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Thursday, April 14, 2016

Notes on the free trade debate

First, Dr. Miller has graciously provided the audio of our debate at Future Strategist, which, among other things, once more demonstrates the astuteness of my decision to avoid pursuing a career in radio or anything that involves speaking in public. It's as if the more clearly I am able to think through these complicated issues, the harder I find verbally articulating the path through them. At this point, I have to expect that if I ever come to correctly grok the fullness of all the myriad pros and cons of free trade, my verbal explanations will be reduced to seemingly nonsensical word bursts.

move... you know... war... people... um, mask of credit!

Second, since I didn't have any reason to fully cite a few of the more interesting quotes I'd found, (for, as Spacebunny observes, a very particular definition of interesting) I thought some of you might find reading them to be illuminating. Since Dr. Miller didn't put much effort into distinguishing between free trade in goods and free trade in labor, there wasn't any point in doing more than mentioning these statements in passing. But many free traders do attempt to make the distinction, which is why I believe they are worth noting.

Milton Friedman, "What is America" lecture at Stanford:

There is no doubt that free and open immigration is the right policy in a libertarian state, but in a welfare state it is a different story: the supply of immigrants will become infinite. Your proposal that someone only be able to come for employment is a good one but it would not solve the problem completely. The real hitch is in denying social benefits to the immigrants who are here. Look, for example, at the obvious, immediate, practical example of illegal Mexican immigration. Now, that Mexican immigration, over the border, is a good thing. It’s a good thing for the illegal immigrants. It’s a good thing for the United States. It’s a good thing for the citizens of the country. But, it’s only good so long as it’s illegal.

Ludwig von Mises, Liberalism, Chapter 8. Freedom of Movement

The natural conditions of production and, concomitantly, the productivity of labor are more favorable, and, as a consequence, wage rates are higher, in the United States than in vast areas of Europe. In the absence of immigration barriers, European workers would emigrate to the United States in great numbers to look for jobs. The American immigration laws make this exceptionally difficult. Thus, the wages of labor in the United States are kept above the height that they would reach if there were full freedom of migration, whereas in Europe they are depressed below this height. On the one hand, the American worker gains; on the other hand, the European worker loses.

However, it would be a mistake to consider the consequences of immigration barriers exclusively from the point of view of their immediate effect on wages. They go further. As a result of the relative oversupply of labor in areas with comparatively unfavorable conditions of production, and the relative shortage of labor in areas in which the conditions of production are comparatively favorable, production is further expanded in the former and more restricted in the latter than would be the case if there were full freedom of migration. Thus, the effects of restricting this freedom are just the same as those of a protective tariff. In one part of the world comparatively favorable opportunities for production are not utilized, while in another part of the world less favorable opportunities for production are being exploited. Looked at from the standpoint of humanity, the result is a lowering of the productivity of human labor, a reduction in the supply of goods at the disposal of mankind. Attempts to justify on economic grounds the policy of restricting immigration are therefore doomed from the outset. There cannot be the slightest doubt that migration barriers diminish the productivity of human labor. 


Gary North, "Tariffs as Welfare-State Economics", Mises Institute

The ethics and economics of restricted trade surely apply to the person who wants to trade on the other side of the invisible line known as a national border. If the arguments for restricted trade apply to the American economy, then surely they apply to the other nation's economy. Logic and ethics do not change just because we cross an invisible judicial line.... Any time a government sends out a man with a badge and a gun to restrict trade, this is an act of war. Nobody should favor a restriction on other people's trade unless the results of that trade are comparable to the results of trade during wartime.

What I find interesting about these defenders of the free movement of people, or if you prefer, free trade in labor and services, is that although the greatest among them, Ludwig von Mises, clearly recognized the potential flaw in his pro-free trade position, he not only uncharacteristically chose to wave it away, but to the extent he considered it at all, he reached what is now obviously a completely wrong conclusion.

This issue is of the most momentous significance for the future of the world. Indeed, the fate of civilization depends on its satisfactory resolution. It is clear that no solution of the problem of immigration is possible if one adheres to the ideal of the interventionist state, which meddles in every field of human activity, or to that of the socialist state. Only the adoption of the liberal program could make the problem of immigration, which today seems insoluble, completely disappear. In an Australia governed according to liberal principles, what difficulties could arise from the fact that in some parts of the continent Japanese and in other parts Englishmen were in the majority?

To continue from my observation in last night's debate, this is a 20th century defense of an 18th century argument that sounds utterly insane in the face of 21st century realities. Consider the application of this argument to current events:

In a Sweden governed according to liberal principles, what difficulties could arise from the fact that in some parts of the country Syrians and in other parts Swedes were in the majority?

What difficulties indeed?  Anyhow, it has become increasingly apparent to me that the lack of concern about national sovereignty shown by free traders is akin to that demonstrated by libertarians, and reflects a fundamental conflation of the concept of "the nation" with the concept of "the state". They simply don't understand that their positions are logically self-refuting in addition to being empirically false.

UPDATE: The paper I mentioned, Trade Wars, Trade Negotiations and Applied Game Theory, by Glenn W. Harrison and E. E. Rutström, can be found here

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109 Comments:

Blogger 1337kestrel April 14, 2016 8:08 AM  

The economic arguments make sense, if you assume the peoples of all nations are pretty similar.

Anonymous Baseball Savant April 14, 2016 8:23 AM  

VD,

Can you provide the link here to the paper you read regarding the prisoner's dilemma? I think it would be interesting to read.

Blogger Wanda Sherratt April 14, 2016 8:24 AM  

Chesterton once wrote that the bigger an idea is, the harder it can be to whittle it down to words. It's as if an enormous helplessness descends on us. So if someone were to ask "Why do you like civilization?", we'd end up spluttering, "Why, Beethoven! And there's that chair! And pianos! And... and... newspapers!"

Blogger Nate April 14, 2016 8:25 AM  

" At this point, I have to expect that if I ever come to correctly grok the fullness of all the myriad pros and cons of free trade, my verbal explanations will be reduced to seemingly nonsensical word bursts."

The issue is the delta of the clock speeds of the mouth and the brain. For dumb people the mouth clock speed is faster than the brain clock speed... so they can't communicate well.

Your problem is the opposite, but the result is the same. Your brain clock speed is faster than your mouth clock speed. Given input... your brain returns so many possible options and lines of attack it locks you up.

It happens to smart people a lot... for example.. when you are both typing out a sentence and rewording the same sentence in your head while you type.. and then you end up leaving out a word or using the wrong verb tense.

Same thing.

Anonymous VFM #6306 April 14, 2016 8:50 AM  

Free trade does not include the free movement of vowels.

Blogger John S April 14, 2016 8:55 AM  

Thus, the effects of restricting this freedom are just the same as those of a protective tariff.

Since even Rothbard (Von Mises' protégé) changed his mind about free immigration; might we also infer that a protective tariff,being a functional equivalent, is also a pretty good idea?

Anonymous old man in a villa April 14, 2016 8:55 AM  

"In a Sweden governed according to liberal principles, what difficulties could arise from the fact that in some parts of the country Syrians and in other parts Swedes were in the majority?"

