Trade Sequence Part 2 – They Took Our Jobs!

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James K

James is a government policy analyst, and lives in Wellington, New Zealand. His interests including wargaming, computer gaming (especially RPGs and strategy games), Dungeons & Dragons and scepticism. No part of any of his posts or comments should be construed as the position of any part of the New Zealand government, or indeed any agency he may be associated with.

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  1. Avatar Brandon Berg
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    says:

    In this context, it’s spelled “jerbs.”Report

  2. Avatar david
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    says:

    States can have a comparative advantage in industries with low spillovers and generically growth-retarding political aspects. Plantation economies, for instance, which trap themselves in a twofold trap of a permanent comparative advantage in low-growth industry and permanent politics revolving around land reform rather than technological investment. But I suppose that is Part 5.Report

    • Avatar Will H. in reply to david
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      says:

      I don’t think this works as well in modern times.
      Seed, fertilizers, and machinery come from afar.
      Switzerland, for example, produces clocks and chocolate.
      That cocoa has to come from somewhere, and it’s sure not Switzerland.

      Actually, there has been a lot about Monsanto with patented seed lately.
      I think that model of a plantation economy is outdated.Report

  3. Avatar George Turner
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    A good post, but a question. Country A has weed, country B has hash, country C has coke, country D has crystal meth, country E has heroin, country F has AR-15’s and AK-47’s, country G has oil, country H has weapons-grade uranium, country I has management skills in organized crime, country J has a bunch of ninjas, country K has GPS-guided smart bombs, country L has smugglers and hit-men, country M has soldiers of fortune for hire, country N makes lefty-scissors, country O makes illegal untaxed liquor, country P makes TNT RDX HMX TNAZ and other explosives, country Q makes Saturday night specials, country R makes chemical weapon precursors, country S makes ski masks, country T has a rocket program started by ex-Nazi war criminals, country U has underage sex slaves, country V has gold and diamonds, country W has designer drugs, country X has tax shelters, country Y has cheap cigarettes, and country Z has a surplus of potatoes, corn, and wheat.

    Which country do you trade with, and do you really want to get in bed with any of them? If all these countries got together would anyone be better off?Report

  4. Avatar BlaiseP
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    says:

    When the Kingdom of Spain acquired all that gold and silver, they did two things with it. They gilded the inside of a few churches and spent the balance on mercenaries to wage religious wars in the Netherlands. Within a few decades, they were bankrupt.Report

  5. Avatar James Hanley
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    says:

    Thanks for linking trade to the idea of exchange between individuals. As I see it, the concept of free trade starts with Adam Smith’s little tale od specialization in a pin factory. Individuals specialize, factories specialize, neighborhoods specialize, cities specialize, provinces specialize, countries specialize. In an interstellar future planets will specialize. There’s no logical break point anywhere along the way; the boundaries between cities, provinces, countries are purely artificial from an economic perspective. Of course the bigger the region you focus on, the more things it will be able to do for itself, so the less it will have a desperate need for trade (your town would be impoverished withou trade, the U.S., not as much).

    Another point that often gets lost in the debates is that countries don’t trade, businesses trade.Report

  6. Avatar zic
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    says:

    This is a nice piece, James. I’m a firm believer in free trade. But there’s a counter argument that needs to be explored: regional sustainability. (I don’t have the economic terms for what I’m saying, please feel free to provide them.)

    In any given region, there has to be some ability to produce and provide for the population, and in particular, I’m looking at very basic things necessary should, for some reason, trade systems break down. Can a region provide food? Water? Clothing? Shelter? The notion that I can by coffee and oranges here in Maine is wonderful. I love coffee and oranges, and they grow in the tropics. And I’m grateful we can ship lobsters, blueberries, and maple syrup the world over. Those are also nice things.

    But I rarely here discussions about regional sustainability — can we feed the people here, can we provide them water (this is a huge problem in the US west, I think.) I’m mostly focusing on food systems here; there are other things that ought to come into consideration. But a world with free trade has great potential to displace important considerations of regional sustainability. And I think a lot of the discussions about jobs, losing jobs in particular, might reflect the underlying stress of losing the ability to sustain ourselves if systems break down. Here in the US, those fears are pretty far away. There are places in the world where they might percolate closer to the surface.

    But I do think, as we pursue global trade, we should spend more time discussing regional security; even if it means the lettuce at dinner costs a bit more.Report

    • Avatar zic in reply to zic
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      says:

      Oh for an edit function — hear not here. Probably more. There’s a no’easter, and the language circuits scramble.Report

    • Avatar Marchmaine in reply to zic
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      I suppose it is his section 3 (and beyond) that promises to discuss the differences in movement between capital and labor (and goods). Cards, we might say, will be put on the table.Report

    • Avatar Roger in reply to zic
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      says:

      Zic,

      Division of labor at whatever level it occurs implies both specialization and interdependence. If I grow the food and you defend the wall, we not only become more efficient and productive, we also become dependent upon each other. We form increasingly large networks of cooperation (with an internal dimension of competition).

      Your fear of loss of sustainability is odd considering that larger, more complex networks are not only iincredibly more productive, they are also more resilient and robust. Starvation and resource deprivation were commonplace back when networks of cooperation were more local.

      The other element of consideration is the effect of larger cooperative networks in ensuring peace. Interdependency substantially reduces the incentive to go to war. First because you depend upon the other party. Second because you don’t need to steal it to become self sufficient, you can just trade for it. This was explored in depth in Pinker’s latest book on the decline of violence.

      Specialization and trade leads to prosperity and peace. Sustainability ass you define it leads to poverty, exposure to local catastrophe and war. Thus sustainability is not as sustainable.Report

      • Avatar zic in reply to Roger
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        says:

        Your fear of loss of sustainability is odd considering that larger, more complex networks are not only iincredibly more productive, they are also more resilient and robust. Starvation and resource deprivation were commonplace back when networks of cooperation were more local.

        I agree with this; but that’s not really what I’m talking about. More, it’s crucial to weigh the value of local/regional sustainability into the equation; there’s a need for more balance. Not that a region should sustain itself, but the pieces of doing so matter, and need consideration. Efficient production is a good thing; but there is also some value in inefficient redundancy that’s localized.

        I guess I don’t see it as one/other, but feel the importance of balancing both crucial.Report

        • Avatar James Hanley in reply to zic
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          says:

          zic,

          I think we need a definition for local/regional sustainability. I’m on the same page as Roger here, seeing exchange as actually making regions more sustainable because they don’t have to rely on their own resources. True that puts them at risk if the exchange networks break, but that seems to be less overall risk than being self-reliant and not having that resource buffer that trade provides.

          And it doesn’t seem as though you’re actually arguing against that. But it’s not quite clear to me just what you are arguing. Can you flesh it out a bit more, or is it not quite a fully formed idea yet?Report

          • Avatar zic in reply to James Hanley
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            says:

            James, I suspect the problem I have hear is what ‘sustainability’ even means; so yes, my thoughts are at best half formed. Because you sustain something, and what that thing is is crucial. And in sustaining that thing, you also opt to not work at sustaining other things.

            For this discussion, I mean those things essential to a region. I don’t want to define these things, that’s a broad discussion for an individual region to undertake. But they might include ecosystems, natural resources, water supplies, food production, medical care, education, heritage.

            The University of ME has actually launched a program to develop sustainability science. And there’s a lot of writing on the topic in a this edition of, Maine Policy Review that’s worth digging into, even if you’re not from Maine.

            But that we don’t really understand what sustainability means, what regional sustainability means, is actually the problem. Because participating in the global marketplace would actually be one of the things that should be included in the list of sustainable things a region does; it would be part of that umbrella; not above it. I think that’s an important part of the discussion of free trade; and as I said, I believe the resistance to trade represents the tension here; a sense that people are being swept up into something larger, without consideration of what they need at home.

            I don’t think I’m suggesting this as an argument against free trade, but perhaps thinking that it should be a more informed part of how we evaluate trade in general, that some efficiency loss might be crucial to embrace, and that it should be an informed choice, not a choice automatically weighing in on the side of efficiency for efficiency’s sake.Report

            • Avatar James Hanley in reply to zic
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              says:

              The University of ME

              You might want to see a doctor about your narcissism problem. 😉

              Just kidding, not serious at all about that. More seriously, I get what you’re saying. I have no idea how to respond to it, because it’s something I have heard before and haven’t yet figured out how to respond to. It being only half-formed in your thoughts is, certainly, a consequence of the ideas in general not yet being fully formed and fleshed out.* It’s definitely an issue worth thinking about, particularly if it can be done without the discussants falling into simplistic localism v. globalism tropes.
              _______________________________
              *Re: Heritage. I just finished talking to my enviro politics class about federal grazing policy, and emphasized to them just how much ranching–it’s mythos, if not necessarily its economic impact–is a deeply embedded part of the western (U.S.) sense of identity, and how environmental opposition to it is often viewed by the local community as the destruction of their heritage. That makes them politically very recalcitrant, ferociously opposed to change. Us free trade advocates ought to recognize that the same thing can happen when trade disrupts established patterns–even if those patterns are inefficient and sometimes ought to be disrupted, pragmatically we have to recognize just how much strong and sustained political opposition that can create.Report

              • Avatar zic in reply to James Hanley
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                says:

                Thank you for not writing me off as ignorant.

