Comments 75

补偿自由贸易受害者为时已晚

Apr 11, 2017 Dani Rodrik

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发自剑桥——近来全球世界各地的商业和政策精英们似乎已经就如何应对被特朗普这类民粹主义者巧妙利用的反全球化逆流达成了新的共识。鉴于全球化能使所有人得益的信心承诺早已不复存在，精英们只好承认全球化也会有赢家和输家的事实；但他们认为正确的反应不是停止或逆转全球化；而是为了确保输家得到补偿。

纽约大学经济学教授努里埃·鲁宾尼（Nouriel Roubini）简明扼要地阐述了这一新共识：反对全球化的逆流“可以通过那些对劳动者所承受的全球化附带损失和成本进行补偿的政策来遏制和管理，”在他看来，“只有通过制定这样的政策，全球化的输家们才开始认为他们最终可能会加入其赢家的队伍。”

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Dani Rodrik

Writing for PS since 1998
144 Commentaries

Dani Rodrik is Professor of International Political Economy at Harvard University’s John F. Kennedy School of Government. He is the author of The Globalization Paradox: Democracy and the Future of the World Economy, Economics Rules: The Rights and Wrongs of the Dismal Science, and, most recently, Straight Talk on Trade: Ideas for a Sane World Economy.

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0 Comments on this paragraph, 72 in all 72 Comments on this article

Stephen Siamai Kromah Dec 30, 2017

But then the United States' high skill developed labor force became expensive comparatively for similar jobs performed in the rest of world by cheaper labor force. So productions moved to those cheaper production sites in the rest of the world (ROW). And containerization of shipping goods across the globe, and container ship development for ocean transportation of bulk goods facilitated moving goods to the US where incomes are still higher.

Labor is the masterpiece in this. And note of all the trade liberalization that lowered most trade barriers, most of the liberalization in favor of capital movement but not so much so for labor. I know someone may say my point does not make sense. But then the movement of labor ends toward the US. Consider a case in point. How much of the high skill developed labor force in the US have moved out to settle in the rest of world? US labor on its own hardly move to settle in ROW for cheap wages; in spite of lowering rest of barriers to trade.
Stephen Siamai Kromah Dec 30, 2017

Can we be sure of advanced countries can be "most" exposed to the international economy? I do not think so. Lessons learned by Sub-Saharan Africa from the 2008 global financial crisis that was derived from the US Subprime loan; thought us sense that no one region or group of countries can be insulated from the global economy.

You can remember when the subprime loan default crisis emerged in the US, the view was Sub-Saharan Africa could not be hit by the financial crisis that the subprime loan led to; since the region's countries were not trading in financial markets in the US or Europe, etc. But then a second wave from global commodities stroke the global economy by 2009; indirectly derived from that same financial crisis that the subprime loan brought about.
Stephen Siamai Kromah Dec 30, 2017

The loser's grievance is a grievance; in the interest of globalization, we can not ignore. Solving the loser's grievance is also part of what the World Trade Organization (WTO) is about; that is trade negotiation among trading partners of the world economy. Trade negotiations are frictions among competing partners of world trade.

WTO must see itself in the content of being about trade frictions among the trading nations of the world. We cann't continue to ignore the problem by continuing to see solution for the grievance of the loser is not a free trade deal. Somewhere somehow in trade negotiation lies the solution for the loser's grievance.
- richardhedrush @yahoo.com Jan 4, 2018
  
  I would not say that the WTO is anything other than an organization by the coprporationss FOR the corporations. For those people with brains that work, we have known alll along what is going on. The central banks own the world, the governments, the police, education, the courts, military, and media. The intent is criminal, traitorous, uses secret organizations like MI5 and CIA and even whatever replaced the KGB to find and control dissenters. Those people writing for PS are only unknowing puppets of these people. The politicians, economists and others in positions who should know better than what they lie about and have been preaching. Those of us in the trenches will, one day, break free of their devil's grasp.
Jacqueline Coolidge Apr 18, 2017

Maybe it's not "globalization" that needs to be reformed, but rather the excess of power built up by corporations and the excessive expansion of intellectual property rights: Why were copyright durations extended from 50 years to 90+ years? Why were patent protections expanded to include living things and minor tweaks to pharmaceuticals? Why do governments allow a corporation to assign its trademark to an off-shore tax haven? Why, even after SCOTUS's infamous "Citizens United" decision (bad enough of its face) included explicit encouragement to Congress to require more transparency in political funding, the GOP has moved in the opposite direction and opposed any efforts to improve transparency? Why can't even shareholders in a corporation demand to know whether the CEO is spending corporate money lobbying for an ambassadorship to Paris? Why can't Congress require state company registries to identify the beneficial owners of legal entities? Wouldn't progress in these areas help address the problems of growing inequality?
- richardhedrush @yahoo.com Jan 4, 2018
  
  Absolutely! As things develop it gets worse. There is a very great possibility that those who have not, will be enslaved. Many are already wage slaves.
roberto martorana Apr 18, 2017

