Tuesday, January 19, 2010

More Thoughts on Free Markets

It goes without saying that it's important to try and get more than one side of any debate. Recently I've been absorbing what might be called "leftist" thinking by reading Noam Chomsky and listening to his lectures.

I know it's unwise to accept claims at face value. Checking claims is critical. In this post I want to present Chomsky's thesis regarding such people as Ronald Reagan and Milton Friedman offered here and then offer the results of the checks I've made regarding those claims.

First of all let me offer a basic free market claim that Chomsky would criticize, and I'll say that I came to understand this from Sowell. The claim is with regards to division of labor.

Suppose I'm an engineer and I put myself through college working in food processing. Suppose I was pretty good at food processing and could produce 10 lbs of food per day. But now also I'm an engineer and let's just say that I can output 2 designs per year.

Contrast me with a poor laborer. He can't do engineering at all. Suppose he can process food, but not as well as me. So one might think he's in really bad shape if we were to engage in trade. Let's assume if he had to design something it would take him 4 years with all of the errors and corrections that would be required, whereas he can process 5 lbs of food in a day.

Let's compose a hypothetical economy in a country called Jonistan. Jonistan is composed of 100 workers just like me. Good at processing food. Good at engineering. We have another country called Nicolombia. Not as good at either.

Let's suppose Jonistan needs to accomplish the production of 50,000 lbs of food every year to keep the population fed. The rest of the available time is devoted to engineering projects that improve technology and make life better. Here's how it would work assuming 200 working days in a year.

Jonistan would put 25 people to the task of producing food. 25 people x 10 lbs/day x 200 days/yr is 50,000 lbs of food per year. This leaves 75 people available for engineering. 75 people x 2 designs per year means 150 designs per year.

Suppose Nicolombia also has 100 workers and needs 50,000 lbs of food a year. They'd put 50 people to work on food (50 people x 5 lbs/day x 200 days/yr is 50,000 lbs of food). 50 would be available for engineering. They'd make 12.5 new designs/yr (50 persons x 0.25 designs per person/yr = 12.5 designs per year).

Total output is as follows:

Jonistan: 50,000 lbs of food, 150 designs.
Nicolombia: 50,000 lbs of food, 12.5 designs.
Total output: 100,000 lbs of food, 162.5 designs.

Now let's alter the work and assume Jonistan and Nicolombia engage in free trade. Let's put all Nicolombians to work producing food and all Jon's in Jonistan to work on engineering. A total of 100,000 lbs of food is required to feed both countries. But watch what happens.

Total output in Jonistan: 100 people x 2 designs per year = 200 designs/yr.
Total output in Nicolombia: 100 people x 5 lbs/day x 200 days/yr = 100,000 lbs/yr.

Everyone gets fed, everyone still works, but the total output has gone up from 162.5 designs to 200 designs. Nicolombia exhanges in free trade with Jonistan and offers 50,000 lbs of food for 25 new designs. Both sides are very happy and have more than they would have had if they hadn't engaged in free trade and exploited the comparative advantage. Free trade is really great, right? Who would oppose such things as NAFTA? Who would oppose WTO? This is the beauty of free markets that the Reaganites and Friedman types think is so important.

And now for Chomsky's response. Chomsky claims that in fact Reagan was a President that violated the above free market principles to a degree unsurpassed by any President since Herbert Hoover. When Reagan was President the Japanese were far more efficient at automobile production. Reagan saw that they could destroy the U.S. auto industry. So he simply enacted enormous tariff's on Japanese products while U.S. auto was instructed in the efficient Japanese methodologies. These actions destroy the beneficial effects of the free trade principles defined above. Yes, by pursuing a comparative advantage total output is increased TODAY. But what if I don't want to be a food manufacturer for all eternity? What if I would rather sacrifice output temporarily while I develop the technology that makes me a skilled laborer rather than an unskilled laborer? Should I let Japan destroy this important industry? Absolutely not. I will block them for now, then re-open trade when I've recovered.