                I am. And aware of that fact.

                In my years of writing about land use, it became obvious that it’s a term that can me all things to all people; subject to both the intent of the speaker and the ear of the listener. So I do have a bit of a narcissistic streak about a local school hopefully doing good by launching a program to help put some science to the definition.Report

              • Avatar zic in reply to James Hanley
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                says:

                And on heritage: Heritage, in itself, is an economic opportunity; one that is highly localized. People come to Maine to see the small fishing villages. They visit Appalachia to by pottery. They go to Arizona to see cowboy and Indian wild west stuff. It’s a whole lot cheaper to eat a plate of fish sticks on a plate made by machines in a factory in China while watching John Wayne westerns.

                And a whole lot less meaningful.Report

              • Avatar James Hanley in reply to zic
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                says:

                Totally agreed. But sometimes heritage is really hard to pin an economic value on. It’s not until the tourists come to the quaint little town that we can easily calculate the value of quaintness. It’s an unfortunate fact of life, and it leads some people to overvalue quaintness (to the point where any other economic development is forbidden) and others to undervalue it (to the point where all the old stuff gets torn down because nobody realizes there might be a point to keeping some of it).Report

              • Avatar zic in reply to James Hanley
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                says:

                You’d just love talking to some of the local realtors. . . selling quaint instead of ready for a fire-dept. training session before it’s ready for a fire dept. emergency.Report

              • Avatar DensityDuck in reply to James Hanley
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                says:

                Indeed, all it takes is one National Geographic documentary about the honest and humble life of the good folk of Huggerston (sole industry: a four-hundred-year tradition of buggy-whip manufacturing) to get people to feel a lot different about the whole free trade thing.Report

          • Avatar Will H. in reply to James Hanley
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            says:

            I noted the same thing, though in not the same terms.
            From my view, the issue is more one of where bringing superior goods from afar outweigh the benefit of local production, and goods & services which defy the necessary transportation.

            With zic’s issues of sustainability as noted, there comes into play the competition for resources; one of the oldest being that of water.Report

            • Avatar zic in reply to Will H.
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              I wouldn’t limit it to natural resources, though they likely deserve the most weight.

              I don’t think most folk want Gangnam Style to be their only music choice, though right now that might be most ‘efficient.’Report

    • Avatar Michael Cain in reply to zic
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      this [water] is a huge problem in the US west, I think

      It varies. The Lower Colorado River Basin is almost certainly in a deep hole. Most of the rest is okay, or would be, if they made better decisions about how to use their water diversions (what to grow, how to apply the water). On the order of 70% of the water diversions in the Upper Colorado Basin are used to grow corn to feed cattle and ethanol plants; this will eventually be recognized as a non-optimal use. The climate change computer models suggest that the northern states — Washington, Oregon, Idaho, Montana, Wyoming, possibly northern parts of Colorado and Utah — will see increased winter precipitation. Storage and management have always been important in the West; they become more so. In substantial parts of the West, the North American monsoon is an important part of the annual precipitation, but none of the models have a clue as to whether the monsoon flow increases or decreases. Two years ago the Great Plains summer high pressure system set up over western Texas and as a result, Colorado had huge amounts of monsoon rain. This year the high set up farther north and the Colorado monsoon rains were much lighter.

      Still, water is probably the reason that there will be an increased desire by the western states to put up “the inn is full” signs and try to slow migration from points east.Report

      • Avatar zic in reply to Michael Cain
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        I think agriculture is the bigger problem, some 80 to 85%.

        So. . . we grow lettuce in AZ and CA, where, in most places, there isn’t enough water to grow lettuce. And we then ship it to NY and MA, where there is enough water, but the resource of land is under pressure for subdivision into kingdom lots.

        Let’s see now, we’ve used water and fuel wastefully to be efficient?

        Land is a limited resource. Fertile soil is a limited resource. Water is a limited resource. And how you treat land, water, and fossil fuel has other serious considerations. So perhaps today’s efficiency comes at tomorrow’s expense?Report

        • Avatar North in reply to zic
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          Zic, it’s very very important to keep in mind that AZ and CA lettuce is specifically a phenomena of state intervention. Water is damned and diverted to agricultural use in these arid regions on the tax payers dime and given to farmers and significantly below market rates. This comes at the direct expense of urban dwelling people in the southwest who have significantly higher water and tax bills because the precious fluid is being diverted to grow lettuce and strawberries in the desert. In a more liberal trade system those subsidies wouldn’t occur and the strawberries and lettuce would be imported from hot humid regions elsewhere where you could grow the plants without a multi billion dollar dam and diversion system.Report

          • Avatar Kim in reply to North
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            so that’s why my produce costs more in PA! 😉Report

          • Avatar zic in reply to North
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            In a more liberal trade system those subsidies wouldn’t occur and the strawberries and lettuce would be imported from hot humid regions elsewhere where you could grow the plants without a multi billion dollar dam and diversion system.

            Please explain this more; how ‘more liberal trade’ would change this? (And I’m not arguing with gov’t sticking its neck into AG, including water rights, but rather suggesting that global trade builds off the systems existing, and this system already exists. )Report

            • Avatar North in reply to zic
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              Well agricultural subsidies are considered a barrier to trade (ask any third worlder and they’ll emphatically endorse this, it costs us dearly in lost trade with third world countries* to keep our subsidies) so in a liberal trade system this free give away of water would be discouraged by free trade agreements. In this case specifically agricultural farms in deserts would be forced to pay market rates for water and that would make desert farmed lettuce etc uneconomical. This is happening in the US right now even without free trade agreements that directly address this, mind, water is getting dear in the southwest and the big urban voting blocks are increasingly asking “why are we paying higher taxes and water bills to grow strawberries in the desert”? With the population shifting to urban settings the power of entrenched farmers lobbies is being undermined (the lunacy of this is heightened in that we’re importing cheap labor to farm our desert lettuce from the regions that would otherwise probably be growing out lettuce). The insanity of these agricultural subsidies is one of the most nasty examples of corporate welfare and is utterly antithecal to trade liberalism so the phenomena of desert lettuce, isn’t something we can fairly lay at globalizations feet.

              *mainly in financial and accounting services.Report

              • Avatar DensityDuck in reply to North
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                To the extent that there is a mythical Ideal American, it’s the small agricultural landholder. This is why farm bills exist.Report

              • Avatar Citizen in reply to DensityDuck
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                Farm bills, subsidies and free water help the big guys and the metros. Dumping killed all but the tiniest fractions of the small guys. I yearn for the end of subsidies and hope for a 20 year hard drought. Maybe the little guy will have a chance again.Report

              • Avatar zic in reply to North
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                Thank you, North.

                This is helpful. I think my concern lies in how we get from here to there; and in making sure we account for what we loose in that journey.

                The subsidized water for AG, (and wasn’t the rational for this rooted in food security?) many other regions turned their back on that production; in part, because their local production was expensive due to labor (AZ and CA also have a below-market and highly skilled work force of immigrant pickers,) and property taxes, often based on the land’s market value, and not it’s current use.

                I’m not a scientist, an economist, an anything. I’m just a middle-aged woman without a college degree. Still, I can’t help wonder if we under-value regional food security. There’s a lot of daylight between a world fed by Archer Daniels and a world fed by family farmers — and the current equation doesn’t include things like an evaluation of why lettuce from the Sacramento Valley’s cheaper. When that local farm land get’s developed, it’s no longer farm land. When an essential habitat for an animal or plant get’s destroyed, it’s often gone forever.

                Global forces do not measure these things. And efficiency is one important metric, but only one in a range of metrics to consider. Cheaper is not always better, and cheaper often hides the subsidies and bad assumptions in the calculations.

                My son’s a machinist. He sees a world where we won’t have tool makers soon. The Wall Street Journal ran a front-page story about a man (a white man) who learned how to build birch-bark canoes and taught the skill to the local Indian tribes here in Maine. Somewhere in our free markets, these things — skills in particular — deserve some recognition.

