Free trade has been good for the poor

by on October 3, 2016 at 3:23 am in Economics, Uncategorized | Permalink

A study by Pablo Fajgelbaum of the University of California, Los Angeles, and Amit Khandelwal, of Columbia University, suggests that in an average country, people on high incomes would lose 28% of their purchasing power if borders were closed to trade. But the poorest 10% of consumers would lose 63% of their spending power, because they buy relatively more imported goods. The authors find a bias of trade in favour of poorer people in all 40 countries in their study, which included 13 developing countries. An in-depth study of European industry by Nicholas Bloom, of Stanford University, Mirko Draca of Warwick University and John Van Reenen of the LSE found that import competition from China led to a decline in jobs and made life harder for low-tech firms in affected industries. But it also forced surviving firms to become more innovative: R&D spending, patent creation and the use of information technology all increased, as did total factor productivity.

That is from The Economist.  Here are versions of the paper.

1 prior_test2 October 3, 2016 at 3:35 am

So, re: Walmart – enhancer of the living standards of the poor, or creator of lower living standards when replacing so many local businesses over the decades of its growth?

2 Josh October 3, 2016 at 5:34 am

Since we are human beings and not pigs, we also should probably acknowledge that replacing Main Street with a wall mart probably has other effects besides how much cheap plastic crap we can buy.

3 Hazel Meade October 3, 2016 at 9:41 am

Yeah, so now the main street has coffee shops and restaurants and boutique shops, instead of a hardware store and a cramped overpriced grocery. Why is this a bad thing, again? Many people love their quaint historic downtowns, but they don’t go there to shop for hardware or daily necessities, have not for a long time, and wouldn’t want to due to traffic congestion. Those old historic downtowns work much better as dining and entertainment centers than they do as a place to go to buy furniture and electronics.

4 josh October 3, 2016 at 10:56 am

In places where Wallmart is only game in town, it has empty shops. You clearly have not seen much of this country.

Maybe Marie Antoinette really did say “let them eat cake”.

5 Hazel Meade October 3, 2016 at 11:42 am

How much have you gotten around lately?
If the downtown shops havn’t been replaced by something else by now, the town was clearly in decline regardless of whether a Walmart moved in or not.

6 Doug October 3, 2016 at 5:17 pm

> In places where Wallmart is only game in town, it has empty shops. You clearly have not seen much of this country.

Nearly every place, you’re referring has had seriously declining employment. The shops are empty, because nobody has any disposable income. Nobody has any disposable income, because nobody has a job. In places like West Virginia or Ohio, that’s mostly because the major employers have shut down. Ain’t nowhere in the country, where the downtown hardware store was the main local employer. Maybe these quaint main street shops employed collectively 30-40 people in a hundred thousand person county. The employment losses came from 2000 employee manufacturing plants or coal mines shutting down. Believing that Harlan County is depressed because they lost a three-employee butcher shop is nothing more than a fairy tale.

7 FUBAR007 October 3, 2016 at 11:39 am

Spoken like a true northeasterner, Hazel. Visit the rural Midwest sometime. And, no, exurbs don’t count.

Why is this a bad thing, again?

Commodification of labor. The flip-side of cheaper consumer goods is lower-paying jobs with less opportunity for advancement. Proprietors are replaced with low-wage corporate employees. If their business takes off, a proprietor can look forward to expansion and a shot at wealth. The low-wage retail employee can look forward to competing with their co-workers to claw up to lower management…which is still low-wage. As for those new coffee bars and boutique shops, I question whether those a) pay their employees as well and b) turn as much of a profit as the old local hardware stores, grocery stores, etc. did. In my experience, boutique shops are usually part-time hobby jobs for the housewives of upper-middle class professionals.

There are also non-quantitative, second- and third-order effects. The short version: it injures local culture and community solidarity. Similarly, the flip-side of more efficient, nationalized, centrally managed distribution is one-size-fits-all indifference toward local needs and concerns. Big-box chain retailers have a minimal stake in the socio-economic health of the local community. They don’t give a rat’s ass about the local chamber of commerce or whether local tax revenue is sufficient to keep the schools in proper shape.

In places as densely populated as the coastal and near-coastal Northeast, this is less of an issue as fading small towns can, provided they’re within 50-60 miles of a major metropolis, reinvent themselves as exurbs. West of the Appalachians, particularly west of the Mississippi? Not so much.

On a side note, I find it fascinating that a self-proclaimed libertarian is sticking up for large, consolidated, centrally run organizations against small, independent proprietors.

8 Hazel Meade October 3, 2016 at 11:46 am

Same answer as above. The rural midwest is in long term decline for reasons entirely independent of Walmart. Agriculture is becoming more efficient.

On a side note, I find it fascinating that a self-proclaimed libertarian is sticking up for large, consolidated, centrally run organizations against small, independent proprietors.

This reminds me so much of my socialist sister who was so mad that her “independent” (feminist, socialist) bookstores couldn’t compete against Borders. Boohoo. Sometimes being “independent” just means your an idiot with an axe to grind who doesn’t know how to run a business.

9 FUBAR007 October 3, 2016 at 12:09 pm

@Hazel: The rural midwest is in long term decline for reasons entirely independent of Walmart. Agriculture is becoming more efficient.

True. But, big-box retailers and the economic consolidation that comes with them are accelerating the decline. Gasoline on the fire.

This reminds me so much of my socialist sister who was so mad that her “independent” (feminist, socialist) bookstores couldn’t compete against Borders. Boohoo.

Not a parallel example. What you’re referring to here are niche retailers who learn the hard way their niche market, at least locally, isn’t large enough to sustain a business. Strictly speaking, they’re not competing with Borders and Barnes & Noble to begin with. A more relevant example would be an independent, mom-and-pop bookstore without a particular niche focus. Of course, Amazon has rendered all of this moot.

Which reminds me: are Amazon warehouse employees–those who fill orders–better compensated and better off economically in general than the Borders and Barnes and Noble retail employees they’ve displaced? Are their opportunities for advancement better or worse?

Sometimes being “independent” just means your an idiot with an axe to grind who doesn’t know how to run a business.

I’ll remember you said that next time you go off about the evils of big business/government vs. the plucky nobility of the innovating entrepreneur.

10 Hazel Meade October 3, 2016 at 12:37 pm

In general I think the outcomes of the free market (i.e. the choices of independent consumers) are best left alone.
Why do we think that society should make collective decisions about whether small independent bookstores are “better” than Amazon?

Seems to me that you’re essentially just forcing your person aesthetic choices upon society as a whole. You think small stores are “cooler” are you think everyone else should too, so you wish to interfere with my ability to stop online at Amazon so you can preserve the “cool” jobs at the cute little bookstore-cafe. When really it’s an utterly arbitrary choice and not one of such great social import that the rest of society must be compelled to bend to your will.