Hello , I really appreciate the work and this opportunity that allows me to add as my participation , I wrote this on Riodialog and Myworld2015 consultations , I insisted on as it was necessary to find a way of funding, going beyond the usual fiscal policies , at this point i add that we need a new rule in the monetary policy for all those institutions that take advantage of the role of central banks with an extra issue of currency tied to the discount rate to be used in exchange for the tax levy, called " Theory of the compensation of the money supply a model that integrates the concepts between von Hayek and J.M. Keynes,because it keeps the economic freedom of enterprise and market , creating resources that can be used by the government but to the extent that they are created and without increasing the tax burden..or "too much inflation.... ( I make an example for clarification : Normally a BC issue currency, and it lends a fixed interest for its return , this simple step will create an imbalance between the monetary and currency issued by the return which was originally filled with the new gold extracted from mines, but since there is no longer this relationship, while retaining the old rule no more compensation was in the money supply , so if for example a BC press 100 million units at the rate of 3% , if he sees return to 103 at deadline , but where should come 3m if those have not been printed by this .... the need to have an extra issue of 3 million units to be placed in circulation and use for public utilities such as ' topic under discussion ) we make the example for the new rule : the BC press 100m to be placed on the market ( they lend to commercial banks) and puts them on the balance sheet at the same time press 3m ( equal to its rate ), and gives them to the State for free...( which uses them for public utility ... ) , without putting 3m on the balance sheet of the bank as outputs ... so then the return of commercial banks is normally also should easier find the ability to restore the famous 103m from BC ..... I hope to bring to your attention this reasoning as a key message to see debated in the appropriate forums and that it will be useful, thank you, best regards , .if more intersting https://www.facebook.com/quantitativefree/
Patrick Newman Apr 17, 2017

The Chinese dont believe in the underlying theory that justifies globalisation - international comparitive advantage. Globalisation is nothing more than the ability of corporations to maximise profits and minimise taxes across national boundaries.
- P. Kamath Apr 19, 2017
  
  Patrick Newman: You are right here. Behaviour of Chineese in recent many decades indicates they have practised little or no sense of ethics or morality in business. It applies to both PRC as well to Taiwanese. Example: During Appartheid era, these guys did not object to get relabelled as "whites" in S. Africa to do business, supply armaments to Zambian dictator, also to Col. Quadratic, supply deadly military weapons to Sri Lanka against Tamil separatists along with Pakistani govt. the occupation of Tibet was just brutal. Business terms with Mynamar govt. was harsh until Mynamar govt. finally woke up. Chineese have a historical mindset that propels such behaviour. Anyway, one has to be cautious when dealing with these guys.
Tod Kersten Apr 17, 2017

Well? Give us a preview...
Emilio Zuniga Apr 17, 2017

What does IT mean changing The rules of globalization? Of what rules are we talking about? The concentration of income and wealth in The US to The extend that is strongly correlated with import growth deserves a detailed analysis in the tax system. But this is domestic adjustement not a global role.
Tim Richardson Apr 16, 2017

This is an interesting article but the conclusion is jarring. Whether because of the welfare systems you mention or the unprecedented reduction in poverty, most counties are happy with globalisation. The US has made poor choices (you say). And because of that, globalisation must change? That seems very arrogant to this non- American. Anyway, you miss a big point: globalisation is an economic disruption. The US economy has survived and indeed caused many disruptions because it offers a different approach: very high economic flexibility combined with first class infrastructure. Also, it's a shame you didn't offer evidence on who these losers are. US manufacturing is often cited by the lazy, but output has hardly declined even as jobs have plunged. That's not globalisation, it's automation. Only unpredented trade barriers and a withdrawal from export markets could stop that, but at an enormous cost. Not even EU trade barriers at their peak blocked the move to high productivity factories ( anecdotally, based on my personal experience.)
John Doyle Apr 16, 2017

The welfare system is always about compensation, just as taxation is designed to be more equitable in its application.
The real issue is the elite parasite class making ["recommending"] rules for government and trade to the governments deliberately to widen the gap between rich and poor and keep it all for themselves.
Economists, particularly in academia, are complicit and push what is known as the mainstream line but which is replete with false notions.
Why do so few understand that a monetary sovereign government cannot go broke in its own currency? The follow on from that is that a federal government has no need to borrow or save it's own currency. It buys all its debts with new money ad hoc. It never uses federal taxes for income.
So it can easily afford compensation.
The fact this truth is not understood is a purely political decision, ideologically driven aka neo-liberalism. This has to change. Brexit, even Trump are testament to the problem.
CH R Apr 16, 2017

The recipe of winners from trade liberalisation (or any policy change) compensating the losers is hardly news in economists' circles - since decades. And it should neither be in business and politics.

The idea was taught by Krugman / Obstfeld's textbook on international economics for instance, though I 'learned' it probably before from social politics in Germany.

Sad that some people are allowed put nonsensical market ideology into large scale experiments to their gain.
Russ Wilcox Apr 16, 2017

Two points:
(1) It's not all about income. Cost of living is also higher in USA. If cost of living were reduced in tandem with globalization-driven wage declines, a good quality of life could be maintained. To get there, we must re-design government, infrastructure and public institutions to be leaner and more efficient; and we should promote the status of cultural, community and spiritual contributors.
(2) It's not all about globalism. Jobs will disappear for many in all countries due to tech change. Countries can either adopt a brutal totalitarianism to concentrate wealth in the hands of a few, or they will share wealth. In the USA it seems most likely that there will be greater sharing than today, however in some non-European form. A model that should be explored is expansion of the Earned Income tax Credit.
Dr. Robert Goldschmidt Apr 16, 2017

Let us assume that a US business historically has given 8 out of every 10 dollars of gross profit to US workers and 2 to owners. Then any viable solution must sustain that ratio. It seems to me that federal constraints on corporations are a much more direct and apolitical method of accomplishing this. Another conclusion that can be reached is that, under such a constraint, globalization of labor will be reversed.
Delia Ruhe Apr 16, 2017

