Home > Uncategorized > Mainstream economists, globalization, and Trump

Mainstream economists, globalization, and Trump

from David Ruccio

globalization

Are mainstream economists responsible for electing Donald Trump?

I think they deserve at least part of the blame. So, as it turns out, does Dani Rodrick

My argument is that, when mainstream economists in the United States embraced and celebrated neoliberalism—both the conservative and “left” versions—they created the conditions for Trump’s victory in the U.S. presidential election. As I see it, mainstream economists adopted neoliberalism as a set of ideas (about self-governing individuals and an economic system that needs to be understood and obeyed) and a political-economic project (on behalf of corporate bosses) and ignored the enormous costs, especially those borne by the majority of workers, their families, and the communities in which they live. And it was precisely the resentments generated by neoliberalism—which were captured, however imperfectly and in a cynical manner, by Trump’s campaign (and downplayed by Hillary Clinton’s)—that many voters took to the polls one week ago.

Rodrick’s condemnation of mainstream economists is more specific: the role that mainstream economists served as “cheerleaders” for capitalist globalization.*

It has long been an unspoken rule of public engagement for economists that they should champion trade and not dwell too much on the fine print. This has produced a curious situation. The standard models of trade with which economists work typically yield sharp distributional effects: income losses by certain groups of producers or worker categories are the flip side of the “gains from trade.” And economists have long known that market failures – including poorly functioning labor markets, credit market imperfections, knowledge or environmental externalities, and monopolies – can interfere with reaping those gains.

They have also known that the economic benefits of trade agreements that reach beyond borders to shape domestic regulations – as with the tightening of patent rules or the harmonization of health and safety requirements – are fundamentally ambiguous.

Nonetheless, economists can be counted on to parrot the wonders of comparative advantage and free trade whenever trade agreements come up. They have consistently minimized distributional concerns, even though it is now clear that the distributional impact of, say, the North American Free Trade Agreement or China’s entry into the World Trade Organization were significant for the most directly affected communities in the United States. They have overstated the magnitude of aggregate gains from trade deals, though such gains have been relatively small since at least the 1990s. They have endorsed the propaganda portraying today’s trade deals as “free trade agreements,” even though Adam Smith and David Ricardo would turn over in their graves if they read the Trans-Pacific Partnership.

This reluctance to be honest about trade has cost economists their credibility with the public. Worse still, it has fed their opponents’ narrative. Economists’ failure to provide the full picture on trade, with all of the necessary distinctions and caveats, has made it easier to tar trade, often wrongly, with all sorts of ill effects.

Rodrick is absolutely right: mainstream economists’ own models include at least some of the losses from trade—in terms of outsourced jobs, declining wages, and rising inequality—but, in their textbooks and public interventions, they routinely ignore those losses and take the position that globalization and free trade need to be celebrated, protected, and expanded. Lest they create an opening for the “barbarians” who are critical of the conditions and consequences of capitalist globalization.

Those of us who have been critical of free-trade agreements and the whole panoply of policies associated with globalization and neoliberalism understand they’re not the sole or even main cause for the deteriorating condition the U.S. working-class has found itself in recent years and decades. Neoliberalism is not just globalization, as it includes a wide range of strategies and structural changes that have boosted the bargaining power of employers vis-à-vis workers—from the adoption of labor-saving technologies through the growth of the financial sector to a deterioration of the social safety net.

But we also can’t ignore the correlation, since the early-1970s, between globalization (measured, in the chart above, by the sum of exports and imports as a percentage of GDP, which is the green line on the right-hand axis) and inequality (measured, in the same chart, by the percentage of income, including capital gains, going to the top 1 percent, on the left-hand axis). There are lots of economists, both everyday and academic, who understand that a tiny group at the top has captured most of the benefits of trade agreements and other measures that have allowed U.S. corporations to engage in increased international trade, both importing and exporting commodities that have boosted their bottom-line. Meanwhile, many American workers—many of them voters in Pennsylvania, Ohio, Michigan, and Wisconsin—have lost jobs, received stagnating wages, and suffered as their local communities deteriorated.

However, mainstream economists, in their zeal to push globalization forward, ignored those problems and concerns. They thus paved the way and deserve a large share of the blame for Trump’s victory.

 

*Readers need to keep in mind that, when Rodrick refers to economists, he’s actually referring only to mainstream economists (which is the only group he seems to recognize). Other, so-called heterodox economists have never been so sanguine about the effects of neoliberalism or capitalist globalization.