11 Slocum October 3, 2016 at 12:52 pm

“True. But, big-box retailers and the economic consolidation that comes with them are accelerating the decline”

Nonsense. Walmart, Amazon and — especially in low-income communities — Dollar Stores are making it more feasible to live on lower incomes. Do you really think that the retail jobs provided by old-time main street merchants would somehow have preserved rural prosperity? If so, how? (And do keep in mind that Mom and Pop retail businesses generally pay *lower* wages than Walmart, not the other way around).

12 Thomas October 3, 2016 at 12:55 pm

Corporate employees make more than mom and pop employees. Long ass narrative without facts.

13 Slocum October 3, 2016 at 1:06 pm
14 FUBAR007 October 3, 2016 at 1:06 pm

In general I think the outcomes of the free market (i.e. the choices of independent consumers) are best left alone.

Free market outcomes are neither a) always morally/normatively neutral nor b) always mutual beneficial to all parties involved. They can also have second- and third-order effects that contribute to larger socio-economic problems. The “destruction” part of “creative destruction” is, from the perspectives of economic philosophy and policy-making, just as relevant a matter of consideration as the “creative” part. Free market cheerleaders often ignore such negative consequences or claim they’re not relevant. Doing so is factually incorrect and, in some circumstances (albeit not so much in the case of bookstores), morally wrong.

Why do we think that society should make collective decisions about whether small independent bookstores are “better” than Amazon? Seems to me that you’re essentially just forcing your person aesthetic choices upon society as a whole. You think small stores are “cooler” are you think everyone else should too, so you wish to interfere with my ability to stop online at Amazon so you can preserve the “cool” jobs at the cute little bookstore-cafe. When really it’s an utterly arbitrary choice and not one of such great social import that the rest of society must be compelled to bend to your will.

I’m not your sister. I actually prefer Amazon and big-box retailers myself. Far better selection. My only gripe with Amazon is that at least half the books I order from them arrive damaged. Not the packages they come in, mind you, but the books themselves. (Were I a more conspiracy-minded type, I’d think they’re trying to get me to 100% switch to e-books. But, I’m not, so I just chalk it up to indifference/incompetence.) Anyway, RE: bookstores, I wasn’t advocating a position one way or another, but rather just questioning your analysis.

My larger point is that creative destruction–such as that found in more efficient, big-box retailers rendering Main Street, mom-and-pop stores obsolete–isn’t an unalloyed good. Trade-offs are inherent and inevitable. Costs can matter just as much as benefits.

15 FUBAR007 October 3, 2016 at 1:18 pm

@Thomas: Corporate employees make more than mom and pop employees.

I was referring to how well coffee bars, boutique shops, etc. (i.e. the “new” Main Street) pay vs. how well the defunct hardware, grocery, furniture stores (i.e. the “old” Main Street) paid. If you’ve got data on this, by all means, please share.

That said, do you really want to make the case that a minimum-wage clerk at Wal-Mart or Target has greater opportunities for advancement than a small business proprietor whose business is taking off?

Long ass narrative without facts.

Wipe your nose, junior, and grow an attention span.

@Slocum:

Four towns in Michigan do not constitute the “rural Midwest.” Also, three of those towns are within commuting distance of Ann Arbor and/or Detroit, making them exurbs or potential exurbs. Even then, though, I’m curious as to how many of those buildings are empty vs. housing profitable small businesses/franchises.

16 Nick October 3, 2016 at 1:42 pm
17 Hazel Meade October 3, 2016 at 1:45 pm

isn’t an unalloyed good

And who gets to decide what is a “good”? Is preserving of older forms of economic organization a “good” and if so, why? Why should anyone’s economic interests be prioritized by society, especially given that every person is free to make their own economic choices and if it is so important to them, free to pay more for stuff to benefit people they think should be benefited? Why is that “good” so important that you think it is worth using force to compel everyone else to participate in preserving it?

18 Slocum October 3, 2016 at 1:55 pm

“That said, do you really want to make the case that a minimum-wage clerk at Wal-Mart or Target has greater opportunities for advancement than a small business proprietor whose business is taking off?”

First of all, Walmart and Target *don’t* pay minimum wage. But, yes, I’d say there’s more opportunity for advancement at Target or Walmart than in owning a small main street shop (not to mention that’s an apples-to-oranges comparison, since most of the people who worked in locally owned retail stores were not the owners).

19 FUBAR007 October 3, 2016 at 2:19 pm

@Hazel: And who gets to decide what is a “good”?

Setting aside theistic worldviews and the belief/non-belief in transcendental moral absolutes, what constitutes “good” is, in practice, defined by consensus and tradition within a society. Distilled down further, it tends to be defined as that which, under the circumstances, raises the greatest number of members of the society as high as possible up the society’s perceived hierarchy of needs.

Is preserving of older forms of economic organization a “good” and if so, why?

Arguably, if the older form provided more broadly distributed prosperity, stability, and opportunity than the new form. It depends on the specific circumstances.

You, and those who share your views, seem to have two holes in your thinking. First, you can’t seem to perceive a situation of creative destruction wherein the destruction is greater than the creation. Second, you can’t seem to grasp the idea that the losers in a particular case of creative destruction, particularly one in which benefits are diffuse while costs are concentrated, don’t simply cease to exist or continue to matter from a socio-economic, policy-making perspective.

Why should anyone’s economic interests be prioritized by society, especially given that every person is free to make their own economic choices and if it is so important to them, free to pay more for stuff to benefit people they think should be benefited?

Individuals do not operate in a vacuum. Choices have consequences for others, not just for ourselves, even if just as second- and third-order effects. Furthermore, the capacity for economic choice isn’t evenly distributed, and not all transactions are entirely mutually beneficial. In some cases, the capacity for economic effect of one party is so disproportionately great, it negates the capacity for economic effect of the other party. There’s also the time dimension–short-term benefit vs. long-term benefit–to consider. A choice can result in a benefit in the short-term, but a loss in the long-term.

Why is that “good” so important that you think it is worth using force to compel everyone else to participate in preserving it?

It depends on the good in question.

20 Hazel Meade October 3, 2016 at 2:29 pm

what constitutes “good” is, in practice, defined by consensus and tradition within a society. Distilled down further, it tends to be defined as that which, under the circumstances, raises the greatest number of members of the society as high as possible up the society’s perceived hierarchy of needs.

21 Hazel Meade October 3, 2016 at 2:33 pm

what constitutes “good” is, in practice, defined by consensus and tradition within a society. Distilled down further, it tends to be defined as that which, under the circumstances, raises the greatest number of members of the society as high as possible up the society’s perceived hierarchy of needs.

Squirrels.
What if MY definition of the “good” is different than my society’s? I can think of tons of examples, including many that progressives would agree with, where the “traditional” values of a society are at odds with what individuals within that society would benefit form.

Choices have consequences for others, not just for ourselves, even if just as second- and third-order effects.