... “if free-traders had actually cared about the working class...” Larry Mishal, this makes no sense, since the “free” of “free trade” means, in part, “free of any responsibility to workers (not to mention consumers and the environment). Moreover, how do legislators support compensatory programs at the same time as they’re legislating ways to reduce government revenues, such as: making it legal for corporations to relocate their headquarters — thus their profits — in their subsidiaries in low-tax countries; standing by while corporations demand wage cuts from workers and even bust their unions; providing corporations with subsidies in the hope that they won’t move their operations to low-wage countries; making the rich even richer through regular tax cuts while these ingrates move the bulk of their income to the Caymans? Finally, how is it possible even to raise the issue of compensatory programs in a Congress chock full of useless Democrats paying lip-service to workers, and lunatic Republicans whining about moral hazzard and freeloaders?

Why should a government construct a welfare state only for the next government to cry poverty and dismantle it, all while ignoring the reason why it was constructed in the first place? Why not simply restructure international trade by welcoming labour, consumers, and environmentalists to the trade negotiating table? Maybe then all classes of people in every trading country — not just the sane and practical Scandinavians — could enjoy the fruits of capitalism and international trade.
Cary Fraser Apr 16, 2017

Globalization as policy and practice evolved as predatory capitalism targeted at undermining any viable effort to sustain/create an order in which economic activities would create the basis for a sense of global community that could shape the future of humanity.
In light of the increasing evidence that climate change and its threats to ecological sustainability pose severe challenges for humanity and other species, both intellectual competence and political vision are absolutely necessary for current leaders to articulate a vision for human and eco-system survival.
It's time to discard the fallacies of free trade and xenophobic/racist populism.
- Cary Fraser Apr 18, 2017
  
  Globalization ameliorated/redistributed/entrenched poverty - 2 billion people may have been lifted out of poverty but how many others were impoverished and made vulnerable?
  There is a need to carefully assess the costs and benefits of globalization - especially in terms of the ways in which the rhetoric of globalization evades the calculation of the human costs of the entire enterprise.
- Tim Richardson Apr 16, 2017
  
  Globalisation has lifted 2 bln humans out of poverty in a generation. I can not think of a more remarkable achievement in human history and I am open to suggestions. Many complaints about globalisation are literally the definition of a first world problem.
Oliver Denker Apr 16, 2017

Boring.
M M Apr 16, 2017

Globalisation has only perceived rules, it is organised chaos serving and benefitting the ones that are on the gravy train, everyone else is just left out in the wilderness.
David Chipping Apr 16, 2017

At least we no longer perpetrate the lie that globalization benefits the whole, enough said, now how do you fix this ?
William Ryan Apr 16, 2017

Way below Steven Edwards make a very important comment and observation that I think hits the nail most directly and correctly. Thanks Steve.
Lawrence Kramer Apr 16, 2017

What we have here is a failure to imaginate. It's not too late to compensate the losers; we just haven't invented (or embraced) the tools.

"Redistribution" has historically involved taxing the rich by taking their profits. But that's not necessary anymore. With the abundance of supply, All we have to do is declare a national dividend and PRINT some money (disguising it, of course, as something else). That way, the wealth that is redistributed takes the form of low-marginal-cost goods and services - made so by globalization and automation - rather than money. The program would not be inflationary: too much money cannot chase too few goods if there cannot BE too few goods.

Three obstacles: how to disguise printing money as not printing money, choosing who will get something for not working, and, maybe most important, overcoming the theological resistance to earning our daily bread by the sweat of our brow. A guaranteed basic income just doesn't FEEL right, even if it IS right.

Also, we should recognize that globalization is just a way-station to automation. To a local human worker, a local robot is not much different from a foreign worker. The more costly we make it to employ locals, the more jobs will be worth the trouble to automate. That's why higher job standards won't work. Protecting workers from imports is easy; protecting them from machines, not so much. The national dividend is the only way to go.
- Tim Richardson Apr 16, 2017
  
  The problem is not what to do: there are lots of examples of Western countries with strong support for free trade, perhaps because of the safety-nets they offer. Is the US alternative of extreme flexibility and low-intervention labor markets still a viable alternative? The voters seem to think so. After a devastating global crash which was caused by poor regulation of US financial markets mostly linked to residential mortgages (not globalisation), voters have given conservatives a strong endorsement.
- Lawrence Kramer Apr 16, 2017
  
  I should add that in a world that has no place for displaced workers to go, "emigration" takes the form of lower life expectancy in the short term and low birth rates in the long term.
Niels H. Bünemann Apr 16, 2017

It's a bit too easy to say that "we will need to consider changing the rules of globalization itself" without offering any suggestions as to how the rules should be changed. Is Dani Rodrik hinting at making a protectionist agenda acceptable, or what is it that he has in mind?
Per Kurowski Apr 16, 2017

When robots and automation lurk around the corners it is dangerous to look too much into trade as being the source of winners and losers

http://perkurowski.blogspot.com/2017/02/here-some-disorderly-lose-cannon.html
- Douglas Costello Apr 16, 2017
  
  Winners and losers. Are we talking about sport or are we really talking about inequality where the rules are slanted to favour one party over another? I assume we are talking the later
  
  As for Robots and AI they aren't going to take over the world but workers wages and conditions are going to have to be protected otherwise we will exacerbate inequality and the outcome generally isn't pretty or peaceful. It seems that the rules favour one group over another and over the long term this isn't a aound practice.
jean nutson Apr 16, 2017