  1. November 17, 2016 at 2:04 pm

    Throughout the world and most notably in the Economic Departments of Western Universities, negative external costs are not being emphasized as a part of the decision making process. Maximizing total return is. There is little or no interest in saving the planet; becoming more efficient in raping it yes; but not in saving it.

    http://www.InquiryAbraham.com

  2. November 17, 2016 at 2:26 pm

    Excerpt from (https://bestsolutionsfl.wordpress.com/2016/11/17/trumps-proposals-4-all-americans-2-receive-their-fair-share-of-the-american-dream-2/) written before election;
    clink on site if you wish to read: “Where we went wrong-” and “The Fatal Flaw”

    “.When you enter that election booth, that time is sacred.
    No matter what has been said or done you and you alone shall record history.
    Tell yourself, “This is the moment of truth. I have been pounded and battered by this rigged system;‘enough is enough’. Now at this moment I have the power to change this system.”

    “A FAIR SHARE FOR ALL” “Money now is a license to live. “Trickle Down” system doesn’t work.
    “It’s time to rewrite the rules―to curb the runaway flow of wealth to the top one percent, to restore security and opportunity for the middle class, and to foster stronger growth rooted in broadly shared prosperity.”( Economic Nobel Laureate Joseph Stiglitz)
    Yes, OCCUPY, the “Trickle Down” system doesn’t work.
    Yes, Bernie Sanders, the “Trickle Down” system doesn’t work.
    Yes, Pope Francis, the “Trickle Down” system doesn’t work.
    It doesn’t work because the establishment impedes the flow.
    READ: It doesn’t work because the establishment impedes the flow.
    REPEAT: It doesn’t work because the establishment impedes the flow.
    This must change.
    We must remove these impediments and create a flow of wealth directly to the “PEOPLE”.
    The system is meant to “reward all”, to allow all “Their Fair Share”.
    Millions now realize;… the economy is rigged, …the justice system is rigged, …the health care system is rigged, …the employment system is rigged.
    They are all part of an economic system that is really just a rigged political system.
    Fortunately, this November voters across America will still have the choice to cast a revolutionary vote to “MAKE AMERICA GREAT AGAIN”
    History has allowed (maybe perhaps for the last time) only one candidate to remain to accomplish this goal.
    Yes, Donald J Trump, whose PLEDGE is a proven bond.
    Now your PLEDGE will allow the system to be un-rigged.
    This change in direction can be done only with your vote.
    The U S Constitution has structured this union so that the
    Chief Executive Officer, CEO (The President)
    is responsible to its
    Board of Directors, BOD (The Congress)
    and that office together with his
    Chief Financial Officer, CFO (The Sect. of Treasury)
    can work together “…to form a more perfect union…” .
    Your vote will be that Pledge!
    Now the pressure will be placed on you.
    Let us be mindful of Gandhi’s famous quote:
    “First they ignore you, then they ridicule you, then they fight you, and then you win.”

  3. marc1seed
    November 17, 2016 at 7:43 pm

    Here is a link to the New York Times’ First Profile of Hitler (1922).  How do we get the electors to read this before Dec 19?Marc BatkoPortland OR

    The New York Times’ First Profile of Hitler: His Anti-Semitism Is Not as “Genuine or Violent” as It Sounds (1922)

     http://www.openculture.com/2016/11/the-new-york-times-first-profile-of-hilter.html

    In 1922—at the dawn of Hitler’s budding nationalist movement—The New York Times published its first profile, and explained his demagoguery away. The article, titled “New Popular Idol Rises in Bavaria,” begins with several alarming subheadings: “Hitler credited with extraordinary powers of swaying crowds to his will,” “forms gray-shirted army… They obey orders implicitly,” “Leader a reactionary,” “Anti-Red and Anti-Semitic.” It then goes on to undermine these charges.

    According to “several reliable, well-informed [unnamed] sources,” we’re told, “Hitler’s anti-Semitism was not so genuine or violent as it sounded,” though “the Hitler movement is not of a mere local or picturesque interest.”

    He was merely using anti-Semitic propaganda as a bait to catch masses of followers and keep them aroused, enthusiastic and in line for the time when his organization is perfected and sufficiently powerful to be employed effectively for political purposes.

    What purposes? The paper quotes one admiring “sophisticated politician” as saying, “You can’t expect the masses to understand or appreciate your finer real aims. You must feed the masses with cruder morsels and ideas like anti-Semitism. It would be politically all wrong to tell them the truth about where you really are leading them.” Where might this be? The shadowy source did not say. We cynically expect all politicians to lie, to feed us “cruder morsels.” But assuming that racism, bigotry, and scapegoating—whether sincere or not—will go down so easily with so many people constitutes a very dark view of “the masses.”