Was that supposed to be rhetorical? What difficulties? Well for starters the difficulty created when you try to impose "liberal principles" held by Swedes on a majority population (Syrians) that don't want or respect them. Now you are no longer imposing "liberal principles", but draconian totalitarian policies.

How hard was that to grasp?

Anonymous smedley butler April 14, 2016 9:01 AM  

Moses wasn't a great public speaker.

Blogger tz April 14, 2016 9:04 AM  

@5 constipated trade? oh , v not b

Blogger Salt April 14, 2016 9:14 AM  

Nate wrote:The issue is the delta of the clock speeds of the mouth and the brain.

When mouth and brain are aligned you get Ann Coulter.

Blogger Avraham April 14, 2016 9:15 AM  

Howard Bloom made a good argument that it all depends on the social meme that the group's essence. To the degree that the actual individual are secondary compared to the meme that motivates the entire group.

That means that not only are people not similar but radically different. And libertarians depends on people being the same. But we are not all the same and even if we think we are we can't know that. We can not know our motivations. And our motivations are the inner meme.

Anonymous Conservative Buddhist April 14, 2016 9:16 AM  

Public speaking, interviewing, podcasting including impromptu etc are skills that can be learned and honed through practice just like dribbling and shooting a soccer ball.

Blogger SciVo April 14, 2016 9:16 AM  

Wanda Sherratt wrote:Chesterton once wrote that the bigger an idea is, the harder it can be to whittle it down to words. It's as if an enormous helplessness descends on us. So if someone were to ask "Why do you like civilization?", we'd end up spluttering, "Why, Beethoven! And there's that chair! And pianos! And... and... newspapers!"

Civilization? Craft, dialogue and unconcern.

Blogger VFM #7634 April 14, 2016 9:16 AM  

"As a result of the relative oversupply of labor in areas with comparatively unfavorable conditions of production, and the relative shortage of labor in areas in which the conditions of production are comparatively favorable, production is further expanded in the former and more restricted in the latter than would be the case if there were full freedom of migration. Thus, the effects of restricting this freedom are just the same as those of a protective tariff."

Exactly. The ultimate laboratory for how free emigration rights can kill a country: Puerto Rico.

Blogger Nate April 14, 2016 9:17 AM  

"Was that supposed to be rhetorical? What difficulties? Well for starters the difficulty created when you try to impose "liberal principles" held by Swedes on a majority population (Syrians) that don't want or respect them. Now you are no longer imposing "liberal principles", but draconian totalitarian policies."

well for one what you are thinking of when you say "liberal principles" are nothing like what Mises would've called "liberal principles".

There would be no wellfare for these syrians to take advantage of. They'd either work or starve.

So as you can see... the problem would work itself out. Wellfare is liberal to us. Mises would not have called it liberal at all.

Anonymous Dave Gerrold's Cabana Boy April 14, 2016 9:21 AM  

Understanding completely. I can speak publicly well, particularly when presenting material that I have meted down and trodden out.

When I am in position of having to explain a thorny concept on the fly, as in an argument or debate, my brain runs far ahead of my mouth, and vapor lock can result.

Sometimes you have to force yourself to pause/appear to ponder, while you get your myriad angles in order before saying the words aloud.

Blogger frigger611 April 14, 2016 9:22 AM  

I enjoyed the debate, but had some disappointments. I think it would have helped if Dr. Miller understood that the audience was likely more informed and well read on the issues of basic economics and specifically the "free market" sort of versions. He spent too much time on boilerplate fuzzy feel good cliches about all boats rise with the tide etc, and virtually nothing on Western Civ. Economies cannot exist without a civilizational framework, after all - a point most libertarians seem to miss.

I was VERY disappointed that he didn't seem to bother researching your variable of LABOR MOBILITY, a brilliant insight and notion of yours, and which acts, basically, as Shiva the Destroyer. I wanted to see this examined by the both of you more deeply.

He later admitted that the idea struck him as one that he hadn't considered much before, but definitely recognizes now its import.

Felt like a missed opportunity.

As for your speaking, it was generally fine, but you are trying to do too much. You would improve 1000% if you weren't also acting (somewhat) as moderator, and as compiler and reader of questions - this is too much multi-tasking.

Maybe if you had SpaceBunny or some 3rd party available to look over the questions and choose the best, your mind would be freed up to only concentrate on the argument.

Blogger Samuel Nock April 14, 2016 9:28 AM  

@17

The reason Miller didn't spend time addressing issues of civilization and culture is because he hasn't spent any time thinking about them.

Blogger Samuel Nock April 14, 2016 9:31 AM  

@19 "Vox what if you did a transcript and eBook the thing?"

He is. Transcript will go to Brainstormers, and ebook will be $4.99.

Blogger Austin Ballast April 14, 2016 9:35 AM  

A core question I am still working out is "who decides?" I would not trust those currently in power to really put the good of the nation ahead of their own interests and profits.

This means that limiting trade could be just as bad as claims to not limit it. (Reality finds us limiting it all the time, regardless of what we claim.)

This same principle applies to all areas of life, including the libertine society most Libertarians aim for.

Controlling that means someone will set the laws on what behavior is acceptable and what is not. That is also prone to abuse, but the answer of having no rules leads to the cesspool we are headed towards now.

I am not sure if this is as clear to others, but it demonstrates to my mind that we cannot avoid the "who chooses?" question in any area. Someone always chooses. The question is if we will allow the possibility of a good choice or if we will follow some false claim of no one deciding which ends up letting immoral people decide, whether they are raunchy cultural libertines or predatory countries.

I will bet that Gary North has no trouble with "people with badges and guns" enforcing some morals per his support for Kingdom Theology, the idea that God's rule will happen on this Earth before Jesus returns. His opposition to "people with badges and guns" is only in one issue, not all issues and is thus inconsistent.

(I am basing this on my understanding of his theology and his life's desire to write an extensive Biblical commentary, though I forget the exact scope of that now. His father-in-law had the same theology and he has noted his support for it many times over the years.)

Blogger VD April 14, 2016 9:36 AM  

As for your speaking, it was generally fine, but you are trying to do too much. You would improve 1000% if you weren't also acting (somewhat) as moderator, and as compiler and reader of questions - this is too much multi-tasking.

We really didn't have an option. We're going to look into what controls can be handed over to someone else in the meantime.

Blogger Austin Ballast April 14, 2016 9:36 AM  

I was hoping the discussion would deal with the issue of how free trade in goods requires the free movement of people. It sounds like it did not, unfortunately.

Blogger CarpeOro April 14, 2016 9:36 AM  

" As a result of the relative oversupply of labor in areas with comparatively unfavorable conditions of production, and the relative shortage of labor in areas in which the conditions of production are comparatively favorable, production is further expanded in the former and more restricted in the latter than would be the case if there were full freedom of migration."

