US never exactly believe in full on 'free trade'.
As an aside, you made me curious if Trump made this constituency materially better off. Here's what Claude thinks (tl;dr: it's a wash): https://claude.ai/share/36233694-3729-4758-b2e6-c2058791ab1a
It's easier for everyone to just deal in the economic losers, but we didn't do that, and now they are burning the house down. This will not get them what they want, but they will continue doing it anyway.
Globalization was the test, AI is the final exam.
I'm not sure history will end so soon.
But there was a lot of pain. Living conditions got worse and stayed worse for entire lifetimes before they got better, and they didn't get better because the people who won decided to deal in the people who lost, they got better because the world went to war and incinerated most of its capital, literally and metaphorically, and the regrowth happened under conditions of scarce labor rather than abundant labor, allowing the people on the bottom to strike a decent deal the second time around.
That, uhh, won't happen the same way again. Now we have robots and nukes. But it's true that without the benefit of hindsight I'd have had an apocalyptic view going into the last kerfuffle, I'd have been wrong, and it would have been due to a failure of imagination. Let's all hope that I am wrong again, but the mechanism will again have to be a failure of imagination, and it takes a lot of optimism to fit my hope squarely inside my blind spot.
No, living conditions did not get worse. Yes, livings conditions were pretty bad during the early industrial revolution. But they hadn't exactly been rosy before.
> [...] they got better because the world went to war and incinerated most of its capital, literally and metaphorically, and the regrowth happened under conditions of scarce labor rather than abundant labor, allowing the people on the bottom to strike a decent deal the second time around.
Which war are you talking about? There's been more than one, you know. And the decades after the second world war were probably the nadir for humanity: we never had as many dirt poor people as then and will hopefully never have as many. Remember, that's the time when there were genuine fears of global starvation. Things have been looking up a lot since perhaps around the 1980s and even more so in the following decades. Mostly thanks to PR China and India and South East Asia graduating from dirt poor to merely poor or even middle class.
You also seem confused. You seem to say that a relative capital scarcity is good for labour ('incinerated most of its capital') but also that relative labour scarcity is good for labour? Which way is it?
> the decades after the second world war were probably the nadir
People compare themselves to their parents and grandparents, you can only hustle so far in the face of lived experience.
> You seem to say that a relative capital scarcity is good for labour ('incinerated most of its capital') but also that relative labour scarcity is good for labour? Which way is it?
In an extreme downturn (Europe bombing its cities), the poor undergo more real suffering but the rich undergo more nominal suffering so inequality is reset. Bombed out factories and apartments create an enormous demand for labor -- the broken window fallacy is only a fallacy if you studiously ignore distribution. This is why we should eagerly seek to fix r>g in peacetime -- it's guaranteed to be mathematically possible and it's clearly better for everyone.
Different people in different parts of the globe had different experiences.
People in rich parts of the globe had a pretty decent 1960s. People in PR China had the Cultural Revolution..
> This is why we should eagerly seek to fix r>g in peacetime -- it's guaranteed to be mathematically possible and it's clearly better for everyone.
Why do you want to compare these two variables specifically?
Btw, during much of the 2010 real interest rates in the western world were negative while we had positive real growth. Thus r<0<g. Was that the golden age you yearn for?
When last year the Trump admin started interdicting oil shipments out of Venezuela, it left shipments heading to China intact. Then during Trump's visit to China, the two parties made a lot of progress on trade and other issues (in part because Beijing's attitude improved because the first Trump administration's restrictions on trade underlined to Beijing how dependent China is on trade with the US).
"How did the rich countries really become rich? In this provocative study, Ha-Joon Chang examines the great pressure on developing countries from the developed world to adopt certain 'good policies' and 'good institutions', seen today as necessary for economic development. His conclusions are compelling and disturbing: that developed countries are attempting to 'kick away the ladder' with which they have climbed to the top, thereby preventing developing countries from adopting policies and institutions that they themselves have used."
https://www.amazon.com/Kicking-Away-Ladder-Development-Persp...
Also motorcycles. https://en.wikipedia.org/wiki/1983_motorcycle_tariff
Manufacturing is cheaper if you have access to resources and such. Japan may of had abundant of but in this case I don't feel it's was all about manufacturing costs.