    Ten years later, after Hitler was released from prison for treason and had begun his candidacy for president, many, even more complimentary, articles would follow—as Rafael Medoff documents in The Daily Beast—all the way up to Time magazine’s naming him “Man of the Year” for 1938. “Why did many mainstream American newspapers portray the Hitler regime positively,” asks Medoff, “especially in its early months? How could they publish warm human-interest stories about a brutal dictator? Why did they excuse or rationalize Nazi anti-Semitism? These are questions that should haunt the conscience of U.S. journalism to this day.”

    One reporter in a 1933 Christian Science Monitor dispatch from Germany informed his readers that “the train arrived punctually”—indulging a trope about fascists making the “trains run on time” that has astonishingly come back in circulation via former Cincinnati mayor Ken Blackwell. “Traffic was well regulated.” The correspondent found “not the slightest sign of anything unusual afoot.” The word we often hear for what happened during the 30s is “normalization,” a process by which the most harrowing portents were blended into the landscape, rendered signs of nothing “unusual afoot.”

    The normalization of Nazism in Germany involved a tremendous propaganda effort, much of it aimed at children. In the U.S., the press seemed more than willing to turn an ethno-nationalist movement with frightening—and plainly stated—objectives into an ordinary, rational state actor. Anti-Semitism was described as legitimate political resentment or reasonable anger at German Jews’ “commercial clannishness.” Somehow the victims of Nazism had to be responsible for their own murder and persecution. “There must be some reason,” wrote The Christian Century in an April, 1933 editorial, “other than race or creed—just what is that reason?” Few people, it seems, could or would allow themselves to imagine that the new German Führer actually meant what he said.

  4. November 18, 2016 at 3:05 pm

    YOUR first statement disqualifies your entire message: ““Hitler credited with extraordinary powers of swaying crowds to his will,” “forms gray-shirted army… They obey orders implicitly,” “Leader a reactionary,” “Anti-Red and Anti-Semitic.”
    The POWER OF THE CROWDS SWAYED TRUMP !!!!
    using the sacred power of the ballot box to transfer the awesome power of governing.
    Mass media is still trying to misdirect the knowledge and desires of THE POWER OF THE CROWDS (People): Reverse..“… an economic recovery program that has privileged the recovery of financial markets and corporate profits has fueled the increase in wealth inequality, in the United States and across the world.”
    Reverse that program, make the money FLOW to “…help form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity,…”
    SEVENTY percent of the people believe the American economy is rigged. And they’re right.
    EIGHTY percent of the people desire a change, a revolution. And they’re right.

    • Jeff Z
      November 18, 2016 at 4:19 pm

      Lucky,

      That statement that you seem to attribute to marc1seed is part of the NYT profile from 1922.
      While many people desire a change, I seriously doubt that Trump will be the one to do it, Hillary was maybe even less likely to deliver something.

      • November 18, 2016 at 4:24 pm

        Yes, that statement is part of the NYT profile from 1922…that is being used to prove a comparison of Hitler to Trump.
        A MIS-DIRECTION, “Hitler swayed the crowds, Trump WAS SWAYED BY the crowds.

  5. Jeff Z
    November 18, 2016 at 7:13 pm

    I understand your point. I do not agree with it, because American voter turnout was abysmal, and has been for years. This indicates either disaffection or indifference.

    I DO get that Trump most definitely has fascistic tendencies, like a strong cult of personality and addiction to his own publicity for starters.

    While he won the Presidency on the basis of the Electoral College, the popular vote went to Hillary. On this basis, Trump will likely be pursuing policies that most participating voters oppose. Now, for those who did not vote, I have no idea what they would like to see. But you can not automatically assume that they endorse Trump and his proposals.

    • November 18, 2016 at 8:13 pm

      I wish “The Rest Of The Story, Harvey” were still alive. Instead of the mass media ‘misdirection’ we probably would have been able to understand that Hillary had over
      1.2 MILLION CALIFORNIA VOTES, and that the ELECTORAL VOTE is really a better measure that the size of the vote from a limited section.
      “SEVENTY percent of the people believe the American economy is rigged. And they’re right.
      EIGHTY percent of the people desire a change, a revolution. And they’re right.”
      “The COUNTRY is controlled by LAWS>
      LAWS are controlled by POLITICIANS>
      POLITICIANS are controlled by VOTERS>
      VOTERS are controlled by PUBLIC OPINION>
      PUBLIC OPINION is controlled by the MEDIA
      (News, Hollywood, Internet…) & EDUCATION
      so. whoever controls MEDIA & EDUCATION, controls the COUNTRY.”
      ( William J. Federer, Change to Chains,)

      • November 19, 2016 at 12:21 am

        Correction: Hillary had OVER 2.2 million CA votes, over coming Trumps popular vote (49 states at 1.1 million.

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