Which World is the Real One?
Brad DeLong is right that he and I live – or at least think we live -- in two different worlds. The question is: which is closer to reality?
Brad says that Jeff Faux lives in a world in which transnational corporations partner with third world elites to keep wages low in both developed and underdeveloped countries, where corporate lobbyists dominate US trade and other economic policies, where the careers of Washington policymakers go through the business/government revolving door.
“I don’t think we live in that world,” he says. I think we do. And so apparently do the corporate CEOs who have been describing this world for years.
As for Brad’s world, he says: “I think we live in a world in which the tremendous wave of globalization over the past two decades has produced enormous benefits for those members of China's urban working class lucky enough to get jobs in export-oriented industry and for those ex-peasants who have managed to move to China's coastal cities.”
I live in that world as well. No one disputes that the economic growth in China has brought benefits to some – and enormous benefits to a few.
I think “globalization” is too glib a term to describe the process of industrial transformation going on there, but clearly the opening up of foreign markets has been very much part of the story.
But Brad’s world is too limited here as well. Missing are the millions who have been uprooted, abused and murdered and those who profit from their misery. Missing are the Chinese elite that divert the country’s foreign earnings to finance George Bush’s war and American over consumption instead of investing in their society’s own internal development.
Brad hopes that our support of this regime will soften it in the future. Maybe yes, maybe no. But in opposing the conditioning of trade relations with social protections, he is essentially saying it’s none of our business. This would be a defensible position if at the same time he wasn’t lecturing American workers that they have a moral obligation to the Chinese poor that the Chinese rich (and yes their US corporate partners) do not have.
Brad’s post reflects the confused language that pervades the globalization debate. He tells us that American consumers and manufacturing workers (in Brad’s world, the latter, apparently, do not shop) have different interests. Yet he criticizes the suggestion that Goldman-Sachs, Citigroup and the Chinese hierarchy might have interests that differ from that of the average American worker. Then he tells us what policies “we” should pursue. Who is this “we?” in whose name the US government should promote the outsourcing of jobs (way beyond manufacturing, these days) in order to increase prosperity for Chinese peasants and workers, who he also tells us have different interests from American workers? It makes the head spin.
Brad says he believes in social democracy and free trade abroad. This was a reasonable package 30 years ago. But the world is rapidly changing. The neat dichotomy between here and there is being made increasingly obsolete by global economic integration – which I grow weary of pointing out is not simply “more trade.”
The New Deal – our model of social democracy – was based on a narrowing of the imbalance of power between labor and capital, which in turn was based on their mutual dependence within a largely domestic economy. But the neo-liberal form of globalization has vastly tilted bargaining power against workers and has subsequently undermined social democracy at home. In the world I live in, for example, employers every day threaten to off-shore jobs unless workers agree to cutbacks in benefits, wages and work rules. It is no accident that NAFTA was the inspiration of Ronald Reagan.
It is absurd to suggest that this argues against domestic reform. Coming from some, it is hypocritical. The hysterical demands that we have to cut back on entitlements because of our debts, comes loudest from the Wall Street and other “free-trade” interests that have promoted the policies that produced 25 years of continuous current account deficits. I’ve never heard anyone in the corporate world worry that putting intellectual property rights in trade deals would endanger them at home.
I understand that issues of class and power make some people uncomfortable – particularly economists in whose models of the market such elements are difficult to place. But social democracy has little meaning if it is not defined as a way to protect human beings from being treated as commodities. My point is that in a global economy we need global protections.
Ironically, that the world has changed is a point that those of the neo-liberal persuasion make over and over to rationalize the growing insecurity of the working class. It’s time to apply it to those at the top as well.
Jeff,
I'm totally in agreement with you here. This has been a great debate between you and Mr.DeLong. Hopefully there are no hard feelings?
Incidentally, Mark Kleiman calls you Mr. DeLongs "sockpuppet." Any idea what he is talking about? His site is:
www.samefacts.com
Thanks!
March 2, 2007 11:40 AM | Reply | Permalink
Thomas Palley, link http://www.thomaspalley.com/?p=18
The relevance of the Stolper-Samuelson theorem is clear. For the last two decades, U.S. policy makers, from both major political parties, have worked assiduously to create a global market place in which goods and capital are free to move. Over the same period, two and one half billion people in China, India, Eastern Europe and the former Soviet Union have discarded economic isolationism and joined the global economy. Now, these two tectonic shifts are coming together in the form of a “super-sized” Stolper-Samuelson effect, and they stand to have depressing consequences for American workers.
...
Not since the industrial revolution has there been a transformation of this magnitude, and that revolution took one hundred and fifty years to complete. By comparison the new revolution is a mere twenty-five years old. These developments have a significance that goes far beyond the currency manipulation and WTO rules violations that have been the focus of trade deficit policy discussions. There is no reason to think the end is in sight, and American workers can look forward to the international economy exerting downward pressure on wages and work conditions for the next several decades.
