Archive for the ‘Economics’ Category

Brimfield’s Great Flea Market, and China’s Great Cultural Revolution

September 18, 2021

Brimfield MA’s antiques flea market, several times yearly, is gigantic. My wife and I hadn’t gone in years, but decided to visit on September 10. About two hours from Albany.

Every kind of collectable imaginable is on offer, and many you wouldn’t imagine. Like one dealer’s display of old band-aid boxes. We were entranced by the varieties of early typewriters. The whole show is a visual feast, full of bon-bons to tickle the eye and mind. You register an object in a nanosecond, then move on to the next. But quite often you stop and think “WTF?” Struck by sheer strangeness. What were they thinking when producing this item? When buying it originally? And who would buy it now?

What a vast human effort to create all these millions of things, every one conceived to somehow be a boon or a source of pleasure. And it is startling to see what people today will buy. At one point, passing a display of what looked like, well, junk, I remarked to my wife, “Don’t people have a concept of throwing away?” While we keep producing new stuff, much old stuff sticks around; so our ratio of stuff to people rises. Imagine how glutted flea markets will be in a century or two.

Ones like this are always windows to my childhood, objects from which are now certifiably antique (as I am). So many things we played with. Lincoln logs, army men, Monopoly, Etch-a-sketch. I noticed a “Colorforms” set. That rang a bell, but I didn’t stop to remind myself what Colorforms were, exactly. I did thumb through a copy of Fun With Dick and Jane, the very book that larned me readin’.

We’re not normally buyers, just lookers — except for my coins. And my wife did acquire several choice jewelry items. A discerning connoisseur; they were all carefully selected from $1 pick trays.

Most coins you see are overpriced junk. From a guy’s binder full, I took out one unpriced item and asked. He said $10. I said $5, and he agreed. An 1852 Canada Penny token, not the common horseman type; quite high grade; once badly cleaned but I can fix that. Another gal had many pages of coins. I pulled out an Italian 1926 Two Lire marked $7. She was tough, wouldn’t budge below $6. But it’s a rare date and EF, very unusual thus (worth more than ten times the price). Then from a tray of miscellany, I held up a lovely EF 1855-B French Ten Centimes. The dealer said a buck. Thank you! Another guy’s tray had a small bronze pinback medal with busts of LaFollette and Wheeler — the 1924 Progressive Party national ticket. After much negotiation, three bucks. I enjoyed this because I have a nice personal letter from Wheeler, who survived into my youth.

My wife was terrific in helping to scout out coins. When she uttered the word at one dealer’s stall, he pointed to huge stacks of modern U.S. coins in “slabs” (plastic encapsulations certifying authenticity and grade). Ordinarily of zero interest to me. Then he said, “$100 for the whole deal.”

Seriously?

I whipped out my wallet. The 519 slabs filled a carton I could just barely lift.

Meantime: during lunch, my wife (typically) asked me the most memorable thing I’d seen. “The Chinese statuette,” I said, having pointed it out to her. “I actually thought of buying it.” The tag price of $65 had seemed awfully reasonable. “Would it be completely crazy?” She encouraged me; we searched and managed to relocate it. My $45 offer was accepted. The guy mentioned it was apparently dated 1966 in Chinese.

So this was no antiquity. However, 1966 was actually perfect, as this was clearly an artifact of Mao’s “Great Cultural Revolution” launched that year. A trio of harsh-faced figures, one brandishing Mao’s “little red book,” abusing a bent-over fourth, with a denunciation placard hanging from his neck. The makers evidently deemed this thing heroic and inspirational. In fact it’s bone-chilling. Many thousands were killed this way.

Multihued porcelain, over a foot high, it’s in perfect condition, and a truly remarkable piece of history. A graphic caution about the dangers of political extremism, and how madness can engulf multitudes. Especially relevant to today’s America. Some googling reveals that such Cultural Revolution propaganda porcelains were a genre, but I couldn’t find a match for mine. I’m thrilled to have gotten it.