Globalization is the movement of people, goods, products , machinery, data, signals and services across any determined point or location on the GLOBE via any of the existing infrastructure ie cable telecommunication, web telecommunication ,and even via direct satellite communication at terminals such as airports, seaports ,financial companies , media and internet companies, this is the skeletal framework of the term GLOBALIZATION the policy aspect is quite insignificant, with this in mind it's quite hard to find any loser except for instance someone whose job has been rendered less essential by a new technological tool or method or by a more essential skill ,the biggest winners of course will continue to be the major stakeholders in those industrial setup, on the other hand all trades involve exchange of goods ,products and services with money or other values regardless of which point on the globe or the distance involved so practically the term'' free trade'' itself and it's been used interchangeably with globalization is debatable.
- P. Kamath Apr 16, 2017
  
  Jean Nutsonl: excellent little description as to what globallization is. Congrats.
Charles Van Schilt Apr 15, 2017

I think that people who believe there is some kind of balance between winners and losers of globalization are living in La La Land. Since 2008 98% of the wealth created went to 2% of the people. The global system was rigged by the wealthy elites too serve them certainly not the majority of people. So when one looks at numbers of people who were hurt by globalization it would appear that about 98% were hurt while only 2% gained anything. Obviously within the 98% there were many who survived and did not loose everything as many did but they certainly weren't winners. The majority have seen their lifestyles diminished, not necessarily destroyed, but lessoned. They have survived in some cases working more hours with lower wages. So yes globalization needs to change it should have been from the beginning fair trade not free trade.
- Tim Richardson Apr 16, 2017
  
  On the other hand, 2 billion humans have been lifted from poverty in the past 30 years. If an alien has been sitting on the moon watching the earth for the past generation, they'd be amazed that globalisation could be treated as anything other than a stunning success.
P. Kamath Apr 15, 2017

Steve: I wrote a comment that turned to be 400 words long, but then decided to delete ! , for no point getting into details!
I really appreciate your well chosen words and well articulated and loaded comments. You are right here. We are living in a turbulent era with good access to knowledge about what happened in the past 200 years and a very challenging future decades, I wouldn't worry about myself , but do about our children!
Regards,
P. Kamath
Carl Feinberg Apr 15, 2017

If compensating the losers will no longer work, I would Professor Rodrik expands on "changing the rules of globalization itself" in a subsequent column.
jagjeet sinha Apr 14, 2017

WHEN ROADS DON'T LEAD TO THE CAPITAL - A CAPITAL CEASES TO BE A CAPITAL
Am surprised that the Harvard Professor does not learn from earlier centuries that there was only One compensation - MIGRATION.
When Liverpool could not benefit from Economic Geography - Liverpudlians MIGRATED either to London or The Anglosphere.
When Glasgow could not benefit from Economic Geography - Glaswegians MIGRATED either to London or The Anglosphere.
All roads lead to the Capital - Marie Antoinette notwithstanding - to either storm The Bastille or cross borders.
And if the Capital cannot deliver - The Capital ceases to be the Capital.
And Dominions then create New Capitals - in other words The Economic Geography is redrawn.
Withdrawal from Globalization is rarely the successful solution - rather much more usually.
- jagjeet sinha Apr 15, 2017
  
  GLOBALIZATION IS THE PILGRIMAGE
  The Mayflower May have sailed a long time ago.
  But my love for The Mayflower is endless - a few minutes away from my daughter's apartment in Canada Water.
  It must be the must memorable pub that we go to - sited @ Rotherhithe where The Mayflower sailed from in 1620.
  The spirit of The Pilgrims and the pilgrimage a poignant reminder of Globalization capacity for successful solutions.
  Real Capitals live in the Real World - London's bravado after the First Brexit 500 years ago resulted in The Anglosphere.
  
  Yes you are right - the Ballot box has replaced those water canons.
  But there are Fake Capitals that do not listen to the Ballot box - impervious to the results, so long their biscuits are buttered.
  Moscow Beijing London are REAL Capitals - but Brussels and Delhi literally take the cake, the two bureaucracies impervious.
  Irrespective of results from the Ballot box - they carry on regardless, the peasants use of the ballot box has no effect.
  Because the bureaucracy entrenched in Brussels simply redirects the migrants or redraws the boundaries.
  Creating Seven Yugoslavias - only magnifying the migration outwards - leaves Globalization as only real panacea.
  Withdrawal from Globalization is rarely the successful solution - Global Britain after the First Brexit the right answer.
  Global Britain after another Brexit - remains the right answer.
- Steve Hurst Apr 14, 2017
  
  jagjeet
  
  There is nowhere for the losers in the West to migrate to Jagjeet the Mayflower sailed a long time ago. The purpose of welfare payments and the behaviour conditions attached to receipt thereof is to ameliorate the risk of a retake of the Peasants Revolt of 1381. You just can't get the right sort of peasants today. Things have got to get a great deal worse before anything happens on that front. The ballot box is a more likely route because it cannot be controlled. Boris Johnson's water cannon vehicles have been sold off for scrap
  
  As for Liverpool the old joke is - What is half way between murder and suicide - Merseyside
John Fountas Apr 14, 2017

Professor Rodrik,

Thank you for the article. I'm a big fan of your work.

In my opinion, your views are uncharacteristically defeatist and overcomplicating. It's never too late to right a wrong and help the disenfranchised. If the effects of populism are to be ameliorated, the many must be compensated in the short-term to regain basic living standards and dignity (on condition that they retrain/learn new skills or find employment).