But this is not how we treat others. Do we allow Mexico to block U.S. subsidized agri-business corn? No. We flood their market by force. And when a million poor farmers find themselves out of business we direct them to U.S. factories just across our border in Mexico that are paying pennies per hour. They make our flat screen TV's, which continue to drop in price while they live in homes made of card board boxes.

According to Chomsky this is a process repeated over and over. Take a country like Honduras. Prior to U.S. "free market" imposition this place is totally self sufficient. They make plenty of food and feed their population. But then free markets are imposed and they become a country that exports snow peas and beef to the U.S. due to their comparative advantage. GDP is up. Profits are up. And now child malnutrition is soaring and the population is generally starving. It's not acceptable when the free trade model would affect us badly, as in Japanese car imports. But it is imposed on others by force.

Chomsky made a couple of claims in this lecture that I wanted to check. The first was that Reagan was a protectionist. The second was that what Chomsky calls the "neo-liberal" economic policies of Friedman and others began to be imposed around the 1975 timeframe, and that the evidence is pretty clear by all economic measures that for the average American this is the time when things took a dramatic turn for the worse. Not for the wealthiest in America, but for the poor. So I checked these claims. Here's what I have dug up.

Was Reagan a protectionist? This source says yes.

What about economic indicators from 1975 onward for average Americans? Check the following:
  • top 1% share of total wages here
  • median family income here
  • productivity vs median family income here
  • income growth by quintile here
  • income ratio here
  • low, middle, and high income growth here
  • bottom 99.5% share of total income here

What I've been able to check appears to be accurate. Something bad happened around 1975. What was it?


HispanicPundit said...

You really gotta stop quoting the EPI on issues like this - or would you accept counter factuals from, say, the Heritage Foundation?

Sometimes I wonder if you even read what I wrote. Let me cut and paste since you seem to have missed it before:

another possible interpretation is that the chart does not take into account 401k's and healthcare costs: with the rise in healthcare costs, much of an employees wage gains have gone in the form of healthcare payments, not direct pay...a hidden but still income gain for the employee. See here and here for more. Which I suspect is the case, as the chart is produced by the EPI...an arm of the unions, see here.

In other words, median family income and other stats often (purposely?) exclude non wage increases like 401k benefits, healthcare costs and other non wage related income growth. Another fundamental error is they dont control for the changing family environment. See Thomas Sowell on that here.

The EPI, an arm of the union, has a self interest to make the economy look as bad as possible - after all, they want to increase governments role in the economy (with issues like pro-union legislation, minimum wage, etc). So they are in no way to be trusted on this issue.

Jon said...

OK, I finally read your links and want to respond.

Your response has to do with the accuracy of the EPI figures. That was not really the central part of my argument, but I'm going to address it anyway. My main point here is that it seems that free trade is advocated by such people as Reagan only when that action is convenient from a U.S. perspective. We cram tough love down the throats of unwilling countries. But when the tables are turned and we are looking at a situation where we are not at the advantage from a trade perspective we block free trade. It's important to recognize what's really happening to be able to cut through right wing rhetoric. Do you agree with my main point here?

Now to your links. Your first link responds to the EPI figures with three arguments. The first is that the inflation figures are wrong. The second is that the changing household mix affects things. The third is that compensation needs to include non-income as well.

With regards to the first point he doesn't argue that inflation is one thing prior to 1975 and something else afterwords. By adjusting inflation he shows that income gains have been made. But he doesn't explain why they have slowed so much since the 70's and also why there has been such a shift in inequality, which he concedes.