Topping off the day, we went looking for a dinner venue and found a Chinese buffet — our first such in at least 18 months. For a while there, I’d feared buffets would be a permanent casualty of Covid. Civilization is a great thing. While eating, I couldn’t help being mindful of the dangers to it, so vividly illustrated by what I’d just bought.

How Much is a Life Worth? A 9/11 movie

September 10, 2021

It seemed an odd subject for a film: the story of the 9/11 victims’ compensation fund. But Worth explores the issue of how we value a life.

Keaton as Feinberg

I’ve written about that before, in the context of Covid-19, and how much economic pain we should accept per life saved.* In the case of 9/11, the government feared an avalanche of economically ruinous lawsuits, so set up the fund to give survivors taxpayer money if they’d agree not to sue. Lawyer Kenneth Feinberg (played by Michael Keaton) was named “Special Master” to run the fund. It would become operative only if 80% of eligibles bought in (within a two-year window).

Feinberg constructed a payment formula, with a floor and a cap, heavily based on lost earnings — a commonly used measure in “wrongful death” lawsuits. The cap immediately incurred pushback from lawyer Lee Quinn, representing families of high earners demanding bigger payments. Feinberg’s other nemesis was Charles Wolf (played by an understated Stanley Tucci), who organized a legion of more plebeian folks.

Feinberg as Feinberg

Wolf insisted Feinberg’s approach was all wrong. But in their interactions, Feinberg never simply asked him, “What do you propose?” Which didn’t seem at all clear. During my own career as an administrative law judge (proceedings often in the World Trade Center), contending parties would always offer different explicit plans for resolving issues. Evaluating those competing plans, I’d reach an answer.

Tucci as Wolf

Nevertheless Feinberg, after a rocky start, in which he seemed pretty clueless toward the complex human feelings at play, gets his consciousness raised, and winds up more or less satisfying Wolf by (my interpretation) junking his formulas and deciding payouts based on impressionistic evaluations of individual circumstances. Also, Feinberg tells Quinn to get lost. And while fund buy-ins lagged ominously until near the deadline, they finally did flood in, blowing past the 80% requirement.

I understood why a formulaic approach was inadequate, with some flexibility imperative. A human individual’s “value” is only tenuously connected to their earnings; indeed, the value of one’s life is mainly to oneself, which counters basing it on income. Which of course leaves the conundrum of how to price that self-value in dollars. Unfortunately the film was fuzzy about how Feinberg’s revised method actually worked, giving no concrete examples. I’m dubious that an impressionistic approach based on someone’s unfettered judgment would produce results fairer than some thoughtfully crafted formula. As Feinberg himself suggested near the film’s beginning, fairness in a situation like this is probably an impossible chimera.

Michael Keaton did a pretty accurate Ken Feinberg, based on my own recollection of my law school classmate. (A reason I wanted to see the film; I can’t recall another portraying someone I personally knew.) Even back then Feinberg was a compelling personage. I particularly recall his announcing to me, in his standard stentorian voice, “I gave you a bullet vote.” It was a Faculty-Student Committee election, at the height of 1960s “student power” agitation. With two seats up for ballot, I ran against a pair of activist types, and my candidate statement said I didn’t believe in student power; that students didn’t know enough to run the university. I surely didn’t. And never imagined winning (especially given my introverted lonerism). Yet oddly enough I was elected — thanks in part to that Feinberg bullet vote.

* https://rationaloptimist.wordpress.com/2020/03/22/covid-19-how-much-is-a-life-worth/

Coin Ad Rip-off

July 17, 2021

The Albany Times Union 7/16 issue had a full page ad hawking Walking Liberty half dollars for $39 each. Supposedly a special release deal for New Yorkers only! As a coin dealer for 40 years, I can advise that ads like this are always rip-offs. Always.

This one is full of breathless verbiage about the coins’ claimed rarity. In fact they are exceedingly common, the vast majority worth no more than the silver melt value, around $9.

But the ad gushes that SOME are worth UP TO 100 times face value. Those words “up to” are always slippery. Actually certain Walker halves are worth thousands. For sure you won’t get any such rare ones. Meanwhile, “100 times face value” for half dollars equals $50. You’re already paying $39. These hucksters think their suckers can’t do math.

