kirisutogomen | Benedict Arnold

Current Mood: bitchy

Entry tags:

treason

Benedict Arnold

I don't hate America. I don't hate Americans, whether blue-collar or white-collar, or studded leather bondage collar. I think people should have jobs, and that these jobs should be challenging and interesting, making the best use of talent, skills, and education.

I also think that trying to foment artificial class warfare by portraying the principal providers of employment in America as rapacious exploiters of a helpless middle class is craven demagoguery of the worst kind. Businesses provide jobs, pay people for their labor, both here and in other countries. Americans are no more deserving of jobs than people in other countries, Freedom is inherently good, and also happens to be the most efficient mechanism we have for allocating resources, especially the contributions of individuals to the greater welfare of mankind.

There's been a lot of noise recently about offshoring, the practice of companies hiring foreign workers to do work that previously had been done by Americans. Not all of this offshoring involves the elimination of jobs in America, but I believe that people use the term to refer to both relocating existing jobs elsewhere and creating new jobs in other countries which could have been created here. I submit that this practice is constructive, and beneficial both to Americans and to foreigners, who are often in more dire economic circumstances that most Americans. I also believe that free trade is fundamentally morally superior, as well as efficient, and that "fair trade" is an arrogant, xenophobic concept that reflects at best abject ignorance and more often base, spiteful bitterness.

Offshoring is essentially not that big a deal. There are not millions of jobs flooding out of the country all of a sudden. Economic conditions have not changed so rapidly that it is now of exceptional advantage to lay off Americans in droves and hire foreign workers en masse. Relative productivity changes fairly gradually, trade rules are altered in a sluggish, halting manner, many jobs are repatriated after companies expereince degraded performance from offshored positions, and plenty of employment is being shifted into America from other countries.

Many, many jobs simply cannot be done remotely. How would you offshore school teachers, nurses, concierges, limo drivers, blackjack dealers, personal trainers, bartenders, or real estate agents?

Certainly rich world employees are paid quite a bit more than those in developing nations. They are also several times more productive at most occupations. Superior education, massive investment in infrastructure such as road networks and electricity distribution, and a great deal of past capital investment in plant and equipment mean that an individual American can produce substantially more than a handful of Mexican or Chinese workers. Relative productivity does change over time, and to some extent relative wages will adjust to compensate. If South Koreans' productivity relative to Americans increases over time (as it has), the relatively low wages of South Koreans will increase faster than those of Americans (as they have). The incentive to employ a greater proportion of South Koreans will increase at the margin, for those jobs where the comparative profitability was previously on the knife edge. There is a one-off expenditure associated with relocating jobs, so there won't be a lot of frantic switching back and forth.

Companies such as Dell attempted to transfer some fairly low-skilled service jobs, such as front-line routine customer service, to India, a country with low wages, a supply of well-educated people, and lots of English-speakers. Despite those characteristics, Dell and others chose to move those positions back to the US. A variety of problems such as accent difficulties and time zone differences made the India option the worse choice.

Mercedes, BMW, and Honda have discovered that it is more profitable to employ American auto workers than German or Japanese ones manufacturing cars both for the American market and for export. Plants in America manufacture "European" cars and export them to Europe.

Much of the recent whining about offshoring has been triggered by a perception that it is no longer merely manufacturing jobs that are being transferred overseas, but that now relatively skilled white-collar jobs are being "exported". Why is this of more concern? Are we claiming that unemployment among the lower classes isn't a serious problem, but that once job market transformations affect our more educated, highly-compensated Americans it is now a problem worth paying attention to? Not that I admit that there is any validity to this idea of "exporting" jobs, but even if it were true, how do the self-appointed champions of the people justify being more concerned about the conditions of the wealthier?

A more fundamental lie is that there is some sort of jobs deficit, that there are a fixed number of jobs to go around and that we are in some sense exporting some of these jobs. This is known as the "lump of labor" fallacy, and has been recognized as spurious for nearly two hundred years. Yet idiots continue to promote this ridiculous idea. Simply put, as GDP increases over time, we're doing more stuff. We may being doing different stuff, but it's more valuable stuff than we used to be doing. Some companies may employ fewer people, but others employ more. Our population continues to increase, and our employment rate is not decreasing (in fact, it's increasing over the long haul).

A particularly offensive notion is the idea that is being energetically asserted by John Kerry, when he calls companies and their management "Benedict Arnolds" for offshoring. Fulfilling their duties to their employers (the shareholders) by providing employment for people in other countries, usually people who are painfully impoverished by our standards, contributing to a more efficient allocation of human capital in America, and allowing for potentially substantially reduced costs to American consumers is apparently treason against the Republic. Treason is punishable by death. Treason is one of the worst crimes we have. Are going to send our employers to the electric chair? Shall we round up the vicious enemies of global poverty and put them in concentration camps, or show mercy and simply lock them up for life? Presumably Kerry's wife will be the first up against the wall. Heinz operates 57 of its 79 factories and employs 72% of its workforce outside the US.