                I know that for me, it’s just a feeling. And after the anti-numbers display put on by Republicans this election cycle, I’m acutely aware of how foolish I sound; Joe Scarborough saying Nate Silver’s numbers feel wrong.

                I actually brought this is, in part, to challenge my feelings and assumptions, not just to challenge yours.Report

              • Avatar Kim in reply to zic
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                The numbersmen I know (one of them called the election better than Mr. Silver) are buying up all the tools they can find, as they expect the escalating price of gas to bring a lotta jobs back to America… eventually. And warehouses in the middle of nowhere are cheap.Report

              • Avatar zic in reply to Kim
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                says:

                /tool making is a skill, took makers create the cutting tools used in machine tool; so the tool used to cut a piece of metal into the shape, say the blades in a jet engine, a gear, an injection mold, the shell of an apple laptop, etc. We train machinists to run CNC machines, lathes, etc. We do not have a single tool-maker training program in the US, and I searched high and low, there are no apprenticeship programs either.

                But I’d recommend your friend go junk-hunting in Maine; there’s plenty of old tools to be had on the cheap in our ‘antique shops.’ I’d be happy to provide a list of good destinations, I got to know them well while I rehabbed my house.Report

              • Avatar North in reply to zic
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                Yeah the Germans and the Scandinavians have a ton they could teach us about apprenticeships I hear.Report

              • Avatar Will H. in reply to zic
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                Machinists & millwrights make tools.
                They have apprenticeship programs all over the place.

                The trend is now to make machines that will make tools.Report

              • Avatar BlaiseP in reply to zic
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                You might be looking in the wrong places. Every community college now has a 3D program, leading to CAD/CAM along one track and animation along the other.

                Trust me, we’re still on top of the stack with toolmaking. It’s just done in software these days. We can send a program to run a five-axis turret lathe anywhere in the world.Report

              • Avatar zic in reply to zic
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                I know this, Blaise; the biggest program in the US (they’re very expensive to set up and run due to the cost of the machinery) is at CMCC in Auburn, ME, and my son’s a graduate.

                And I began looking for the tool-making apprenticeship after he graduated because that’s what he wants to do. You don’t get qualifications for tool making within such programs. 3D graphics are a help, it still requires the skill one can only gain through experience working with a master.Report

              • Avatar BlaiseP in reply to zic
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                Though nothing is less wanted than unwanted advice, but have him contact Siemens, which does have such apprenticeships.Report

              • Avatar zic in reply to zic
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                Advice much appreciated. Thank you.Report

              • Avatar Will H. in reply to zic
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                I think of those experience requirements, and see the validity of them, to a certain extent.
                I see a lot of safety personnel that really don’t understand what’s going on. Some of them seem afraid to be on an industrial site.
                Presumably, if he wants to make tools, then he at least understands them.

                A lot of the tools I use are specialty tools.
                I recently drove for about 50 minutes (one way) to retrieve a brass ball-peen hammer 1/4# head, fiberglass handle. When that’s what you need, nothing else will do.
                It’s not really the price so much that made me go get it, but availability.

                One tool that I see a lot of modification of is a v-wac.
                I can’t help but think that if the people making them understood their use better, they would make them differently.

                AutoCAD is the standard, but a lot of places use MicroStations. It’s just a better program in a lot of ways.
                Most CNC programming is proprietary, and most of it is based on Pascal.

                “Making” tools covers a lot of territory.
                For example, Nicholson makes some of the best files around, but many of those are drop forged.

                But my understand is that most tools are made by machinists.
                I know it’s not my work.
                From talking with various machinists & millwrights, I know that there are a lot of certifications which some from seminar attendance (same in my own field).
                I’ll see what I can come up with later. I’ve got a few things that are semi-pressing for now.Report

              • Avatar North in reply to zic
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                My dear lady I’m utterly transported at the opportunity to be helpful!

                I agree heartily that betwixt where we are now and where we have good reason to believe the optimum less distorted state of economic affairs lies a dreadful breadth of interim terrain some of which potentially could be even more unegalitarian than where we are now. Matt Y and Klein both have observed, if memory serves me, that there’s a lot of potential for de-regulatory capture.

                The initial creation of the infrastructure for the southwestern water diversions was about food security, sure but more pertinently it was about having food. In the early 1900’s when it took off in earnest technology and economics simply weren’t in place to feed the west coast. The population was comparatively low, the water was there for the taking and of course the depression had the Feds looking for some big projects to make work. So the origins of this system were perfectly well founded. The problem is that times have changed but the systems were never designed to accept those feedbacks and change. The farmers still pay for water now as if the water still isn’t needed elsewhere; but it is. The policy still encourages farming as if there’s no other source of produce for the region; but there is. And of course the interested parties (most of them, let us be clear, large agricultural corporations hiding behind the skirts of the more uncommon family farmers) are vehemently against changing the status quos.

                Land values are a tough one. On an intellectual level I know that the price signaling of changing property values is an important feedback used to allocate land to its most effective use (in utility terms). My family, though, were fisherfolk in Nova Scotia and I have vivid memories of their dismay when the boom in coastal real estate driven by the Europeans caused their real estate taxes to skyrocket (at the same time the fishery vanished forever, a mighty great libertarian cock up that was). So the brain says land values being market based is good even though my heart sighs and says “but people get hurt”.

                I’d agree that there’s a lot of difference between a world fed by corporate and a world fed by family farms but really, before we get too choosey we gotta focus on getting the world fed. Absolutely when farm land get’s developer it’s no longer farm land but you can be confident that if food prices get high enough people are perfectly capable of moving to denser housing and tearing down the subdivision. Thing is food prices haven’t gotten that high (and that’s a triumph, not a shame). It is also important to remember that a huge majority of the stuff we do currently to support “family farms” often ends up padding the rumps of large corporate conglomerates. That’s cynical but also a fact. Actual trade liberalization doesn’t mean farms will vanish, it means that we’ll be able to discover the products that our local farms can grow best!

                You and I are wistfully on the same page about tools. If you zip over to David’s posts on the Bounty you’ll find me waxing on about the vanishing art of wooden ship building like some eighty year old geezer. But one of the delights of getting the economy developed enough is that we’ll have the slack in time and wealth to preserve all those old techniques and skills both for fun and for love of history. It is scarcity and hand to mouth living that truly threaten to erase our past. Globalization doesn’t preserve it, I conceed that readily, but globalization isn’t supposed to. Globalization is supposed to more effectively allow us to satisfy those lower rungs of the Maslow pyramid so we have the wherewithal to turn out attention to more meaningful and beautiful things. Long story short, I’m a liberal too (just a rather neo-one) so I view economics as a means to an end. Not ends in of themselves.

                Feelings are important, ain’t nothin wrong with them. You just gotta try and inform them with the facts too. Far as I can tell you’re doing fine and I’m grateful you’re thinking it out here.Report

              • Avatar zic in reply to North
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                says:

                Smiling.

                But this: t is also important to remember that a huge majority of the stuff we do currently to support “family farms” often ends up padding the rumps of large corporate conglomerates. That’s cynical but also a fact. Actual trade liberalization doesn’t mean farms will vanish, it means that we’ll be able to discover the products that our local farms can grow best!

                Having grown up on a family farm, I don’t know. A farm’s got to survive conglomerate AG* in order to find a ‘best product.’ And soil/drainage/water conditions dictate the potentials without the subsidies of water and with an eye to maintaining soil health.

                Here’s where it get’s sticky, however. I think tax policy matters; public policy matters. And I don’t have much problem using tax policy to encourage/discourage certain uses; I think there are some activities (like family farms, fishing docks, and forests) that merit protection; valuable resources, but not necessarily economically valuable resources compared to the values the ‘free market’ might assign. So we again butt into the metric of markets and how that value’s assigned; and perhaps my real issue — that economics, the monetary worth, is sometimes a poor metric for judging value. Other values are important, be they habitat for an endangered owl, a threatened fishing community, vanishing skills, or a hay field.

                I’m not just thinking of farms here in US/Canada, but the world over. India, Egypt, Africa are all seeing their ‘traditional’ farms and food sources transformed into conglomerate agriculture. Something about the spreading of the Western Diet the world over bears thought, but that’s another discussion.