Was it a cash cow situation, where their one formula was working but as well as where Harley were reluctant to invest in a different avenue, to innovate causing cow to dry up. And that is when they called in the government to settle? That is always the impression I seem to receive.
Excluding manufacturing costs was it because they were scared of an innovation being a failure?
The same cash cow formula can be seen with the likes of Disney Pixar and Toy Story 5, a pointless movie plot at this point where if money was invested, a new creation could be born.
What you are seeing is "the bar" for a successful manufacturing business increasing until only the most profitable are left -- things like chips, things like shell companies that exist to monetize a brand. "New growth" isn't highly profitable so it never has a chance to get started (unless a recipient of an asset windfall is willing to finance it all the way to "the bar" -- see: Elon Musk).
If competition is on the scene then how can you assure me that myself taking the risk of investing will return me the sum I wish for in return.
Production has already been established but the threat is in that an another forecastable model exists and that to catch up to their market will require more investment and expenditure which could lead in less chance of a return. And even if the model is copyable; as like the trope of Chinese knockoffs to of Japanese products, you're still at a lower advantage.
It's not they don't want to innovate but the risk to gamble on innovation is high enough that you could stifle competition cheaper via governmental means.
This slows their forecast and where you can then strategise to overcome the competition rather than risking expenditure via innovation. Crafty, cheers.
Triffin's Dilemma says that in the case of the modern USA, assets will be pumped. Macroeconomics says asset pump = export dump.
The way that economics dumps exports is by raising the bar (strong currency = poor customers, expensive assets = expensive houses = expensive labor, costs go up, price goes down, profitability is squeezed). Eventually the bar became impossible to hop without a cheat code like "good brand and no R+D" or "software level profitability".
At the individual level, manufacturing pay went in the shitter as the jobs dried up while house prices and stock prices went through the roof... so everyone who could became real estate agents, or doctors overcharging real estate agents, or sellers of investment scams to venture capitalists.
What's wild is that this happened to the Spanish, the Dutch, the English, and by the 1960s Triffin could see that it would happen to the US as well.
If you want details from an economist who does his homework, "Trade Wars are Class Wars" by Klein and Pettis.
That's true.
> assets and exports compete in the balance of payments, an asset windfall kills exports by increasing the currency hurdle and embedded asset price.
They don't really have to compete with each other. It depends on what the central bank does (or doesn't do) about the exchange rate, for example.
Assets have had such a stranglehold over US politics for the last 50 years that if we ever actually run pro-export policy it won't be due to doomed self-promotion by exports (we even have a term for the pattern where this fails on first contact with tradeoffs: TACO) it will be because assets self-sabotage, implode, and exports fill the vacuum.
Germany and Singapore are two prominent historic examples of countries that export just fine despite a strong currency.
Weakening your domestic currency has barely any impact on the real price of traded goods and commodities: they just price at the world market rate. The impact is felt for goods with sticky prices, chiefly labour. Weakening your currency is mostly a way to try and give everyone a wage cut. That can make your exports more competitive for a while. But it's not the only way to cut workers' wages. (And in general, later you seem to agree that giving ordinary people more real income is kind of the point of economics. So giving everyone a real wage cut seems a bit of a curious way to get there.)
> we are already seeing yields rise despite a dollar that is still strong enough to crush exports.
Rising yields fairly mechanically leads to a stronger dollar.
Btw, you might like https://en.wikipedia.org/wiki/Lerner_symmetry_theorem
The Lerner Symmetry Theorem suggests roughly that import tariffs are equivalent to export taxes; and export subsidies are equivalent to import subsidies.
And the US is actually doing pretty well in exports, if you take into account that they are exporting not just goods but also services; and if you squint a bit, you can also see that Americans love to found new start-ups and new world beating companies and sell shares in them to the world. That's also a kind of export, but it shows up on the other side of the ledger for accounting reasons.
Similarly, if you build an office building in Seattle and sell it to a foreigner, that also doesn't show up as an export for accounting reasons.
> The model assumes ... no foreign ownership of domestic assets, balanced trade
It's a magnifying glass with duct tape over the lens.
They are not necessary to work in practice.
Really strange that rest of the world can tariff and put up barriers, but once the US does that, all free-trade warriors step out of the wood work.