Two Thin Reeds

Brad DeLong says America workers making $30,000 a year ought to be willing to cut their living standards in order to help China’s economy. He gives us two reasons.

First, DeLong guesses that there aren’t many commissars turned capitalists, anyway. I really don’t know how many there are, but according to the Chinese Academy of Social Sciences, 90 percent of Chinese citizens with more than US$128.2 million are the children of senior officials. A recent article in the Washington Post reports analyst predictions that “Within 10 years, China could be the world’s biggest luxury market.”

And how much of the sacrificing by the American working class through out-sourcing to China trickles down to the poor Chinese workers?

According to the Chinese Ministry of Labor, nominal wages have been stagnant for most manufacturing workers there for the last decade and when adjusted for inflation have fallen for 30 percent of them. This, in the face of the great Chinese economic boom.

Second, based on Brad DeLong’s extraordinary ability to see into the future, China is the next superpower, and we Americans need to suck up now or they might be mean to us when they’re bigger and stronger than we are. This is an amazing argument. Neither Brad DeLong nor Jeff Faux nor anyone else knows what China is going to be like in 2047 0r 2075. Or whether China today is like America in 1877 or Japan in 1970, or Brazil in 1950.

As for his theory of international relations based on gratitude, I’ve never in my life heard an American say that we needed to support Great Britain because it traded with us in the 19th century. (Mostly, of course, Britain traded with her colonies). And of course the UK, like most of the Europeans, supported the South in the Civil War. The US supported a declining Britain because of ethnic and cultural ties. It was after all, the mother country of the WASP majority. And of course because we feared the Germans.

It is an awfully naïve view of history to think that nations make major policy decisions out of a sense of gratitude. We sold the scrap metal from New York’s 2nd Ave. elevated train to the Japanese in the 1930s. It came back, as they said in World War II, in bullets. Nations have no permanent friends or enemies observed Disraeli, only permanent interests.

Two pretty thin reeds on which to justify the deliberate undercutting of the American working class.


Comments (40)

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.> Neither Brad DeLong nor Jeff Faux
> nor anyone else knows what China is
> going to be like in 2047 0r 2075. Or
> whether China today is like America in
> 1877 or Japan in 1970, or Brazil in 1950.

I do know that there ain't gonna be no oil in 2075, and probably not much easily-accessible iron ore either. Neither the US nor China are preparing for this AFAICS, so both will probably be in the same boat.

sPh

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Actually, the blinders to who are the winners in China is on point to my posts in J. Bradley's thread. J. Bradley is basically the US equivalent of the sons of party apparatchniks in China, being placed to where they are by opportunity of birth. Of course he won't see the problem of an inheritor class getting all the marbles, as he is part of an inheritor class getting all the marbles.

This is also why there is so much love for aggregate statistsics, instead of gini coefficient, quintile, and other social mobility factors. Aggregate stats, like GDP per capita mask failures of distribution, often going against what the Davos crowd is arguing.

Its also on point to your original post, Jeff, regarding the inherent biases of class to the Davos side.

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This debate is silly because you are throwing in over-the-top accusations. You say "Brad DeLong says America(sic) workers making $30,000 a year ought to be willing to cut their living standards in order to help China's economy." Wow! That's really some statement! And you have a link, so it must be backed up, right?

So I check the link - does Brad really say this? Nope. But apparently this post is a followup to a previous post. Does Brad say it in the previous post? Again, nope.

But this is what I can understsand, if I read your characterization of his argument, and his characterization of your argument:

- Brad wants lower-middle class Americans to become poor.
- You want poor Chinese to stay poor.

I feel like I'm watching a debate between high schoolers here.

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There is a science news press release today from an NYU study demonstrating that the mental adjustments (blinders) people make to preserve their ideology result in diminished moral sense of outrage.

http://www.eurekalert.org/pub_releases/2007-02/nyu-nss022807.phpNYU

Study shows diminished sense of moral outrage key to holding view that world is fair, just.

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Its our standard of living that makes this country what it is.

