Matt Yglesias

“Best Decade Ever” is usually spouted by academic economist douchebags with secure employment.

I don’t really see why its not rational for people to feel threatened by the rest of the world catching up.

A lot of our propserity in the 50s and 60s was because the rest of the world was so far behind. Other countries could not supply the labor necessary, and demanded our products.

With the rest of the world catching up, these are not as true.

Now of course from a birds eye view, the rest of the world catching up is good for humanity… but not necessary good for the people of the United States

“We would probably feel better about the slow rate of growth in the US over the past 10 years if it had nonetheless been the fastest growth in the world.”

Well, I would feel better about it if it were more evenly distributed.

And responses like this are usually pouted by ignorant idiots who don’t bother to look at the ramifications beyond the borders of the US. For most of the world, 2000-2010 was a fantastic period of economic growth and rising incomes.

Aside from the obvious threats to the power differential underpinning our dominance, I wonder if part of globalization is that median wages in the US are going to stay still or even decline along with some prices until we converge on a point of equilibriam with the rest of the globalized world.

I more often get this from the other direction where people mistake my agreement with the assertion that 2000-2010 was about the best decade ever for humanity with undue complacency about the problems of the world. But the fact of the matter is that it can both be true that rapid catch-up growth in large population poor countries is a huge step forward for human welfare, and also true that developed countries in general and the United States of America in particular, seem to have run aground to an extent.

Except that I feel like you often do speak as though you are complacent about the problems here in the United States. Then you get mad when people react to that. At other times, you are upfront about the problems with the world, as you are here. I recognize that a blog is always going to reflect evolving opinions and spirit-of-the-moment expression, but it gets damn hard to follow sometimes.

Also, I feel like there is a tension between that paragraph and this:

Indeed, even though it’s not rational for people in rich countries to feel threatened or upset about catching-up happening abroad,

It’s not really rational for them to feel upset about people catching up; it’s rational for them to feel upset about their lives getting harder. And I think that one of your consistent analytical flaws is that you see all of this stuff as relative rather than absolute. But people who can’t find work aren’t mad because some Chinese guy is doing better relative to them. They’re mad because the material conditions of their lives have gotten worse. That’s profoundly rational.

At some point, I think those who celebrate the current order have to catch on to the fact that it is a false dilemma between helping the rest of the world and helping the United States. It is not true that we have to choose one or the other, and it is not true that everyone in the United States is so well off that we are simply supposed to ignore their problems in the name of cosmopolitanism. That is an ugly and callous attitude. But your amen chorus tends to assume it.

Are you in favor of independent labor unions in China?

Are you in favor of independent labor unions in China?

Why should anyone be happy at the sight of Chinese workers being hyper-exploited? Extreme poverty or hyper-exploitation with less poverty – this is a false dilemma.

Not directed at Cowen in particular, but — at this point inequality’s all that really matters. How are the bottom 10% doing in 2011? How were they doing ten years ago? How will they be doing ten years from now?

Anything that doesn’t keep at least half an eye on that is really just wankery.

The malefactors of wealth in the US have used free trade and foreign competition as a cudgel to crush labor and reduce middle class prosperity, but that doesn’t mean trade in itself is what is causing the problems.

Europe has seen a larger expansion of free trade than we have, but their rich are weak enough and labor is strong enough that it hasn’t led to an erosion in middle class living standards.

Growth in the American economy has been pretty good over the last 30 years. Middle class stagnation is caused by the class war, not slow growth.

Since the bottom 10% all live outside the US, in exactly those countries that have experiences massive growth – the lives of the bottom 10% have gotten MUCH better over the past 10 years.