The changing household mix sounds like a fair point, but what about the fact that working hours are up dramatically? Everywhere I look it seems to be saying the same thing, and this definitely squares with my own perceptions. Everyone around me that has a job works crazy hours, including me. But anecdotes I know don't count. Here's wikipedia talking about with women entering the work force working hours for Americans are actually up 247% since the 50's. The best source I've found with a good graph of the annual change is from the EPI, so I'll just give that for reference. Isn't it strange that in the U.S. with rising productivity and supposedly improved wages Americans are finding themselves with less and less leisure time? Makes good sense from Chomsky's perspective.

Jon said...

Chomsky's also making good sense of the radical collapse in the savings rate even accounting for 401k's. I saw on this movie IOUSA that it peaked at about 13% in the 70's and fell to actually under 0 for the first time in history in around 2006. I think it's up a bit since then.

As a hard ass right winger you'll probably assert that this is because Americans want expensive vacations and huge mansions. Of course that's true in some cases, but I think basic economics explains that this is not the general story because of utility. But I'm not going to get into that right now.

The final point is that compensation is actually up when you look to 401k's and benefits. But remember that rising medical costs are a function of the crony capitalist system that I'm criticizing. And does that claim account for the phasing out of pension plans?

I have to tell you I think he's right. Working hours up. Savings down. I think more and more as we approach retirement we're going to see more and more elderly people homeless and impoverished. With pensions gone and savings rates down to almost negative it's going to be more and more Wal Mart greeters. We're lucky. We're skilled professionals. We have 401k's. We save. But look at all the people your age. How many are investing aggressively in 401k's. Whereas I look at everyone I know that is my Dad's age and they get by with pensions and Social Security. I know this is an anecdote, but I'm just saying that if I had to place bets I'd say I think the rosy picture of the right is off.

Jon said...

One other point. Your link from Perry contrasts "Real compensation" but what matters is MEDIAN compensation. The claim is that the super wealthy are cleaning up and normal people are not. When the top 10% double their income and the rest are flat that looks OK as far as the overall hourly pay rate, but we have to ask why the prosperity is being distributed as it is.

HispanicPundit said...

You cant keep moving the goal post on me. I responded to the claim that wages have stagnated, not that income inequality has gone up (which, btw, I think I addressed pretty well). I could also respond to your income inequality claim.

But before I do, I want you to tell me WHY income inequality matters at all? Do you think that economics is zero sum?

In other words, why should the riches wealth bother me at all? So long as I am getting wealthier as well, why should it bother me that they are getting, say, 10x wealthier?

In other words, wages IS what matters.

But again, this is another fundamental difference between us. Its like Christians who argue that the world is going to hell soon. Armageddon is coming. Then you get other Christians who think the world is getting better...times are improving. Both people look at the same world and come to vastly different conclusions.

Frankly, I think your doom and gloom of today vs yesterday is just plain wrong. ALL of my friends grew up poor...dirt poor, by USA standards...and we are all doing very well. The economic profession would agree with me as well. Sure, they would agree with you that income inequality is rising - which it is, but I dont think its meaningful - but they would also agree that todays middle class has it far better than yesterdays middle class. Its obvious to me, but apparently you see it different.

Regarding income inequality in particular, my favorite argument addressing that is how trade helps reverse it: see here.

Jon said...

Sorry about the moderation. I'm having spammer problems.

You made an argument on stagnant wages. By using different CPI figures he can show that wages are up. But my initial response is that if that's the way we want to evaluate it then wages used to be increasing dramatically and evenly but now they are up slowly and only to the rich. The dramatic changes for the worse since the mid 70's remain whichever CPI figure you want to use. An explanation is required.

Does income inequality matter? Not necessarily. But if previously gains were spread evenly and they were large, but presently the gains to the rich remain while the gains to the poor are eliminated, then I would like to know why and I would like to know if it can be corrected. Why not have dramatic gains for both rich and poor instead of just dramatic gains for the rich?

Savings down and almost eliminated from peaks in the 70's. Growth rates for the middle and poor reduced dramatically (whichever figures you want to use for inflation). Working hours up dramatically. Something's amiss.

HispanicPundit said...