Wonder what Mises answer would be to how this has worked out with the easing of trade restrictions? As they ease, those areas with a surplus of cheap labor (China, India, etc.) have drawn in the means of production and the wages of labor there have gone up to some extent for a portion of the population - yet productivity per worker remains below that of the United States. At the same time, production and wages have fled the United States - leaving the more productive and previously well paid unemployed or under employed. It could be argued that at best the quantity of production of mankind has remained basically the same. Would he argue that it is only because it isn't completely free trade or would he observe that he had failed to calculate some factors into the equation?

Anonymous Eduardo April 14, 2016 9:37 AM  

Oops, did not know that thanks man... Woukd fix if I could edit.

Now that price is a bit sour no? Wonder how the price was calculated...
----------------------

Portuguese-speaking dude being English nazi... Moment

Car-Taa-Ge hehehe ... Isn't it Car-Tay-ge?

Blogger VD April 14, 2016 9:38 AM  

So as you can see... the problem would work itself out.

One problem. Not more serious ones. Bring in a bunch of industrious Chinese, or Jews, or Germans and you'll soon have additional problems.

Blogger Mr.MantraMan April 14, 2016 9:41 AM  

A religious zealot and two men of the jewish persuasion, easily understood how they view people as fungible units of exchange.

Blogger Elocutioner April 14, 2016 9:44 AM  

This comment has been removed by the author.

Blogger CarpeOro April 14, 2016 9:46 AM  

"Howard Bloom made a good argument that it all depends on the social meme that the group's essence. To the degree that the actual individual are secondary compared to the meme that motivates the entire group."

I'll have to give it the discussion a listen, but this seems like a fatal flaw to me. With the influx of immigrants you no longer HAVE one meme. You have multiple ones, one for each group that remains distinct. By nature, these will compete. With the continual influx of members of the alien groups, their memes fail to be absorbed or merge into one meme. As the blog discussions go in the end, there can be only one, which means war or expulsion.

Blogger frigger611 April 14, 2016 9:50 AM  

@18

Yes, Samuel - someone very smart (probably on this very blog) once said "libertarians are like women - they tend to take things like 'civilization' as givens."

Dull peons that fill places like Arlington National Cemetery make possible those academies of enlightenment where our priestly betters will correct us, saying "well, of course it works in practice! But does it work in theory?"

All rhetoric, no gunsmithing.

Blogger pyrrhus April 14, 2016 9:53 AM  

Milton Freedman and his fellow libertarians failed to understand one crucial fact--immigration by people of low intelligence (say below 90) can never be a good thing at any level, because they are violent, and there aren't many jobs they can do well...

Blogger Salt April 14, 2016 9:54 AM  

The TPP deal -

New Balance is reviving its fight against the trade deal, which would, in part, gradually phase out tariffs on shoes made in Vietnam. A loss of those tariffs, the company says, would make imports cheaper and jeopardize its factory jobs in New England.

Blogger Samuel Nock April 14, 2016 10:01 AM  

@30

"First, assume a civilization...."

It's actually just a few steps upstream from the can-opener joke involving economists. It's funny because it's true.

Blogger Avraham April 14, 2016 10:10 AM  

CarpeOro: I thought that was the point of Howard Bloom. He in fact was critical of Muslims in particular because of the different meme that motivates them as opposed to Western values.

Blogger CarpeOro April 14, 2016 10:14 AM  

@34

I'll have to listen to it to get the full context. Thanks for the clarification

Blogger The Other Robot April 14, 2016 10:26 AM  

@30: "well, of course it works in practice! But does it work in theory?"

I think it is rather more like:

"Without understanding why it works in practice, I will assume that I can change many things all at once about this civilization I am living in and expect it to continue to work just as before."

Anonymous BGKB April 14, 2016 10:26 AM  

what difficulties could arise from the fact that in some parts of the country Syrians and in other parts Swedes were in the majority?

That's why he used the civilized Japanese in the example.

Exactly. The ultimate laboratory for how free emigration rights can kill a country: Puerto Rico.

Are you arguing Brain Drain from Puerto Rico? I am pretty sure they can only emigrate to the US.

I will bet that Gary North has no trouble with "people with badges and guns" enforcing some morals per his support for Kingdom Theology

Perhaps he wants to cross the invisible line in front of little girls bathrooms?

Car-Taa-Ge hehehe ... Isn't it Car-Tay-ge?

In Massachusetts, Chariot for Women is promising to launch a service featuring female drivers picking up only women and children. Drivers will even have to say a "safe word" before a ride starts.
http://finance.yahoo.com/news/women-only-car-services-fill-niche-legal-044702775.html

Blogger Nate April 14, 2016 10:28 AM  

"One problem. Not more serious ones. Bring in a bunch of industrious Chinese, or Jews, or Germans and you'll soon have additional problems."

Correct. Additional problems that will not be nearly as acute though.

Blogger tz April 14, 2016 10:31 AM  

I keep thinking of this skit

I'm waiting for EU governments to pass laws subsidizing employing the "refugees". It isn't merely low intelligence, it would be worse to have a feral, aggressive culture of smart people. Ask England about the Vikings, or some of the more recent examples.

Japan isn't languishing because they lack free trade, they would be worse off. They'd be even worse if they let in immigrants to replace the nonexistent members of the latest generation.

I think before NAFTA we had freer trade and even immigration with Canada - because we both were semi-protectionist, we both had higher wages, so car factories on both sides weren't seen as any kind of trade war. Michigan and Ontario were not unlike Michigan and Ohio. Add Mexico, and everything breaks down. Before the 1990's (especially before 9/11) Sarnia and Port Huron were like suburbs, and Windsor to the Detroit area. Yes, there were bridges and customs booths, but little friction. So between culturally compatible places, it is now actually worse.

"We fired him because he kept stealing and abusing" "he says it was because he was Muslim" "He claimed the Koran said it was his duty to disrupt our workplace"...

Anonymous Mature-Craig April 14, 2016 10:34 AM  

it has become increasingly apparent to me that the lack of concern about national sovereignty shown by free traders is akin to that demonstrated by libertarians, and reflects a fundamental conflation of the concept of "the nation" with the concept of "the state". They simply don't understand that their positions are logically self-refuting in addition to being empirically false

interesting

Anonymous Mature-Craig April 14, 2016 10:35 AM  

I think Trump said something to the effect of "I believe in smart-trade"

Blogger tz April 14, 2016 10:37 AM  

Maybe the EU is just becoming one giant version of the "B Ark".

@37 Will the MA car service allow Trans-women?

The most wonderful thing about transgenderism is it allows men to invade female-only spaces and have the SJW swarm attack if the women put up a fight.

Has anyone checked if Disney was making all their bathrooms "gender neutral"? Or are they stalling?

Anonymous Eduardo April 14, 2016 10:41 AM  

BGKB

Well... Errr, is it me or the west is slowly moving to a society comprised of female things and both-sexes things?

Is just funny to think that the company conception comes from the need to feel safe...

Have an idea... Uber-Ilk! We come in a black 100.000+ vehicle, with a motorcade and overwatch helicopter, and you get to borrow a .45 during the luxurious ride, that will make all those other b**tches think of you all day long! All our drivers are bonafide Alphas and all escort personnel reliable Betas, that excludes any Brazilian Delta-Gamma ;-)

I am sure we could sell that...