Since the bottom 10% all live outside the US, in exactly those countries that have experiences massive growth – the lives of the bottom 10% have gotten MUCH better over the past 10 years.

http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTRESEARCH/0,,contentMDK:21882162~pagePK:64165401~piPK:64165026~theSitePK:469382,00.html

It appears the reduction in global poverty is overstated – unfortunately. It is also highly concentrated in China, whose statistics are suspect, and – moreover – is a Communist Party dictatorship.
According to Egyptian state television, President Hosni Mubarak has promised that his new government will preserve subsidies, control inflation and provide jobs. “I require you to bring back confidence in our economy,” Mubarak wrote in a letter to his new prime minister. “I trust your ability to implement economic policies that accord the highest concern to people’s suffering.”

The food price issue is global and is a result of rising demand and rising incomes. This movie will continue.

http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTRESEARCH/0,,contentMDK:21882162~pagePK:64165401~piPK:64165026~theSitePK:469382,00.html

It appears the reduction in global poverty is overstated – unfortunately.

It is also highly concentrated in China, whose statistics are suspect, and – moreover – is a Communist Party dictatorship.

Chinese demand is also causing a large spike in food prices, which has been a factor in the Arab revolt.

I think you make some important points here.

I just want to address one other aspect of the point about how rational it is for people in rich countries to feel threatened by catch up growth. Matt’s phrasing ignores what I think is a stronger driver of worry: fear of competition with cheaper labor. Given that economic theory predicts a tendency towards wage convergence in an open economy, it seems entirely rational to me for people who have lost or fear they will lose out to competition with cheaper foreign workers to fear that competition. Now, strictly speaking, it is not rational for someone worried about competing with foreign workers to also worry about catch up growth, because growth should tend to increase the competitor workers’ wages and, in theory, make them potential consumers for your products. And, in fact, I think if you look at surveys average Americans are surprisingly optimistic about growth in China, but worried about competing with low wages and bad environmental standards.

I am beginning to wonder if Matt is basically writing off a generation or two of America’s middle and working classes, figuring that stagnating to decreasing wages for them is an acceptable trade-off for a richer world in absolute terms. The problem that he seems to miss, even if he doesn’t care about those Americans affected, is that this cannot help but make for ugly non-cosmopolitan, non-liberal, non-progressive politics in this country.

I don’t know – if their figures are right, that’s still pretty impressive – reducing extreme poverty from 50% to 25% of the population in developing countries in 30 years doesn’t seem so bad. Neither do 500 million less people in extreme poverty in a time of still strong population growth.
China plays an important role, but really it’s pretty much all of Asia. And more recently we’ve seen a lot of positive signs out of Africa – not all of Africa, but much of it.

that’s actually wrong – what has gotten better are the lives of, roughly speaking, the bottom half. The worst off ten percent – roughly what Paul Collier refers to as “the bottom billion” – are mostly living in places that haven’t seen much, if any, progress (mostly sub-Saharan Africa w/o the hopeful cases like Ghana).
I would still say the bottom half matters tremendously. I also don’t think starving children in Africa should be any reason not to care about poverty in the US – but while I disagree with some of Matt Y’s policy views on that, I don’t think he doesn’t care about poverty in the US.

no – Matt has said before that he doesn’t think, for the most part, that American workers are competing with Chinese workers (but rather with German, Japanese, Canadian etc. workers). And I do think the degree that outsourcing to low-wage countries is responsible for job-loss is often exaggerated by people on the left. It’s pretty clear from the data, for example, that NAFTA hardly had any impact at all. But China does seem to be different – data show a pretty significant dent in manufacturing employment in the US that corresponds to the growth of Chinese exports. And I think Matt is often surprisingly callous in writing off the importance of manufacturing jobs for a prosperous economy.

Is that really true? The Chinese may be better off, as may be even the relatively stable nations in Africa, but I don’t think conditions in, say, DROC or Afghanistan have improved much in the last 15 years.

At some point, I think those who celebrate the current order have to catch on to the fact that it is a false dilemma between helping the rest of the world and helping the United States. It is not true that we have to choose one or the other, and it is not true that everyone in the United States is so well off that we are simply supposed to ignore their problems in the name of cosmopolitanism. That is an ugly and callous attitude. But your amen chorus tends to assume it.