Also, it says the $39 price is “just $585 for the full Bank Rolls.” Thus 15 coins per roll. In fact a standard bank roll of halves is 20.

Even the ad’s enlarged photo is a fake. It shows a 1919 half with a “D” mintmark on the front. No such coins exist.

What does “systemic racism” mean?

June 15, 2021

Black Republican Senator Tim Scott said America is not a racist country. I used to agree, seeing our few remaining racists as backward people who didn’t count for much. If anything, anti-racist affirmative action now held sway. And then we elected a nonwhite president.

However, that actually intensified racial antagonism, by newly threatening the caste dominance some whites saw as their birthright. And the next president played those racial anxieties like a fiddle. Now Republicans harp on academic “critical race theory” as a bugbear somehow threatening whites; and even “replacement theory,” a supposed conspiracy to swap them out for nonwhites.

Yet most Americans are not actually racist. It’s still only a small minority, and they’re still not our society’s movers and shakers. They’re losers. That itself partly accounts for their attitudes.

So why all the talk of “systemic racism?” Can you have systemic racism without (many) racists?

The answer is yes. “Systemic racism” does not mean whites are systematically racist. Instead it refers to societal structures that incorporate the lasting effects of ancient discrimination.

Our local Times-Union recently reported on past “redlining” in Albany. A 1938 Map with literal red lines around areas warned banks that mortgage loans there would be risky. Not necessarily targeting Black neighborhoods as such — rather, economically problematic ones. In fact, that map’s redlined zones were populated mostly by poor white immigrants. Only later did Blacks move in; mainly because of affordability, while being unwelcome in most white neighborhoods. And redlining did deny mortgages to Blacks. Such maps have been gone for decades, but their effects on where people live persist.

Then take education. For a long time “separate but equal” really meant separate and very unequal, by design. The Supreme Court outlawed that in 1954, yet separate and unequal is still widely the reality. The separateness is partly due to factors explained above. That’s hard to undo. The inequality manifests in rotten schools compared to white neighborhoods.

That should be more fixable. Yet the system is very resistant to such reform. So instead of ameliorating the disadvantage with which many minority kids start life, the education system actually worsens it, perpetuating the impact of past bias.

All this exemplifies what is meant by “systemic racism.” It doesn’t require anyone today actually being racist. It’s in the system.

Then there’s policing and criminal justice. Some say Blacks on average just get in trouble more. That has to be acknowledged. But (contrary to racist stereotypes) trouble is not in their biological DNA. Instead it comes with their social and cultural territory — not dictated by DNA either. It’s left behind when Blacks live in better neighborhoods. But for those who don’t, their environment is another lasting reverberation of a past landscape full of disadvantage.

And they get treated even worse by police and the criminal justice system than the foregoing might predict. Can’t say there’s no outright racism at play, but it’s more a matter of unconscious assumptions about people. Without being consciously racist, many have negative gut reactions toward Black faces, culturally implanted in ways often too subtle even to pinpoint. But when tested for it in the lab, even many Blacks themselves show it.

It’s very hard to overcome. I don’t consider myself some enlightened higher being, but nowadays, in most contexts, encountering Blackness gives me a positive rather than a negative vibe. Partly this is a reaction against their nemeses on the racist right. And I admire most Blacks for being good people despite all they’ve endured. Yet occasionally an opposite unconscious response is detectable.

I keep coming back to Jonathan Haidt’s metaphor of one’s conscious mind as a rider on an elephant, which represents the unconscious. We think the rider is steering, but it’s really the elephant in charge. Our challenge is to get control of that beast.

Manifesto for a new political party

June 4, 2021

We have a two-party system. Except that one is no longer a responsible legitimate party. After 53 years as a Republican, I became a Democrat as the only sane option. But I still hanker for a good second party, and I’ve thought about what it might stand for. I have no illusions that it could spring forth in today’s America. But, as an exercise in political imagination, here is the platform:

1. Truth and honesty. This even being on the list — let alone as #1 — is a sad commentary on today’s Republicans. Inhabiting an alternate reality of lies. Many Republicans know it. Bad faith pervades the party.