Just be careful how far you go in your argument. I've read your response twice and you kind of toe the line without explicitly crossing it. There are two arguments you seem to be making, one valid, the other not so.

The first argument is that income inequality is up. That the gains going to the poor and middle class have reduced or even stagnated relative to the rich. These arguments are, to a large degree, widely agreed upon by left and right. The difference are in answering why. Here is a good overview of the issue, from an economic perspective. The responses from the right are similar to the ones I have given you. Questioning the importance of income inequality and emphasizing that it is not as bad as many on the left make it seem - though ultimately granting that there has been an increase. All of this is standard economics.

The second argument you seem to be making, however, is a lot shakier. It goes further and claims that wages for the middle class and poor have actually gone down. Its the argument that todays middle class and poor are actually worse off than yesteryear's poor and middle class. I don't know any economist who believes that. For one, its ridiculous on the face of it. Mere technology, pharmaceutical innovation, healthcare, standard of living and basic work environments have advanced so much in absolute terms that its, frankly, absurd to think otherwise.

If you are making the second argument than we are much further apart than I realized. Even more so if you rest the second argument on free trade. I don't know anybody, left or right, who would agree with you.

This is why it is difficult having conversations with you. Have you ever argued with a conspiracy theorist? Or better yet, someone who disagrees with almost every foundational argument you make? Its quite frustrating. Its how I feel with you. We cant even take basic economic axioms as fact. Your knowledge is so thorough, your confidence is so extreme, your trust is so vast, that you take a linguists word over that of the economic profession. Even capitalism itself is questioned. Where to begin with someone like that? Its like arguing with a young earther, the effort is so vast and their basic evolution knowledge so fundamental that it makes the discussion more effort than its worth.

I keep trying because we are friends...but if you were anybody else, I would have written you off a long time ago. There are only 24 hours in a day.

Jon said...

Well, thanks for stooping to help my pathetic self. :)

Let me ask a question though, and try to be honest with yourself. Is it possible that what's really frustrating is you're getting questions you may not have heard before that are kind of tough to answer? In the thread about their responsibilities regarding terrorism and ours your defense of the state violence has you as a terror advocate. I ask and you don't want to answer. With regards to Iran's nuclear ambitions my point is that Iran's behavior is logical, so our violence is probably encouraging their nuclear development. That's the point. Instead you want to talk about irrelevant side issues. Here the point is that as far as U.S. policy trade is free when to our advantage but regulated when not. You haven't really addressed that.

It seems to me that you wish my claim was something like "price controls don't affect quality, middle men never provide value, free trade is bad" (despite my extensive discussion on the value of free trade). You act like I'm confidently making such claims when in fact I don't claim these things at all. And this is your basis for saying the discussion is fruitless.

Look at my email to you on banking. I said something like "Not sure I agree. I have questions, but my concerns may be wrong." There's nothing super confident about that or other economic claims. My confidence has been more related to double standards on terror, immoral state violence defended in the West, etc.

But then these are the uncomfortable questions. These are the questions that shatter the noble myth of the country that you hold and that I once held. Everyone wants to focus on sins of state enemies and many people have never considered looking at their own sins. It's not something that was easy for me either. In fact it was not something I could even do for a long time.

HispanicPundit said...

Is it possible that what's really frustrating is you're getting questions you may not have heard before that are kind of tough to answer?

Not possible at all - because its primarily on economic issues that I get frustrated, and its precisely economic issues that I know more about.

Where you shake my foundation and leave me thinking is on foreign policy issues. Its one of my admittedly weak areas. And personally i LIKE those questions and discussions. I like the prodding. I've even solicited you for more information and questions on certain topics.

Its our economic discussions that make me question your knowledge of foreign policy. I KNOW something about economics and if on that topic you take extreme, IMHO not well thought out positions, then I get the feeling that you are also wrong on foreign policy - only I havent put in the time necessary to prove it to you.