                * I am endlessly perturbed by the term ‘traditional agriculture, which is a modern invention to use excess explosives from the war efforts of WW1 and 2, and has nothing to do with tradition, so thank you for an alternative term.Report

              • Avatar Will H. in reply to zic
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                My understanding is that a lot of that water allocation came from treaties between the states based on population figures at the time.
                Later came competition between population centers and agrarian use.
                Still going on these days; notably in the proposed Sunflower plant in Hays, Kans. and the Prairie power station in St. Libory, Ill.
                With both of those sites, drawing water for industrial purposes away from agrarian use was a main point of contention.
                That is, the farmers in Kansas don’t want their irrigation water drawn off to produce power for sale in Colorado.
                I remember reading in the Omaha World-Herald back in 2006 about irrigation rationing due to low levels in the Ogallala aquifer.
                When I talked with some people in Texas about it, they hadn’t heard of such a thing.Report

          • Avatar James Hanley in reply to North
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            the precious fluid is being diverted to grow lettuce

            Calling Dr. Strangelove!Report

        • Avatar Michael Cain in reply to zic
          Ignored
          says:

          I guess I’d put it this way: you can move water to the Imperial Valley and parts of AZ (and Mexico) and grow lettuce in February, or you can grow lettuce in a heated building under artificial lights in NY and MA in February, or you can do without lettuce in February. Unfortunately, the heat/light in NY and MA will be dependent on energy imported from other parts of the country (primarily coal from Appalachia or Wyoming, natural gas from the Gulf Coast or overseas, nuclear fuel from Australia or Russia, hydro power from Quebec). Chances are good that shipping February lettuce from CA/AZ is a better deal.

          If we’re going to talk about regional self-sufficiency, one of the regions most at risk in the US is the BosWash urban corridor. 70-80 million people, heavily dependent on imported food and energy. An economist friend of mine who works in DC and takes a cheerfully depressing outlook on things often remarks, “If the rest of the country ever discovers that they can provide the services that BosWash is selling them, for a fraction of what BosWash is charging, that urban corridor is in for some seriously interesting times.”Report

    • Avatar James K in reply to zic
      Ignored
      says:

      I actually think trade enhance sustainability rather than undermining it. Trade acts like an insurance policy, if you lose your productive capacity, you can buy what you need from overseas. Think of it as a bunch of mountain climbers tied together, if one slips the others can prevent them from falling.

      Water and shelter are a bit different since shelter is generally a non-tradeable so you can’t really import it (even if you can import some raw materials), and water is rarely traded over distance because it’s so heavy. So these goods will naturally be more domestically produced. But food and clothing? I actually think a focus on domestic production would harm sustainability rather than enhancing it.Report

      • Avatar Matty in reply to James K
        Ignored
        says:

        I think you may be taking sustainability literally (i.e long term viability) while Zic is using it as shorthand for avoiding certain environmental impacts. Moving food or raw materials has many effects (off the top of my head air pollution from transport and taking land from other uses to build transport infrastructure) that people may have good reasons to object to.

        It is an interesting question now I think of it how those effects compare to what the impacts would be of trying to produce more on a local scale – which would need more intensive agriculture and things like mining.Report

        • Avatar North in reply to Matty
          Ignored
          says:

          On one hand, yes, on the other hand no. Yes there’re transportation costs and as long as fossil fuels and AGW are a concern that impacts sustainability but the specialization that global trade brings also brings heightened efficiency. Local land that’s better suited to, say, indigenous forest or native prairie grass is allowed to regress back to a less used state and the food is imported from where it’s cheaper and easier to grow a lot of it. The US hasn’t been as forested as it is now for quite a long time and that’s because liberalized trade has made farming the more marginal lands uneconomical.
          So in some ways globalization promotes sustainability (and this is without even talking about the fact that only relatively prosperous and affluent societies created by globalization are willing to assign much priority to environmental sustainability concerns).Report

          • Avatar Matty in reply to North
            Ignored
            says:

            Local land that’s better suited to, say, indigenous forest or native prairie grass is allowed to regress back to a less used state and the food is imported from where it’s cheaper and easier to grow a lot of it.

            That’s kind of what I was getting at with my last sentence. How do the environmental benefits of letting an area revert to forest stack up against the environmental costs of transporting food from elsewhere. I suspect there is a net positive effect but I don’t know of any actual studies on this.Report

            • Avatar zic in reply to Matty
              Ignored
              says:

              Several years ago, I worked on a piece about the northeastern forests for The Federal Reserve Bank of Boston. This didn’t end up in the finished article, but I spent a lot of time researching carbon sequestration for that story; so might be able to answer part of your question.

              In short, the forest in the northern half of Maine sequesters more carbon then the Eastern Seaboard produces every day; particularly when that forest is left to grow for a long period, and then harvested for other purposes that also sequester the carbon — building material instead of paper or fuel, for instance. But paper and fuel is the more likely use. The old growth forests in the pacific northwest and rain forests are even better at sequestration; with tropical rain forests the most important.Report

              • Avatar James Hanley in reply to zic
                Ignored
                says:

                I worked on a piece about the northeastern forests for The Federal Reserve Bank of Boston

                You know, you’re pretty damned impressive for ” just a middle-aged woman without a college degree.”

                Seriously.Report

              • Avatar North in reply to James Hanley
                Ignored
                says:

                Seriously. The League suffers from not having tons of ladies in the commentariate and blogateriate but the ones we have? Zoom! Whoosh! My head just spins sometimes.Report

              • Avatar zic in reply to James Hanley
                Ignored
                says:

                http://www.bos.frb.org/economic/nerr/rr2003/q3/q303letter.pdf

                Without college. And I had a head injury, and the four years of high school are a complete blank. Essentially, I have an 8th grade education from one of the poorest school districts in Maine.

                So thank you.

                And in that link, the most crucial bit is the description of the bargain between Maine landowners and public use; unique in the nation, a hand-shake deal that still holds despite the changes in ownership, and one of those ‘heritage’ issues I think it crucial to comprehend.Report

            • Avatar Matty in reply to Matty
              Ignored
              says:

              I should have added in the issues of transferring production – what is the cost of converting an acre of Guatemalan rainforest to agriculture versus doing the same to an acre of north American prairie?

              I guess what I’m saying is that quantifying what we value about ecosystems so we can do cost/benefit analysis on the environmental effects of growing lettuce here versus there is hard (carbon may actually be one of the easier metrics to deal with) and that’s before we start balancing the environment against other concerns.Report

          • Avatar James Hanley in reply to North
            Ignored
            says:

            The US hasn’t been as forested as it is now for quite a long time and that’s because liberalized trade has made farming the more marginal lands uneconomical.

            That kinda fishes with the “trade hurts the environment” argument. (Which is not to claim that trade never does.)Report

        • Avatar James K in reply to Matty
          Ignored
          says:

          Without question the vast majority of transportation costs for a good come from getting it home from the shops, because that’s the only part of the shipping process that hasn’t been ruthlessly optimised by transportation companies trying to make as much money as possible.Report

  7. Avatar Citizen
    Ignored
    says:

    Awesome series,
    I see some tracks straying from my rails here.

    1. If more complex trade systems lead to less war how do we explain the magnitude and frequency of wars over the last 100 years?

    2. What happens to regions where the only marketable resource is food, that becomes over priced by a non-local food producer. This is ignorance of the non complex, (leads to heads on pikes, pikes being the last true bubble)

    3. A scientist would easily explain the usefullness of having large quantities of transferable energy at hand, IMO it appears that current economic models only value kinetic exchanges and are ignoring potentials. Large Potentials in the hands of foreign leaders is inherently a bad idea IMO.Report

    • Avatar James Hanley in reply to Citizen
      Ignored
      says:

      pikes being the last true bubble

      I’m not sure to what extent I agree with point 2, but that’s a great line.Report

    • Avatar Roger in reply to Citizen
      Ignored
      says:

      Pinkers book lays out that death by warfare is several orders of magnitude lower now than in the past. Hunter gatherers men died in the range of twenty percent or so, and the death rates have declined as civilization has evolved. There was a blip in the first half of the 20 th century, which he spends a chapter or two on.

      Basically, not only are we more prosperous now than ever, we are more peaceful too. Substantially so.Report

    • Avatar James K in reply to Citizen
      Ignored
      says:

      1. The 20th Century was part of a declining trend in war, Pinker gives the data in his book The Better Angels of Our Nature. The main reason it doesn’t look like it is because A) the 19th Century was unusually peaceful and B) modern agriculture has expanded our population so when we have a war more people end it dying because there are more people to die.