2. Civic virtues — democracy, decency, civility, tolerance, fairness, compassion. Sad too that this requires stating. We’d thought our democracy was secure. Now we know it needs defending. This includes the right to vote itself.

3. Science acceptance — this goes with #1. Science is not just another viewpoint, it’s how we know things. Republican rejection of science — on evolution, climate change, covid, you name it — makes it a party of fools.

4. Racial comity. Our history of slavery still afflicts us, its legacy a factor in Black Americans, on average, living less well than whites. Most fundamentally, many still feel they’re not accepted or treated as fully equal. Simply put, we must ensure such treatment. This certainly means no tolerance for racist or white supremacist views. Or police abuse. It’s not “law and order” (and not “freedom”) when police — armed government enforcers — overstep their authority.

5. Freedom of speech. Democrats are too tolerant of intolerance. True, some viewpoints can be deemed beyond the pale (See #4). But most such issues concern what should be matters of legitimate debate. We must end the McCarthyism of punishing people for their opinions. Republicans do it too, persecuting apostates from Trump worship.

6. Free market capitalism. It’s not some system thought up by ideologues, it’s how people interact economically absent interference. And businesses trying to make a buck by selling stuff gives us the goods and services underpinning our advanced living standard. Of course there must be laws and regulations to prevent abuse (we have laws against jaywalking) and there are some functions the market cannot fulfill. Otherwise, consumers and society reap the bulk of the wealth created, when markets are competitive. Anti-competitive government actions and regulatory capture are key problems.

Many Democrats romanticize government running everything. Such a concentration of power would be the antithesis of democracy.

7. A caring society. America is a very rich country. We can amply ensure every citizen has at least minimally decent health care, shelter, nutrition, etc. Don’t call it socialism or “social justice,” it’s simply recognition of our common humanity.

8. Equal education opportunity. Its lack is central to inequality. People born in disadvantaged circumstances are put further behind by rotten schools, that tend to go with the territory. Democrats have a poor record here. School choice would help. By failing to invest in all our children, we make adults who are burdens rather than productive citizens.

9. Global human rights. Remember George W. Bush’s second inaugural, casting America as the global promoter of democracy and human rights — widely mocked by cynics? But being seen as standing for what’s right, and for humanity’s highest aspirations, is key to America’s own global standing. And a more democratic and thus more peaceful and prosperous world benefits America.

10. Free trade. Both parties have lost their way, succumbing to narrow interests at cost to our national interest. Free trade does hurt some people, but makes us collectively richer. If other countries harm themselves with protectionism, we shouldn’t respond by doing likewise. It’s not a zero-sum world; freer trade globally makes all countries richer — again good for America.

11. Global engagement. In both the above respects, “America First” should not mean America alone, retreating behind walls. Since 1945, we led the way building a rules-based world order aided by a network of alliances with nations sharing our values and aspirations for human betterment. We have benefited hugely, yet again making a world in which America itself can best flourish.

12. Church-state separation. One of America’s greatest blessings. Freedom of religion shouldn’t mean government favoritism toward religion — a source of woe throughout history. Church-state separation has benefited religions, it’s a key reason why they remain so strong in America compared to Europe. Those trying to tear it down play with fire.

13. Gun control. All rights are subject to reasonable regulation to protect the public, and that includes gun rights.* America’s unique proliferation of guns is a major contributor to violent crime. We must act to keep guns out of the hands of dangerous people, and ban military style assault weapons.

14. End the “War on Drugs.” Drug use should be a medical matter, not a criminal one. The drug war itself harms society vastly more than drug use ever could. While achieving almost nothing. (Psst Republicans: this is another “freedom” issue.)

15. A welcoming country. America, uniquely among nations, is blessed by the diversity of enterprising people who chose to live here. They enrich us, culturally, economically, and spiritually. As Ronald Reagan said, America is a shining city upon a hill — whose wall has a great big door.

This platform distills a lifetime of thinking and political engagement. Is it so radical? Radically reasonable and rational perhaps. Yet can we imagine an American political party with such a program — and winning elections?