Blogger Nate April 14, 2016 10:41 AM  

This comment has been removed by the author.

Blogger tz April 14, 2016 10:49 AM  

@15 well for one what you are thinking of when you say "liberal principles" are nothing like what Mises would've called "liberal principles".
There would be no wellfare for these syrians to take advantage of. They'd either work or starve.
So as you can see... the problem would work itself out. Wellfare is liberal to us. Mises would not have called it liberal at all.


No, the Syrians would riot and pillage (I don't have to mention rape as they are already doing that even with welfare). Rioting and pillaging can be very entrepreneurial - the most loot with the least effort and trying hard not to kill the goose. Isn't the free market wonderful? They may have low IQs but aren't that stupid. The high IQ elite are stupid since they rationalize everything.

Many men and most women will not mercilessly enforce a libertarian society which is why it has to be the dominant (90%+) cultural norm so violations are extremely rare. You can't leave it to the "dispute resolution organizations" - whatever phone number equivalent of 911, you'll be dead or dispossessed, and the DRO is about efficiency, not doing a "Hama" on a refugee neighborhood.

Blogger VD April 14, 2016 10:54 AM  

Correct. Additional problems that will not be nearly as acute though.

I think they'll be much worse and harder to control in the long run.

And Craig, shut up. Nobody cares. If you want to apologize to Jews, then find your local synagogue.

Blogger tz April 14, 2016 10:55 AM  

@26/@38 - Bringing in a more industrious people can pull up a less so group, and it is hard to argue wealth that derives from virtue instead of cronyism. Consider when the whites colonized (in the USA I'm here permanently sense). Was everyone in South Africa and Rhodesia better off? Even Idi Amin (There is a scene from "The last king of Scotland where he asks his physician "why didn't you tell me not to expel the asians [merchant middle class]?" - "But I did tell you!" - "Ah, but you did not persuade me!").

The problem would be a cultural conflict. If you are hard about being culturally neutral and minimalist, fine. Most of those groups "know how to run things", and a well managed, well run society is antithetical to liberty. For all the problems with the TSA, imagine if it did what really worked?

Blogger Rev. Right April 14, 2016 10:55 AM  

The nation doesn't exist to serve the interests of the economy; economic policy should serve the interests of the nation.

Blogger tz April 14, 2016 10:57 AM  

@46 Virtue signal is just another form of noise.

Blogger Nate April 14, 2016 11:02 AM  

"I think they'll be much worse and harder to control in the long run.
"

When i look at the differences in TX and TN... the effect of the comparatively small german immigration to TX casts a big shadow.

So I am in agreement.

it also makes me think we have to cede some control over immigration back to states. Once the feds decided to let all those germans in... seems a big unfair for TX to not have the authority to keep them out. especially since TX is the one paying the price.

Of course... they do have good beer in TX...

Blogger VD April 14, 2016 11:06 AM  

Bringing in a more industrious people can pull up a less so group, and it is hard to argue wealth that derives from virtue instead of cronyism.

Or, alternatively, a more industrious people can drive them off the land entirely and force them into reservations.

Anonymous VFM #6306 April 14, 2016 11:12 AM  

@17 Felt like a missed opportunity.

Huh? I thought that was a big opportunity taken. If the debate only resulted in a college-rooted econ professor recognizing the importance of labor as a unit of trade...you have no idea what a big deal that is.

If Dr. Miller had recognized the relevance of the idea before hand, he wouldn't have been debating Vox on it in the first place!

That's not an opportunity lost. It was one taken.

My three takeaways:

1 - Dr. Miller may have too much theory and not enough testing, but he's also a damn genuine and curious economist who has clearly proven a willingness to put his most cherished ideologies into the fire to see what survives. I imagine he has tenure or is on track to get it, and if so...he has no professional incentive to put his ideas into a meat grinder. But he did.

2 - The special and assumed separation of the "market good" we call labor from all other goods in the discussion of trade is a disastrous formula. It isn't just about the exchange of envoys - it is about the measurable movement of labor as a market good. H1B is free trade. Those are jobs lost and goods imported - the two converge the closer a system is to free trade. Only national borders and border policy can serve as an effective filter to skim and separate the two goods of labor and products. The weaker a nation's filter, the faster that labor/unit convergence adjusts wealth down or up to a global average, and the more violently the poor of that nation (regardless of the relative wealth of that nation) are displaced.

Impoverished labor is a cheap, low quality good. Migrating poverty loses value as it moves. Or, as Jesus Christ mentioned: "The poor you will always have with you."

3 - Dr. Miller's theory of innovation is really unexplored territory in economics, even though it is a significant nominal area of study. The problem is that innovation is almost always taken as a given (that it happens) and is studied as a component of some sort of theory questioning why innovation happens. However, there really isn't that much out there right now that simply asks "Is it really happening?"

Blogger tz April 14, 2016 11:13 AM  

Galt's gultch was shielded

Imagine if John Galt had instead invented a teleporter and a physical wall shield.
Then he teleported all the moochers and looters to the far side of the wall, and all the men of mind inside.

At that point, the looters and moochers demand in - open borders - immigration, specifically so they can reimpose the looting and mooching. Why would any smart and sane person tear down the wall?

Anonymous BGKB April 14, 2016 11:15 AM  

Was everyone in South Africa and Rhodesia better off

Illegal immigration was their worst problem, but the hottentots did get genocided so the Zulus could be the tribe closest to white handouts.

OT: Ok pay up I told you he was STR8. Ben Shapiro ‏@benshapiro· Apr 12 Ben Shapiro Retweeted Cosmopolitan Note to @Cosmopolitan: this is not a vagina.

Blogger Don Nicholls April 14, 2016 11:43 AM  

You can't ignore the economic effect of mixing people of incompatible cultures. When you do so, you get Europe.

Blogger James Dixon April 14, 2016 11:59 AM  

> The nation doesn't exist to serve the interests of the economy; economic policy should serve the interests of the nation.

Exactly. A subcategory of the law is made for man, not man for the law.

Anonymous Sensei April 14, 2016 12:02 PM  

Whelp, guess it's time to start my Okapi farm...

Blogger James Dixon April 14, 2016 12:11 PM  

Oh, and Vox, it doesn't get said often enough, so: Good work.

Anonymous Jack Amok April 14, 2016 12:30 PM  

Add Mexico, and everything breaks down.

An excellent general statement.

"Trade encourages dishonestly and corruption."

Absolutely. Trade means all sides adopt the trust level of the least trustworty participant. If the two sides are both high-trust societies, like the US (or at least what the US used to be) and Canada, that's not a problem. But, like tz's quote above, add Mexico, and it breaks down.

Add China and it's even worse.

Blogger tz April 14, 2016 1:12 PM  

@29 well said
@50 point taken. of course some here (in the high plains) suggested moving the new Islamic refugees to those reservations.

Another thing overlooked is more ordinary regulations - can I stream popcorntime bit-torrents from a country that doesn't have the same copyright laws?