Yes, like my choice to date one person and not another has consequences for the rejected person. boo hoo. Why should my choices, my pursuit of the good, be restricted because someone else’s good life depends upon my involuntary cooperation?

22 Hazel Meade October 3, 2016 at 2:40 pm

First, you can’t seem to perceive a situation of creative destruction wherein the destruction is greater than the creation.

Why would anyone voluntarily engage in a trade that is not mutually beneficial? And why do you think anyone else (i.e. government, society, YOU) could accurately identify situations where the net destruction is greater than the creation?

Second, you can’t seem to grasp the idea that the losers in a particular case of creative destruction, particularly one in which benefits are diffuse while costs are concentrated, don’t simply cease to exist or continue to matter from a socio-economic, policy-making perspective.

I grasp that they exist. I do not grasp that they have a moral right to control what other people do. I do not grasp that society should subordinate the interest of anyone else to their interests.

23 FUBAR007 October 3, 2016 at 3:38 pm

@Hazel: What if MY definition of the “good” is different than my society’s?

Then, depending on how divergent your definition of “good” is, you may have a serious problem.

Why should my choices, my pursuit of the good, be restricted because someone else’s good life depends upon my involuntary cooperation?

Because you have no more right to self-actualization than they do. (That said, your choice of dating as an example is a straw man; you’re not the only woman in the world.)

Why would anyone voluntarily engage in a trade that is not mutually beneficial?

Misperception. Lack of impulse control. Failure/inability to gauge long-term consequences. Naivete and thus vulnerability to exploitation. Sociopathy.

And why do you think anyone else (i.e. government, society, YOU) could accurately identify situations where the net destruction is greater than the creation?

Observation, reasoning, and analysis.

I do not grasp that they have a moral right to control what other people do.

Up to a point, yeah, they do. Civilization requires it.

No, you don’t have the right to do whatever the hell you want regardless of the consequences.

I do not grasp that society should subordinate the interest of anyone else to their interests.

By this yardstick, crime is a false concept.

Don’t go full metal postmodern on me, Hazel. Surely, your moral relativism has its limits.

24 FUBAR007 October 3, 2016 at 3:59 pm

@Slocum: But, yes, I’d say there’s more opportunity for advancement at Target or Walmart than in owning a small main street shop

Are you high?

25 Slocum October 3, 2016 at 5:20 pm

“Are you high?”

No, not only not high, but I come from a family with a few shop-owners in its history. One of the problems with being a business owner is finding it difficult to give up the local ‘pillar of the community’ status (and putting long-term employees out of work — some of whom may be family members) and so such owners often continue on far too long after the business has stopped being profitable. I’ve seen from a relatively close distance that it’s just not a great place to be a 40-50 something whose resume consists almost entirely of decades of running a family business that eventually become unsustainable (as virtually all businesses do eventually). There’s an old joke: Q: What does a farmer do who wins the lottery? A: Keep farming until the money runs out. That joke could apply as well to a lot of family businesses.

26 Hazel Meade October 3, 2016 at 5:49 pm

FUBAR:

“Waaa!! I want a job and comfortable life forever and ever, regardless of your interests” is not a great argument for why my personal interests should be subordinated to your or anyone else’s. We’re not talking about murder here. We’re talking about some people being guarenteed a job, by way of forcing me to purchase their products. By way of denying me the right to purchase someone else’s products.
If anyone is being postmodern here, it’s you. Your saying that theft of my income is not a crime, but a right.

27 Hazel Meade October 3, 2016 at 5:57 pm

Observation, reasoning, and analysis.

Rationalization, self-interest, and self-delusion. How do you tell the difference?
You think people who don’t like Walmart objectively know (because of their superior intelligence, I suppose) that Walmart’s creative destruction is more destruction than creation?

I think they are just rationalizing their aesthetic values and dressing them up in terms than justifies (to themselves and everyone else) coercing people to do what they want.

28 Seth October 3, 2016 at 10:50 pm

‘Setting aside theistic worldviews and the belief/non-belief in transcendental moral absolutes, what constitutes “good” is, in practice, defined by consensus and tradition within a society.’

And what about the blacksmiths that the mom-and-pop hardware stores replaced. Weren’t those also a tradition in society? Society evolves bub.

29 FUBAR007 October 4, 2016 at 10:32 am

@Hazel: “Waaa!! I want a job and comfortable life forever and ever, regardless of your interests” is not a great argument for why my personal interests should be subordinated to your or anyone else’s.

That’s not the argument I made. You’re projecting.

We’re talking about some people being guarenteed a job, by way of forcing me to purchase their products.

What’s this “we” shit? At no point in this discussion have I advocated what you’re saying. You’re reading that into what I’ve said. Again, you’re projecting.

Your saying that theft of my income is not a crime, but a right.

No, I’m not. You’ve become upset because I disagree with your ideology and so you’ve resorted to attacking the straw man arguments you wanted me to make instead of the ones I actually did.

30 FUBAR007 October 4, 2016 at 10:50 am

@Slocum: One of the problems with being a business owner is finding it difficult to give up the local ‘pillar of the community’ status (and putting long-term employees out of work — some of whom may be family members) and so such owners often continue on far too long after the business has stopped being profitable. I’ve seen from a relatively close distance that it’s just not a great place to be a 40-50 something whose resume consists almost entirely of decades of running a family business that eventually become unsustainable (as virtually all businesses do eventually).

And a 40-50 something whose resume consists of low-wage, big-box retail work, perhaps having clawed up to lower management, is better off? Really?

A small business owner, because they have to detail with the totality of the business and not just one slice of it, is going to have a far broader set of skills and experience. They also have a more credible chance of starting another business of their own and succeeding.

@Seth: And what about the blacksmiths that the mom-and-pop hardware stores replaced. Weren’t those also a tradition in society?

Mom-and-pop hardware stores didn’t replace blacksmiths. They evolved out of general retail as the population grew and the market fragmented and specialized.

Society evolves bub.

No shit, Sherlock.

31 Mr. Econotarian October 4, 2016 at 1:55 pm

“Big chains pay better than mom and pop stores”

“working for a big company rather than a small one leads to higher wages. High school graduates who work for companies with over 1,000 employees earn 15 percent more than similarly educated workers who are employed by smaller firms. Workers with at least a little college education see a bigger pay boost and earn 25 percent more when employed by big companies.”

“Another finding from the paper is that 28 percent of retail workers are eventually promoted into a managerial role offering higher wages. Small firms, by contrast, typically have less need of managers and managerial jobs are often occupied directly by the people who own the company and their family members. Big companies are more likely to be owned impersonally by shareholders who aren’t involved with the management of the company, allowing more opportunities for outsiders to move up.”

http://www.vox.com/2014/7/22/5926557/big-chains-pay-better-than-mom-and-pop-stores

However I will admit that mathematically large companies can only 1) have lower prices and 2) pay more than smaller companies IF they have fewer jobs per goods sold, as they must be using their employees more efficiently.