*The Supreme Court seems headed for an insane contrary ruling.

About those meal delivery service fees

May 13, 2021

Not long ago, my local paper editorialized about supposedly exorbitant fees charged by meal delivery services. With many people still using this option, its economics remains a lively topic. Here’s the letter to the editor I wrote: 

Your editorials endorse “protecting” restaurants by “clamping down” on third-party meal delivery fees which can range up to 30%. You call it “gouging.”

On a $17 meal, 30% would be five bucks. To have someone drive to a restaurant, pick it up, drive it to a home, and deliver it? Sounds like a bargain to me. 

I actually believe free market economics is a good thing. You mention at least three companies delivering meals. Are their profits exorbitant? In fact competition among them has been keeping fees down to where they’re earning little if anything! That’s the beauty of competition in a free market, giving consumers the lion’s share of the benefits from any economic activity. 

And nobody forces anyone to use these services. If they weren’t providing value commensurate with their fees, they’d get no takers. 

Meantime you also favor a $15 minimum hourly wage. How many meals can be delivered in an hour? Could drivers be paid $15 if the fee for delivering a modestly priced meal is capped at 15%, as you advocate? More likely these companies could not operate at all. A loss to them, as well as to their drivers, to restaurants, and to foodies. 

Government should step back and leave this issue to be sorted out by people’s own choices in a free market. 

Covid and the social contract

May 6, 2021

Covid will eventually be, more or less, history. Life will renormalize, more or less. But something big has changed in government’s role in people’s economic lives.

For thousands of years it had very little. That really began to change with Bismarckian Germany’s pension scheme, to save the elderly from penury. It expanded greatly in the Depression, developing a broader “social safety net.”

This sparked some pushback from people seeing beneficiaries as coddled moochers — an aggravating factor being racial. On the other hand, there’s been the rise of “social justice” rhetoric targeting inequality.

Two points. First, inequality is not per se a bad thing; some people being rich is not a problem as long as everyone has enough to live decently. And secondly, “social justice” is a mistaken framing. The word justice entails concepts of deservingness. A polemical can of worms, with some, as noted, deeming safety net beneficiaries undeserving. Better to talk not of “justice” but simple humaneness. Helping people for no other reason than they’re fellow human beings. 

Meantime, inequality is blamed on capitalism. Another mistake. While capitalism does produce disparate results, with some people getting rich, it’s wrong to see their wealth as “taken” from the rest. Steve Jobs got very rich by creating products which delighted customers and improved lives. Thus not a zero-sum game but win-win. That’s not universally the case, yet by and large those who earn riches do so by creating value benefiting others. Wealth is not evil.

And capitalism does not cause poverty. In fact, over the past century, average real dollar worldwide incomes increased something like sixfold. Not thanks to socialism; but masses of people being productively employed in a capitalist system, to make their own contributions to societal wealth, and enabling them to buy the resulting products. Capitalism’s critics never offer an alternative system to achieve that.

However, there are concerns that advancing technology will destroy a lot of jobs. This goes back to the Luddites. In every generation, what has actually happened is technology’s efficiency gains freeing up people to be productive in new and different ways, thus enlarging the overall pie. And despite predictions that Covid would accelerate automation, there’s actually zero evidence so far. But can this go on forever?

Good question, with artificial intelligence ultimately likely to replace human work like never before. A growing population segment already lacks the capability for productive employment. Largely due to what is really the key inequality in modern societies: educational inequality. And even if that could be remedied, it’s still doubtful there’ll be enough productive work for everyone. Perhaps if we can at last produce all we need with little human labor, we should just relax and enjoy it. The question then becomes how to distribute the fruits.

All of which brings us back to the governmental response to Covid’s economic fallout. Previously, social safety net programs tended to be massively encrusted with bureaucracy, means testing, other eligibility requirements, and so forth. Much of that out the window with governments now focused instead on just getting money into people’s hands. Arguably this has gone too far, with a lot of babies thrown out with bath water. But it represents a big paradigm shift in our view of the social safety net — in the direction of a universal basic income. Unemployment benefits have even exceeded what some people earned from jobs, which used to be a caricature lobbed by welfare state critics. Yet most Americans now seem okay with it, shrugging off such concerns. 