And that leads to "innovation" - are patents to be honored? Consider pharmaceuticals, I can't buy the same drug for less in Canada. Much of the crony economy would collapse if we had true free trade. What about the Canadians who might like some of our guns? What if innovations are made one place but best implemented somewhere else that refuses to pay royalties?

Anonymous Ominous Cowherd April 14, 2016 1:43 PM  

@44 Nate ``If we could just get Trump to not talk like an 8 year old...''

Nate, he's talking to people who think that voting matters.

Blogger Josh April 14, 2016 1:45 PM  

Vox, we all know the real reason you're anti trade is the Herschel Walker trade.

Blogger guest April 14, 2016 1:58 PM  

My thoughts about Miller's trust that the future brings a brave new world of the future with medical interventions that increase IQ etc, etc, is that the medical field is really not that advanced. Of course the worst scientific retractions are from the fields of psychology, but the field of medicine has its own laundry list of research fraud and retractions. We are just not that good.

Blogger dc.sunsets April 14, 2016 2:08 PM  

No one wants to live near, shop next to or live with assholes.

My epiphany was to realize that different people consider different actions the epitome of assholeness.

Culture matters. I doubt any of the free trade proponents ever considered what it would be like to be a Ph.D. economist forced to live in the barrio that accompanied all those economically beneficial immigrants.

Blogger dc.sunsets April 14, 2016 2:12 PM  

For a bunch of well-educated people, they seem utterly deaf to their own hypocrisy.

People are both economic and non-economic actors. Human action occurs on both tracks, so positing the economic benefit of free trade on one track that dumps the costs associated with non-economic acts on others is the very definition of concentrated benefits, diffuse costs.

Blank Slate strikes again. It is utterly astonishing how deep was the brainwashing in this patently idiotic concept, and how long-lived it is today.

Anonymous Oppressedfart April 14, 2016 2:15 PM  

Follow up on the twitter comments

@voxday The 10 minute Intro from Miller is hard to hear. Quite painful that he cannot see the obvious holes in his logic.

@voxday 45min in, a bit disappointed that you do not call him out on his logical errors or his strong moral need for equality

@voxday I'm amazed you are letting him get away with "trade makes poor countries rich" "all countries should be equally rich" - 3 times

@OppressedFart You clearly don't understand the format. It's not about jumping in and attacking everything. Listen to the whole thing.

@voxday Don't react that defensive. I never said jump in and go apeshit. But you ignored it completely.

---

The last time voxday told me I clearly don't understand stuff I was trying to tell him about an SJW subversion of major GamerGate hubs. He told me I don't know how allies work and that I should either let KiA do their thing or create my own platform. Just saying.

Going back to topic. The topic finally comes up from 1h13min to 1h16min. But it is only touched very softly and doesn't connect with Dr. Miller at all. It's pretty telling in what way he slaps away the Prisoner's dilemma. It again comes up at 1h30min when voxday makes the important emotional connection, but still Miller's belief that fundamentally everyone wins in so called free trade isn't challenged. Even when the IQ average of a population is mentioned.

---

Rewording the 140 char tweets to expand on what I was missing in the conversation and what I think is important to point out - maybe even to Dr. Miller himself.

Dr. Miller states right at the start that it is beneficial if Mexico becomes equally rich to the USA. He then later makes the point that many poor countries got rich due to free trade (Taiwan, China ...). Making a point that Bangladeshis can afford Smartphones now. These are all arguments hammering the moral foundations of fairness and harm/ care as described in Jonathan Haidt's book The Righteous Mind. Those are clearly moral arguments for Dr. Miller and are tries for emotional appeals to the audience. Given the audience voxday's blog and thus the brainstorming has they of course fall flat. Doesn't mean they weren't made. Doesn't mean they won't connect for the podcast audience Dr. Miller brings himself. And for that audience simple moral arguments against that or exposing them via talking about their untold downsides in some small sentences would have been great. Both for that audience and for Dr. Miller himself.

The question is. What does one care more about. The (citizens in one's) own country getting richer, or the world on average getting richer. For Dr. Miller and his line of arguing clearly the latter. The next question is if the latter is even possible which straight leads to the average IQ issue and some pretty rough examples of what happened to African countries once they got their freedom from white oppressors.

---

Unrelated: I found the talk about an AI deciding to end mankind quite amusing. If an AI can decide it would be in his best interest to reuse the atoms of humanity. Why would it be that hard to conclude that a human based computer, a mega-corporation could come to the same conclusion? That it is in the mega-corporation's best interest to disregard the personal needs of individuals altogether or even worse eliminate the threat of competition a smart population/ hive of people (nation) does pose.

Anonymous A Paradigm Is More Than Twenty Cents April 14, 2016 2:36 PM  

Implicit in the Free Trade argument is the blank slate fallacy. It's not acknowledged, because "everyone knows it" so it must be true. Blank slate is one of the huge fallacies because nobody examines their premises, and the good Dr. of Econ clearly is in the blank slate camp.

Economists tend to regard workers as interchangable carbon-based units. So replacing Northern Euro high-trust workers, farmers, professionals, etc. with low-trust Central American peasants or very low trust Somali clan members in theory is possible, however as the DFL is finding out it ain't quite the same in practice.

Take away the blank slate fallacy and Free Trade tumbles to the ground, a key prop removed.

However, since the blank slate fallacy is a major support for liberalism, it isn't going to go away easily.

Blogger dc.sunsets April 14, 2016 2:41 PM  

This comment has been removed by the author.

Blogger tz April 14, 2016 2:46 PM  

@63
No one wants to live near, shop next to or live with assholes.
...
Culture matters. I doubt any of the free trade proponents ever considered what it would be like to be a Ph.D. economist forced to live in the barrio that accompanied all those economically beneficial immigrants


You're saying the immigrants would hate living near the PhD?

Blogger Blaster April 14, 2016 2:46 PM  

I haven't listened to the entire debate yet. I've just listened to the opening statements and here's my notes/response to James Miller's opening statement:

1. Trade and innovation are the same:

Not true. They are only the same from narrow economic perspective. The important difference is recognizing who controls what.

When you move production to another country, that country now controls production.

When you innovate, you retain control of production.

Furthermore, there's an important difference as to who benefits most from the technological innovation vs the offshoring innovation. The profits from technological innovation go mostly to the technological innovators. The profits from offshoring are split between the domestic shareholders and the foreign shareholders.

The question then becomes, what are those foreign shareholders actually interested in consuming themselves? How much of those profits goes into fueling demand for products we sell vs products they can make for themselves?

When you look at the trade deficit with China, the imbalance is enormous.

In a world where competition always plays by trade rules and there are no wars, control of production and flow of profits doesn't matter. In the real world, it does.


2. Job losses and re-investment.

Where the re-investment goes matters.

"What could those Japanese do with those dollars that could harm America?"

They could invest in the American Housing Market. Instead of buying American exports or paying American workers or investing in American companies, they buy the one product that is essential to every resident of the United States: homes.