In other words, if your theory were to be true, you would expect me to get annoyed on foreign policy issues not economic issues - but my reaction is completely the opposite. Why? Precisely for the reasons I mentioned above: you have become a populist and populists are difficult to argue with. You have entered political discourse that turns me off - subjective and not based on academic consensus.

This is precisely why I dont read political hacks. Look at my google reader. You wont find blog links to ANY purely partisan commentators. Nothing from National Review, the Weekly Standard, or other such organizations. Its just not my style.

Jon said...

Well I'm glad you are taking the time because I am learning a lot from you as I've said before.

It's true though that I am questioning some of the standard positions on economics. I think part of what is driving me is I've come to accept a propaganda model of discourse in this country which prompts me to ask myself if a "consensus" view also serves the interests of powerful sectors that might want to promote such a view. If it does this doesn't mean the consensus view is wrong, but I wouldn't have as much confidence as someone like you would have in consensus because you probably don't accept the propaganda model I do.

So for instance you say "Everyone says life is getting better for all, rich and poor." Of course in some ways that will be true. Technological advances help everyone even if it is only a trickle down. But that's not necessarily true overall. Could be. I'm granting my own limitations here. I know you are much better read on economic issues. But as I said I don't think you accept the same propaganda model I would so you have less reason to question your sources. Meaning based upon our different presupositions it makes sense for me to be more cautious. I recognize that a crony corporatist system would want to sustain the status quo even if in fact the poor were losing ground, so that's the story I would expect to hear in the echo chamber whether it was true or false.

So I need to see the actual arguments and also the counter arguments before drawing conclusions.

HispanicPundit said...

I understand your "propaganda model" with regard to politicians and even the media - in fact, at a fundamental level, we probably agree. But with Academia as well? That will be alot harder to prove. By what standards than do you judge academia? Its a catch-22.

Here is how I enter a topic I am unfamiliar with. First, I try to find all laymen academic debates on the topic I could (the WSJ debates on an important topic between a liberal and conservative economist were especially helpful, years ago). I figure out who represents what side and their respective points. After doing this several times, I find the boundaries of the debates - the mutually agreed upon terms. For example, when economics was my topic, I quickly found out that free trade was agreed upon by both sides, regardless of right or left. At first I didnt understand or agree with free trade, so I read more about it and unless I find REALLY strong reasons otherwise, I usually give the economists the benefit of the doubt. Eventually, I make their boundaries my boundaries.

Then from what they disagree on, I choose. It's usually less based on economics than values (for example, if you worry more about income inequality you will tend to be liberal, if you worry more about economic growth, you will be a conservative - the economics is fundamentally the same). With values, there is no right or wrong answer. So I choose what values match my experiences and moral system. And move from there.

Reading of books follow the same order. I read a liberal book and a conservative book...hopefully the most respected of their sides. Then from there I move into the middle, picking a moderate conservative, moderate liberal, and refining my views. Its only after doing this for several books that I start to venture out to the extreme fringes. And even then, I rarely do.

This is why I am hesitant to reading Chomsky. Foreign policy is a topic I know little about and he could unfairly shape my views on that topic before my foundation is strong enough to address the arguments he makes. Its not being partisan either, I would say the same thing to those who want me to read Ann Coulters books on foreign policy. If they are not in the realm of debatable points, I tend to shy away. There is only 24 hours in a day and therefore I choose the books that give me more bang for my buck.

I'm not saying my method is the right way and yours is the wrong...just trying to explain where I am coming from.

Jon said...

Just for the record, the whole point of my post is that the U.S. opposes free trade. I can tell you that Chomsky doesn't object to free trade. I don't object to free trade. So I'm not sure you're seeing what the objections are here.

HispanicPundit said...

Chomsky objects to free trade as practiced. Atleast according to this (btw, to see Chomsky's true colors, watch how he describes NAFTA, a centrist piece of free trade legislation vs how he describes the Zapatistas, a communist leaning organization).