A recent David Brooks column reflects this: “Ten years ago, I would have been aghast at this leftward shift. But like everybody else, I’ve seen inequality widen, the social fabric decay, the racial wealth gap increase. Americans are rightly convinced that the country is broken and fear it is in decline. Like a lot of people, I’ve moved left on what I think of the role of government and income redistribution issues. We surely need to invest a lot more in infrastructure and children.”*

So far at least, actual wealth redistribution is limited. President Biden is proposing tax rises only for the richest, and for corporations. But most of the new spending is being financed by borrowing. Cheap to do with interest rates at rock bottom. And our society is, on the whole, plenty rich enough to do what we’re doing. But how long can we do it this way? There have to be limits, though we don’t know where they lie, and hitting them could be a rude shock. Former Treasury Secretary Larry Summers says the lack of fiscal discipline in all this spending is totally unprecedented. In the longer term, we have to face up to paying the bills. (Which Brooks too worries about.)

We could instead inflate away the debt, shrinking the value of the dollar, so the rich would pay through devaluation of their assets. But that would be economic havoc; better to just tax them. But again, it shouldn’t be on some social justice theory, as a punitive equalizer, as if their wealth is undeserved. Rather, it should be a re-envisioning of the human responsibilities of members of society toward one another.

That could be Covid’s most lasting legacy.

*Brooks mirrored my own thinking; similarly pushed leftward; partly by how utterly vile American “conservativism” has managed to make itself. 

Our Gal in the New York Times

April 18, 2021

My daughter, Elizabeth Robinson, has made her debut in the august pages of The New York Times. A letter to the editor, signifying serious chops. And it’s in her chosen field of professional endeavor — educational development in disadvantaged spheres. 

Furthermore, happily, I agree with her (not always true). The article she was answering I found basically naive. (Here is a link to it: https://www.nytimes.com/2021/04/06/opinion/stanford-admissions-campus.html.) The writer suggests that higher education opportunities for non-rich people could be expanded by simply “cloning” schools like Harvard. Here’s Elizabeth’s trenchant response:

Mr. Kirp suggests that elite universities should “clone” themselves, opening second branches around the country to allow more students to enroll and access their high-quality education. “It’s not hard,” Mr. Kirp writes, “to contemplate a Bill Gates or Laurene Powell Jobs writing an eight-figure check to help underwrite the venture.”

This is one of those shiny ideas whose sparkle far exceeds any potential impact. Allowing another 6,700 students to enroll in Harvard’s undergrad program every year would do little to address the systemic issues that make it so difficult for so many students to get into — not to mention pay for — elite universities in the first place.

Why not use that eight-figure check to help pay off student loans nationwide, or increase access to high-quality preschools, or set up tutoring programs for high-potential but struggling teenagers, or provide scholarships for the many low-income students who, as Mr. Kirp notes, have already demonstrated they can succeed at elite universities?

Dedicated efforts to mitigate income and educational inequalities across the country would do more to help these universities realize their mission than simply duplicating the same restrictive admissions dynamics in another city. And Harvard already has not an eight but an 11-figure check at the ready: its endowment.*

Note that Elizabeth has her own blog too (https://lizrobinson.squarespace.com/blog/) Mostly discussing issues in the realm of humanitarian work. (The latest post suggests aid agencies competing for the “custom” of aid recipients — a fascinating concept. But she also tackles personal life issues.) 

Elizabeth noted that writing letters-to-the-editor is something she got from me. I had one in the Times over 50 years ago. It defended Vietnam “draft dodgers” — while noting that if drafted I myself would serve. Frankly somewhat disingenuous, as I was trying hard to medically disqualify. 

My picture was once in The Times too. Because I was, indeed, a poor physical specimen, to fill my college’s phys ed requirement I looked for something non-athletic — and hit upon “outdoor education and camping.” Not foreseeing an actual camping trip. Oddly enough, a Times reporter covered it. He wrote that everyone showed enthusiasm — except for “one grim youth who carried his gear in a red plaid suitcase.” There was a photo (from the back).