If the person in Japan uses the money to buy American homes, this inflates the price of American homes, so the American who bought the Japanese car now lives in the Japanese car instead of a house. This is happening right now, though with China not Japan and maybe not quite that extreme. China is investing in North American Cities, typically in homes worth more than $500,000 (which is middle class in the markets they've chosen). This is squeezing the new middle-class American workers (white collar professionals, tech workers, etc.), forcing them to move further away from the job centers, meaning they're spending more time and money commuting which overall reduces the quality of life. There's a ripple effect then, where the middle-income folks spread into lower-income areas driving up THOSE real estate prices. [1]

The only people who benefit from this are real estate speculators and people who already own homes. So yes, you can buy a cheaper car but then you'll spend the difference on parking rent, and you can buy a slightly cheaper refrigerator but you'll spend the difference commuting 2 hours per day because you can't live where you work.

Again the trade deficit with China is enormous. They are not buying goods from Americans, they're buying assets. They're buying control of American livelihood.

[1] http://fivethirtyeight.com/datalab/why-the-chinese-are-snapping-up-real-estate-in-the-u-s/

Blogger dc.sunsets April 14, 2016 2:51 PM  

However, since the blank slate fallacy is a major support for liberalism, it isn't going to go away easily.

It is the heart of the cult. It is also as pervasive as nitrogen in the air we WEIRDO's breathe. It is the knife pointed straight at the heart of Western Civ, wielded by the non-Western invaders, and without it they are powerless.

Truly we are fools, drunk on moral superiority, squandering the accumulated accomplishments of our ancestors while behaving like Timothy Treadwell, whose suicidal stupidity and myopic trust also got his girlfriend eaten.

Blogger Paul Widdecombe April 14, 2016 2:57 PM  

I would like to address the flawed equivocation between innovation and trade. This is an important point which goes to the crux of how and when trade should be used to extend civilizational power.

There are actually three aspects: trade, innovation & IP protection. Correctly negotiated, these the can extend influence between trading partners. Done badly, it results in a need to carry out police actions against perceived cheats.

Let us grant that the discovery of a kind of 3d printing method to convert Iowan corn into cars would be a societal boon, even though the car plants would go out of business. So would cheap imports be. The difference is that the technological advance is permanent, whereas the trade advance is temporary. If your new friendly trade partner decides to up the price, you have nowhere to go - you can't just fire up an automotive industry overnight, especially in a non command economy. You have lost independence & the assumption appeared to be that this would be fine. Presumably on the basis that your trade partner has no ulterior motive in undercutting the market rates. Given that, in all likelihood, your new trade partner is a Marxist megalomaniac with vast resources of slave labor and a desire to enslave you too, this seems an oversight.

Free trade is always a gamble. Often one worth taking. The gamble being that you have deeper pockets than your opponent. That you can take the cheap subsidised goods & focus your efforts on something else & use your ability to innovate to gain an advantage by creating new industries.

Worked against the Soviets.

Worked against the Ottoman Caliphate.

It isn't clear that this strategy will work against the Chicoms. They appear to have pretty deep pockets when it comes to slave driving their populace into replicating out industries, seemingly with the sole purpose of undercutting them.

Blogger tz April 14, 2016 3:00 PM  

Can our dear professor be replaced by an H1-B? (lowering college costs!), or even one calling in from Bangalore?

His should be one of the most easily outsourced jobs.

Supreme Dark Lords are much harder.

Blogger tz April 14, 2016 3:06 PM  

At epautos.com he makes the case the problem is not trade but regulations - I can't buy a new car without an extra ton (literally - weight) of safety features.
So my old truck probably has the carbon footprint larger than the sum of every Prius in LA.
I'm not free to trade for a European Diesel that is 99% instead of 99.5% clean.
So "free trade" ends up being the outsourcing of compliance with stupid regulations.

Blogger Paul Widdecombe April 14, 2016 3:13 PM  

The other reason Vox will have extreme difficulty persuading mainstream economists of the virtues of negotiated trade is that the system is rigged.

Market preferences are expressed within fractions of seconds at the speed of light to request manufactured goods from China, music, films, games and other artworks without having to leave the couch.

Trade preferences, however are expressed once every four or so years by putting an "x" in a box. I call it "horse and cart democracy" as that was the level of technology the system was designed for.

This setup bestows enormous power on the political establishment, of course, creating the imperative to issue all kinds of loans, guarantees, tax breaks, bailouts, deals.

The problem is one of comparative data velocities.

Anonymous Mature-Craig April 14, 2016 3:16 PM  

Trade means all sides adopt the trust level of the least trustworty participant.

hmmm

Anonymous Mature-Craig April 14, 2016 3:21 PM  

I believe that Trade is generally beneficial,

Blogger Paul Widdecombe April 14, 2016 3:23 PM  

Vox - I happen to know that you support the idea of direct democracy.

It might be worth making this clear when debating free traders who probably assume you want to implement negotiated trade through the usual politico shitshow. An assumption that free trade would offer significant efficiencies over the kind of BS horsetrading we would see under the current system would probably be a fair one.

(Now, if the Donald gets in...)

Anonymous Mature-Craig April 14, 2016 3:31 PM  

tariff

noun
A government tax on imports, designed either to raise revenue or to protect domestic industry from foreign competition.

1590s, " from Italian tariffa

usage: The forces that compelled a revision of the tariff in 1882-83 had to do with revenue and expenditures

Anonymous Mature-Craig April 14, 2016 3:34 PM  

something just occurred to me, there are 2 good things about tariffs, 1) raising government revenue, and 2) protecting domestic industry from foreigh competition

much is made about the 2nd reason but reason 1 is a damn good reason for a tariff as well

Blogger James Dixon April 14, 2016 3:41 PM  

> ...but reason 1 is a damn good reason for a tariff as well

Only if it results in an equivalent decrease in other forms of taxation.

Blogger LP9 Forever Solidified in Gold! Rin Integra S.I.G. April 14, 2016 3:43 PM  

Thank you for providing notes, I really enjoy the economics (/global banking, finance, M & A, since it was sadly my line of work) debate topics including trade - I have much to learn and this discourse was quite something!

Anonymous Mature-Craig April 14, 2016 3:58 PM  

this whole thing is causing me to see the real life applications of economics text books and making me think economics is a more useful practical subject than I thought

Blogger VFM #7634 April 14, 2016 3:58 PM  


Exactly. The ultimate laboratory for how free emigration rights can kill a country: Puerto Rico.

Are you arguing Brain Drain from Puerto Rico? I am pretty sure they can only emigrate to the US.


@36 BGKB
But they can emigrate in unlimited numbers according to U.S. law. (So can Cubans, although the Cubans have restrictions on their emigration from the Cuban government's side.) Puerto Rico's entire population could move stateside legally if they wanted to.

Mexicans and Central Americans can't, even though they also emigrate exclusively to the U.S..

Anonymous Mature-Craig April 14, 2016 4:05 PM  

glad I picked up this nugget of good knowledge on the Vox site, cant wait to get into a discussion now knowing with 100 percent certainty that I am definitely right when I argue against open borders free trade

Anonymous Northern Observer April 14, 2016 5:23 PM  

I'm about 45 minutes in, but I think that I've heard enough to say that this would have been better had it not been live.