      2. Define “over priced”.

      3. I’m not sure what you’re getting at with “potentials”. How does the concept translate to economics?Report

    • Avatar North in reply to Citizen
      Ignored
      says:

      To answer your question #1 Citizen the past hundred some years actually lend credence to the trade encourages peace. At the turn of the 1900’s trade was badly restricted by tarrifs and other trade barriers driven by mercantile interests. These barriers eased through the 1900’s leading to significant economic growth. This trend was reversed by the Smoot-Hawley Tariff Act in the US which was strongly linked to the bank weaknesses that triggered the great recession. Two world Wars followed at least partially from those terrible events. In the aftermath of the war trade between the industrialized west has gradually been liberalized and the amount of war between those trade partners has plummeted to historic low levels.
      Note, also, the case of modern China. The historic model (of which Japan is a strong example) is that in the absence of liberal trade ascending Asian powers chose to pursue war to gain the resources they wanted to move into the first world economic club. Japans conflict with the US and the West in WWII was precisely this sort of dynamic.
      China right now is in a similar position to Japan early in the previous century. They are finally developing their economy and are in desperate need of capital and resources to essentially build a modern economy and infrastructure. In the past war would be almost inevitable but through current liberal trade channels China is able to parlay their low labor costs into an asset and trade it for the resources they need. The Chinese are deeply averse to having a war or indeed any conflict at all globally. They want trade to flow to allow them to continue trying to lift their national standard of living.
      Liberal trade in this case is a strong incentive for peace.Report

  8. Avatar Jaybird
    Ignored
    says:

    Dude, I have little to add. This is a fun series and I am enjoying it immensely.Report

  9. Avatar Pyre
    Ignored
    says:

    Pre-Election: Romney/Bain Capital shipped jobs overseas. This is bad.

    Post Election: Liberalization of trade doesn’t destroy jobs. and, in fact, leads to specialization and higher productivity. This is kinda good.

    You people …Report

    • Avatar Jaybird in reply to Pyre
      Ignored
      says:

      You know, if one Republican says X and another (different) Republican says Not X, it’s not exactly fair to say “Republicans are contradicting themselves!”

      Hell, forget fair. It’s not *ACCURATE*.Report

    • Avatar James K in reply to Pyre
      Ignored
      says:

      Me people?

      I never use the expression “ship jobs overseas” unironically. Never.

      And you’re assuming I’m a Democrat, which I am not.Report

    • Avatar North in reply to Pyre
      Ignored
      says:

      Humph, my only problem with Romney and Bain was his tendency to plunder their acquisitions pension funds then dump the hapless employees onto the Feds when the companies folded. I had no issue with any of his ostensible “shipping jobs overseas” schtick. Now the peeps in Ohio had a bigger problem with that but I doubt they’re waving flags for globalization right now.Report

      • Avatar zic in reply to North
        Ignored
        says:

        <i< my only problem with Romney and Bain was his tendency to plunder their acquisitions pension funds then dump the hapless employees onto the Feds when the companies folded. and transferring the leveraged debt to the bought-out company, while taking a profit. Businesses not able to get that borrowed investment on their own probably shouldn’t have gotten leveraged VC investments, either. There are other types of VC funds; designed to make high-risk investments in potentially salvageable businesses.Report

        • Avatar North in reply to zic
          Ignored
          says:

          The only reason I hesitate to condemn the leveraged buyout stuff was that on the other side of that loan was some bank that was granting the loans and they must have known what the heck they were doing or else why grant the loans?Report

          • Avatar zic in reply to North
            Ignored
            says:

            They were lending to a company with Bain as co-signer. That’s what they knew.

            My brother was a mortgage underwriter for a bank. Beginning in 2005, he started complaining about the pressure to underwrite mortgages for iffy borrowers; pressure put on him because of the value those same mortgages had as the basis of synthetic derivatives. In 2007, he was transferred to motorcycle loans; where I’m sure his desire to make certain a borrower was capable of actually paying the loan in question was a concern. That’s when he began looking for another job in a different industry.

            Through the 2000’s it was housing, and the 1990’s, dot-com/tech/VC-blessed companies. I’m sure we’re percolating another another bubble now. Seems like they become discernable mid-decade.Report

  10. Avatar NewDealer
    Ignored
    says:

    Unlike some people on the far left, I generally do believe that trade and credit are net goods and that globalization is a bit of an inevitability.

    That being said my problem with many conservatives and some libertarians is that they want globalization without anything to impact the damage caused. Some to many seem to extoll the virtues of a Jeffersonian-Agarian state: lots of self-sufficient yeoman farmers/producers and small towns where people look out for each other without realizing that globalization requires big cities, people who spend much time at work, and not a lot of self-sufficient yeomanery. The Jefferosian ideal is great for small government and no welfare state but it is horrible for a globalized economy.

    Globalization requires big government and an abandonment of pastoral ideals.

    The United States has over 300 million people. The days of an industrial economy are probably over but we need to find a decent paying solution for the displaced unskilled workers. I think that extreme income inequality or a society that is split between a relatively large upper-middle class/educated class and a huge number of people in poverty and working for low pay/no benefits is only going to produce social unrest and pain.

    We might even be seeing the end of a college degree or grad degree being a sure-fire road to the middle class because our mass educated class has grown too big. It is true that only 30 percent of Americans have college degrees and fewer have advanced degrees but there still seems to be a lot of struggle in this community as well for jobs at a decent wage.Report

    • Avatar James Hanley in reply to NewDealer
      Ignored
      says:

      globalization requires big cities, people who spend much time at work, and not a lot of self-sufficient yeomanery. … Globalization requires big government and an abandonment of pastoral ideals.

      I’m not saying there’s not a logical connection in there, but I am saying that if there is you glossed over it.Report

      • Avatar Murali in reply to James Hanley
        Ignored
        says:

        The idea is that free-trade requires capital and labour intensive modes of production, which occurs in big cities in order to sustain and facilitate the faster pace of life. New Dealer then supposes that big cities are sustained by big government*. Therefore, if we didn’t want life to suck under global free trade, we need big government to sustain big cities.

        *A lot of people (including I think libertarians IIRC) seem to think that without big government we would all be living in sub-urban and rural areas in some pastoral fantasy land. But the fact is that supplying infrastructure to rural areas in not only environmentally inefficient, it costs the government more money. Without land use regulations, cities would be bigger if slightly less cramped. In fact, almost everyone would live in the city and some would commute to the fields to work, rather than lots of people living in suburban areas. Cities probably require less money per person to sustain than suburbs or rural areas.Report

        • Avatar Michael Cain in reply to Murali
          Ignored
          says:

          In fact, almost everyone would live in the city and some would commute to the fields to work, rather than lots of people living in suburban areas. Cities probably require less money per person to sustain than suburbs or rural areas.

          I was going to write something long and complicated, but instead I’ll pose this as a question for the student. If what you say is true, then 1,000 square feet of living space in the city should be cheaper than 1,000 square feet of living space in the suburbs or a rural area. In reality, the space in the city is enormously more expensive than the space in the others. The answer to why cities are more expensive also answers most (but not all) of the question about why farmers live on their farms and support services for farmers are in nearby small towns rather than distant large cities.Report

          • Avatar North in reply to Michael Cain
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            says:

            He said cities require less money per person to sustain, not less money per square foot. If you calculate in infrastructure costs: the telephone pole, the electrical pole, the road, the mail service, the artery highway, needed to support remote living the cost per person is pretty high over a small number of people. In cities the infrastructure costs are higher for some things (like plumbing and septic) but there’re enormously more people to spread the cost over.Report

            • Avatar Michael Cain in reply to North
              Ignored
              says:

              Fine, I’ll rephrase. Why is the per-person cost of living so much higher in Manhattan, NY than it is in Manhattan, KS? His argument is that it must be cheaper to build and maintain a city than a small town. If that’s true, the cost of living should reflect that. It doesn’t. Housing in the city is more expensive, even though people live in much smaller spaces; food is more expensive; in general, per-unit energy and water prices are higher; taxes are higher (the level of services is also higher, but not by enough to explain the full tax difference).Report

              • Avatar North in reply to Michael Cain
                Ignored
                says:

                Well with New York city you have several things.

                First of all we have supply and demand. An absolute ton of people want to live in Manhattan, NY and they’ll pay a premium to live there. An absolute tone of people would rather slit their wrists than live in Manhattan, KS and would pay a ton NOT to live there.

                Second we have to face the facts that New York and the other urban environments are subsidizing the hinterlands. Governments transfer money from the cities to the countryside in great big gobs. Someone has to pay for all those hundreds of miles of roads, poles, rails etc that connect each scattered farmhouse together.

                Also of course we have meddling, the sad fact is that in Manhattan, NY there’re some government groups who’re as crooked as a barrel of fish hooks and some citizen groups who’re as dumb as a bag of rocks who do things like rent control, petty regulation, taxi medallioning and other idiotic meddling that drives prices up.