Can you point to an actual person this paragraph applies to? It doesn’t apply to Tyler Cowen, who (by the linked article) blames technological stagnation for the problems of the median American, not growth in the rest of the world. It certainly doesn’t apply to Matt himself. In fact, I think almost everyone I’ve heard claim that such a dilemma exists is an opponent of the current order, and an advocate of the nationalist rather than cosmopolitan position.

You assume that the countries that contain the bottom 10% consist entirely of the bottom 10% – I am sure that a lot of countries with the “bottom 10%” also have people who are not in the bottom 10% – if the latter group iswhere growth and progress in those countries is concentrated, it doesn’t necessarily do much for them.

How are the bottom 10% doing in 2011? How were they doing ten years ago? How will they be doing ten years from now?

Important, but I am not certain that this is the right way to think about the world. Is the bottom decile really that much worse off than the second or third lowest decile? While improving the situation of the bottom decile is important, we could probably also make almost as much progress if the second or third deciles were lifted, even if it didn’t help the bottom 10%. I don’t think that we are at the point yet in the world where such a small percentage of the world’s population is in abject poverty that bringing up those last few stragglers is the main issue.

That’s very nice and highminded.Yes, increased global living standards are a Good Thing, but I stand by the douchebag economist insult. I also stand by the sentiment that that kind of shit is touted by people who should relocate to the Rust Belt.

Humans are generally concerned with their own welfare and American workers have been getting raped for much of my lifetime. I’m not impressed by chin-stroking think tankers who ignore the fairly widespread human misery in their own backyard.

I think that our ideas about the level of affluence of humanity as a whole are often skewed by the 20th century, which it seems to me was a time of unusually high levels of suffering in many parts of the world and of more Malthusian outcomes than in most eras past. Because populations grew so quickly from 1850-2000, I think it quite plausible that the quality of life of the average citizen of Kolkata or Kibera or Sao Paulo in 1980 or 1990 was quite a bit worse than their forbears’. The last decade has shown progress for most people on Earth, but I am not sure that the the average citizen on earth is living better than at any time previously. Technology and access to food are great, great things, but so are space and air and freedom.

Chinese growth rates and poverty rates are suspect, and even if remotely true, reflect (as Matt has pointed out before) recovery from the disaster of the Great Leap Forward and Cultural Revolution).

China isn’t all of Asia by a long shot.

http://www.imdb.com/title/tt1512201/

People should see Last Train Home. It is a harrowing picture of China.

So Americans losing their economic security who complain about policies fostering such situations and pointing this out makes them ignorant idiots? Look – someone who sees decline around them is not exactly going to be taking out the pom-poms to celebrate growth beyond the horizon, and nor should they.

So Americans losing their economic security who complain about policies fostering such situations and pointing this out makes them ignorant idiots? Look – someone who sees decline around them is not exactly going to be taking out the pom-poms to celebrate growth beyond the horizon, and nor should they.

You missed the memo. We, the middle-class of America do not care about the welfare of the rest of the world if it comes at our expense. I do not want a future of decline and suffering in the United States all so we can sing “We are the World” in a giant circle jerk with others who quite frankly, also do not give two sh*ts about the US middle-class, or other impoverished people.

It will be available for Netflix streaming in a few weeks.

No, Waingro is an idiot for calling anyone who points this out an “academic economist douchebag”.

I think there is some mixing of apples and oranges. The problem that we are seeing has more to do with income inequality within the US than with a rising tide abroad. Proper regulation and the use of appropriate carrots and stick could have prevented the middle class from imploding at the hands of the monied elite. The issue is that we live in a new robber baron era where the rich just get richer and the middle class disappears. The fact that there is ample competition from abroad exacerbates the problem by promoting the exploitation of American workers. There is a role for government in helping people to land on their feet -but that’s just another program the republicans want cut.