32 Ron H. October 4, 2016 at 5:02 pm

@FUBAR007 You are looking in the wrong direction. If you want to see the reason for a decline in small downtown businesses look in the mirror. It’s you and me and every other consumer who chooses to pay lower prices in our own self interest – not Walmart – that’s hurting them.

Walmart and other big box stores offer us a wider variety of choices at lower prices. We could close any Walmart store in a week by simply choosing to not shop there, and instead support local businesses by spending more of our own money to keep them open. It appears that most of us don’t seem seem interested in putting our money where our mouths are.

Small downtown businesses can’t compete head on with Walmart for consumer dollars, but instead move into niche markets not served by Big Box, like coffee bars, boutiques, sandwich shops and other specialty shops which attract the extra dollars consumers have in their pockets after shopping at Big box. Slocum’s Streetview pictures show some examples.

As has been pointed out by others, where you see entire main streets boarded up there s something much bigger than a new Walmart going on.

, I question whether those a) pay their employees as well and b) turn as much of a profit as the old local hardware stores, grocery stores, etc. did. In my experience, boutique shops are usually part-time hobby jobs for the housewives of upper-middle class professionals.

You are certainly welcome to question anything you wish, and you’re entitled to your own opinion, but opinion and anecdote aren’t evidence. If you’re going to make that argument, you should provide some actual data.

On a side note, I find it fascinating that a self-proclaimed libertarian is sticking up for large, consolidated, centrally run organizations against small, independent proprietors.

You are missing the point. It makes no difference how large a private organization or business is, as none have any power to coerce customers, unlike large central governments which have monopolies on the use of force. Any business whether large or small can only entice consumers to spend their money by offering them something of value. I’ve never been forced to enter a Walmart and had my money taken against my will. Government, on the other hand, takes our money at the point of a gun.

33 FUBAR007 October 5, 2016 at 10:58 am

@Ron H.: You are looking in the wrong direction. If you want to see the reason for a decline in small downtown businesses look in the mirror. It’s you and me and every other consumer who chooses to pay lower prices in our own self interest – not Walmart – that’s hurting them.

No shit. I haven’t questioned that. What I am questioning is that big-box retailers are an unalloyed benefit with no negative impact.

As has been pointed out by others, where you see entire main streets boarded up there s something much bigger than a new Walmart going on.

Again, I’m not questioning that. I grew up in western Kansas which has been in decline since the Depression. Believe me, I am quite personally aware of the macroeconomic trends underlying that decline as I’ve experienced them first hand.

That said, big-box retailers and the decline of Main Street haven’t improved the situation. Rather, they’ve accelerated the decline. As I told Hazel, gasoline on the fire.

You are missing the point.

What point? Like Hazel, you’ve projected boilerplate caricatures of progressive arguments into what I wrote. If you want to argue against such caricatures, knock yourself out, but leave me out of it.

It makes no difference how large a private organization or business is, as none have any power to coerce customers, unlike large central governments which have monopolies on the use of force. Any business whether large or small can only entice consumers to spend their money by offering them something of value. I’ve never been forced to enter a Walmart and had my money taken against my will. Government, on the other hand, takes our money at the point of a gun.

At no point in this discussion have I advocated what you’re suggesting. I am more than familiar with anarcho-capitalist jeremiads against the perceived evils of government, and I don’t need or want you and Hazel to regurgitate them to me. I’m not a progressive. If you’re looking for one to argue with around here, there are plenty to satiate your appetite.

34 Ron H. October 5, 2016 at 6:29 pm

@ FUBAR

In that case, if you’re not arguing any of the things I’ve “accused” you of or to which I’ve responded, exactly what IS your point?

35 josh October 3, 2016 at 10:58 am

I take it back. Apparently we are pigs.

36 blacktrance October 3, 2016 at 12:43 pm

Yeah, it underestimates the benefit of Wal-Mart because with it we don’t have to put up with “personable” customer service.

37 Slocum October 3, 2016 at 7:19 am

In general, main street retail businesses offered poorer selection at higher prices while paying their employees less than Walmart. Some owners of main street businesses may have done well, but this was much less true of customers and employees.

38 ChrisA October 3, 2016 at 7:26 am

+1 – false nostalgia for the past is what is what the pro-mercantilism folks are are all about. Really low paid horrible jobs are still there if you want to dig coal or make steel for 1950’s wages. The great news is that most Americans don’t have to do that anymore because of free trade, for most people the alternatives are much better.

39 Brian Donohue October 3, 2016 at 9:02 am

Some false nostalgia, but also some of the impact of a changing world. The sense of a loss of way of life goes back at least to the Luddites. At some point, people need to come to terms with the fact that this is the deal with the Industrial Revolution, along with relieving the world of virtually universal squalor.

Technological innovation is the real driver here, swamping the impacts of trade and immigration. Technology drives productivity improvements, which increases wages but eliminate jobs. New jobs spring up, though, which are universally condemned as inferior to those lost.

Drive through rural America- it’s not hard to find dying communities. At the same time, it’s not hard to think that folks living in these places don’t have the same stuff as those who came before them. I try to imagine living in one of these places in the 19th century, isolated, miles and miles (i.e. days) from the nearest town. One thing is clear- those people had to shift for themselves. I find the whole thing marvelous, because I’m as soft as the next guy in our 21st century civilization.

40 Slocum October 3, 2016 at 9:33 am

It’s not even just technological innovation — changing tastes have profound effects too. Furs and birds feathers were both once huge businesses employing legions of trappers and collectors. But women’s fashions changed and these industries died out. How many furriers and milliners were there in New York City in 1900? How about in 2016? What shall we do about all the unemployed hat-makers and sales ladies? Right now, for example, the Golf industry is declining. Foreign competition? Technological change? Nope, just a lot of people deciding to spend their leisure time doing something else.

41 Hazel Meade October 3, 2016 at 9:49 am

Yes, and as I noted above, if your interest is in the nostalgic aspect of the old buildings, you’re better served by a downtown populated by cafes than one populated by hardware and furniture stores (except maybe antiques). That quaint historic downtown is now easier to get to, less, crowded, and has more interesting shops than it did when people actually had to go there to buy toilet plungers.

42 FUBAR007 October 3, 2016 at 12:15 pm

New jobs spring up, though, which are universally condemned as inferior to those lost.

Because, in a lot of cases (though not all), they are. Lower-paying with fewer opportunities for advancement. And, the opportunities for “upskilling” aren’t always as available or as effective as the creative destruction cheerleaders like to claim.

Downward mobility, regardless of the context in which it’s occurring, ain’t popular.

43 Hazel Meade October 3, 2016 at 12:32 pm

Lower-paying with fewer opportunities for advancement.