We live in homes with central heating and plumbing. Our water is clean enough to drink. The majority of homes are air conditioned. Many are able to take 1-2-3 week vacations almost anywhere they wish. Many have single homes, two cars and a swimming pool. When we go to the market we can choose between 50 different types of cookies while some in other countries don't have bread. For many the hardest decision they will make on a given day is what to have for dinner tonight. We shop at malls with a variety of stores offering us all our heart's desires. We spend billions on fashions, dressing "in style" while many in other countries wear rags. We don't cut our own hair, we go to 'salons'. Open the Yellow Pages and look under "Doctors" and see how many we have. Why, we even have Dentists! Physical therapists! Manicurists! We have retirement programs and Medicare to help when we age.

Democracy, The Constitution, the Bill of Rights, the Rule of Law, are all meaningless if we lose our standard of living and have to live like those in Sudan, Bangladesh, Somalia. etc.


We are living the American dream; the idea that our children will have it better than we did.

But will they?

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In past threads, I've suggested that Brad donate all of his various savings to the Chinese, and I will do the same. But let me dial that request back.

I'd really like to see Brad, as a really gung ho free trader, just take the credibility step of revoking his own tenure.

I think tenured economists have blinders on that prevents them from really understanding what they are advocating.

It's sort of the chickenhawk argument. Brad can increase his credibility enormously in the same way that many chickenhawks can. They can enlist, and Brad can ask UC Berkeley to make him a non-tenured professor.

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"Democracy, The Constitution, the Bill of Rights, the Rule of Law, are all meaningless if we lose our standard of living and have to live like those in Sudan, Bangladesh, Somalia. etc"

Surely you don't suggest that people living in those places would have no use for the rights and freedoms you mention, if made available to them. And surely you don't mean that Americans would not fight to retain them even through economic hard times.

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At $60 per barrel, the trillions of barrels of oil in Venezuela (heavy heavy crude), and in the tar sands of Canada, are economic to produce.

The environmental question is another matter, but when has that really stopped the oil companies?

...because tangible rights and freedoms, I like to think, go together with high living standards. If the Chinese had the right to unionize and collectively bargain, and if that right wasn't being threatened here in the US by our Brahmins, then we wouldn't be having this debate right now.

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When I wrote this comment on Larry Johnson's post about Bush being an apologist for China's repression, it occurred to me then as now that we are already woefully into assuming our second class status to China.

China has shown the ability to co-opt the values we profess by just tickling our greed for a billion "consumers". What luxury goods are made domestically that don't have the trade off in ethics that is required to do business with China? Google, Microsoft, et all, have already consented to allow the political use of their technology. Wal-Mart has accepted UNIONS for their piece!

China just successfully tested a satellite killer. They are loaning money for projects in Africa for 2% at a breakneck pace. They just recently had a huge toxic spill that decimated the drinking water for hundreds of thousands. The air in many industrial cities is toxic. Their coal mines have atrocious safety records for their workers. Does that sound like a country that cares about the population or their environment, or more like one that is just burning human capital to set the stage for long term global dominance?

If Mr. DeLong (whose thoughts I respect) or others think that the US should show a different "face" to the Chinese people, I would agree with that. Showing the Chinese populace that we do not agree with a repressive, totalitarian government structure would be a good thing. But our actions seem to speak differently.

Maybe it's just me, but the Bush Regime seems more intent on China financing our tax cuts and rampant consumerism with whatever we have to sell to them- our jobs, our integrity......

Alphonse ( Al ) Kada
Iranians are fighting the Americans in Iraq so they don't have to fight them on the streets of Tehran

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Surely you don't suggest that people living in those places would have no use for the rights and freedoms you mention, if made available to them. And surely you don't mean that Americans would not fight to retain them even through economic hard times.

Wigmar1, No, I didn't suggest these things, you did.

In another post, I argued the F Scott Fitzgerald theory that "The rich aren't like you and me."

This fact is constantly underscored in this exchange. The rich have a sense of entitlement and superiority - that's a fact that is inescapable in a debate about whether elites from different countries feel like 'brothers' while they loathe the hoi poloi in their own countries.

An attempt like yours to ask them to 'walk the walk' is futile, because the morality of slaves is opposite the morality of masters. I won't delve too deeply into Nietzsche, but all the vices of slaves; cruelty, greed, vanity, hypocrisy - are virtues to masters.

OF COURSE they don't practice what they preach. OF COURSE their newspapers feed us a steady diet of jingoism and nationalism, while they practice a cosmopolitanism that borders on treason.