                Finally there’s the quibbling. If you calculate what it -actually- costs to provide each individual with their energy, water etc I think you’d find that the rural areas are whupped. The only reason it looks different is that rural areas are not counting the cost of installing their own septic field and drilling their own well in their daily utility costs. When one of those things needs replacing it’s done as a special large lump sum expense. In the cities those amortization effects are priced into the monthly bill.

                And my final quibble is on services. If you plunk a pin in a section of Manhattan KS and I plunk my pin into a commensurate section of Manhattan NY and we both start listing all the services and activities are available to a resident within say a twenty minute commute/walk/transit ride what have you I guarantee you that my list isn’t going to just be a little bit longer. All those amenities and options have a cost and it’s baked into the cost of living.Report

              • Avatar Michael Cain in reply to North
                Ignored
                says:

                All good, but you’re dancing around the fundamental point. People want to live in cities because cities enable such an enormous range of economies of scale and increased productivity (if urban workers put in the hours that farmers do, the amenities don’t matter because there’s not time to make use of them). In NYC, there are an enormous range of opportunities to earn $100K or more per year. In Manhattan, KS, far fewer. On a farm further out in rural Kansas, none. Farmers live on their farms because (in addition to the fact that if the calf is coming at 2:00 AM, you need to be there) it’s cheap enough they can afford it. People who provide services for farmers — grain storage, repairing the seriously broken irrigation pump, etc — do so from small towns because they can afford small town prices but not city prices. People won’t ever live in cities and commute out to work the fields, as Murali originally suggested, because those workers can’t afford city prices that are based on high-productivity jobs.

                You’re almost right with the rural septic field example. Every farmer/rancher I’ve ever known is a jack-of-all-trades on repairs. Farmers dig up and fix their own septic fields, scab on home additions, do ugly but functional welding, and perform routine inoculations of the herd themselves because they can’t afford to pay specialists. And your urban subsidies for rural areas comment is spot on. Rural America was in deep trouble in the 1920s (the Roaring 20s burst of wealth was almost exclusively an urban phenomenon). One of the decisions the FDR administration made was that rural America was not going to be condemned to second-class status; most of the programs introduced then continue today, along with new ones. Pick any state that has a “school equalization program” and you’ll find that the urban areas are picking up a good chunk of the tab for rural school districts.Report

              • Avatar Murali in reply to North
                Ignored
                says:

                Also, a large part of cost of living in the cities is artificially created by green zones: a ring of land around cities into which cities are not allowed to expand. Things are already problematic when there is natural land scarcity, but when government regulations constrain the availability of useable urban land, this further increases the land price. In addition, land use restrictions like zoning and height restrictions on buildings make land even more scarce and this causes the price of living to go up.

                Because really, I am not talking about prices that consumers pay. I am talking about the costs for the government to maintain a city’s infrastructure, which is different.

                Now, we are still going to need farm land in the near future. Indoor farming is still not as cost effective in land abundant places. Nevertheless, if land use restrictions are lifted, I foresee greater urbanisation, more urban sprawl. Fewer exurbs and suburbs and settlement patterns will become more dense with larger urban aggregations surrounded by rural areas on the outskirts. or maybe even patches of farmland embedded in a massiv urban sprawl in much the same way national parks are embedded in urban sprawl.Report

          • Avatar DensityDuck in reply to Michael Cain
            Ignored
            says:

            ” If what you say is true, then 1,000 square feet of living space in the city should be cheaper than 1,000 square feet of living space in the suburbs or a rural area. ”

            The assertion is that 1,000 square feet of suburb/rural space should be more expensive, but that subsidies make it cheaper.

            The counter-assertions, by the orthodox free-marketist, are that if the price difference could be completely explained by that level of subsidy then municipalities would have gone bankrupt long ago; that price is pretty strongly correlated to distance from urban center, meaning that there would have to be a sliding scale of subsidy and the same scale in every city in the United States; and that the people claiming subsidies exists aren’t looking at actual costs, but rather making purely subjective guesses based on geographical distance.Report

            • Avatar George Turner in reply to DensityDuck
              Ignored
              says:

              If living rural costs more than living in a big city, and living in a big city like New York costs a fortune now, just think how expensive it was when the Indians owned Manhattan!

              Some of the efficiencies from increased density don’t scale linearly. Running 1 pipe 10 miles for one person versus running it 1 mile for 10 people – requires a much bigger pipe for the 10 people. The length of trenching is reduced – but the trenching has to go through sidewalks and roads, skyrocketing the cost. And of course building upward is much more expensive than building sideways because the lower floors have to support the weight of the upper floors, and beyond several stories that gets expensive, too, increasing the cost per dwelling. Going higher still requires clever plumbing tricks and pumps because standard water pressure drops in half in only about six or seven stories (and waste-water pressures climb on the way down). And of course, running pipes through a complex building is much harder than just throwing a pipe in a trench.

              There’s a reason rednecks live in single-wides.Report

      • Avatar NewDealer in reply to James Hanley
        Ignored
        says:

        The general conservative/libertarian points against social safety net/welfare state policies is that such policies destroy communities. During the healthcare debates, many conservatives pitched an alternative of friends, families, and neighbors looking out for each other. Tom Coburn did this in a town hall.

        We see that the Republican Party is essentially an exurban/rural party now. They control the least urban parts of the United States. Many seem to still have the pathological fear of cities that drove the 1928 election against Al Smith. Many seem to believe in the fantasy of small-town America still.

        However, we are no longer a nation of small towns and walking to work in a very small area. We drive 30-40 minutes if not more to work in cities, office parks, other towns, etc. These are not jobs where you can go home for lunch. Often they are not jobs that allow people free time to do errands in the middle of the day.

        The modern economy is complicated and demands a lot from people. So much that I believe we do not have the time to be Mayberry anymore. If someone suffers a dehabilitating stroke, it is simply not possible to have neighbors look after him the same way. Also medicine is much more complicated and Doctors largely no longer make housecalls. Medicine was cheaper when it did less.

        So I think free trade is fine but that it needs to be backed with a social safety net that only the government can provide. Private charity cannot help. Things are a little better for people who can work remotely.

        In short, I think we can have a capitalist economy that offers nice things like European economies do like universal pre-school. I’m rather tired of the conservative arguments on how this is “tyranny”

        Luckily, I think the election shows that people are starting to feel the same way. Sadly the Republican Party refuses to break their fever dreamReport

        • Avatar James K in reply to NewDealer
          Ignored
          says:

          So I think free trade is fine but that it needs to be backed with a social safety net that only the government can provide. Private charity cannot help. Things are a little better for people who can work remotely.

          In short, I think we can have a capitalist economy that offers nice things like European economies do like universal pre-school. I’m rather tired of the conservative arguments on how this is “tyranny”

          We’d have to work out details, but that the sort of arrangement I could get behind.Report

    • Avatar Roger in reply to NewDealer
      Ignored
      says:

      New Dealer,
      “.. we need to find a decent paying solution for the displaced unskilled workers. I think that extreme income inequality or a society that is split between a relatively large upper-middle class/educated class and a huge number of people in poverty and working for low pay/no benefits is only going to produce social unrest and pain.”

      The best solution for productive jobs is created and or discovered via free markets. Thus the libertarian answer is to be careful not to disturb free markets, or you will make the system less responsive, less smart and less effective. That said, free markets create enough wealth to establish safety nets, preferably ones that don’t mess up the markets and market incentives.

      Furthermore, the reason global prosperity has been rising so fast is the same thing that has been minimizing the gains in unskilled labor in the US. People in China and Vietnam now are empowered to compete with Americans. From God’s perspective, shared by libertarians, mankind is better off. ( insert smiley faced icon here).

      There is a trade off between progress /prosperity and stability. Everyone wants the former without having to pay the price in the latter. Short term, it is not in the cards.Report

      • Avatar Citizen in reply to Roger
        Ignored
        says:

        What are we defining as free trade and free markets as opposed to captured markets and captured trade? I haven’t seen what I would call a free market in 30+ years.

        Again there is no account for non complex systems, I suppose they should just perish?Report

        • Avatar Roger in reply to Citizen
          Ignored
          says:

          Citizen,

          And I haven’t seen a perfect circle in 2500 years.

          Markets involve millions and billions of interactions. Any one of which can have degrees of freedom. There is no clear defining line between kinda free and kinda unfree. There are more and less free markets though.

          In general, the more free ones work real well and the less free are totally FUBAR.