I used that suitcase for years afterward. 

But my Times record is not all bad. Just as I started dating my now-wife, she, a librarian, stumbled upon an article there about a regulatory decision of mine. Nice way to impress a girl! 

* As it happens, Elizabeth just got accepted by Harvard for graduate school, but she hasn’t decided. 

Biden’s “Buy American” mistake

February 15, 2021

Trumpers persist in caricaturing President Biden as some kind of mentally defective fool. One Facebook graphic even denying that such a man could have gotten 81 million legitimate votes. While in the real world, Biden demonstrates what strong, sound, intelligent, honest, competent, sane and humanly decent leadership looks like, moving briskly to tackle unprecedented challenges and repair much of his predecessor’s damage to America. 

But Bidenism is not a cult like Trumpism. I don’t support his every stance.

For one thing, far too much of the $1.9 trillion Covid relief plan is earmarked for checks to people not really needy. Maybe that’s considered the price of political support for the rest. But I’d rather see more money going to those hurting most.

President Biden also proposes expanding regulations privileging American suppliers over foreign ones. That might seem like apple pie. But it runs up against World Trade Organization rules targeting discriminatory practices (against foreign vendors), to make trade free and fair. Trump, in his “America First” folly, tried to weaken the WTO. Not understanding how promoting free and fair trade globally benefits all countries, America included. 

A “buy American” policy sounds good for U.S. jobs. But The Economist recently explained that “by locking firms out of global supply chains and shielding them from competition it promotes inefficiency, destroying more employment than it creates.” The magazine cites one estimate that we actually lose 300,000 jobs. 

How so? Simple, really. If another country can make something cheaper (or better) than we can, we’re better off buying it from them and having our own workers instead make those things wecan make better or cheaper. That’s what economist David Ricardo called “comparative advantage.” Focusing our investment on our strengths, not our weaknesses. That makes us richer. 

Yes, buying cheap Chinese goods means fewer Americans employed making those things. But the savings to U.S. consumers enables them to buy more of other things — and that creates more U.S. jobs. And the trade also makes China richer, enabling Chinese to buy more stuff we export — creating yet more American jobs. Win-win. The beauty of global free trade.

President Biden (like others before him) seems bedazzled by the dream of “bringing back U.S. manufacturing jobs.” That’s so twentieth-century. In fact we manufacture as much as ever — but we do it with a lot less labor. That’s a good thing. U.S. jobs are not being lost to foreign countries so much as to improving automation and other technological advancements. That is, rising productivity.

At one time, almost the entire workforce was needed on farms just to feed everyone. Improved agricultural productivity freed most of us up, to work in factories instead. Thus we could produce food andmanufactured goods, making us richer. Now, another wave of productivity advancement similarly liberates us from factories, so more can be employed elsewhere, like in services. So we can produce food and manufactured goods and services. Another wealth gain. 

America’s future prosperity does not lie with metal-bashing smokestack factories, but high tech and services.

None of this is the economics equivalent of rocket science. “Buy American” is tired old-line Democratic stuff that reminds me why I used to be a Republican. But tragically that Republican party, with actual principles, that actually made sense, is long gone. At least Democrats are sane and sincere, not disingenuous and deranged. 

Understanding the China problem

February 1, 2021

Henry Kissinger wrote a 624-page book, On China. Here’s a shorter take.

China’s imperial dynasty was overthrown in 1911. Violent turmoil followed as warlords, Communists, and a government led by Chiang Kai-shek all battled for power. Then Japan’s 1930s invasion ravaged the country. Finally in 1949 Mao’s Communists triumphed; Chiang and his Nationalists decamping to Taiwan. Which became prosperous and democratic; de facto independent, though China insists it’s theirs.

Poverty always afflicted China. Mao’s harebrained economic policies didn’t help. The 1958-62 “Great Leap Forward” left tens of millions dead. The country was convulsed yet again in 1966 by the madcap “Cultural Revolution” Mao launched to consolidate his control. Destroying much cultural heritage, and many more lives. Ending only with Mao’s 1976 death.

