Brad really walked into that one.

Good one, Jeff. Very good, indeed.

I am beginning to understand the situation in the world a lot better. (I'm a slow learner.) In order to make a maximum amount of money the very wealthy try very hard to keep labor rates as low as possible, no matter what country we are talking about. There is no concern whatever about the living standards of the people who do the hard work that results in massive wealth for the wealthy.

I used to be sure this wasn't true in America. I was naive. As much as I prefer the Democratic Party to the Republican Party, I don't see a lot of evidence that the two parties differ in this respect. And, the most disturbing part to me is that Joe Average self-identifies with the very wealthy and will fight to the bitter end any effort to correct this situation, even as his standard of living drops every year.

Hoppy in Sacramento

Why is it that it is the responsibility of $40,000 year American working families to sacrifice their future in order to raise up the living standards of poor Chinese, when commissars turned capitalists ride around Shanghai in a different Rolls every day?

This is nothing but a rhetorical sleight of hand that is profoundly dishonest.  There is no one, anywhere, who would ever claim that it is the "responsibility" of working families to sacrifice for the Chinese.

And whether or not there are corrupt commissars-turned-capitalists riding around in Rolls-Royces, the fact is that the increased wealth of the Chinese masses is, from the standpoint of the American economy, a good thing.

The focus for people who care about those who lose out because of trade, offshore outsourcing or technology (and a combination of the three, which is becoming more common) is to give them the tools to be flexible in their employment, most prominently by enacting health care reform and education reform.  Clamping down on trade is a loser economically and a loser politically.

I would further assert that "Joe Average" doesn't think that all. Do newspaper columnists - and more importantly, the people who pay them - think that? Sure.

Given that the vox populi has been all but divorced completely from 'politics' you find overwhelming support in polls for things like universal health care or increased fuel economy, but thanks to the insurance and auto lobbies these issues are 'non starters.'

The 'masses' have wealth in China? How about all the people who were kicked off their land and lost their pensions with the embrace of Capitalism?

If they're so wealthy, why can't workers afford to buy the goods they are making? If Chinese workers are wealthy, why does China sell all it's products here, basically in exchange for our debt?

Precisely Brad. The issue here seems to be that DeLong said one thing: trade is good; and then was attacked for having said another: "that the consequences of trade cannot be mitigated" Another issue is that progressive economists always look and sound hypocritical: they preach and teach free market nonsense on the one hand and then print interventionist articles on the other! [Hence my earlier rant about neo-classical economics]. Still Faux has a point:

Getting the American workforce to be competitive is a political as well as an economic problem. Unfettered free markets won't do that. We need sound government intervention. We've been sold the free market bill of goods one too many times. The consequences all seem to flow to a few [especially capitalists], and the costs to someone else. And when those who are hurt raise their voices they are told, all too frequently, by the free martket apologists, that "that's the way it is". Or, alternatively, we are told that there's no money to help. Well let's find the moeny by taxing those who benefit.

At the same time, I don't agree with Faux that trade is bad per se. He presents an unvarnished populism and seems to be advocating a radical trade protectionist program that would lower living standards for majority of Americans so as to help the much smaller number who are clearly hurt by trade. Why should I pay more for all those things? That's money out of my pocket and is a 'back door' way to tax me.

I would much prefer a 'front door tax' that is specifically designed to provide aid to workers whose jobs or wages are hurt by globalization: a tax on foreign earnings of mutinational companies and their shareholders is a start.

And I agree that outsourcing would not be anywhere as attractive to American companies if they did not have to pay for health care. It's a cost burden foreign companies don't have to worry about. Universal health care is not just cheaper as a whole, but it makes for good trade policy as well.

'All Life is Problem Solving'

Even Ezra Klein says Faux's response is a loser. 

Compared to where they were even 10 or 15 years ago, the "masses" in China are immensely wealthier. Compared to where things were 40 years ago, you might as well be on a different planet. That is not to say that they are wealthy on an absolute scale, only very much wealthier relative to before. By any scale imaginable.

If they're so wealthy, why can't workers afford to buy the goods they are making?

In many cases they can. Consumer spending in China has skyrocketed over the last few decades, although admittedly from a very low base.

If Chinese workers are wealthy, why does China sell all it's products here, basically in exchange for our debt?