Because working as a cashier in a mom-and-pop grocery store is such an awesome opportunity, especially compared to working for a large corporate chain.

44 Thomas October 3, 2016 at 1:14 pm

You couls abaolutely work up in a mom and pop shop. With three tiers of employment: mom and pop, family, minimum wage servant, all one had to do for a promotion is marry pop or be born to mom.

45 FUBAR007 October 3, 2016 at 1:36 pm

@Hazel: Because working as a cashier in a mom-and-pop grocery store is such an awesome opportunity, especially compared to working for a large corporate chain.

Not the comparison I had in mind. But, fuck it, let’s go with that. For the front-line clerks, you’re probably right in most circumstances. But, the owners–and their dependents–of those mom-and-pop stores had greater potential opportunities than said corporate clerks. What looks better on a resume–Wal-Mart cashier or small business owner/operator? Is scraping one’s way up to assistant manager at Target better than having a business you own grow and expand?

Anyhow, I was thinking more of the replacement of middle-skill, middle-wage office and industrial jobs with low-skill, low-wage service and retail jobs.

46 Hazel Meade October 3, 2016 at 1:55 pm

Walmart has nothing to do with the replacement of middle-wage and middle-skill jobs with low-wage jobs. Blame automation or trade for that.

But now you just seem to be whining that economic change happens and any time one sort of job declines and is replaced by other jobs, that’s bad. Like people should never have to deal with changing economic conditions. Nevermind that lots of new high-paying jobs in information technology have been created. That’s bad because different people are getting them. So you’re essentially uncomfortable with any sort of change at all, because all change results in the decline of some sectors which harms someone, somewhere, regardless of the befits to others.

Perhaps the problem is that we instill people with the mythology that they can expect to work for the same company for 40 years and then retire with a nice pension. Perhaps our degree-based education system gives people the false perception that they can quit learning the day after graduation. Perhaps the federally enshrined employer-employee model in which all sorts of benefits like medical care are tied to employment gives people a false sense of security, that they can land in a nice middle class job, and then shut down and expect to live comfortably until retirement. Perhaps everyone should be treated as an independent contractor.

47 FUBAR007 October 3, 2016 at 2:37 pm

@Hazel: But now you just seem to be whining that economic change happens and any time one sort of job declines and is replaced by other jobs, that’s bad. Like people should never have to deal with changing economic conditions. Nevermind that lots of new high-paying jobs in information technology have been created. That’s bad because different people are getting them. So you’re essentially uncomfortable with any sort of change at all, because all change results in the decline of some sectors which harms someone, somewhere, regardless of the befits to others.

You’ve admitted that capitalism has a downside! Progress!

And, yes, harm is bad.

Perhaps the problem is that we instill people with the mythology that they can expect to work for the same company for 40 years and then retire with a nice pension. Perhaps our degree-based education system gives people the false perception that they can quit learning the day after graduation. Perhaps the federally enshrined employer-employee model in which all sorts of benefits like medical care are tied to employment gives people a false sense of security, that they can land in a nice middle class job, and then shut down and expect to live comfortably until retirement.

Yup.

IMO, the big piece that’s missing is adequate mechanisms–social, cultural, institutional–to help people to adapt to economic change. We overvalue credentials and “fit” while we undervalue skills and experience. We tend to discriminate against older workers and “re-skilled” workers in the job market. We assume people are more competent at long-term decision-making than they actually are. We assume people have more of an informal safety net–i.e. family, local community–than they actually do. We assume people are auto-didactic when most aren’t. Our credit/debt financing system is premised on the assumption of lifetime employment with increasing compensation. We educate people for an industrial economy that doesn’t exist anymore.

48 Hazel Meade October 3, 2016 at 6:07 pm

You realize that those things I mentioned are a product of government policy right? The conventional corporate-employee relationship is something that is incentivized by tax policy in all sorts of ways. The fact that employers are mandated to provide certain benefits and protections for workers creates this problem. You make working for a large corporation simple and easy – much easier than being self-employed. But a self-employed person would not be so complacent about their future. You talk about people being proprietors of their own business – what’s riskier, owning a mom-and-pop store or owning a franchise of a large chain? Being in control comes with risk. Being an employee of a large corporation is less risky. But it’s a false sense of security, because in the long run, even those comfortable corporate jobs are exposed to the winds of change. Nobody is safe, and we should stop telling people that government is there to make things safe and comfortable. In the long run, the pension fund gets raided and the currency gets devalues, and there is nothing that you can do about it.

49 Nick October 3, 2016 at 1:58 pm

@Slocum & @ChrisA

Some false nostalgia perhaps, but also a sense that small town America, certainly in certain parts of the country, is in decline in its ability to attract/retain residents. In addition, people want these residents to be US-born in very high percentages. Regarding standard of living, the average resident of even the places experiencing population declines likely have it better than they would have at their age had they been born 50 years earlier. However, if one’s town has a population well below its peak, people (including those who live there) are inclined believe things have gone in a very negative direction regardless of whether that “there” is Detroit or Jewell County, Kansas. In addition, if those who are attracted to move their change the demographics of the area, many will not easily view that as a positive sign.

There’s an subculture in the USA that looks much more positively on options that involve small town living than metropolitan living, but market forces keep pushing people toward the metropolitan, creating a sense of loss.

50 Nick October 3, 2016 at 2:58 pm

I have been thinking about my comment & maybe it could be better articulated as:

“People want their community to be good/desirable for their descendants”

Most people view this more through the lens of whether Americans are, on net, moving in or out than anything else, including standard of living. For whatever reason small-town-Arkansas native Justin Moore’s Good Ole American Way stands out to me. http://www.metrolyrics.com/good-ole-american-way-lyrics-justin-moore.html

Chorus “I’m just a country boy from this land
Makin’ a living with these two hands
Still believe in the good ole American way
I watch ’em shut the factories down
Then the foreigners flood into town
They take what’s left for half the pay
We can’t stand by and just let it fade away
The good ole American way”

51 Slocum October 3, 2016 at 3:25 pm

“However, if one’s town has a population well below its peak, people (including those who live there) are inclined believe things have gone in a very negative direction…”

Well sure. But the causes are routinely misdiagnosed and the proposed cures would make things worse. Places like Jewell County Kansas have declined because the farms have gotten progressively larger and more mechanized and require less and less labor (Jewell County reached its peak population in 1900 and had already dropped by nearly half by the 1940 census). And Detroit has shrunk because most of the population (with most of the assets) moved to the suburbs and exurbs starting around 1950 (in 1950 Detroit’s population was 1.8 million out of 3.7 in the metro region. Now the city is less than 700,000 out of 5.2 million). In neither case did this have anything to do with big box stores or free trade. In Detroit’s case, it doesn’t really even have anything to do with economic creative destruction — it had to do with racial polarization and people voting with their feet to escape high taxes, high crime, and lousy schools.

