You treat the flood of jobs overseas and the hollowing out of the middle class like economic inevitabilities all you like.
Well, money will always move to where it can be used the most efficiently, which tends to be in areas with low wages. So, in a free information-driven economy, it is indeed inevitable….UNTIL natural wage equalization occurs throughout the world. This is happening, but slowly, and won’t be finished until both you and I are pushing up daisies.
However, the RATE at which this occurs is subject to change. An equalization of taxation schemes, such as that just completed by the Trump administration, will help; so will the equalization of tariff schemes which they are attempting, although I have my doubts that they’ll be successful.
Anyway, point here is that we can abrogate the effects of this “hollowing out” by smart, market-based governance. The problem is that our government doesn’t do “smart” very well.
And, of course, you can also “solve” the problem by making our economy not-free, prohibiting how and where corporations can use capital. But, this strategy does not have a historical record of success.
But the fact is, it is not market inevitabilities that eviscerated the US middle class, but careful planning by corporations to buy off govt regulation in the early eighties and nineties in order to have the freedom to abandon the population for the sake of their bottom lines with the international trade deals that in fact evolved globalism itself.
Well, that paragraph is a mixed bag:
- The bugaboo with regulatory policy is that at the same time it directs capital to where the government wants it, it slows economic growth. So, it creates a governance choice where the economy can have either fast economic growth and the chips fall where they may, or slower economic growth where the government has more control over where the spoils of capitalism get delivered.
- The latter sounds good to the Left on paper, it seems, but it assumes (a) the slower economic growth won’t be VERY much slower, and (b) it assumes that the government can competently deliver those spoils. Neither appears to be true, looking at the historical data from both the US and UK over the last fifty years.
- On the other hand. you’re absolutely correct (and the negotiators of those agreements have also, grudgingly, admitted you’re correct, since the 2016 election) that those international agreements accelerated the pace of job movement to those lower-wage venues, instead of slowing the pace. Hopefully, the renegotiation of these corporatist treaties, like NAFTA, will slow the pace still further.
Quoting the Economist
I never read it unless I see it on an airplane. So, I can’t comment on anything they write.
Indeed there is no free market model of economics that does not require an external control.
I quite agree. Nothing I write should be construed to assume I believe a return to laissez-faire economics is in order. There is a baseline of regulations which must be in place to insure that all actors have a level playing field to act on, and that misappropriations of capital, when they occur (e.g., “bubbles”) are not dangerous to the overall economy. The debate is over the level of regulation, not its existence.
The rules (regulation) against theft, fraud, counterfeiting, insider trading etc etc etc are regulations enforced by non-corporate players so that all the market interests can be balanced to serve the population as a whole. That’s gone now, not due to market forces, but due to corporate capture of govt.
I have no idea what you’re talking about. All those things are still illegal.