I'm not thrilled about the job the President has done in his first term. But I wouldn't vote for Kerry even if you put a gun to my head.

Flat | Top-Level Comments Only

You make many statements that are obviously true, but your conclusions, feh. I also agree with free trade is fundamentally morally superior, especially in an abtract Adam Smith we-make-bread-you-make-wine world. In the real world, things seem to be much less certain, because relative advantage is created not only by productivity of workers and existance of infrastructure, but by various countries' willingness to allow pollution (an externality we all bear the cost of), dangerous working conditions, or child labor, as well as differing tax structures.

While I agree that Kerry's statement about "Benedict Arnolds" is a bit over the top, if you look at what he's actually proposing to do, it seems to be discouraging offshoring by fiddling with the mix of taxes, rather than threatening to send CEO's to the electric share or even restricting foreign imports. How objectionable is that? In the real world, we have to have taxes, and we have to make decisions about how to implement those taxes. Perhaps you feel that the world should have a uniform tax code?

I think you might be the most coherent Bush-voter I know. I don't usually agree with your arguments, but at least you have arguments.

So, I read something awhile back saying that it was sort of hypocritical to expect developing nations to follow pollution and worker safety rules that we have now, when we didn't hamper ourselves with them while we were developing.

Sure, you can say that we didn't know that dumping all those chemicals into the bay was such a bad idea at the time. But, that's like smokers saying that no one told them that inhaling smoke was such a bad idea.

.. but then compare the population of Europe in the 19th century to China and India now and think about how much more efficiently they pollute and what the relative harm to the planet would.

Anyway, the argument that stupid things have been done in the past, therefore we shouldn't have to be smart now never impressed me.

I'm not going to argue that all developing nations should be forced to adopt modern safety or labor practices. However, I will argue that we have the right as a nation to adjust our tax structure.

"I also agree with free trade is fundamentally morally superior, especially in an abtract Adam Smith we-make-bread-you-make-wine world."

The moral superiority is mostly separate from the effectiveness argument.

Re: the efficiency issue, however, you don't need reality to match the theoretical ideal for comparative advantage to work. It functions in any conditions, regardless of whatever wacky policies governments impose. OK, unless their policy is to create 100% unemployment and starve their entire country, like Zimbabwe, who are doing a great job of that.

"....relative advantage is created not only by productivity of workers and existance of infrastructure, but by various countries' willingness to allow pollution (an externality we all bear the cost of)...."

"So, I read something awhile back saying that it was sort of hypocritical to expect developing nations to follow pollution and worker safety rules that we have now, when we didn't hamper ourselves with them while we were developing."

Pollution is an externality, and technically poor countries should compensate us for our share of damage they're doing. Realistically, hey, they're poor. We have to avoid hampering their progress toward more advanced, less energy-intensive economies. Also we ought to issue them tradable pollution vouchers, and pay them to sequester the carbon we keep throwing into the air.

Labor practices are none of our business. If impoverished families freely choose child labor and the consequent rudimentary improvements in their access to extrmemly basic health care and education, good for them. Regardless, none of our damn business. (It also doesn't falsify the reality of comparative advantage.)

I probably ought to just write an entirely new journal entry on Kerry's silly corporate tax plan. Briefly, our current regime is quite goofy, and his plan would replace it with something even goofier.

I somewhat agree with you on pollution. I tend to feel, however, that often the primary beneficiaries of pollution in developing nations are multinational corporations whose owners live in developed nations where such pollution is considered unacceptable. It is not clear to me that today's multinational operations in third world countries are really helping those countries in quite the same way that the self-directed post-World-War-II industrialization helped, say, Korea or Japan. (As a side note, it seems that these nations developed themselves relying very heavily on protectionist policies. Does free trade always help? Would the Japanese and Koreans be better off today if they had allowed free trade immediately after WWII?)

Labor practices are tricky. What makes it OK for a parent to choose to send their eight year old child to work eighty hours a week in a factory? Why is it none of our business? I'm not going to argue that every country should have identical labor policies, but I don't think we should have nothing whatsoever to say about the most egregious cases, especially when the corporations involved are American.

I agree that comparative advantage "functions" regardless of whatever wacky policies governments impose. However, the most efficient mix will clearly vary as a function of these policies. Is it always wrong to vary your policies in order to promote jobs at home in any way? If so, then shouldn't we go further, and give additional tax breaks to all companies that move jobs abroad? What is sacrosanct about the current mix of tax policies? Again, as I understand it, the only move Kerry is planning to make against outsourcing is changing the tax mix. Contrast this with Bush, who talks free trade, but is happy to pander for votes by imposing steel tariffs, lifting them only when the WTO rules them illegal. I guess I don't understand why you're so strongly opposed to Kerry; to me, his policies come off as pretty moderate.