No wonder Delong keeps changing the subject from class war WITHIN America to pitting workers in America against the pitiable barefoot Chinese. It's a familiar trap for working class liberals - Tom Freidman does it, Kristof does it "You just hate poor Chinese, you racist!"

Look on the periphery of the arguments for the what they really mean, which is
"You are powerless to escape these 'global' (global=authoritarian regimes) 'forces' ('forces'= rich, powerful men) and you should stop complaining and just accept what we say."

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I would really like to see a cite for the 'stagnant wages' claim.


http://www.petersoninstitute.org/publications/papers/lardy0304-tables.pdf
claims that nominal manufacturing wages trebled in the years 1993 to 2003.

http://www.iie.com/publications/papers/paper.cfm?ResearchID=201
has more details.


Certainly a quick google on china wages would seem to disagree with your claim.

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No, I don't suggest "these things," that much should be clear to anyone. You said:

Democracy, The Constitution, the Bill of Rights, the Rule of Law, are all meaningless if we lose our standard of living and have to live like those in Sudan, Bangladesh, Somalia. etc.

and you gave this utterance its own graf.

Typically, doing that leads readers to conclude that you are offering it as a complete thought, especially when your preceding and succeeding grafs are not in the same vein, as they are not.

Maybe you expressed yourself poorly and would write the sentence differently if you had it to do over, but as your utterance stands, you are suggesting that these rights and freedoms won't mean anything in a severe economic decline.

So, what is it about these rights and freedoms that makes them "meaningless" in a depression or other economic catastrophe? I think that they would acquire a greater value when the oil-slick of materialism is swept away.

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because tangible rights and freedoms, I like to think, go together with high living standards.

I would agree that a set of tangible rights and freedoms do not evolve in a state of nature, and are typically product of a stable and productive society. That's not the same as saying that once a society has developed these values, that they will be, or should be expected to be, lost when that society declines. In the American Depression, for instance, tho it was not really horrible by world standards, I don't think the general level of regard for civil rights and liberties diminished at all. Quite the contrary, IMO.

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=== In the American Depression, for instance, tho it was not really horrible by world standards, I don't think the general level of regard for civil rights and liberties diminished at all. Quite the contrary, IMO. ===

Have you read _The Grapes of Wrath_?

sPh

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Well, for one, this shift appears to be creating a 90/10 split of aristocrats/plebs. Now, if I'm a pleb, and I see a declining living standard while a relative few are heading into aristo status, why should I care about rule of law? To protect _their_ property rights?

Even now, our system has created a "volunteer" military via economic draft. If you're J. Bradley DeLong, daddy sends you to Harvard. If you're a poor kid, you join the military for GI Bill bennies. You get sent to Iraq in a war started by a President who's qualification for office was being born to an aristo ex President.

All of this quite legal and quite Constitutional. It was also quite legal and Constitutional during the Civil War, and folks rioted in NYC and other places across the country. The riots were of course illegal.

The value of laws and freedoms are worth exactly as much as the overall society participates in them. The draft riots during the Civil War occured because a wholly legal and Constitutional policy screwed enough of the plebs to the benefit of the aristos that the plebs decided "screw the law". A lower level variant occured during Vietnam.

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Of course. Grapes of Wrath, published in 1939 and made into a movie the next year, is a perfect illustration of the increased concern over and regard for civil rights and social issues that emerged during the Depression.

Nobody cared about poor people in the '20s.

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The value of laws and freedoms are worth exactly as much as the overall society participates in them.

A correct generalization, but why assume that if we get taken down a few pegs that people won't care about (or participate in) them?

folks rioted in NYC and other places across the country. The riots were of course illegal.

These draft/race riots destroyed half of NYC, and dozens were killed IIRC. Is it wrong that they should have been illegal?

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The riots occurred because a rich man could pay a poor man to take his place in the draft.

This abuse has been corrected, though the rich still do not have to serve.

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That's an interesting question.

How many rioters would have been killed in the army, while the kids of the elite did the 19th century equivalent of "serving their country best, managing a hedge fund"? Probably more than "dozens" given the casualty of that time. Also, as almost everyone in the sucker social class was a renter, who actually owned most of the "destroyed half of NYC"? If you guessed the families "serving their country best managing a hedge fund", you win a kewpee doll.

So, on one hand your point is well taken. On the other, a dispassionate view of legality on this says the law was to...