I think that if you'd done it without an audience, you could have paused, for like 15 or 30 minutes, between each turn to collect your thoughts and prepare your responses.

I think that I have another hour to go, but it's been good so far.

Anonymous BGKB April 14, 2016 5:25 PM  

is that the medical field is really not that advanced.

We plucked up the low hanging fruit, but in some ways we have regressed. Drug companies wanted to kill off aspirin because its dirt cheap, so they did tests to find its a weak blood thinner, only to have doctors rejoice at a cheap blood thinner that didn't need monitoring. When they did the same for quinine they found side effects not noticed in hundreds of years, either fraudulently or the chemically created version was incorrect. Then they went after Colchicine dirt cheap used in Asia for gout for thousands of years. They couldn't fake anything wrong with it but since they did the trials they had exclusive rights to sell raising costs from $10/year to hundreds a month, only for it to come out that the previously more expensive alternative is worse for both Asians and Blacks. http://medicalxpress.com/news/2016-04-gene-variant-racial-disparities-adverse.html

No one wants to live near, shop next to or live with assholes. My epiphany was to realize that different people consider different actions the epitome of assholeness.

Who would have thought David the Good would be living in Ft Lauderdale instead of me.

1) raising government revenue...reason 1 is a damn good reason for a tariff as well

Not if the money gets used to import more 3rd world moslems or encourage Latrina to have 28 crack babies.

Anonymous AI don't care April 14, 2016 5:44 PM  

it was very well done, most entertaining part (for me anyway) Dr.Miller informed us of the likelihood that A.I. done wrong, was gonna kill us.......not out of malice, but out of indifference. struck me funny as hell.

A.I. needs its own VFM shield

Anonymous A Paradigm Is More Than Twenty Cents April 14, 2016 6:07 PM  

dc.sunsets
It is the heart of the cult. It is also as pervasive as nitrogen in the air we WEIRDO's breathe. It is the knife pointed straight at the heart of Western Civ, wielded by the non-Western invaders, and without it they are powerless.

Sometimes I feel like I'm an extra in some B-grade movie like Invasion of the Bodysnatchers or They Live.

I look at the world like a normal person, and see a lot of conflicting information. I put on my pair of glasses, and everything gets weird, but it makes perfect sense. And trying to get anyone else to see it is a huge fight.

Like this: They Live - Put The Glasses ON

Anonymous mature-craig April 14, 2016 6:08 PM  

re: raising government revenue being a good reason for a tariff.

I recall Vox saying he resists anything that would lead to government expansion, so in that sense....

however in a more nationalistic sense I think its a good thing, assuming that the tide starts turning in such a way that things are done more intelligently in this country

Anonymous A Paradigm Is More Than Twenty Cents April 14, 2016 6:08 PM  

Huh. Din't come through. Oh, well: here's
the URL, copy / paste.
https://www.youtube.com/watch?v=c9rrgJXfLns

Blogger 1337kestrel April 14, 2016 8:19 PM  

His should be one of the most easily outsourced jobs.

Supreme Dark Lords are much harder.


Uh, we did outsource the job of Supreme Dark Lord.

Blogger tz April 14, 2016 9:59 PM  

One of my favorite preachers, Chuck Baldwin goes into NeoConnery - Maybe the various states can use the invasive species laws, though it is our own fault for letting Hollywood into our homes.

The worst part is the splitting and practical denial, "No TRUE Jew" - while they are running Wall Street and Hollywood and are the the opposite of anything righteous described in scripture. But Jesus tended to split it along those lines - the ordinary people asked for forgiveness and followed him, the elites who ran things were the sons of the devil and brood of vipers.

Blogger Samuel Nock April 14, 2016 10:51 PM  

@90 @1337kestrel

Thread-winning comment. lol.

Anonymous Jack Amok April 15, 2016 12:16 AM  

When Dr. Miller used China and India as examples of Free Trade making societies more wealthy, he was oblivious to what Vox had said about world-wide free trade raising the global median income to $16k a year and that that was below the US average.

China and India profited from Free Trade because they were dirt poor and Free Trade allowed them to siphon off wealth from the US. The US has become poorer because of Free Trade. And to be blunt, because of the debt bubble nature of our measures of wealth, I don't think we can actually say for sure that the median income of the world actually has gone up. It's entirely possible that once the debt bubble bursts and wipes away the false wealth people in the US (and EU) think they have, that the median income of the world has actually decreased.

I mean, does anyone really think that converting Americans from automakers into retail clerks and replacing them with Chinese automakers is actually going to increase the net wealth of the world?

Blogger The Sasquatch April 15, 2016 12:27 AM  

I do a lot of public speaking, and I approach it from the context of one who is primarily a writer. Here are some tips if you're interested in getting a little better...

I think you'll find more success if you realize that, since most people listen at a much simpler level than where they read, you need to speak at a much simpler level than where you write. Speak as if you're explaining something to a third grader. Simple organization, as simple content as you can. You're giving the listener a taste of the more fulfilling meal they might enjoy if they choose to go further and engage you're writing.

If you struggle with UMs and AHs and other mental pauses, start listening for these patterns in your daily life - on tv, the radio, podcasts, friends with whom you speak, etc. Inside of a week, you'll notice more often when you do it. Inside of a month, you will have eliminated it completely. It will also drive you nuts at first, but that goes away eventually.

Good luck.

Blogger Eric April 15, 2016 12:41 AM  

China and India profited from Free Trade because they were dirt poor and Free Trade allowed them to siphon off wealth from the US. The US has become poorer because of Free Trade.

I don't know if I agree with that. Free trade affects different people differently. If you have a highly sought-after skill, free trade will increase the value of your labor by opening external markets. If you don't, free trade will decrease the value of your labor by opening external labor pools. The Microsofts and Googles and Intels (not to mention defense contractors) have done very well by free trade.

I suspect the US is probably wealthier if you were to count up every dollar. But the dollars are certainly more concentrated, and Joe Sixpack has taken a beating. Personally I'm not much concerned with the bottom line overall wealth of society. I'd much rather live in a place where people could make enough to get by without getting outrageously lucky or being super intelligent, even if it meant the stock market didn't do quite as well and government benefits were a bit lower.

Anonymous Jack Amok April 15, 2016 1:11 AM  

I suspect the US is probably wealthier if you were to count up every dollar. But the dollars are certainly more concentrated, and Joe Sixpack has taken a beating.

Do dollars of debt count too? If so, I really doubt the US is wealthier. Debit $19 Trillion from the account and things change quite a bit, and that's just the official debt.

Though yes, whatever wealth there is has become far more concentrated. And for what it's worth, I used to work for Microsoft. I will absolutely say that Microsoft's ability to import workers from India (and also outsource work to India and China) has dramatically decreased the overall wealth of the company. It made a few executives even richer (I'm not talking about Gates and Ballmer here either, but rather the third tier guys like Nadella and a bunch of others you've never heard of), but has put the company itself into a tailspin I don't expect it to pull out of.