Unfortunately, all of our problems always end up meeting at their lowest common denominator: rapacious income/wealth inequality. This is creating incentives that are speeding up the destruction of our planet, political system, social fabric, etc.

I urge you to use your voice for good. This is the most important time in human history. You have an incredible responsibility as an intellectual and academic, and I can only hope that you will use your power to advocate for a more constructive approach.
Greg Posehn Apr 12, 2017

Compensation of the disadvantaged seems right, but the trouble with compensating the losers is you create a dependency, by removing their incentive to adapt and become winners in another pursuit. The only way that I can see to redress the injustice to the those disadvantaged by trade is to spend on education and retraining.
- Douglas Costello Apr 16, 2017
  
  Compensating the losers doesn't require handouts. Rebalancing the tax system would go a long way to helping. Inequality has been built into the US system and the losers are in effect subsidising the elites through their capacity to take advantage of tax deductions and rates not available to ordinary tax payers/workers. The system has numerous examples of in built trickle down theory such as the 20% tax rate on hedge fund profits as opposed to the 39% rate for the ordinary taxpayer. Whats so special about Hedge Funds that they are given a fiscal advantage over everyone else.
Luke Lea Apr 12, 2017

Well, yes, compensating one of the factors of production, namely labor, was obvious from the outset: https://goo.gl/p5m4BG

But do we know how on the necessary scale? Not quite yet: https://docs.google.com/document/d/1WIdVnQEWdYgYYly9iKkesWCVhfINvbtwuVq2GMOxMbw/edit?usp=sharing
- Peter Schaeffer Apr 12, 2017
  
  LL, You should consider using link (URL) shorteners. Try goo.gl/XhCZ9e as an example.
Bernhard Kopp Apr 12, 2017

' Compensate' must be a lot more than social programs. If company towns, and entire formerly industrial regions die from deindustrialization/ globalization, then broad public and private investments must produce new opportunities. Only relatively few young, better skilled and more flexible workers can pack up and just move. Many, if not most, do not. A service job at half the pay and no benefits is not an accepted 'opportunity'.
- Tim Richardson Apr 16, 2017
  
  I know there are anecdotes about service jobs paying half as much as old jobs, but the US has low unemployment and good real wage growth.
Ollivier Bodin Apr 12, 2017

DR may be somewhat optimist concerning Europe. According to most recent poll in France 24% are prepared to vote for a candidate prepared to withdraw from the EU, 18% for a candidate threatening to do it in absence of a full renegotiation, 8% for candidate that wants substantial changes of the rule of the game , 5% +/_ for few other "small" candidates who also want to withdraw from the EU Treaties and only 24% for one candidate accepting the treaties as they are...We also need to change the rules of Europeanisation ..
Jorge Morales Apr 12, 2017

I did not get why Prof. Rodrik believes that it is too late to compensate the losers.
- Steve Hurst Apr 12, 2017
  
  Peter, the Bourbons do take the biscuit, that is their real heritage, sit back and relax. BTW I amazed how many Wolfgangs there are - its a real cracking name
  
  Marie was maligned but thats nothing new
- Peter Schaeffer Apr 12, 2017
  
  SH, The "Ancien Régime"? Really? Yes, indeed.
  
  From "The elite’s Marie Antoinette moment" by Wolfgang Münchau in the FT.
  
  "Some revolutions could have been avoided if the old guard had only refrained from provocation. There is no proof of a “let them eat cake” incident. But this is the kind of thing Marie Antoinette could have said. It rings true. The Bourbons were hard to beat as the quintessential out-of-touch establishment.
  
  They have competition now.
  
  Our global liberal democratic establishment is behaving in much the same way. At a time when Britain has voted to leave the EU, when Donald Trump has been elected US president, and Marine Le Pen is marching towards the Elysée Palace, we — the gatekeepers of the global liberal order — keep on doubling down. "
- Steve Hurst Apr 12, 2017
  
  Pundalik
  
  I dont have any problem with your comment because I am not an economist so none of my economic policies - if I had any - can be put into practice. My comments are simply observations. With regard to my last comment - I consider the National debt(s) is due to an attempt to maintain lifestyle in the West in the face of globalisation downforces. What else can it be. The fact it has nominally doubled in the US in a decade, some 70% in real terms and concurrently the economy has only just broken clear of the pre crash baseline indicates the size of the 'compensation' needed. Inequality increases asymmetry in income and can only reduce the tax revenue from the lower 50%. US FDI creating 1.6 million jobs in China loses a very large number of jobs in the US. Compensation at the right level is I suspect a near impossibility, as is UBI universal basic income which is just another form of compensation. These are all problems we are due to face in society and unfortunately it will be the young who face the biggest blowback. I comment because I find much of what is published by PS dubious and little short of status quo propaganda, although I have no problem with Dani R. The fact I agree with Dani is neither here nor there -my Maths Tutor used to remind me that the fact my answer agree with somebody else's meant nothing, we could both be wrong and both be wrong for entirely different reasons
  
  History says unemployment and hunger tend to be catalysts. We face a dire situation with the world population doubling and in the West an ageing population massive debt burden and steadily and long term declining productivity. We also now have something new to contend with - smart software, a product which has effectively no replication cost once created, a unique characteristic in a product
  
  “It is difficult for me to imagine what “personal liberty” is enjoyed by an unemployed hungry person" Stalin
  