As is so often the case, workers have understood the new reality long before economists and policymakers. Workers realize that trade is no longer a matter of exchanging exotic commodities for manufactured products, and that the new system involves trading their jobs and arbitraging wages. Especially bitter, is the fact that the process of globalization is being driven by large American multinational corporations that American workers helped build. U.S. policymakers have also abandoned American workers by promoting free trade agreements that have de facto created a global labor market that threatens workers’ livelihoods and economic security.
The central political problem DeLong is not dealing with is that he is in essence arguing for the devastation of the American working and middle classes. This is not a viable political position for anyone on the left.
March 2, 2007 11:42 AM | Reply | Permalink
He was dissing him. He was insulting him by joking that DeLong must have created some kind of living breathing sock-puppet to argue with because he (Faux) was such a hack (in Kleiman's estimate)
March 2, 2007 11:53 AM | Reply | Permalink
I see no reason why a rich black man and a rich white man wouldn't conspire to keep poor mean of all colors from challenging their power. The mega-rich are a perfect example of the Master morality of Nietzsche:
Good is whatever makes me stronger, bad is what doesn't.
Say it with me now: The very Rich are not even remotely human.
March 2, 2007 11:56 AM | Reply | Permalink
Jeff
You make reference to the New Deal. The New Deal was a result of the Depression. To you believe we are in a depression or anywhere near one now?
Daniel A. Greenbaum
March 2, 2007 12:21 PM | Reply | Permalink
Seems to me that what's happening with globalization is the beginning of world govt. Some have a vested interest in staying away from that term, but the sooner we recognize that better IMO.
I suspect that, like the US budget deficits, we're not really getting free trade, we're just deferring the costs.
March 2, 2007 12:40 PM | Reply | Permalink
What kind? Neo-feudalism? The cultural right at least know that there is more to government than the market - maybe that's why it's easier these days for them to have a populist wing. Government should reflect the values of the people it represents. We don't have anything like world agreement on cultural values. But perhaps some of the globalists now believe representative government is just as reactionary as nationalism?
March 2, 2007 12:59 PM | Reply | Permalink
Mr. DeLong chose to ignore this citation of mine yesterday:
"Just today a report is out about the 200,000,000 Chinese migrant workers who are living in the cities without rights because they don't have the proper residency permits.
Migrants Face Abuse
To put that in perspective that is about 2/3 of the size of the entire US population. This is a sign of improving economic conditions in China? I think not."
One of the things that separates liberals from conservatives is that liberals want to put into place policies which will alleviate suffering now while conservatives are content to offer policies that may help eventually.
I don't think a program which has moved 200 million people off the land and into a situation where they are squatters in cities with no health or retirement care can be regarded as improving the lot of the average peasant. He also ignores the 80,000+ instances of civil unrest that happened in China last year.
In a world where natural resource availability is becoming a real issue is building a super city like Shanghai with all its glitz and excess the path that China should be taken? Aren't we in the US discussing ways to conserve and create a sustainable model, so why should be applaud China's efforts to recreate the outmoded 20th Century city?
Let's face it the motivation of all those who still flog the ideas of unlimited growth is that they participate in the consumerist/capitalist model which is predicated upon never ending growth. This doesn't fly in a finite world. Talk about to viewpoints...
--- Policies not Politics
Daily Landscape
March 2, 2007 1:10 PM | Reply | Permalink
Mark A. Kleiman Sucks Giant Green Slimy Goat Balls
March 2, 2007 1:18 PM | Reply | Permalink
Jeff, by contrast, thinks we live in a different world: one in which "class solidarity among [transnational] educated elites and global movers and shakers" leads to "a business partnership between Chinese commissars who provide the cheap labor and American and other transnationals who provide the technology and financing... whose lobbyists in Washington provided access to the US market" which "undercut[s] the bargaining position of labor virtually everywhere," "effectively excluding ordinary people."
American Corporations Fight Creation of Labor Unions in China
Last March, in his annual speech to the National People’s Congress, Chinese Premier Wen Jiabao announced wide-ranging economic reforms of “epoch-making significance,” including a new labor law that would crack down on inhumane working conditions.
But the move sparked opposition from many American and European corporations, even though they have long claimed that their business activities in the People’s Republic of China promote human rights.
The first draft of the law would have required all employers in China to sign written contracts with workers (preferably without fixed termination dates), restricted mass layoffs, increased severance pay and boosted the power of the government-sponsored All-China Federation of Trade Unions to negotiate layoffs, salaries, working conditions and internal company policies.
In a suprise move, the government asked for public input. Nearly 200,000 comments were sent in. The responses were mostly from Chinese workers, but representatives of American and European business organizations, including the American Chamber of Commerce in Shanghai and European Union Chamber of Commerce in China, also chimed in, criticizing the proposed safeguards. They warned that the new law would discourage their corporate members from making further investments in China.