As I said, China does not sell ALL its products here. And China does not decide where to sell its products. Most of the products sold in the US but made in China are made and marketed by American companies that outsource manufacturing to China. The issue of American debt is a separate issue, and is primarily a political issue, not an economic one. The real question is why there is such a huge trade surplus. There are two primary reasons why China has such a huge trade surplus with the US:

A policy of deliberately undervaluing the yuan against the dollar, making goods produced in China cheaper.
The high quality of Chinese manufacturing relative to costs. There are cheaper places for western companies to manufacture, but few places that can maintain Chinese levels of productivity and quality.
The point here is that defending trade is not some pointy-headed argument that doesn't take account of the very real issues confronting American workers. The challenges to American workers come much more from technology than they do trade in any case. Trade has real benefits to Americans, from lower prices to increased exports in some areas. But there are costs too. We must acknowledge those costs and not ignore them. But at the same time we need to recognize that there isn't a whole lot that can be done about them without seriously sacrificing a huge amount. The "cure" of regulating or restricting trade is worse than the "disease" of people losing their jobs from trade.

Very sane and reasonable response, but I still see all these benefits of free trade as largley 'faith based.'

This debate should not get wrapped up in arguments about resentment or class war. I'm as left as anybody out there and yet why doI agree with this guy?

QUOTE:
"Not only are we shipping factories, technology, equipment and jobs to China, we are exporting our future to China. Nor should this shock any student of history. For contrary to free-trade mythology, every nation that has risen to pre-eminence and power -- Britain before 1860, the United States from 1860-1914, Germany from 1870-1914, postwar Japan, China today -- has pursued a mercantilist or protectionist trade policy. Economic nationalism is the policy of rising powers, free trade the policy of declining powers. For great powers have ever regarded trade as an arena of struggle in the clash of nations. It is no accident all four presidents who made it to Mount Rushmore were protectionists. "Thank God I am not a free trader," wrote Theodore Roosevelt. "Pernicious indulgence in the doctrine of free trade seems inevitably to produce fatty degeneration of the moral fibre." Think Teddy might have had a point, Mr. Ikenson? Probably not. For libertarianism is an ideology, and evidence that contradicts the dogma of an ideology is to be disregarded or denied. For the dogma cannot be wrong."

Pat Buchanan

Superiority to workers? I AM a worker! and as a worker I don't consider myself uniquely more entitled to a certain job moreso than a non english speaking person in a foreign country just because I'm white & western & special. I take pride in my work but if there's some equally talented guy in bangladesh who can do the same thing & more productively than god bless him.

Dustin
I responded to your question in the Brad Delong thread, so I'll just say:

If you are fine with losing your job, I guess there's not much I can say. Only that we're seeing that really nothing can't be outsourced so even white collar managers or engineers are at risk.

I don't hate Indians or Chinese. I like them so much I want them to have tangible, meaningful labor rights. I want ALL states to respect workers' right to organize - that's not chauvinism, it's even handedness.

Holy cow! We better stop outsourcing those construction jobs to the Indians pronto.

Our corporations are not building buildings in Bengalore?

You self-identified as a "worker" -- what kind of worker are you?

But we are guaranteed the right to a government that puts our interests as Americans above anyone else. That's what the Constitution is all about. We formed a social contract to protect ourselves. The founders had no utopian illusions about how "free" trade was apt to be without a government passionate about protecting the rights and well-being of its people.

Jeff Faux: In spite your name, you're the real deal. Thank you very much for this piece. You dare to ask the question I have often asked, and I've never heard it from anyone else, even the leftmost of economists, let alone the deLongs of the world:

Brad’s question is a claim for moral superiority. But if the purpose of the policies promoted by Brad and his fellow water-carriers is to force the American working class to transfer income and opportunities to the world’s poor --while providing the boys and girls at Goldman-Sachs with more Christmas candy bonuses then they can eat in a millennium -- I’d like to know the moral equation that justifies having lied to American voters and workers all these years.

Yes, indeed. The politics of the past fifty years can legitimately viewed as a "bait and switch" operation. The system that won the Cold War was the mixed economy of the New Deal - the one that gave even Nikita Khrushchev pause. The new book "Khrushchev's Cold War" by Fursenko & Naftali cites newly released Soviet-era archives

What Khrushchev had to admit [after his 1959 trip to the USA] was that the Americans had succeeded in providing to their workers a lifestyle that he had imagined possible only under full-fledged communism." (p242)

If Wall Street regarded this deal as one forced upon them, to be rescinded at the first opportunity, then they indeed are guilty of lying to the American voters and workers all these years. Egalitarianism was part of the package they sold -- and it still matters!

One minor quibble which I expect you'd probably agree with since you talk about the "boys and girls at Goldman-Sachs" above: I don't care nearly so much about the Chinese elites as I do about the American elites who are enriching themselves at the expense of ordinary people.

You're damn fucking right I'm a nationalist!

We used to call it patriotism. Tattoo that on your forehead, motherfucker.