  "It is not these well-fed long-haired men that I fear, but the pale and the hungry-looking." - Julius Caesar
  
  Or a lyric quote from Bob Marley
  
  Them belly full but we hungry
  A hungry mob is an angry mob
  A rain a-fall but the dirt, it tough
  A pot a-cook but the food no 'nough
  
  I also have no problem with being challenged or challenging, because that is healthy debate
  
  Keep challenging Pundalik, keep challenging, its good
  
  Regards
- P. Kamath Apr 12, 2017
  
  Steeve Hurst:
  You economists thrive in juggling numbers and speculations. Can you show one lousy little example where a county, city or country has successfully put your ideas into practice with demonstrable success? Europe, N. America or S. America or anywhere?
- Steve Hurst Apr 12, 2017
  
  Jorge
  
  Well we are not at 1792 yet, I hope we do not get there. 'History may not repeat but it sure does rhyme' - Mark Twain
  
  The National Debt is a belief that must be garnished liberally. To reduce the debt it is necessary to take money from somebody with money. Usually people holding money are not the main recipients of the expenditure that created the debt so object to the debt reduction. Equally those benefiting from the debt object to its reduction. It also becomes more difficult if those beneficiaries also generate export income - such as the US industrial military complex which is responsible for 1/3rd of arms sales globally. I can see nothing but debt growth. If interests do rise then service costs rocket. Operation Twist was used by the Fed to push some of the problem into tomorrow. Eventually tomorrow becomes today. I would be only too happy to be proved wrong
- Jorge Morales Apr 12, 2017
  
  Thanks for your reply, Steve.
  You really think we are in a the midst of a revolution, like France in 1792?
  Without a doubt, we face serious political, economic and social challenges, but they can be addressed by effective public policies.
  With respect to the US budget deficit, it can be reduced by cutting expenses and increasing tax revenues. Its very existence is the result of ideologically biased wishful thinking (low taxes increase growth!) and misallocation of economic resources (e.g. defence spending).
- Steve Hurst Apr 12, 2017
  
  Jorge
  
  I appears Dani is suggesting there is new Ancien Régime which suffers the same conflicted position of 1792 France. They know the problem but are unable to act without damaging their position.
  
  It is a simple question of the impossibility of effective compensation to resolve detriment. National debt growth is an indicator of an attempt by governments to compensate.
  
  That the national debt has doubled in the US in a short period without much feelgood factor is an indicator of the size of the problem and suggests that Dani's broad appraisal is correct. The debt growth rate is unsustainable hence compensation cannot be delivered at the necessary volume to level the playing field.
  
  Compensation proponents never deliver actuary figures as to how it can be delivered. If you sequestrated the 1% overnight how long would that largesse last.
  
  In short there are real social problems on the near horizon in developed economies as they all have the same characteristics
Kamil Bayye Apr 12, 2017

What do you mean 'reversal is costly'? Reversal of what?
Steve Hurst Apr 11, 2017

Nouriel Roubini: the backlash against globalization “can be contained and managed through policies that compensate workers for its collateral damage and costs,”

This Roubini position is an utter tosh and nonsense because it tries to pretend that a winner has parity with a compensated loser.

The issue is that a winner has independence within the system but the loser is given his compensations conditionally and loses independence. His compensation is determined by others in its scope and granted by others and can be withdrawn arbitrarily.

Anybody thinking a loser is the same as a winner is quite frankly nuts and is also almost certainly a winner talking from a winning position.

One fact is almost certain, financially a loser will be worse off than a winner otherwise there is no point in being a winner so on that single point a loser is destined to remain a loser.

The only time this will change is when there are more losers than winners which may well be soon, who knows. Until then discussion about compensating losers has decidedly strange medieval feudal undertones as though people can have different legal status and rights aka a caste system imposed on them. Good luck with that, every day could end up being Bastille Day
P. Kamath Apr 11, 2017

A nice little excellent article. America was built on the mindset " one is for himself" and "..pursuit of happiness". It seems ! it can't be reversed. The idea of compensation , any adequate security net etc are alien concepts and pleas founiversal health care etc are pinko's ideas. It is too late to teach majority with these ideas. So horses have bolted from the stable!
Petey Bee Apr 11, 2017

A truly excellent review, but what is the reasoning to conclude that compensation of the losers is no longer of benefit?

We wish to "rewrite the rules", to prevent a runaway cycle of worsening inequality that is enabled by tech, globalization, fiscal policy, labor market deregulation policy, and financial deregulation policy.

Such rewriting will be done by either governmental or supernational bodies made up jointly of multiple governments. The composition of these governments, *while the rewriting of the rules happens*, matters a lot. Since western governments remain democratically elected, if the community of policy scholars advocates a "rewriting of the rules", it would be a prerequisite to try to support the election of governments that believe in this purpose -- something that varies today in western countries from dubious, to definitely not being the case. Thus a first step would be to buy some votes, and to do this, simple redistribution seems like an obvious avenue to explore. (There are other benefits too -- left-populism is far less destructive than right-populism).

+0.9875
Peter Schaeffer Apr 11, 2017

There is another aspect of this that Professor Rodrik does not mention. In the U.S. trade deals have typically been promoted by Democratic presidents. However, the actual votes have come from Republicans. NAFTA is a good example. Democratic Senators were split (27/26). Republican Senators were strongly favorable (34/12). Democratic members of the House were opposed (102/156). Republican members of the House supported NAFTA (132/43).