The business community made its influence felt. Andreas Lauffs, a Hong Kong-based lawyer who advises Western corporations on Chinese employment law, says that in mid-January the Chinese government began circulating a second version of the law. Although much of the first version was left intact, companies no longer have to worry about union approval for changes such as conducting layoffs. Lauffs says he had expected government to simply ignore all the criticism. “Frankly, I was surprised how big the changes were.”
This has pro-labor groups in the United States crying foul. “Western corporations have shown themselves to be hypocrites,” says Tim Costello, co-director of Global Labor Strategies, a Boston-based think tank. “They’re opposing the very things that can raise the living standards of Chinese workers.”
March 2, 2007 2:22 PM | Reply | Permalink
No,I was making a political point. The depression was the event that discredited unregulated capitalism and provided the political leverage for the New Deal. The captains of big business accepted it, grudgingly, because they had no place to go. America was where they produced, sold and made their profits.
Neo-liberal style globalization has given them a way to undermine social democracy and to excape its constraints.
March 2, 2007 2:32 PM | Reply | Permalink
BTW, this apparently, is Kleiman's take on the "Populist Left" side of the debate:
Why is it so difficult for "reasonable people" to engage with the issues rather than engage in bullshit name-calling? I mean, talk about projection.
Slimy goat balls indeed.
March 2, 2007 2:33 PM | Reply | Permalink
"No one disputes that the economic growth in China has brought benefits to some..."
-No. Economic growth has brought benefits to the vast majority of the population of China. That's simply a fact, and your claims otherwise are based on a surprising level of ignorance. Those benefits however have come at a cost.
- The government of the PRC is an aggressively and seriously nationalist government, pursuing a nationalist economic policy. The nationalism of the Bush administration, both politically and economically is false: absolute bullshit. What strikes me as absurd about DeLong's argument, if only because he doesn't refer to it as such, is that DeLong and others like him respond to the aggressive nationalism of the Chinese with arguments for the passive internationalism of the market. The logic seems to be that nationalism as such is not the problem, only defensive nationalism is. But China, India and others followed the logic of defensive nationalism for years, and wisely so. Why should they begrudge us playing the game as best we can?
I'd like to read more on that.
I'd also like to read more on the European as opposed to the American response to the rise of China. As I commented in a previous post- as perhaps the only person here actually doing business with Chinese factories (and with members of a family connected both to Harvard and personally to Brad DeLong)- I referred to the fact that our partners import machinery and chemicals from social democratic Europe -a major selling point!- and not from the US, which is not well known for producing quality.
I say these things as an internationalist for whom a Chinese peasant means no more of less than a peasant in rural Ohio: that is to say a bit less than my mother. I'd be more pissed at DeLong If it weren't for the fact that straw men are everywhere on these posts, though he's doing a pretty good job of acting like one.
Still this entire conversation is a fucking joke.
March 2, 2007 4:29 PM | Reply | Permalink
Here's a report of a response from Europe concerning India, at least. Don't know if anything came of it. But the rhetoric in encouraging:
http://www.ft.com/cms/s/e10e25d2-8484-11db-87e0-0000779e2340.html
March 2, 2007 5:44 PM | Reply | Permalink
Here's my version of the "two worlds":
A. (DeLong): The United States is drawing China inexorably into a bright future of universal liberal democracy and capitalism.
B. (Faux): China is drawing the United States inexorably into a shadowy future of universal authoritarian state capitalism where quaint 18th century notions about "life, liberty and the pursuit of happiness", or "We the people" repose quietly in dusty museums.
I think DeLong and most other establishment figures are relying rather heavily on the sainted Milton Friedman and his "Free to Choose" liturgy (political freedom flows inevitably from economic freedom) for their confidence that we are living in World A.
I'm with Faux in worrying that there is a troubling lack of real evidence to support the St. Milton-ian faith in economic determinism. Come to think of it, didn't economic determinism go out of fashion along with Marxism? Apparently it only got converted into Friedmanite economic determinism.
Maybe those living in World A can help me with my faltering faith in the transubstantiation of economic freedom into political freedom. Save me from heresy if you can -- but I'm more disposed to be persuaded by evidence than rhetoric. I hope that isn't already my undoing ;)
March 2, 2007 6:03 PM | Reply | Permalink
Neo-fuedalism is a good guess. The right to enter into contracts with employers will be paramount and will trump the others.
The right knows that there's more to govt than the market, but they won't admit that in public because to admit it is to invite debate. If there's no world govt, there's no debate. The nation state would seem to be on the way out, but it's going to take quite a while for everyone to get on the same page.
March 2, 2007 8:00 PM | Reply | Permalink