HispanicPundit said...

Before we end this, I wanted to address your free trade claim, namely: "the whole point of my post is that the U.S. opposes free trade."

As I said above, the United States is arguably one of the, if not the, biggest supporter of free trade in the world. Does this mean that the United States always supports free trade? Of course not, just look at what the Democrats did with CAFTA and what Obama plans to do with companies that outsource.

So yes, from an "ideal" standard, the United States does not do enough to support free trade. But in comparison to other countries, we are far ahead of the curve.

And this despite the fact that ALL free trade agreements done with a poor country, primarily benefit the poor country. This is why it is Mexico, the Dominican Republic and other poor countries that fight hard to get free trade agreements with us. Its them knocking on the United States door, not the United States knocking on their door. It makes sense too: we are the richest country in the world, already on top of the food chain, so we dont stand to gain much from a free trade agreement with the tiny Dominican Republic. But they, being on the lower end of the totem poll, can gain alot.

So yes, in some instances the United States falls short of its ideals, cowing to a special interest group here in the United States at the expense of a poor country. But given that all free trade agreements with poor countries primarily benefit the poor and that we do already have alot of free trade agreements - its not as bad as you make it seem.

To give you an example of that, read this account by Steven Landsburg here. He is professor of economics at the University of Rochester.

Jon said...

I have to wonder if your ears are broken or something. I watched your Zach De La Rocha interview (again) and listened very carefully to see if Chomsky ever said anything indicating he opposed free trade. He never did. He has problems with NAFTA and NAFTA has "Free Trade" as part of the acronym. Does that mean it really is free trade? Does Ron Paul oppose free trade? He also opposes NAFTA and says it should be more accurately called "Managed Trade" which is exactly what it is.

You say "contrast how he describes the Zapatistas." OK. He describes two completely separate things in different ways. He says that the Zapatistas were initiated with some positive elements, but this he contrasts with WHAT ACTUALLY HAPPENED with the Zapatistas, which suggests to me he has a negative view of them generally.

The U.S. is the biggest supporter of free trade if you think supporting NAFTA and the WTO is about supporting free trade, but in fact they do the opposite.

You say Mexico fights hard for free trade agreements. Who is Mexico? Is Mexico the poor farmers driven northward to work in factories for a few pennies an hour? Or the migrant workers driven here by the poverty that has resulted? This is an area I need to study more, but I would ask you to look at so called free trade consequences in terms of the gap between rich and poor and falling standard of living for the poor. Chomsky's claim, which I haven't confirmed, is that yes you do see GDP go up, you do see small sectors getting very rich, but then you see much larger sectors driven to starvation and poverty. So when you consider the success of these programs keep these questions in mind.

As an example, apply it to your article about the Bangladeshi girl. This 10 year old girl lost her job, and that's supposedly a tragedy. Well I guess it is despite the fact that it is sad to see her working in the first place, but here's how this may really be working.

A Mexican farmer is self sufficient. In comes the U.S. with tough love. Market discipline. Not something we subject ourselves to, but in his case we'll ram it down his throat. So he's out of a job and moves northward to a TV factory and has to have his 10 year old daughter work to avoid starvation. She's done now. Never will get the education. She'll be stuck in the TV factory forever. In comes Tom Harkin deploring the TV factory. TV factory closes and now the family is even more screwed.

Right wingers though only see what Harkin did. They don't consider how what they did also contributed to the problem.

Jon said...

In case you'd be interested here's some data on immigration rates from Mexico by year. It's interesting that it was in slight decline just prior to the implementation of NAFTA then spiked radically after NAFTA. It's since fallen back to about pre-NAFTA levels. This is despite all the anti-immigration sentiments in the U.S. (minutemen, talk of walls, etc). Anti-immigration has been a big part of the last two presidential election cycles. Generally I would think that immigration is fueled by tough economic conditions, though I understand other factors can be at play.