          On one side of the ledger we have West Germany, South Korea and the US. On the other we have East Germany, North Korea and the USSR . On one side we have restaurants, Electronics and entertainment. On the other side we have health insurance, public schooling and college tuition.Report

          • Avatar Kim in reply to Roger
            Ignored
            says:

            So, Roger, the stock market? That systematized fleecing of your retirement account (that you have remarkably little control over), in order to enrich the wealthiest of us? The one where corporations get tax breaks for getting/contributing to your retirement?

            That one ain’t free. Not by a long shot. And it’s “not free”-ness is disproportionately hurting the poor/middle class.Report

            • Avatar zic in reply to Kim
              Ignored
              says:

              And Kim brings up a crucial element — stock markets; which are abstracted from the markets of goods and services.

              Subject to manipulation by high-speed trades right now. And hedging.

              But also highly dependent on regulation for certainty. When I purchase a stock, as an individual or a contributor to a fund, trusting that the regulatory environment for that stock functions and is sufficient. This critical point is so often overlooked, and that’s very troublesome. Just as regulation can create uncertainty, it also creates certainty. Just ask someone who held BP stock 1.5 years ago.Report

            • Avatar Roger in reply to Kim
              Ignored
              says:

              Zic and Kimmi,

              I am lost. Who fleeced my retirement? I invest in the stock market, and never felt I was getting fleeced when the market dropped. That is the risk of investing. I didn’t feel like I fleeced anyone when I made it all back either.

              Yes, some corporations and governmental stooges took advantage of the rest of us. The bailout of the GM/chrysler unions and the disgusting bailouts of the various financial firms for example. And yes, we do need regulations on financial markets. Thin, impartial, fairly consistent ones that don’t try to pick favorites.

              But this gets back to why I didn’t vote for Obama or Romney. I detest cronyists.Report

          • Avatar Citizen in reply to Roger
            Ignored
            says:

            Roger,
            What I see in globalization is the capture of all global markets. At the end of the day the question becomes whether we want to centralize or decentralize greed. My experiences indicate it is better to decentralize.
            What degree of freedom creates a salt march?Report

            • Avatar Roger in reply to Citizen
              Ignored
              says:

              Citizen,

              I too recommend decentralizing greed. Furthermore I would suggest aiming it in productive directions. That is what sports, science, entertainment fields and economics do.

              What do you mean by capture? Who captures the market and how do they do so without the use of force or the support of governments?Report

              • Avatar zic in reply to Roger
                Ignored
                says:

                There are other ways to capture markets without the use of force or the support of government. For example, in Belize, just break all the competitor’s beer bottles.

                Bottles are the big expense; they’re returned (two empties gets you a fill bottle). Belekin was the only beer available after the British left that was locally brewed. Charger came in in the 1970’s, with a better product. Grabbed the market nearly overnight. So Belekin hired people to go out and buy up the Charger bottles and then smash them. Charger went bankrupt, though they had better beer. They didn’t have pockets deep enough to constantly replace the bottles.

                While it doesn’t involve smashing bottles usually, this is a typical method of capturing market. In US pharma, for instance, a legitimate exit strategy for a start-up investment might include selling out to a competitor who doesn’t want to face the competition.Report

    • Avatar James K in reply to NewDealer
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      says:

      I can’t say I’ve ever been enamoured of the agrarian ideal, and neither a most people when given the choice. 18th and 19th Century Europeans cities were pretty awful place sot live, but people flocked to them because the country was worse.

      As for the need for “Big Government”, I tend to be a bit leery of that term since it hides a lot of detail. I think we need to consider what we government to do certainly, but my ideal government would be big in some ways and small in others.

      The days of an industrial economy are probably over but we need to find a decent paying solution for the displaced unskilled workers.

      This is indeed a problem, though I can’t help but think the rise of credentialism and the costs of compliance for starting a business is making that transition harder. Some combination of judicious deregulation and transitional support seems like the right kind of solution to me.Report

      • Avatar NewDealer in reply to James K
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        says:

        Probably a bit but some professions need credentials and training. If you are going to be doing something that can cause injury to a person somehow, you should be credentialed.

        This includes law (bad legal advice can be disastorous and there are plenty of bad lawyers with law schools and credentials), medicine, and some aesthetics work (applying chemicals or wax to the human body and massage, or do old-school shaves). It probably should not include people who strictly cut hair, taxi drivers, and people who do manicures/pedicures.

        Plus as my brother points out, there is plenty of unofficial credentialism in fields that do not require it by law. Dance Studios are a good example. The government does not require a license to run a dance studio but there is a private association that seems to be join or die. As in if you are not approved by said group, you will not find employees or students.

        By big government, I basically meant the welfare state. I think universal healthcare, universal pre-K/pre-school and other safety net programs can encourage more risk taking by people economically.Report

        • Avatar North in reply to NewDealer
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          says:

          Your third paragraph mostly invalidates your second bud. Those markets where there’s a serious chance of harm would develop private credentialism systems as a way of signalling to customers that they can/should choose trained practitioners over low cost inexperienced entrants.

          But I agree on paragraph #4 so yay for that.Report

          • Avatar NewDealer in reply to North
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            says:

            Somewhat, I think that private credentialism can be more exclusionary along racist, homophobic, sexist, religious bigotry lines.

            The original ABA code of ethics was largely designed to keep poor immigrants (especially “Russian Jewboys”) from competing with older and established WASPs. Some of the prohibitions included no advertising about rates. It took until the 1970s for the Supreme Court to say that this violated the First Amendment.

            Public/Government credentialism at least provides avenues for challenges along equal protection lines in court.Report

            • Avatar North in reply to NewDealer
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              says:

              Absolutely, ND but in those cases we’re injecting a third element, animus, into a discussion about economics. Animus goes into economics like honey goes into an engine. There’s no good reason for it to go in there and it makes the engine run poorly (or in the case of enough of it seize up entirely). Also plenty of public credentialism from the same era had similar motivations.Report

              • Avatar James Hanley in reply to North
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                says:

                Yeah, it’s not as though the government–which is responsive to folks in the same private sectors that would develop private credentialism–is exactly immune to discriminatory policies.Report

              • Avatar NewDealer in reply to North
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                says:

                True but I don’t believe in humans as economical or rational actors.

                I believe that humans are social, emotional, and largely irrational actors and will always inject things where they don’t make sense.

                One of my biggest problems with Matt Y (and most traditional economists) is that they are thinking in pure hypothetical land of pure rationalism. People are not rational. We can be from time to time but largely we are emotional. Poets know more about how humans act than economists. And I would trust a poet more to come up with an accurate hypothetical on what would happen if a certain policy were introduced.

                As a completely unrelated example, let’s use Hurricane Sandy and Price Gouging. Matt came out with a series of articles that allowing price gouging would solve the shortage problem. When people dissented, he doubled down.

                The rationalist/economist variant on price gouging seems to be that by allowing price gouging, these results would happen:

                1. People would only take as much as they need and this will free up resources.

                2. People will see that there is money to be had and rush in with the necessary items and this will decrease the price

                Never mind that NJ had plenty of gas, the problem was a lack of electricity and ability to get the pumps working.

                You need to inject the human and psychological element to understand that items one and two will probably not happen. People might rush in with the desired resources but the prices would remain high and I would bet good money that people would still horde if they could afford it, and those that could not afford the high prices will still suffer. Also price gouging can cause damage in the long term for a business. People will remember being bilked and probably stop going to said business when the crisis time is over.

                It also doesn’t help as Felix Salmon points out that most arguments for price-gouging come from wealthy people to afford it.

                In short, most economists seems perfect for Vulcans but not people. I am a bit amazed that economists still feel largely uncomfortable with acknowledging that people are not rational. Behavorial economists excluded of course.Report

              • Avatar DensityDuck in reply to NewDealer
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                says:

                The assumption is, also, that gas distribution is something you can just do out the back of a U-Haul truck with some steel drums and a length of garden hose. It’s not as though allowing gouging would cause a bunch of bootleg gas stations to spontaneously appear (and then disappear when prices went back to normal).

                Although the orthodox libertarian would say that’s because of the bastard government and its red-tape nitpicky regulations about things like grounded storage tanks and automatic cutoff valves. 😉Report

              • Avatar James Hanley in reply to NewDealer
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                says:

                I believe that humans are social, emotional, and largely irrational actors and will always inject things where they don’t make sense.

                So you have faith in one human system over any other human system…why?Report

              • Avatar Kim in reply to James Hanley
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                says:

                Much easier to have faith in the beast within, than with the human systems. The beast is both straightforward and predictable, after all.

                And greed makes the world go round.Report

              • Avatar NewDealer in reply to James Hanley
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                says:

                I don’t know if faith is the right word but I prefer systems that acknowledge the vast compexities of the human brain and society. Many (but not all) economists seem to have trouble with incorporating emotions and psychology into their concepts.