That history of traumatization shapes China’s psyche. Mere domestic order seems a great blessing. Chinese also keenly feel past humiliation, seeing a century of Western bullying and exploitation. Making them truculently nationalistic, with chips on their shoulders, something to prove, swaggeringly aggressive.

Deng Xiaoping succeeded Mao, jettisoning his craziness and most communist dogma, opening up the economy. While big state-owned enterprises endure, they accompany a private sector actually epitomizing “unfettered laissez faire capitalism.” Producing four decades of spectacular economic growth, eliminating most Chinese poverty and creating a vast middle class. For which they also thank the regime.

Younger people, especially, wanted a freer society too. But that dream died with the 1989 Tiananmen bloodbath. All memory of which the party has striven to scrub out. The basic deal it offers is rising prosperity in exchange for total political control.

Corruption and dishonesty have long characterized China’s culture. In 2012 Xi Jinping became leader, gaining plaudits for an anti-corruption campaign. But it was mainly a way to amass more personal power than anyone since Mao. China actually remains deeply corrupt. While Xi has suppressed all dissension or debate, deploying pervasive propaganda and an Orwellian surveillance state. Thus China’s repression in Tibet, then Xinjiang, then Hong Kong. A million Xinjiang Uighurs are in concentration camps, an effort to pretty much stamp out their Muslim religion.

Today the idea of democracy has scant traction. What freedom Chinese do want is economic, which they’ve got. Politically most seem happy with dictatorship, if (as they believe) it manages the country well. In fact, they take pride in their system’s achievements, rejecting “Western” values like rule of law or press freedom, and feeling superior to democratic nations as dysfunctional, disordered, and declining. They support crushing Hong Kong’s democratic aspirations. Some social liberalism does surface mainly among the young, for causes like women’s equality, LGBT rights, and the environment. But most Chinese are more into consumerism and other personal stuff than public affairs. And remember that China has no historical ethos of individualism like ours, conformism being more the rule.

Also greatly shaping Chinese society is the one-child policy, harshly enforced between 1980 and 2016, to prevent overpopulation. It succeeded too well, causing a shortage of working age people. While a traditional preference for boys meant many girls aborted, with lone boys raised as spoiled princelings, and not enough females for them to marry. Add in desperate competition for university slots and housing costs becoming unaffordable, another damper on marrying.

Many millions had migrated from farms to cities for better pay, but the “hukou” system prevents their registry as official residents there, making them second class citizens. A deep social division. Meantime sweatshop factory jobs are disappearing, moving to even lower wage countries. Now many Chinese feel they’re in a rat race with “996” office jobs — 9 AM to 9 PM, six days a week.

There’d been hopes that an increasingly prosperous and secure China would become a well-behaved member of an interconnected global community. But clearly today’s China thinks differently. If Trump was right to see China more adversarially, unfortunately he followed up brainlessly, subverting our own interests. Not just with self-harming tariffs, but trying to decouple our economy from China’s, dividing the world into two economic ghettoes with separate supply chains, to our detriment. Particularly idiotic was confronting China alone, blowing off our allies who could have been marshaled into a united front.

But this needn’t be a new cold war. Whereas Soviets wanted the whole world Communist, China has no such agenda, being “Communist” in name only. Seeking instead just national aggrandizement. Mere cost-free kowtowing could actually help assuage that. What we really have is not combat but competition, and there’s a big difference. Competition among economic actors is always the way of the world, and should be, it’s the essence of our own free market system. The world is not zero-sum with China’s gain necessarily being our loss. They don’t stupidly imagine destroying America would be advantageous. We have to manage our competition for mutual advantage.

Of course that doesn’t mean overlooking China’s intellectual property theft and other unfair tactics. Just as we enforce rules within our own economy and punish violators but don’t seek to put them out of business. Nor do China’s human rights violations make it our enemy. That too we must call out, and mitigate whatever way possible; but again, that needn’t mean blowing up what’s mutually beneficial in our economic relationship.