HispanicPundit said...

I have to wonder if your eyes are broken or something, I specifically wrote above: "Chomsky objects to free trade as practiced."

AS PRACTICED. NAFTA is free trade as practiced. He claims its not real free trade. He'd probably be against CAFTA. These are practiced free trade agreements.

Or are you really claiming, after watching the video twice, that Chomsky is not against NAFTA? That is my point. What else did you think I meant when I said free trade as practiced???

Fine. He doesn't like Zapatistas as practiced. But this is a general pattern with Chomsky. He gives too much weight to intentions and doesn't look at incentives. This is why communism always fools him. They speak a good game but the incentives are there for there to always be, with time, mass slaughter. Just look at Chomsky's defense of the Khmer Rouge. You'd think he would have learned his lesson.

Even your Mexican farmer example is more complicated than that. I would agree that NAFTA puts economic pressure on farmers (though the real pressure comes from agricultural subsidies, but thats a different story). It just makes sense. NAFTA is about opening up trade with the most industrialized country in the world. The type of trade that would likely entail is industrial trade - factories, companies, retail, etc. Certainly not farm work.

SO you get a spike in the demand for industrial work. This is going to come at the expense of farm work. This is exactly how it plaid out in the United States. The industrial revolution was good for city life and hard on farmers. But who would argue that the Industrial revolution was bad for the United States?

The reason we all agree that the industrial revolution was good is that we all grant a certain historical fact: farm work is extremely arduous. Its not some "self sufficient" work that Chomsky could romanticize about from the comforts of his office at MIT. Its real gruesome work.

Just for the record, I have real experience with the farm life loss in Mexico. My dad comes from a very small pueblo in the south of Mexico that was especially hit hard by NAFTA. He makes the same point I am making here. It was bad for farmers but good for Mexico as a whole - and by Mexico he also means poor people. Like the farmers that got the opportunity to switch and become retail workers. Sending money to their family in the South. If you consider what they make pennies an hour, than farmers would be making pennies a day.

I also dated a girl from a small pueblo in Jalisco. She would have to catch a two hour bus to go into the city and work at some long hour, no vacation factory. She hated it. But even she admitted it was progress. At 18 years old she made more money than her father, a farmer of many generations. She supported most of the family and paid most of the bills. Her family relied on her. Sure, she didn't get vacation, but neither does her farm working alternatives. Her income was more than her family has ever seen - both after and BEFORE NAFTA. It was a clear and large increase in their standard of living.

HispanicPundit said...

This is why I dont trust Chomsky on issues like this. He doesn't take all of this into account. Yet its all intertwined.

Here's how it actually plays out: countries open up their borders to trade...entering the much needed trade links. Industrialization comes to their country. At first there is economic disruptions but with time the country becomes industrialized. Moving from a farm economy to a service economy. This is the right-wing vision and this vision doesn't rely on hypotheticals: it actually happened. Look at the East Asian Tigers, which has experienced the greatest alleviation of poverty in the history of man. In half a century, places like Hong Kong, Taiwan and South Korea have gone from subsistence to First World status. And now free markets and free trade are lifting tens of millions of people out of poverty in India and China. Its real. Its history. Its practiced.

While all of this was going on Chomsky would be feeling morally righteous by contemplating and writing about the poor farm workers who lost their jobs. Completely missing the big picture.

Jon said...

You initially talked about how all sides of the debate agree that free trade is good. My response is that Chomsky doesn't disagree. Do you agree that nothing you posted indicates Chomsky would disagree? Your link appeared to be a response to what I had said, so that's what I took you to mean. I say Chomsky doesn't have a problem with free trade. You say he does have a problem with free trade as practiced by quoting him being critical of NAFTA. Is this supposed to mean he actually has a problem with free trade?

My point is NAFTA is not free trade. So how can it be free trade in practice? Does Ron Paul have a problem with free trade in practice or does he just have a problem with NAFTA? These are different questions.