And you need to rethink the ramifications if it becomes widespread knowledge in America that the rest of the world’s growth came at the expense of our decline.

Nice to know that Americans don’t matter to you.

The neoliberal elite: Pretending to care about poor people far, far away so that they can excuse not caring about all the lucky-ducky poor that get to be exploited here!

What we may be seeing is a movement of the world’s poorest from completely disorganized slums/favelas to “tiny flats in tower blocks”. Whether the latter are “public housing” or private with subsidized rents isn’t important. In Brazil the NY Times reported the latter, with the emphasis on pure transfer payments to the poor, aka socialism.

The residents of these tower blocks are then wll positioned to be a global sweatshop force, if another country hasn’t already underbid them.

Establishing running water and indoor plumbing is a good thing. Heck of a job really.

I left America for a third-world country in 2005 (yes) and now, having been here for 5 years later, the changes have amazed me; and many of the things that, 5 years ago, were obviously new and mystifying, are now a completely accepted way of life.

My favorite thing about living outside of America is the positive and constant state of change.

Unfortunately, I think that’s probably true. As I wrote over at Sumner’s reveiw of the Cowen piece, I think innovation and growth in countries at the technological frontier will be slowed by the catch up growth in the emerging markets, essentially it is a tremendous labor supply shock.

My hypothesis is that emerging market catch up growth has uncomfortable medium term implications for growth for those at the edge of the tech. frontier. As this VoxEu article argues, in essence the original industrial revolution was largely fueled by expensive labor and cheap capital in the Netherlands and England, in comparison the equally advanced Chinese were cursed with too much cheap labor so that capital replacement of labor had a higher bar to clear.

http://www.voxeu.org/index.php?q=node/6051

The implication for advanced countries is that as 2.5 billion laborers are integrated into our economic system the payoff from new technological development is reduced compared to utilizing the new source of cheap labor.

Even though economists often complain about the low US savings rate, it seems odd that could live besides such low interest rates unless there was an underlying weakness in investment demand. In the context of the recession, that is probably uncontroversial but real interest rates have been falling for twenty years in the US.

However, as other supply bottle necks in commodities and labor absorbtion slows and consumer demand increases in India and China investment returns to new technology could increase.

I’m not impressed by chin-stroking think tankers who ignore the fairly widespread human misery in their own backyard.

Nor am I, but you’re strawmanning, here. Matt plainly says that the lovely decade just past was pretty unlovely for Americans in specific. Indeed, I’d say the title of the post is a pretty good hint as to his feelings on the matter.

More than his feelings, however, it’s reflective of reality, whence you pretty well have to part if you want to subsequently have any kind of intelligent discussion regarding policy. I fail to see what you’d accomplish by drawing attention exclusively to the hardships faced by American workers, while ignoring other ramifications of global economic development.

This bit from Krugman is pertinent here: http://krugman.blogs.nytimes.com/2011/01/28/the-wal-mart-decade/

I am beginning to wonder if Matt is basically writing off a generation or two of America’s middle and working classes, figuring that stagnating to decreasing wages for them is an acceptable trade-off for a richer world in absolute terms.

I wonder about this, too, though I’ve yet to be entirely convinced. It’s a scary prospect, primarily for the reasons which you mention, but also because, if true, it represents a weird incoherence in Matt’s thinking on the achievement of progressive policy aims. I remember–and found grosso modo convincing–his defense of health care reform, despite its imperfections, as a means to help people who were disadvantaged now. Commenters hoping that a catastrophic failure of the present system would lead more directly to an ideal configuration struck me as more than little callous. Throwing the next two generations of American workers under the bus–if indeed those are the stakes; sebastiank, below, evidently disagrees, at least in part–would be equally so.

The path from ‘abysmal’ to ‘excellent’ will inevitably pass through ‘insufficient.’

