing a smart European trade commissioner would do is tariff the US for the lack of universal health care.
It's only fair that they shouldn't have to compete against workers who are left without access to basic human rights like medicine, doctors and nurses.
Stirling Newberry http://www.bopnews.com
November 16, 2006 7:21 AM | Reply | Permalink
I love reading Stirling's posts because they "connect the dots." Yes Virginia, you really can't wage wars without eventually weakening your currency.
If elites 'pick winners' - like turning health care into a profiteering racket, it will be thus. If you have both parties' first important presidential primary in Iowa, we will pay fealty to corn, both in protectionism and the hyper-hoax and boondoggle of 'ethanol.'
I was in Iowa supporting Dean exactly three years ago, and the ethanol lobby zombies were thick as thieves - handing out t-shirts and pens to spread the gospel of government subsidies.
I'm concerned about our manufacturing industries - especially autos. These companies were the backbone of our victory in WWII and we've thrown them under a bus named "free trade."
How about free trade in agriculture? How is that more important to, say, 'national security' as the ability to manufacture hundreds of thousands of tanks and jeeps? Gosh, if third world farmers could actually make a dollar staying put, maybe they wouldn't be lashing themselves to rafts and heading for Spain by the thousands.
If only they held the first Presidential primary in Detroit.
November 16, 2006 8:17 AM | Reply | Permalink
"the first thing a smart European trade commissioner would do is tariff the US for the lack of universal health care."
Stirling, it's funny that you say this because when US elites defend "high drug prices," they suggest that other countries with socialized medicine schemes don't invest enough in research and, therefore, they use generics instead but this means that they don't have an amazing pharmceutical industry (read asset) like the US does.
maybe you've posted something on this quality versus quantity argument.
of course, I know that marketing is the majority of a drug's price-- a major reason why I support single payer-- but does the system in general produce amazing results even if only a few can take advantage of them?
Of course, I exercise over an hour a day and tend towards vegitarianism to hedge my bets! ;-)
November 16, 2006 11:46 AM | Reply | Permalink