52 Jeff R. October 3, 2016 at 10:50 am

Yes, at least in the case of small towns, Wal Mart stocks products that simply weren’t on offer anywhere else prior to their arrival.

53 Hazel Meade October 3, 2016 at 9:36 am

This is a dumb one. Enhancer. Walmart increases efficiency of delivery of goods that poor people consume. It doesn’t create competition for jobs, or offshore them to China (or at least does not do so to any greater extent than any other local business could). The objections to Walmart on the basis that it reduces the number of shopworkers is one of the most economically ignorant arguments commonly in circulation among progressives.

54 Slocum October 3, 2016 at 10:34 am

Yep — although higher productivity/efficiency does reduce the number of sales clerks in the same way that factory automation reduces the number of assembly line workers. Costco has a small fraction of the number of employees per million dollars in sales compared to old-school main street merchants. But somebody had to pay for all those clerks waiting behind counters, and that somebody was the customer. As Milton Friedman reportedly pointed out, we could employ a lot more ditch diggers if we gave them spoons instead of shovels or bulldozers, and we could employ a lot more retail workers if we banned Amazon, Costco and other online and big box stores and recreated all the old retail inefficiencies.

55 chuck martel October 3, 2016 at 10:55 am

Back in the late 19th century, the guys sitting around the pot-bellied stove at Zeke’s general store lamented the fact that Zeke might not survive the competition with Montgomery Ward and Sears, Roebuck because there was no way he could match the inventory in those catalogs and the US Mail delivery right to the customer’s door. Somehow, however, society managed to go on.

56 josh October 3, 2016 at 10:59 am

sorta.

57 Brett October 3, 2016 at 12:07 pm

Enhancer. People may have liked seeing those shops on main street, but they only sporadically purchased from them even before Walmart in the 20th century – and they didn’t create many jobs at all, never mind good-paying jobs. Even assuming the businesses were profitable (big assumption), they usually only made enough money for the proprietor to live a comfortable life-style.

58 Thomas October 3, 2016 at 1:17 pm

Don’t you think that white collar SWPL Obama voters deserve a nice downtown district at someone else’s expense to look at?

59 Maz October 3, 2016 at 5:12 am

That doesn’t seem like a very relevant analysis. Why advocates for ending all trade between nations? If that actually happened, production within nations would be completely reorganized, so who would actually win and lose is difficult to say.

60 Maz October 3, 2016 at 5:14 am

*who advocates

61 Josh October 3, 2016 at 5:35 am

But if some is good, more must be better. Didn’t you learn about the law of constant marginal returns in Econ 101?

62 Ricardo October 3, 2016 at 9:42 am

Even *diminishing* marginal returns, so long as they stay positive, will guarantee that if some is good, more is better.

63 Thomas October 3, 2016 at 1:18 pm

The ninth apple gave him severe stomach pain and twentieth killed him, but he was sure he was better off.

64 MyersH October 3, 2016 at 5:59 am

>> “That doesn’t seem like a very relevant analysis.”

What? How can you possibly object to such a definitive statement as “A study…suggests”?

Pablo and Kamit must really know what they’re talking about… they used actual numerical numbers in their analysis like 28%, 13 and 40 — very very convincing.

65 Prole October 3, 2016 at 5:23 am

So many new and wonderful things to spend the Social Security Disability check on! And there will even be a little left over for crystal meth.

66 yo October 3, 2016 at 6:17 am

Do you know whether your crystal meth is imported or homegrown?

67 Prole October 3, 2016 at 7:04 am

Homegrown, thanks to free trade’s beautiful handmaiden, unrestricted immigration. José on the corner provides only the best meth. It keeps me up all night! More time for me to play videogames, watch pornography, and dedicate myself to the fine art of trolling MR, all from the comfort of my mother’s basement.

68 Hazel Meade October 3, 2016 at 9:57 am

Prole clearly needs some make-work job to keep him occupied, if only for the sake of his self-esteem. Maybe we can hire him to troll the internet, looking for microaggressions.

69 The Anti-Gnostic October 3, 2016 at 11:37 am

Work brings dignity and a sense of self-worth. I’m inclining to the belief that it’s preferable to pay welfare at the cash register than via taxation and government transfer payments.

I might feel differently if all this trade really were “free,” i.e., Venice was trading its ducats with Damascus for silk. The current regime is hardly free, with currency manipulation and thousands of pages of regulation and unaccountable, transnational bureaucracies.

70 Hazel Meade October 3, 2016 at 11:40 am

You’re free to pay taxes at the cash register. Just look for the ‘fair trade’ logos. I prefer to avoid them, myself.

71 The Anti-Gnostic October 3, 2016 at 11:50 am

With the social pathologies engendered by State welfare, you may not be saving any money.

72 Hazel Meade October 3, 2016 at 12:03 pm

How about we employ those people doing something that benefits me in a tangible way. Maybe as day care workers?

Oops, that doesn’t work, you need a license and 6 years of college for that. Federal law.

73 The Anti-Gnostic October 3, 2016 at 2:16 pm

I can agree with that: remove barriers to entry, and protect their employment prospects by controlling the borders.

74 foosion October 3, 2016 at 6:24 am

“led to a decline in jobs”

Not having a job can lead to a decline in purchasing power that more than offsets lower consumer prices. It can also have rather negative psychological effects.

75 Thomas October 3, 2016 at 1:21 pm

Not having a job means you can pursue arts and hobbies and dedicate more time to La Raza, Occupy, or BAMN.

76 Jill October 3, 2016 at 6:21 pm

Well, it certainly may motivate you to be more politically active, when decisions are made by Congress reward companies for deportation of jobs. And when you can’t afford adequate food, or heat in the winter, or whatever else you may need– because your job got outsourced elsewhere.

77 rayward October 3, 2016 at 7:03 am

Over a billion people have been lifted out of poverty in the past 20-30 years as a result of trade, over 600 million in China alone. That’s small consolation for the far, far fewer number of workers in the U.S. whose incomes have been reduced as production has been shifted to China and other places. But it’s an insult to them to claim they are better off because of Walmart’s everyday low prices. Like Col. Nathan Jessup, the authors of this study must believe we cannot handle the truth, so instead the authors claim that those whose prospects have declined as a result of trade have nevertheless benefited from trade because of Walmart’s everyday low prices. “Is this funny, sir?” “No, it isn’t. It’s tragic.”

78 ChrisA October 3, 2016 at 7:23 am

“That’s small consolation for the far, far fewer number of workers in the U.S. whose incomes have been reduced as production has been shifted to China and other places. ” – surely you don’t mean what you wrote there? Don’t you mean that is it “some” consolation or do you really believe that the vast increase in welfare in the Chinese is not worth reducing the income of one person in America?

79 rayward October 3, 2016 at 11:09 am

A clunky sentence – Monday morning at 7 am. It’s small consolation to the U.S. workers whose prospects have declined; you must have read “for” as a tradeoff for the reduction in poverty. I don’t believe the workers in the U.S. really care that millions have been lifted out of poverty in China.