                I agree that these thoughts can very well be irrational and might often be bad but they also exist and need to be accounted for.

                This goes beyond the unacceptable bigotry and racism mentioned by North above but to the simple fact that people don’t like feeling cheated or bilked or that someone is taking advantage of an unfair situation/need.Report

              • Avatar North in reply to NewDealer
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                says:

                ND I think the reason that economists overlook the various complexities and varieties of individual human reactions is because they’re looking at a mass system. Some humans are more greedy, some more generous, some more rational, some more intuitive. Individually the predictive power of economics is limited but over huge numbers of people the various individual quirks cancel each other out and only the basic more fundamental economic laws shine through.

                Also on gas gouging it’s significant to note that even though gouging is illegal it still happened. If you’d hopped on craigs list or any similar listing service you could get gas without standing in line if you were willing to pay quadruple the price. If you were willing to pay eight times the price they’d bring it to your door. Twenty times the price it’d be brought to your door by a naked blond Asian wearing nothing but high heels.Report

              • Avatar NewDealer in reply to NewDealer
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                says:

                at North:

                Lots of things are illegal and still happen. Though I admit that we can have constant back and forth debates about this sort of stuff. Drugs and Prostitution and Gambling will happen whether legal or not but there are still many people against those things (on all sides of the political spectrum) even if they happen.Report

              • Avatar James K in reply to NewDealer
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                says:

                It’s not the economists don’t recognise that people are irrational, it’s that simply saying “people are irrational” doesn’t get you very far.

                A lot of irrationality is just personal idiosyncrasy which cancels out in large numbers. Some of it is really just strong preference, which isn’t considered irrational in an economics sense. Some of it is real irrationality, but to account for it you need some theory that predicts how that irrationality will turn out. Otherwise you’re just fumbling in the dark.Report

              • Avatar Murali in reply to James K
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                says:

                To be clear, as I understand it, there is a lot of recent work being done in economics to look at the way in which people are predictably irrational. For example, as I understand it, people are a lot like ducks. The first time people see a price to a certain good, they tend to think that that is the natural price of that good. This is kind of like a duckling imprinting on the first thing they see. This imprinting also doesn’t change. A lot of Americans tend to become aware that auto-workers are paid about $75/hr. Naturally, when they look at China, and see that they are paid much less, they think that workers in China are underpaid. While if a Chinese national who is used to looking at a $6 an hour wage were to look at an American they would think that it is Americans who are overpaid*

                *Seriously, American auto-workers are overpaid. My brother has a PhD and works as a scientist in a forensics lab and is paid less than a third the amount US auto-workers are paid. And Singapore as a first workd country has in most cases except healthcare a comparable or even much higher cost of living. Granted my brother just started working, but $75 an hour does look excessive for what is semi-skilled to low skilled labour.**

                **of course this is a prejudicial judgement on my part. Price in an efficient market is set by marginal supply and demand, not by how much effort or skill goes into training.Report

              • Avatar DensityDuck in reply to Murali
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                says:

                “Seriously, American auto-workers are overpaid. ”

                OMG UR ANTIWORKER U CAPITALIST STOOGE HOW CAN U HATE PEOPLE LIKE THAT HOW CAN U LIVE WITH URSELFReport

        • Avatar James K in reply to NewDealer
          Ignored
          says:

          I think there is some space for credentialism in the most serious cases (though I would like to see more weight given to Friedman’s ideas of using compulsory insurance to turn insurance companies into private regulators.

          I’m also much less concerned about welfare than most libertarians. I can see the merit of welfare support and some support for health care and education, even if I would do it differently to the way you would.Report

      • Avatar Matty in reply to James K
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        says:

        18th and 19th Century Europeans cities were pretty awful place sot live, but people flocked to them because the country was worse.

        This is probably still true today, in 2007 the UN published a report on the challenges of growing urban populations in poor countries (STATE OF WORLD POPULATION 2007 ) that concluded urbanisation is a significant cause of poverty reduction. Urban poverty can look worse and cause more immediate problems because it is concentrated but by both economic measures like purchasing power and human welfare indicators like access to clean water slum dwellers are usually better off than peasant farmers.Report

  11. Avatar Patrick Cahalan
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    says:

    I think there are several reasons, but the primary one is that free trade does destroy jobs – it just doesn’t destroy net jobs. This goes back to Bastiat’s point about the seen and the unseen. Seeing the jobs go away, is easy, and blaming it on foreigners comes even easier. But noticing the new industries that spring up is much harder since they may be totally unrelated to the jobs that were lost. They may be in a different state and/or industry entirely. It’s actually very easy to miss the upside of freer trade unless you know what you’re looking for. And it doesn’t help that economists can’t tell you where the jobs will be created because if they knew that they’d be far too rich to care about answering your questions.

    I think I need some more on this part, right here, and I suspect this is the part where the difference between short-term and long-term is going to be a sticky problem. Especially if you’re talking about country-level specialization.

    If Country A is awesome at fabricating sheet steel from raw ore, and they invest a lot of time and training and capital equipment towards fabricating sheet steel from raw ore, they can’t undo that and switch to something else at the drop of a hat. If Country C’s science program uncovers a new way to vastly more efficiently produce sheet steel from raw ore that is basically incompatible with Country A’s method, and Country D has a shiteload of capital, Country D can buy/license/steal Country C’s IP, give a bunch of their capital to a multinational, and that multinational can move to Country E and within short order be kicking Country A’s acres in sheet steel production.

    While this might be grand for everybody B-Z, I’m not so sure that it’s great for Country A until they retool everything or switch to a different specialization altogether. From the standpoint of Country A’s participation in the global trade market, they’re going to be teh suck for a while. Now, maybe over the course of twenty years this works out cyclically, and it’s a net win over those twenty either way… Country A is better off participating in the system even if occasionally the music stops and they have no chair for 5 years or whatever.

    But, since the capital comes from Country D, Country D wins out just a little bit more than countries B-Z, and they can do it again.

    Barring some sort of equalization, in fact, Country D can put itself in the position where Countries O-Z, in particular, are bearing a lot of the up-front risk – Country D’s international corp sets up capital facilities that would normally pay off in 20 but thanks to competitions between countries O-Z, D gets paid off in 5, and that intervening 15 years there’s always the possibility that Country D will repeat and suddenly Country E has a worthless capital investment (there’s also local externalities). So Country D can play a sort of perverse reverse whack-a-mole where a substantial portion of all the innovation gains are feeding back largess to Country D, and the externalities are always borne by O-Z.

    This is awesome if you’re Country D (cough, America, cough).

    But we’re talking about a very large iterative game here, and there is a very great power imbalance because D holds most of the money, Lebowski, and O-Z have high incentives to play risky.Report

    • Avatar North in reply to Patrick Cahalan
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      says:

      Well keep in mind this is an over simplification. In reality countries and economies have multiple diverse strengths so when one goes away due to new technology etc… the others remain.

      Also in your example and in a liberal trade system it would be far more profitable for country C’s tech developers to licence and sell their new tech to the sheet metal producers of country A. A has the infrastructure and general know-how about sheet metal fabrication, transport and packaging that C lacks even if C now has a superior method of creating the sheet metal itself, C could get more money by selling the tech to A without having to put in the expense of building a sheet metal industry from scratch. In that scenario the tech would go from C to A and C would make a bundle. A would have greatly improved sheet metal production and would make a bundle and costs for sheet metal would decrease so every country involved would benefit enormously.Report

      • Avatar Patrick Cahalan in reply to North
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        says:

        Well, I don’t want to get too much into what Jason calls “puppet show” land, but in general the difference between theoretical non-trade barrier international trade and in practice low-trade barrier international trade is that there *are* barriers, and there *is* the case of non-equal capital distribution.

        There’s lots of other factors, too. Ethopia can invade Somalia or Iran can meddle in Iraq or any one of a number of other scenarios making all sorts of other jarring imbalances in the overall system.

        I guess my point is that much like the argument between capital and labor, in an in-country economy, you can see the argument between capital and production, in that higher layer of abstraction. OPEC is basically analogous to a union. So’s the EU, although the analogy gets really strained for obvious reasons.Report

    • Avatar James K in reply to Patrick Cahalan
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      says:

      I think the mistake her is treating each country like a unified bloc, rather than a collection of diverse agents with conflicting agendas. If all the corporations in Country D banded together,t hey could dictate terms pretty effectively. But in practice they are all trying to undercut each other to get the best deals, so their leverage is much smaller than you might think.Report

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