You wrote:

But this is a general pattern with Chomsky. He gives too much weight to intentions and doesn't look at incentives.

The general pattern for you is to make very vague accusations that can't be evaluated. Or just make blanket charges (such as your claim that Ahmadinejad has threatened to wipe Israel off the map) with zero supporting evidence. For example:

Just look at Chomsky's defense of the Khmer Rouge. You'd think he would have learned his lesson.

I'd love to look at it because I haven't found it. I hear this charge a lot, but I don't see much in the way of evidence. As a quick primer check the wiki entry on this topic. Looks to me like Chomsky was always critical, but thought U.S. propaganda was exaggerating Pol Pot's crimes. This becomes a "defense" of the Khmer Rouge. No. It's a call for honesty, even for enemies of the state.

OK, so you dated a girl that thinks NAFTA is a good thing and your Dad does too. That's fine, but as you know that's an anecdote. Your experience is worthwhile and I wouldn't completely dismiss it, but it's not a great argument. Also the claim that the Industrial Revolution was good and therefore NAFTA is good. Again, that doesn't follow. These are different things. What we really need to do is look at the overall effects of NAFTA from a statistical standpoint. Is child malnutrition up? Are large swaths of the population suffering more while a few people at the top are making a killing? We've got to look to the actual results, not comparisons to separate events or anecdotes.

Give the Perle debate a listen as he goes into the East Asian Tigers. You said you would. Come on.

HispanicPundit said...

I sent you a criticism on Chomsky with regard to the Khmer Rouge. It was from Brad DeLong. I have yet to hear a response from you. He goes through Chomsky's books and quotes.

I'm not arguing that Brad DeLong gives an open and shut case but it does address the Chomsky and Khmer Rouge connection. So your statement that I make statements without back up information is just wrong: I have, you have simply chosen to ignore the evidence.

Regarding NAFTA: That is free trade...maybe not up to the standards of pure free trade but than what is? What free trade agreement, as practiced, has Chomsky ever supported?

And from what little I have read about Chomsky and Ron Paul, it seems that they disagree with NAFTA for two different reasons. Chomsky thinks NAFTA is bad for Mexico. Ron Paul thinks it was bad for the USA. Who is right?

Its interesting to see how we both look at the same people and come to different conclusions: To you, I bet its Chomsky and Ron Paul's foreign policy views that make you think their economic views must be right. To me, its their economic views that makes me think their foreign policy views are screwed up (more Chomsky than Ron Paul).

Maybe they are right: Im certainly no expert on economics. But when I see the full academic movement against them, I am skeptical. Who knows, maybe young earthers are right too??? :-)

HispanicPundit said...

Oh and, before I forget, you wrote:
The general pattern for you is to make very vague accusations that can't be evaluated. Or just make blanket charges (such as your claim that Ahmadinejad has threatened to wipe Israel off the map) with zero supporting evidence.

A quick google search shows this and this.

I think evidence wise, I am far ahead the curve.

Jon said...

You said look at Chomsky's "defense" of the Khmer Rouge. Show it to me. Again you offer very vague responses. Apparently there's a website somewhere that I hadn't yet replied to? I read all your links from that thread (here for your reference) . I didn't see anything that was a "defense" of the Khmer Rouge, though I did respond to some of the charges with substance. You didn't address my replies. I think it's very irresponsible of you to offer such slanderous charges without any evidence whatsoever. It's kind of like gossip. And I'm not even saying you're wrong. I'm saying if you are going to make such destructive charges you should provide some evidence. You may find that you are wrong, and I think you are in this case. You may be ahead of the curve, but most people are gossips that make charges without evidence (like you did here). Beating the curve is not good enough.

I don't know that it's an either/or on NAFTA. Chomsky probably also thinks NAFTA was bad for Americans. Poor Americans anyway. Not the rich. It works great for them.

I address your errors on Iran here.