80 Thomas October 3, 2016 at 1:24 pm

The dissonance between US-centric protectionism and equality among all people really brings out the racist apologetics on the left. Singer wouldn’t approve.

81 Jill October 3, 2016 at 6:24 pm

Companies– and their servants in Congress– were not trying to make life better in China. They were trying to make life easier for mega-corporations. And if many U.S. workers lost their jobs and had to take lower paying ones, and they don’t have enough food or heat in the winter now– you think they’re supposed to be thrilled about some guy in China doing better while they are doing worse? Would you feel that way yourself in these circumstances?

82 asdf October 3, 2016 at 7:22 am

As soon as they shook off Mao, China’s rise was bound to happen. They have the IQ for it, regardless of what trade deals we negotiated with them.

East Asia’s rise already happened though, and its fertility is abysmal. Once you take out East Asia the most anyone can do is point to western charity giving people $2/day instead of $1/day to live on or something to that effect. Actually, when you run the numbers its clear that as long as we define poverty as something like $10/day or less we are ultimately in a losing battle against NAM fertility when it comes to reducing global poverty, even assuming rosy UN fertility estimates.

83 carlolspln October 3, 2016 at 7:46 am

What on Earth are you talking about?

84 Ted Craig October 3, 2016 at 9:56 am

What on Earth don’t you understand?

85 anon October 3, 2016 at 10:06 am

The overwhelming statistics in Radelet’s The Great Surge show worldwide progress. Not limited to East Asia.

86 asdf October 3, 2016 at 12:50 pm

“…rose out of extreme poverty, as defined by the World Bank”

All of this goes back to how we define “extreme poverty”. Nearly all these quotes revolve around something like “people used to live on $1/day, but thanks to the Gates foundation and rising commodity prices and such they live on $2/day.” My perspective on that is that I don’t want my kids living on $1/day, or $2/day, etc. Pew did a study of global incomes and if you set the cutoff at say the American minimum wage

I don’t want my kids to live on the kind of incomes you consider “escaping from poverty”.

87 John October 3, 2016 at 8:53 am

“It is important to stress that these results purposefully shut down trade’s effects on wages. The goal of the project is to demonstrate the importance of demand heterogeneity across consumers for the distributional effects of trade. However, understanding the overall consequences of trade on the entire distribution of individuals requires an approach that jointly integrates supply-side and demand-side heterogeneity. We leave this for future work.” (emphasis — if it makes it though — added)

Not too much of a suggestion it would appear,

88 Hazel Meade October 3, 2016 at 9:55 am

The key question is whether the loss in wages resulting from increased competition among low-skilled laborers offsets the increase in purchasing power or not.

Ricardo tells us that on average it will not. But there may be some segment of the population that can be identified for whom increased purchasing power does NOT offset the lower wages. If we can identify who those people are, we can buy them off. Or if we can identify who they are we can tell people who they are NOT. There are plenty of people who simple don’t know if they have been winners or losers, and are easily swayed to believe they are losers simply because they don’t see themselves ‘keeping up” with the gains of others.

89 anon October 3, 2016 at 10:09 am

We should not really pretend that cheap imports are all good, and then dissafected males dropping out of the workforce being bad, as if they are wholly unconnected.

Cheap imports are great, but you might need some balancing jobs programs.

90 Thomas October 3, 2016 at 2:11 pm

They are deplorable and white men are over says the NYT. So, what do you care? Get rid of blue collar jobs and increase government sinecures with AA employment gates. Democrat party strategy working as designed

91 MPS October 3, 2016 at 10:39 am

I don’t think the quoted paragraph supports the headline.

Suppose free trade increases buying power of the poor by 60-odd percent. You have to also look at how it impacts their wages.

There’s a subtle element to this analysis which is today’s developed world, material welfare is probably not as important as social welfare. What I’m getting to is I imagine a lot of people would prefer to have respectable employment at a decent wage even if it came at a modest cost to material welfare, because of the social implications and because of how it makes one feel.

92 chuck martel October 3, 2016 at 11:00 am

Not too long ago, there was no such thing as a job. Does it seem likely to you that the current W-2 employer/employee relationship is destined to endure for eternity? And, if not, when would it change? And at what kind of a rate? Do you actually believe that technological change can be accepted without social change?

93 Hazel Meade October 3, 2016 at 11:05 am

How will they feel if they know their jobs are make-work that only exists to keep them occupied?

94 Jeff R. October 3, 2016 at 11:10 am

How do Dept of Education employees handle it?

95 anon October 3, 2016 at 11:14 am

Because there are no math scores for them to review or improve.

96 Jeff R. October 3, 2016 at 11:32 am

Part of good reading comprehension is being able to identify facetious comments.

97 anon October 3, 2016 at 11:50 am

I can never remember who really wants to close the DOE.

98 Thomas October 3, 2016 at 2:15 pm

And boy do they review them! So much time reviewing that they have no time for improving. Not that improving scores is their goal. Educational policy and theory has, for a long time, been focused on reducing score gaps. Go poll Democrats if they would want an increased average score at the cost of one or more preferred groups’ scores. We already know they would throw Chip in front of the trolley before Treyvon. Because they are racists.

99 anon October 3, 2016 at 11:12 am

People have talked about the difference in job satisfaction at GM, building cars, and at McDonald’s, making burgers.

I can think of plenty of “make work” more like the former. Cutting pine beetle infested forests and replanting resistant species?

100 Hazel Meade October 3, 2016 at 11:38 am

I can think of plenty of “make work” more like the former. Cutting pine beetle infested forests and replanting resistant species?

Great idea. I can just see those laid off factory workers loving the backbreaking labor. And the opportunity to spend lots of time camping in the great outdoors.

101 Ted Craig October 3, 2016 at 11:41 am

Except UAW membership isn’t interchangeable with NFFE membership.

102 anon October 3, 2016 at 11:18 am

I really don’t know why government can’t have a good, hard, job waiting for anyone who asks. With 20% non-participation among 25-35 year old males, it seems both neccesary and unlikely to perturb the broader job market.

103 The Anti-Gnostic October 3, 2016 at 11:39 am

Because then everybody would just work for the government and there’d be nobody left to pay the taxes.

104 anon October 3, 2016 at 11:48 am

Would you plant trees for minimum wage if you had another option?

And why wouldn’t you pay tax?

105 The Anti-Gnostic October 3, 2016 at 1:15 pm

You said “anyone who asks.” I think you’d be in for a surprise, and there are a lot of global poor crossing the border as well.

We are approaching a situation where the majority of the country consume more in government services than they pay in taxes. The difference is made up by debt. This is a finite process despite what Paul Krugman says.

106 anon October 3, 2016 at 4:07 pm

I don’t favor open borders, so that is moot. Use eVerify or whatever.