The path from ‘abysmal’ to ‘excellent’ will inevitably pass through ‘insufficient.’

“Best Decade Ever” is usually pooh-poohed by the American middle class, one group for whom the phrase does not hold true. They shouldn’t feel so sorry for themselves; sure, it was the Best Decade Ever for some people richer than them, but it was the Best Decade Ever for far, far more people who are poorer than they will ever be.

In other words: If you think you’re defending the poor by insisting that it was a shitty decade, your definition of ‘poor’ is skewed.

“Best Decade Ever” is usually pooh-poohed by the American middle class, one group for whom the phrase does not hold true. They shouldn’t feel so sorry for themselves; sure, it was the Best Decade Ever for some people richer than them, but it was the Best Decade Ever for far, far more people who are poorer than they will ever be.

In other words: If you think you’re defending the poor by insisting that it was a shitty decade, your definition of ‘poor’ is skewed.

That’s a very liberal, progressive, humanist attitude you’ve got there.

From favela to Cabrini Green; from barrio to General Molotov allie.

Old-fashioned Stalinism did this sort of thing well. It was known for its tower blocks.

There have been some socialist programs in places like Brazil which have improved the lives of the poor in this sort of way. These have happened at the same time as neoliberalism, but neoliberalism has not been the cause.

Look – I am progressive and liberal. But I also care about the United States more than the rest of the world. What you and others who are more globalist in nature do not understand is that by pushing policies which hurt the West and the first-world, developed countries is that you actually hurt progressive causes.

Want Amercians to support a more internationalist approach to the world? Make sure that the middle-class has a future.

There are better things than neoliberalism, but neoliberalism is far superior to what was there before. This is about the only objective way of measuring the quality of a change. So neoliberalism has earned the credit it won, and once it is replaced by something better, it will have deserved to fall. Most of history can (must?) be seen this way.

There are better things than neoliberalism, but neoliberalism is far superior to what was there before. This is about the only objective way of measuring the quality of a change. So neoliberalism has earned the credit it won, and once it is replaced by something better, it will have deserved to fall. Most of history can (must?) be seen this way.

It’s a fine line, I suppose, between saying “I don’t want policies which hurt me even if they help the rest of the world” and saying “I don’t want policies that help the rest of the world if they don’t help me.” Rising incomes in third world countries mean more expensive goods which means less money in your pocket.

It’s a slippery slope from here to an argument in favor of building American wealth on the backs of the global poor to me, which is not liberal, the way I see it.

It’s a fine line, I suppose, between saying “I don’t want policies which hurt me even if they help the rest of the world” and saying “I don’t want policies that help the rest of the world if they don’t help me.” Rising incomes in third world countries mean more expensive goods which means less money in your pocket.

It’s a slippery slope from here to an argument in favor of building American wealth on the backs of the global poor to me, which is not liberal, the way I see it.

I am not at all in favor or building American wealth on the backs of the global poor. In fact, the current neo-liberal agenda is actually doing the opposite: destroying American wealth on the backs of the global poor.

It is why I am more in favor of less world integrated economies, and more national integrated economies. This ensure domestic demand is built with domestic labor, reducing the ability of businesses to continue this race to the bottom economics, as well as linking the producers in a nation with the consumers in the nation.

I am fine using American tax dollars to help other countries facilitate thier own growth models internally. But currently, the only beneficiaries of the currnent economic models are the owners of capital and the government officials complicit with the current trade policies.

Perhaps it would be wiser to go back and read his archives… this is hardly the only post where he basically says ‘fuck the american people, so long as the third world poor are doing great!’.

He always wants to make the lives of foriegners better with other people’s money, he never wants to pony up for huge tax increases (which he repeatedly frames as anti-growth and politically impossible). The only time he ever wants to raise taxes are on consumption.

The totality of his work speaks for itself, there is no reason to confine discussion to a single post.

The people of Egypt are delivering the verdict right now.