I have to stop answering everything. I'm not getting anything else done. Must not insist on having last word.

treptoplax's point about the relative value of a clean environment is still valid, even if it's a corporation doing the polluting. Locally contained pollution is simply worth different amounts to different populations. As far as whether the companies are "really helping" poor countries, I'm not sure I see your point about the contrast with Korea or Japan. Industrialization still occurs, jobs are still created, and the wealth of the country still increases rapidly.

Your side note is a very interesting topic. I highly recommend The Wealth and Poverty of Nations (http://www.amazon.com/exec/obidos/tg/detail/-/0393318885/) for a comprehensive historical perspective. England in the early 19th century and post-WW2 reconstruction both seem to have benefited from an initial dose of protectionism. The benefits tend to be more than nullified by the continuation of such policies past the point of usefulness. Governmental industrial policy is almost always an abject failure, and it's quite unfortunate that there are a few shining examples of success that can be cited in the defense of what hardly ever works.

Child labor:

Child labor is the least awful of very bad options. Child prostitution or picking up an assault rifle and joining the Lord's Resistance Army are reasonable alternatives, and if we curtail child labor, we're just going to encourage the really vile alternatives. This is what happens if you just refuse to buy products made with child labor, and don't do anything else (which seems to be the primary response advocated by activists in the US and Europe).

The International Labor Organization (a piece of the UN) estimates that ending child labor would cost $760 billion. Wake me when we budget it.

Does Child Labor Decline with Improving Economic Status? (http://www.nber.org/papers/w10134)

Differing national tax structures do create distortions in the comparative advantages the nations enjoy. One of the main problems with our current corporate tax system, which is made even worse by Kerry's proposal, is that it is so radically different from everyone else's that it does create some pretty perverse incentives. (Absolutely nothing is sacrosanct about our current mix.)

I'm not sure how you vary your policy to "promote jobs at home". You can artificially improve the comparative advantage of some jobs over others, but (pretty much directly derived from the fundamental principle behind comparative advantage) you can't just add to your national wealth creation by doing that.

The steel tariffs were pandering. If Kerry came out and criticized them, or our agricultural subsidies, or any other of our protectionism, cool. Instead he picked the vile John Edwards as his running mate. Kerry's "Six-Point Plan" on trade includes the following:

Push Bush to reinstate the "Super 301" process immediately, so the administration is required to report and act on foreign trade barriers.

Super 301 is painfully evil.

A 120-day review of all existing trade agreements

Yikes. That's a disaster in the making. These are treaties. Expecting to be able to insert amendments is unrealistic at best. ("Review" is code for "shitcan".)

More forceful efforts to stop illegal currency manipulation by China and other countries

This is plain ridiculous.

Outside of the six point plan,

Support Jobs In America Through "Buy American" Guidelines.
....U.S. federal contracts where possible should be performed by American workers. They support stronger "Buy American" guidelines for defense and homeland security. John Kerry and John Edwards also support the consumer's "Right to Know" where call center calls they receive are originating from.

Feh. Stupid, stupid, stupid.

From an economic standpoint, a clean environment is just something else to be purchased, and of course rich people will buy more of it. It's all well and good to say it's worth $100 a year to me for the local river to be clean enough to swim in - the 3rd world peasant who can't quite afford penicillin for his kids will figure differently, and he'll be right.

Assuming he actually gets that $100, that is...

When did you get a livejournal account?

Of course, the peasant and I don't live on the same river. But we do live on the same planet, so if I want to make it worth his while to leave the rainforest alone to soak up carbon out of the atmosphere, I'd better hire him to take care of the rainforest for me. If I want China to not pump so much greenhouse gas into the sky, I'd better pay them for that, too. The Kyoto solution of ignoring what poor countries do doesn't work as well.

There's actually a working example or two of this. There's a bunch of peasants in Indonesia who are getting paid by some NGO to protect part of an orangutan habitat. They get paid collectively, and only if zero trees get cut down. They also don't get paid if orangutan meat or babies ("pets") show up in a local marketplace.

The result has been that there's been very effective cooperation within the community. No one wants to be the guy who had any forest cut down near his home. No one wants to be the guy who let poachers in, or out. Where there had been essentially no enforcement of poaching laws, soon any poachers who go near the forest mysteriously turned up dead. All the remaining poachers seem to have moved to some other line of work.

"I think you might be the most coherent Bush-voter I know."