107 Thomas October 3, 2016 at 2:17 pm

There are better jobs with the same pat rate available today. To get people to work, you have to pay more. Not to mention government work would be district oriented, AA dominated, prevailing wage $80,000 per year giveaways.

108 anon October 3, 2016 at 4:13 pm

Better jobs than manly lumberjacking? Tell more.

109 Some Guy October 3, 2016 at 1:16 pm

I suspect the list of things you don’t know is quite long.

110 Jeff R. October 3, 2016 at 11:34 am

“unlikely to perturb the broader job market.” Only if you hire people with no skill and paying them in pixie dust.

111 anon October 3, 2016 at 11:54 am

Let’s call this straight up:

There is a fantasy abroad in the land that the free market automagically provides a good and rewarding job for everyone who wants one.

If you believe that you are deluded, but if you know it to be false, and just say screw the losers, you are something far worse.

112 Jeff R. October 3, 2016 at 12:04 pm

Great, when you find someone indulging in this fantasy, please set them straight. But you could, first, consider that it is just as great a fantasy, to think that federal and state governments could become a sort of employer of last resort, providing people with “good” and “rewarding” jobs, whatever that means, and this won’t have any effect on the rest of the labor market.

113 FUBAR007 October 3, 2016 at 12:24 pm

@anon: There is a fantasy abroad in the land that the free market automagically provides a good and rewarding job for everyone who wants one.

If you believe that you are deluded, but if you know it to be false, and just say screw the losers, you are something far worse.

+1

But you could, first, consider that it is just as great a fantasy, to think that federal and state governments could become a sort of employer of last resort, providing people with “good” and “rewarding” jobs, whatever that means, and this won’t have any effect on the rest of the labor market.

Fair point.

What’s your solution?

114 Troll me October 4, 2016 at 1:22 pm

Not trading in fantasies is a good start. Recognizing that many positions needs to be filled for which there are many competent potential candidates, but matching costs, discrimination and other issues get in the way, could also help.

115 Innocent Strawman October 3, 2016 at 12:33 pm

What did I ever do to you, anon?

116 anon October 3, 2016 at 4:11 pm

I have never gotten that kind of Eeyore argument. Sure it could work, but we might mess up, so don’t try.

117 Jill October 3, 2016 at 6:27 pm

But Anon, the free market is magic. How could you have not learned that by now, reading this blog. If anything goes wrong, well it will be corrected by the free market. Or if it isn’t, then you are not allow to do anything about it because…..Free market magic rules, LOL.

118 Jill October 3, 2016 at 6:30 pm

It’s like a fundamentalist religion. The free market is the way, the truth and the light. No one can be right or good unless they agree with the Free Market God and submit to him, regardless of what he does to them. Not my will but Free Market’s will be done. LIke the Old Testament and Abraham having to sacrifice his son.

119 Ron H. October 4, 2016 at 5:47 pm

@anon

There is a fantasy abroad in the land that the free market automagically provides a good and rewarding job for everyone who wants one.

No there isn’t . There IS however plenty of evidence that free markets provide more prosperity and better standards of living for more people, and have lifted more people out of poverty worldwide than any other system of resource allocation ever know.

120 Karl Pinno October 3, 2016 at 2:21 pm

But the poor are against free trade and suicide rates among 40 to 64 year old son have doubled and they vote from trump or sanders
And brexit
the poor must be really stupid they don’t know how blessed they are

121 Jill October 3, 2016 at 7:43 pm

That’s right. They don’t know how blessed they are that people in China are doing better, while they themselves have lost their jobs because they were outsourced to China. And some of them found new jobs, but those jobs pay less. So they don’t have adequate food, heat in winter, money to pay for other necessities etc. How stupid can you be to not enjoy this situation?

122 Bob October 3, 2016 at 2:34 pm

Regarding the debate above about the battle between big box retailers and smaller independent proprietor retailers, the big box retailers didn’t win because they’re more “efficient”. They won and destroyed independent proprietors because they could and did borrow massive amounts of ex nihilo credit.

In the 70s and 80s, the local retailers were destroyed by anyone willing to borrow massive amounts of ex nihilo credit (junk bonds, anyone?) Indeed, whoever borrowed the most won. Levitz wiped out Kreoehler, which in the 1960s had 8,000 people making furniture in USA, but by the late 70s was foundering. They got nailed by the folly of price cutting, “making up in volume what they lose on each sale..” Sports Authority, Petco, Lowes, Micky D, CVS, Safeway, Best Buy, these are the last dinosaurs standing of a economic scam that wiped out USA small retail and gutted USA manufacturing. Times Kroehler by 10,000 and you see what happened in USA when banks started lending ex nihilo credit at interest. The program began to die in the late 70’s, for as with today, ex nihilo credit leaves a scorched earth. We had that lats 70s recession.

When Deng Xiaoping opened China, and offered USA big business the exact same ex nihilo credit deal Uncle Sam offered in USA. Uncle Deng gave USA bankers a whole new lease on life, a massive ex nihilo credit pool, and USA industry was completely hollowed out, with our big #1, autos, now gone full Zombie. Now we lack USA manufacturers, USA small retail, and our pride and joy, the big box discounter, is dying as well.

123 JWatts October 3, 2016 at 4:58 pm

“Regarding the debate above about the battle between big box retailers and smaller independent proprietor retailers, the big box retailers didn’t win because they’re more “efficient”. ”

Walmart was clearly far more efficient than just about everybody else. They won out against independent retailers and large chains, such as, K-Mart and Sears. Their stores in the 1980’s were clearly better run than the competition.

124 Jill October 3, 2016 at 6:25 pm

Yes, they were highly efficient at crony capitalism– getting tax breaks and loopholes, getting state or local governments to build roads to their stores etc. etc.

125 JWatts October 4, 2016 at 10:26 am

” ..getting state or local governments to build roads to their stores etc. etc.”

Walmarts are traditionally built near high traffic locations close to a major interstate or highway, so that statement is just ridiculous. They are built close to existing high traffic roads.

“Yes, they were highly efficient at crony capitalism– getting tax breaks and loopholes”

Is there any evidence that Walmart has gotten significantly better treatment than any large corporation locating a highly taxable business in a given area? I suspect that Walmart gets far less ‘tax breaks and loopholes’ than a similar sized manufacturing business would.

I think your comment is more about mood affiliation than any significant difference in business ethics between Walmart and other large businesses. Walmart’s core business is tailored to the middle and lower class in America. More the lower class than the middle class. They specialize in ‘lower prices’ that are a greater benefit to the poor more than any other group because the poor have less marginal income. And yet the Left seems to hate Walmart with a passion.

126 Thorstein Veblen October 4, 2016 at 1:19 am

FYI, the results in Bloom/Draca/Van Reenen are not true. Its one of the worst papers you’ll find in a top 5 journal…

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