This pattern of Democratic presidents supporting "free trade" and elected Democrats opposing it, has continued to the present. Obama got his TIPP, and TPP votes from Republicans, not Democrats. The final TPP vote was 219/211. Democrats opposed the TPP (28/157). Republicans supported it (191/54).

The point of all this should be clear. Trade deals only pass in the U.S. with Republican support. If trade deals included compensation for the "losers", Republican support would be near zero. A few more Democrats might favor trade deals if they had compensation. However, Republican opposition would be near unanimous. Traditional Republicans (the #nevertrump crowd) don't support trade deals because they are good for America, they support trade deals because they are good for the corporate elite.

If trade deals, came with tax hikes to compensate the "losers", traditional Republicans would vote no. State differently, "free trade" is only acceptable to traditional Republicans if it makes the rich richer and the poor poorer. Of course, plenty of Democrats are fully in agreement. Obama called the "losers" "bitter clingers". Hillary called them "deplorables". The elite consensus, that the losers from globalization should not be compensated is very strong in the U.S.
- Peter Schaeffer Apr 13, 2017
  
  AHW, the motives for the “all gains, no compensation” mindset (in the U.S.) are not easily discernable (at least to me). Part of it is obvious, Presidents (typically, but not exclusively Democrats) haven’t asked for any compensation, so why would any be offered? Obama (or Clinton) could have demanded massive offsets, as the price for his (their) support for the TPP or NAFTA. He (and Clinton) never even tried.
  
  Part of it is the (was the) prevalent mythology, that “everyone gains from trade”. Since “everyone gains”, there was/is no need for compensation. You would be hard pressed to find any serious economist who would privately make any such claim. In public, such dogmatic (and quite wrong) statements remain nearly universal from economists and non-economists alike (Professor Rodrik is rare exception). Note that the “free trade benefits everyone” ideology isn’t limited (in the USA) to the corporate elites who directly profit from such policies. The liberal/left media is quite rigid on the subject. In the U.S., “protectionism” is a scare word that can be (and is) used to silence any serious discussion. The political power of “protectionism” is on a par with “nativism” and “racism”.
  
  It can be argued that Pareto optimal outcomes are possible with the some of the gains from trade being used to compensate the losers. However, that approach presumes that “free trade” policies can only prevail if they are Pareto optimal. U.S. history demonstrates otherwise. Why would the advocates of “free trade” agree to give up anything if they don’t have to. If you can have your cake and eat it to, why not?
  
  The question of how to compensate the losers from “free trade” is quite real. To date, very little of substance has been offered (even assuming funds were available). In the U.S. “compensation” has amounted (so far) to food stamps, disability payments, Obamacare, and Opioids. If that sounds dismal, it should. Other countries have larger welfare states. However, I don’t see too many “compensation” success stories abroad. The UK has single-payer health care. The geography of the Brexit votes shows that the losers from “free trade” aren’t thrilled about the status quo. Canada has suffered large manufacturing employment losses in recent years. However, the natural resources boom has (apparently) offset those losses. That is clearly not true in the U.S.
- Steve Hurst Apr 13, 2017
  
  Peter S
  
  Your last comment was interesting. Thanx for posting it
- Peter Schaeffer Apr 13, 2017
  
  PB, A few notes. The TPP vote data was just for the U.S. House of Representatives. That would be obvious to an American (the Senate only has 100 members), but may not be obvious outside of the U.S.
  
  The other note is that the vote totals show that elected Democrats are far more skeptical of "free trade" than elected Republicans. That is quite true (except for Democratic presidents obviously)
  
  However, voters are a different matter. Strangely enough, Democratic voters are more favorable towards "free trade" than elected Democrats. Presumably this reflects the preponderance of upscale elites in the Democratic party (who think they benefit from "free trade") and minorities (who generally don't care about trade much, if at all).
  
  The Republicans are the reverse and to a much greater degree. Elected Republicans (save for Trump) tend to be rabidly pro "free trade" (for example, Paul Ryan). By contrast, Republican voters are very opposed to "free trade". The gap in the Republican party between voters and politicians is (was) vast. The easiest way to understand Trump is that Republican voters (finally) elected someone who expresses their views.
- Steve Hurst Apr 12, 2017
  
  Alisdair
  
  The objective is the lowest cost option, which is the break point to avoid civil unrest. In this the Government behaves in a very similar manner to a listed company where broadly adverse measures are often used with the excuse shareholder dividends must be maximised legally to the benefit of the shareholders. You are looking at the development of a shareholder society where taxpayers are progressively treated differently to recipients of public funding. This is done to protect taxpayers interests. You might recognise some of these messages already. Maximum publicity will be given to dealing with rule breakers and no limit will be placed on privacy invasion in order to investigate potential rule breakers
  
  Actually debt is a very effective tool in keeping unruly elements under control. There is a direct correlation in the UK between Thatcher introducing the 'Right to Buy' council houses - which was a blue collar take up and a abrupt reduction in strikes. You do not strike if you will lose your house and maybe in a cardboard box. Running up an arrears on a council owned property was however a completely different thing - not least because court action took months and repayment agreements had to be explored. This whole ingenious approach has been extended to a prescriptive policy re unemployment whereby controls are put in place to ensure compliance or sanction.
  
  You can expect a similar development if a UBI or compensation ever occurs, it will have punitive strings attached
  
  Therefore civil unrest will only occur under quite extreme conditions with a mass effect - therefore when and if it does occur it will be nasty and quite likely involve military deployment
  
  The rule book will always be used to lower the break point cost of civil unrest
- Alisdair Hamilton-Wilkes Apr 12, 2017
  
  @Peter Schaeffer
  You make and excellent point, which leads into the next question: Why?
  