I need to practice taking compliments better. Thank you. :-)

But hey, you live in the People's Republic of Cambridge. I may be the only Bush-voter you know.

(I'm not sure having "Bush-voter" as my identity is what I was really hoping for. :-)

Actually, I know entirely too many Bush voters. I contrast you with a member of my family who says "I am a card-carrying Democrat. I think President Bush is a lying scumbag, but I don't know if I can vote for Kerry," but when pressed for any real reasons why, says they just don't like Kerry very much.

I personally like Kerry more the more I learn about him. Rather than a flip-flopper, he seems to me an intelligent moderate who is willing to admit that most issues are too complicated to sum up in a 15 second sound bite.

"....he seems to me an intelligent moderate who is willing to admit that most issues are too complicated to sum up in a 15 second sound bite."

Yup, that's true. Very intelligent. Recognizes the complexity of complex issues.

Now I'm going to go into political attack-ad mode, which probably ought to be beneath me, and I may well delete this following section after re-reading it.

He's still a flip-flopper. That silly thing about voting for the war before voting against it makes for an awful sound bite, but there's an underlying problem with the actual position he was trying to describe -- he voted to authorize the use of force, but voted against funding peacekeeping and reconstruction efforts. Come again? Let's invade, knock over the government, and then walk away, leaving the country in anarchy? That's not regime change, that's just regime demolition.

Kerry really flip-flopped on education reform. He was pushing for more accountability, objective evaluation of effectiveness, maybe even charter schools and (whisper it cautiously) vouchers. Then the NEA applied a little pressure, and he crumpled like the proverbial thing that crumples really easily.

He (along with 97 other Senators) voted for the Patriot Act. Now that it's fashionable to complain about it, he's suddenly changed his mind.

His position on NAFTA and other trade agreements is particularly disturbing. While you and others have some potentially legitimate concerns about environmental and labor issues, when politicians propose to review existing trade agreements on those areas, that's code for scrapping them entirely. While he voted for it, now he says he would have voted against it. Would have? If what? He doesn't say.

Five months apart: 12/02 -- "And we should attempt to end the double taxation of dividends," followed by 5/03 -- "This is not the time for a dividends tax cut that goes to individuals."

"Much of the recent whining about offshoring has been triggered by a perception that it is no longer merely manufacturing jobs that are being transferred overseas, but that now relatively skilled white-collar jobs are being "exported". Why is this of more concern?"

There's certainly been lots of unhappiness with manufacturing or
farming jobs that have been viewed as going overseas-- hence the imposition
of tariffs on imports on steel, Vietnamese shrimp, etc. The reason focus
shifted away from manufacturing jobs is that argument was mostly had in the past
few decades, as the ability to move manufacturing centers and ship goods efficiently
became easier, and automation allowed fewer workers to produce the same
amount of goods. Now we're experiencing new changes in the economy,
with a decrease in costs of telecommunications and sending and processing
information. And job growth is very slow here currently, the economy isn't booming,
and people are worried, regardless of whether it's sensible for them to
do so. So of course it becomes a hot button topic for politicians.
But the focus on white-collar jobs is because that's the thing that's
changed, that the public perceives to be an issue, and that sort of momentum
is what politicians use.

I also wonder if the loss of white-collar jobs is viewed as being
less of a regional phenomenon. While decline in the American steel
industry hit a few states very hard, it might not have had much of
an impact in, say, Florida. But call centers and radiology analysis could
be done anywhere, and so it's viewed as more of a nation-wide issue.
Some areas would be affected more than others, of course, but maybe it
feels more like nowhere is safe from this "threat".

Rhetoric will always be extreme, on any side of the political aisle.
If we wrote off every politician who used such language, we'd have
very few left. Whether this would be good or bad is another question. =)

All good points.

Job growth hasn't actually been all that slow, despite what people claim. That's a fine example of perceptions lagging reality by a year or more. Job growth in positions paying above median wages has also been plenty more than in low-paying jobs, despite what people are trying to tell us.

Similarly, the economy actually is booming. Maybe not sustainably, but real GDP grew 4.8% in the year ending June 30. It hasn't grown that fast since Reagan.

I don't think service industry specialization is more evenly distributed than manufacturing. I have absolutely no data or source on this; I'm just guessing.

I'm not going to excuse extreme rhetoric just because everyone else is doing it. I also can't think of a position being taken by the Bush campaign that engages in the same level of nastiness focused on a particular group in our country. Someone should remind me of what I'm forgetting, as I can't say I'd be stunned by a counterexample.

Flat | Top-Level Comments Only

Benedict Arnold

no subject

no subject

I've heard that too...

no subject

Comparative advantage

Re: Comparative advantage

Re: Comparative advantage

no subject

hey

compliments

Re: compliments

Hold my nose and vote.

What's new

Re: What's new