1. Send only lower class folks to die for their country.
2. Protect the property rights of those who didn't have to die for their country.

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I guess what I'm saying is that the societal "developmental threshold" for the invention or acquisition of these rights, etc., is not necessarily the same for losing them. Once they become a part of the social fabric, and population's political consciousness, they are not easily thrown aside.

Yes, after a full nuclear exchange, the concept may become meaningless. But in any reasonable scenario, remembering that the US has the best combination of natural resources, climate, and transportation resources of any large country except possibly Argentina, no.

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You must have read different histories of the Depression than I did. As jobs and food disappeared, violations of civil rights became widespread. Anyone who was different from the accepted social norm of a region was subject to being driven out onto the road if not outright murdered.

Here is how it played out in 2005:

=== From the Los Angeles Times
GRETNA, Louisiana - Little over a week after this mostly white suburb became a symbol of callousness for using armed officers to seal one of the last escape routes from New Orleans — trapping thousands of mostly black evacuees in the flooded city — the Gretna City Council passed a resolution supporting the police chief's move.


"This wasn't just one man's decision," Mayor Ronnie C. Harris said Thursday. "The whole community backs it."


Three days after Hurricane Katrina hit, Gretna officers blocked the Mississippi River bridge that connects their city to New Orleans, exacerbating the sometimes troubled relationship with their neighbor. The blockade remained in place into the Labor Day weekend. ===

We are only two weeks' food supply away from descending into this behaviour throughout the nation, and the Other will be thrown to the wolves first no less here than anywhere else on Earth.

sPh

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Well, many thousands of sons of the elite (I include, as I am guessing you do, the the merely well-off as well as the true 'social' elite) did join the army, and did die. This is true of the Union and of course even more so of the Confederacy.

In the North, many did not pay to avoid the draft, and many, many more joined before being drafted. Conscription began on 1-1-63, and "less than 6 percent of the 2.2 million men in blue were conscripts."

http://www.ntis.gov/search/product.asp?ABBR=ADA326566&starDB=GRAHIST

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Well if the entire country were as destroyed as New Orleans was by Katrina, who knows what would happen, you may be right.

But the fact that you have to reach so far into the improbable does not help to establish that basic rights, etc., will become meaningless in a time of economic decline, even a severe one, that occurs over time and without a sudden and complete disruption of all systems at once-- transportation, law enforcement, medical care, food supply, water systems, etc.

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Help me understand "into the improbable"? This already happened once nationwide, during the 1930s. And resurfaced again as soon as one small area of our united Nation got into trouble. But it is "improbable"?

That word - I do not think it means what you think it means.

sPh

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It is highly, highly improbable that the entire country would be reduced as suddenly and completely as New Orleans was reduced by Katrina. That's why cherry-picking events from the Katrina experience is bogus as a prediction of the way the country would go in even a severe economic and standard-of-living decline. If you need a definition of 'improbable,' you can help yourself to any number of on- or off-line dictionaries.

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So, what is it about these rights and freedoms that makes them "meaningless" in a depression or other economic catastrophe?

My point is and was; what good would these rights do for people in the countries I mentioned, it wasn't that these rights would lose their value to American citizens if the USA went into another depression. By the way, to me, "depression and economic catastrophe" can be seen as redundant. Remember a few years ago, the films on television of starving children in Africa?
Remember how you could almost count their ribs?

My original point was; what makes this country great, and I said its standard of living. Those children on TV aren't our children becasue of our standard of living. If you want to argue that those aren't our kids because our Constitution, Bill of Rights, etc, created our standard of living, then I might agree, but those rights have no meaning to those kids on TV.

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Alphonse ( Al ) Kada Iranians are fighting the Americans in Iraq so they don't have to fight them on the streets of Tehran.

HAHAHAHAAHA, good humor there.

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I wondered about that, too.

Nominal wages is simply the amount of the wages. Real wages are nominal wages adjusted for CPI variations.

http://en.wikipedia.org/wiki/Real_wage

Note I am assuming that the diarist's "manufacturing wages" are paid in "urban areas."