  Is it because they do not want to or, once the cost of compensation is calculated it is too high (maybe higher than the gains from the increased trade).
  
  Also how would people be 'compensated'? Being offered indefinite welfare doesn't seem either equitable or sustainable.
- Steve Hurst Apr 12, 2017
  
  Peter,
  
  I have never met a vampire personally, but I don't know what might happen tomorrow. Bela Lugosi
- Petey Bee Apr 12, 2017
  
  Very interesting numbers... I didn't realize there was such a difference.
stephan Edwards Apr 11, 2017

The social is DEAD, it is not only dead the hammered a stake through its heart and buried it six feet under. The winners are not only not interested in compensating the losers they OWN the government outright and can make sure it never happens. I agree that ship has sailed even if the winners were inclined to help the losers it is to late. The hate and rage at globalization and the "Globalist Elites" isn't going to change. I suspect one of 3 things will happen:
1) The US will continue holding elections but the results will be "fixed" to maintain the Status Quo either by controlling who gets to run or by controlling who counts the votes. Either way effectively an Oligarchy.
2) A populist of the Left or Right who makes Bernie Sanders or Donald Trump look like moderates.
3) The losers abandoning the Ballot box for the gun because the Ballot box is complete and utter waste of time. As everyone who pays enough attention to read this knows the only policies that are getting carried out by either party are only those that benefit the winners. I hate mention this to you folks in your Globalists paradise but the peasants and peons are catching on that none of our "Elites" can be bothered to even pretend they care about the losers.

I don't see a fourth alternative because the only ones who could actually change anything are the ones doing well out of the current system and have no interest in changing it.
I must offer my congratulations, the Elites of the Corporate, Academic and Government have not only killed the middle class, and the US economy but it looks likely you have completed the trifecta by killing democracy as well. For under none of these scenarios does democratic or republican type government survive.
- richardhedrush @yahoo.com Jan 1, 2018
  
  You are absolutely correct. However, there is a fourth option: A benevolent dictatorship who decides to clean up the crap. That would be a Caesar to the rescue.
- Gordon Shedd Apr 16, 2017
  
  "[] the Elites of the Corporate, Academic and Government have not only killed the middle class, and the US economy but it looks likely you have completed the trifecta by killing democracy as well."
  I think it's time to get more specific about who the responsible parties are:
  The concentration of wealth into the top 1% is a consequence of free market ideology and shareholder value maximization--both promulgated by Friedman and the Chicago School, and facilitated by MBA's from all of the top business schools, who have become the 1% while maximizing corporate revenues by milking globalization and financialization, maximizing hospital revenues by milking Medicare and the health insurance system, and maximizing university revenues by milking guaranteed student loans. MBA's run all of these lucrative (and necessary) segments of the economy, and they control the Executive, Legislative, and, based on the Citizens United ruling, the Judicial branches of federal government. Their victory is now complete.
  MBA's are the new Robber Barons.
  - richardhedrush @yahoo.com Jan 1, 2018
    
    Correct!
Jerry F. Hough Apr 11, 2017

There are a series of things that could be said. The first is that the destruction of democracy must be reversed. The New Democrats, as Bill Clinton said, have an economic program near to Eisenhower, and Hillary, an Goldwaterite and McCarthyite in her youth, is follows both policies today.

This the party of the left. The same has happened in Europe.

Russia has perfectly free elections in the sense of multiple candidates and freedom to vote freely for them. But we know Russia does not meaningful democracy because of the restrictions on those who can get on the ballot.

It is the same here. A Clinton runs against a Republican esttblishment that is further to the right. Even a Christie at a time of great dissatifaction ran on a program of reducing Medicare and Social Security.

Think about the Gorsush nomination. Simple majority rule found throughout western Europe is called a nuclear option!!!
And in Europe the main purpose of EU is end the power of democracy.

The 21 most rural states have 42 Senators when they have 21% of the vote. They have less population than California, New York, and Illinois combined who have 6 Senators.

Think about the fact that the poor states are the red states
To be sure, the most rural states are the poor ones. Their overrepresentation should give extra power to the poor. Yet, the poor states are red--the conservative ones. The so-called left-wing blue states are the rich ones. "Left" now means bathrooms and support for students who suppress free speech.

Immigration and refugees are so explosive because their consequence--and often purpose--is to ensure that the poor are grossly underreperesented in the political sphere. Illegals are given sanctuary in wealthy cities in large part because they cannot vote for social welfare measure.

What if we had the de facto rules of most of the 19th century when immigrants were given the vote immediatlely--or within a year. Do you think the rich (the top 20% who earn over $130,000 family income) would welcome 18 year old "children" if they could vote for their economic interests immediately??? Do you think that there would be such pressure to admit refugees here and in Europe if they could vote immediately??? Really???

We are in the early stages of the democratic revolution of 1848.It is time to re-democratize. The income redistrbution is more important than Rodrik says. Since the botttom in 2009, the market tripled and wages for 90% were stagnant. The main economic program of the left-wing party of Obama and Hillary was no tax increase on those under $250,000--that is. the top 5% to 20%--the rich who own stocks.

A tripling of the Dow from 6500 to 20,000 is visible enough. A triping from 20,000 to 60,000 is utterly explosive. We have had no recession for 9 years. What happens when there is another?

http://prosyn.org/OfBWbBf/zh;

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