But I'll ask the question again. Do you really think it raises the overall prosperity of the world to convert US autoworkers into retail clerks and replace them on the assembly lines with Chinese? Think hard about that question. It's not just about relative wealth distribution among countries, or even among segments within a country. What impact does that have on the overall productive capacity of the world? If the average standard of living is productivity divided by population, what is the impact of moving the most productive people out of productive occupations?

Anonymous mature-Craig April 15, 2016 11:30 AM  

a place where people could make enough to get by

as I see it the vision of elected officials ought to be creating an environment where all the citizens, young and old, military, and civilian, all races, can make enough to get by

Blogger Eric April 16, 2016 12:50 AM  

But I'll ask the question again. Do you really think it raises the overall prosperity of the world to convert US autoworkers into retail clerks and replace them on the assembly lines with Chinese? Think hard about that question.

Yes, I do, because everyone who buys a car will pay less for it. It absolutely increases the prosperity of the world.

Blogger Eric April 16, 2016 12:54 AM  

Jack, productivity, the way economists measure it, is nothing more than an indication of the cost of labor. That's why workers in France are so much more productive than those in the US. Because the point at which you decide to buy a machine instead of hiring more people comes sooner. The idea you would want to hire Americans because they produce X amount of goods and services per Y dollar is looking at the wrong end of the telescope.

Blogger Eric April 16, 2016 1:16 AM  

That should read "X amount of goods and services per Y unit of labor".

Anonymous Jack Amok April 16, 2016 2:48 PM  

Jack, productivity, the way economists measure it...The idea you would want to hire Americans because they produce X amount of goods and services per Y dollar is looking at the wrong end of the telescope

Those two statements don't make sense together. Are you arguing for the way economists measure productivity (i.e. by using dollars or euros or some other currency), or are you arguing for not measuring it that way?

Because if you want to use the conventional economic measurement, you have to find some way to account for the debt explosion, which I don't think you can. It's too big and warps the numbers.

Myself, I'm not using it. Let me rephrase the question. Which of the following two conversions has the largest net productivity difference? A) A Chinese farmer becoming a Chinese automaker, or B) An American automaker becoming a cashier at WalMart?

Blogger Eric April 16, 2016 10:42 PM  

The later, of course. But that just reinforces my point: productivity is a measure of labor costs. Nothing more. Higher productivity does not necessarily represent more efficiency - in many cases it's quite the opposite. What's more important - the amount of labor that goes into production of goods and services, or the amount of money? If we could have one guy make every good and service in the world, albeit at ten times the cost, would that make sense?

The economist had an article on this probably twenty years ago, back before the magazine's hard turn to the left. The particulars are probably a bit out of date, but the theory isn't. They compared two hotels from a major chain (can't remember which one). In the kitchen the American hotel had five guys washing dishes by hand. In France hiring an employee is a little like getting married, in that you're taking on a whole raft of obligations and separating is a pretty messy business. So in an effort to avoid taking on a lot of employees the French hotel purchased an expensive industrial dishwasher and hired one guy to run it.

That French guy is five times as productive as the Americans. But in fact everyone is a little worse off for the goofiness of French labor markets - the customers pay more for their food and four Frenchmen who might have had jobs do not.

If you were starting an international dish-washing business, does it make sense to locate your business in super-high-productivity France where high labor costs will force you to buy capital equipment that would drive your costs above a similar plant in the US? Who, exactly, does this benefit?

It benefits France, and only France, while locating the business in the US benefits everyone who isn't French.

From my perspective as an American, I would certainly like to see American auto workers employed in American plants on American soil. Because it benefits me and my countrymen, and that's enough. But if I weren't American there wouldn't be any reason for me to want that.

Anonymous Jack Amok April 16, 2016 11:47 PM  

Eric, you still haven't answered the question. What has the bigger productivity delta? Converting a Chinese rice farmer to a Chinese autoworker, or converting an American autoworker to a Walmart cashier?

Blogger Eric April 17, 2016 2:13 AM  

Jack, I answered your question in my first sentence.

And I explained why it's irrelevant.

Anonymous Jack Amok April 17, 2016 2:10 PM  

So your position then is that we lose on every transaction but we'll make it up in volume. I don't expect that to work out.
It benefits France, and only France, while locating the business in the US benefits everyone who isn't French.

No, in that example, it benefits some people in the US, but nobody else. And let's just step back a moment and ask why the international dishwashing business wouldn't locate in France... Because of goofy French employment laws, right? Without those laws, the French restaurant would just hire French dishwashers. They wouldn't buy an expensive machine from Germany (I'm sure the dishwashing machine is a Bosch, right?) not pay transportation costs to have the dishes shipped to the US to be washed at International Dishwahsers Inc.

Now, since you brought up goofy laws, I will grant that the worst loss of the equation I proposed - the American autoworker converting to a Walmart cashier - isn't entirely a result of Free Trade. A good deal of the blame goes to idiot regulations (but then Free Trade is one way our politicians kick that can down the road - if it wasn't for Free Trade we'd be short of cars and paper and batteries and all sorts of manufactured goods our regulations make too damn hard to build in the US). With more sensible regulations, the guy would be building something useful and maybe be even more productive than he was as an autoworker.

There's an unfinished furniture business in Oregon. They used to harvest pine, cedar and spruce trees from Oregon forests, mill them into furniture at their Oregon mill, and sell them up and down the West Coast. They now ship the trees to China where a Chinese mill converts them to furniture and ships them back. The quality has gone down, the selection has gone down (because of shipping cost structure), and the transportation costs completely ate up any labor savings - the stuff still costs the same as it did before. Why did they do it? OSHA and EPA regulations, and employment law. Just about like your goofy French dishwashers.

So we have a real example of your hypothetical international dishwashing enterprise. And overall it's made the world less productive. Now, in addition to the labor required to make the furniture, we also need the labor to ship the logs across the ocean and the furniture back. The cost of production has remained the same - which you might say implies productivity is equal but I will say is proof it is lower, because the explosion of credit (in both the US and China) means that we have a good deal of hidden, unrealized inflation baked in. Those costs are actually significantly higher than they appear, specifically because the credit schemes of the US and China make manufacturing costs in the US appear artificially higher (because US credit disfavors them) while it makes Chinese manufacturing costs appear artificially lower (because Chinese credit favors manufacturing).

A big part of the reason economists - even right-leaning ones - have a hard time recognizing what is going on is that the Free Trade/Globalist/Bankster cabal have become very good at manipulating the pricing signals which economists have trained themselves to use.

Well, this thread is getting long in the tooth. I'll let you have the last word if you'd like.

Anonymous Jack Amok April 18, 2016 12:27 AM  

Eric,

I had an answer, seems to have been eaten by moderation. This thread is a bit old.

Let's pick it up some time in the future...

Anonymous Philipp April 30, 2016 11:46 AM  

The mistake the free traders, libertarians and other proponents of open borders and mass immigration make is that they think that all human beings are the same. They disregard the race, ethnicity, religion, history, culture, traditions, norms, values of the immigrants. They think we belong to a species called homo economicus.

Blogger Schalk Dormehl August 31, 2016 10:13 PM  

If you identify a problem, you're challange is to see how to solve it without men with guns and without constantly using those men with guns to force others to behave against what they would normally do.

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