Between 1995 and 2005 nominal wages in Chinese urban areas grew by about 11 percent per year, while US wages grew by about 3 percent.

http://cesifo.oxfordjournals.org/cgi/content/full/52/2/276

(Check to make sure there are no spaces in the URL before you press go)

This chart shows the consumer price inflation has been negligible in the last 7 or 8 years in China.

http://cesifo.oxfordjournals.org/cgi/content-nw/full/52/2/276/F8

(Check to make sure there are no spaces in the URL before you press go-- this (TPM) website likes to insert them into URLs for some reason. Here, an incorrigible space appears in the above URL before the '276.')

Thus, I would conclude that even real wages have not fallen much, if at all, in the past 7 or 8 years.

This is to be expected given the huge increase in productivity in China in the last few years.

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Once they become a part of the social fabric, and population's political consciousness, they are not easily thrown aside.

Yes, after a full nuclear exchange, the concept may become meaningless. But in any reasonable scenario, remembering that the US has the best combination of natural resources, climate, and transportation resources of any large country except possibly Argentina, no.


"In the end they will lay their freedom at our feet and say to us, 'Make us your slaves, but feed us.'"

- Dostoevsky's Grand Inquisitor -

or in 2007; "Make us your slaves but make us safe"?

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You may have the last word.

Of course, in the event of the Second Coming, all bets are off . . . .

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<I> OF COURSE they don't practice what they preach. OF COURSE their newspapers feed us a steady diet of jingoism and nationalism, while they practice a cosmopolitanism that borders on treason. </i>

 Holy Ironic sentence batman! 

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Of course it's also possible that those arguing in favor economic jingoism, doing so under the express concern that they might lose THEIR job, are the ones arguing in bad faith.

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"How many rioters would have been killed in the army, while the kids of the elite did the 19th century equivalent of "serving their country best, managing a hedge fund?"

I don't quite get the above quote. The Draft protests were instigated by Copperhead Democrats (Confederate supporters of whom NY's mayor was one) using the $300 "commutation fee" as a pretext. The fee was designed for the wealthy, yes, but it seems that frequently poorer people banded together and cooperatively raised the money for each other to pay it.

On August 13, 1863, when the draft was first initiated (due to a shortage of soldiers in the 3rd year of the war) mobs of Irish poor began rioting against the draft and the police and then turned their brutal violence, which lasted several days, on NYC's African American population, lynching, burning and torturing them. It was these scapegoats who bore the brunt of the casualties -- not the rioters, as I understand it. State and federal troops finally restored order.

In the end, "on August 19, the draft was resumed. It was completed within 10 days without further incident, although far fewer men were actually drafted than had been feared: of the 750,000 selected for conscription nationwide, only 6% actually went into service." (Wikipedia)he episode was not a pretty one in our history, which is why people don't seem to want know about it. However, more of the nineteenth century "elite" seem to have done their patriotic duty and enlisted, unlike in the colonial wars of today.

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I realize after checking with sources that what I wrote was a simplification. In fact, most Civil War soldiers were enlisted men.

My own Irish ancestor enlisted to fight in the Mexican War as a refugee from the Potato Famine. He was 10 years old but lied and said he was 12. It was that or go to an orphanage.

I have never discovered if he participated in the Civil War, or if so, on what side. His last child died in 1994 at the age of 104.

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Just because you don't like the direction a post is going, is no reason to give it a 1, unproductive.

My suggestion is that you give out 10 4s and 5s for every 1 you give out.

Encourage people to contribute.

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I'd really like to see Brad, as a really gung ho free trader, just take the credibility step of revoking his own tenure.
No need to go after Brad's tenure. As a prof at a state school, Brad's salary is subsidized by the taxpayers of California. Take away that subsidy and Brad had better get his ass into those graduate programs for the masses, stat. Now put those graduate programs on the Web, competing for the big bucks with say Chicago and LSE, and let's see how those economists like the winds of competition for once in their pampered lives.
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Of course, in the event of the Second Coming, all bets are off . . . .

There was a First?

All I can say Dustin, is pick up a Nietzsche reader some time - I would also recommend Thorstein Veblen's "Theory of the Leisure Class." The wealthy go by a different set of rules and have a completely different aesthetic and morality than ordinary people.

Newspapers are not owned by factory workers. They are owned by elites who seek to shape public opinion. William Randolph Hearst comes to mind. Rupert Murdoch, Silvio Berlusconi is the Italian version.

Rupert Murdoch feeds us jingoism about the American way here, but then he sets up shop in China and agrees to tow the party line. Its seems you'd have to be willfully obtuse to ignore that.

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