Globalism and globalisation (and internationalisation)

A good deal of the Trump campaign focussed on ‘globalisation’, and the effects that process has had on, for example, the American car industry. I remember Detroit in the 1960s, a vigorous city, the home of the American car, and shortly to come, as Motown, the home of The Supremes. It had a fine civic sense and fine symphony orchestra. Today it is a civic shambles. The orchestra survives, but about half the city’s 138 square miles is unoccupied. I don’t think President-elect Trump will be able to restore Detroit to its former glory, but he will certainly be trying to revive employment in the so-called ‘rust-bucket’ industrial states, and his infrastructure rebuilding program may be the way to go. Where the money is to come from I have no idea. But then the USA has been broke for a long time, and there is no other real alternative for the global currency than the USD.

One of my favourite bloggers is an economist called ‘Lorenzo’, who publishes some of his essays on the SkepticLawyer website I have referred to before (for example, here). And he has recently had a most useful go at the shifting terms that surround the topic of globalisation. Over to him.

Three different phenomena have to be distinguished:

globalisation: the increasing range of cross-border transactions of all varieties, including (in some ways especially) the flow of information. Globalisation is driven by falling transport and communication costs.

internationalisation: increasing use of international organisations to make or adjudicate policy decisions. The EU is internationalisation par excellence, but there are many manifestations of it, including the WTO and the International Criminal Court.

globalism: advocacy of rising international flows of goods, services and finance, of internationalisation and high levels of migration. Globalism is a set of policy positions, amounting to something close to articles of faith: particularly supporting migration.

There is nothing about globalisation per se that requires internationalisation or globalism. One can be quite hostile to internationalisation and high levels of migration without, for example, being hostile to international trade. (This the position of quite a strong majority of Britons, according to polling, for example, though controlling immigration apparently trumps trade.) An obvious objection to internationalisation is that it undermines democratic accountability–people may elect those who appoint those who run the relevant organisations, but their decisions are only (at best) very weakly subject to democratic oversight. (And doing an end-run around domestic interest groups can be the point of such arrangements.)

This then also becomes an objection to globalism. The other clear point of contention with globalism is migration.

Much of the rest of his interesting essay is about the costs and benefit of migration, another theme of the Presidential election, and I’ll refer to it later. My own view, for a long time now, is that the nation-state is the most useful device human beings have found yet with which to provide a good life (or, if you like, a better life) for millions of people. It provides a system for accountability, too. Until that form is adopted by the great majority of populations, I think the ‘internationalisation’ of power is not a policy for a nation-state to follow, since it does not provide for accountability. Many of the Brexit voters felt that they had lost control over their own nation, because far too many decisions were made in Brussels. Americans inhabit a large country with a wide variety of landscapes and opportunities, and they are less travelled internationally, on average, than Australians. They don’t think they need the UN, though President Roosevelt believed in it completely.

Given the outcome of the Second World War, Australia could not have done other than support the United Nations and its off-shoots. Indeed, Chifley’s Minister for External Affairs, Dr H. V. Evatt, was one of the strong leaders in the formation of the UN, and was elected to the presidency of the United National General Assembly for one year. Sixty years later, I do not think we can leave the UN, but I do think that we do not have to follow every idea that comes out of its deliberations. Too much of what happens there is what economists call ‘rent-seeking’ — countries or international NGOs seizing on any idea that comes up that might push money from elsewhere towards them. A classic case is the whole global warming charade, where the notion is that rich nations caused whatever people think the crisis is, and should therefore pay the poor nations as a kind of reparation.

I have written before  (even before the establishment of this website) that Australia should have gone down the ‘armed neutrality’ path that Sweden chose after 1945, declining to join NATO, making its own planes and weapons, and making clear, also, that attacks on it would be resisted decisively. Switzerland and Finland did the same, for different reasons. If it is claimed that they just get a free ride from NATO, I would advance the thought that Australia as an armed neutral would have gained a free ride from the USA in the same way, and without our having been tied to American foreign policy, which is directed (quite properly) at supporting the USA’s own interests. Australia would always be important for the USA, given the importance of the Pacific and Australia’s place in it. In short, I am not a great supporter of the UN, and think that much of what it does is beneficial neither to the the people of the poor nations nor to those in the rich nations, who pay for the UN. Nor do I think we need to be an all-the-way-with-USA country, either.

Back to Lorenzo and migration

The standard line among “serious” folk is that migration is good for one’s economy. Well, it can be, but it need not be. The migration of Palestinians into Lebanon was, for example, very bad for the Lebanese economy because it destabilised Lebanese politics leading directly to the Lebanese Civil War…. the Nordic model of high levels of social provision and high levels of economic freedom relies quite crucially on strong connections and easy communication between officials and public based on shared expectations and values to permit relatively high efficiency in provisions of social services. The more diverse the spread of expectation and values are among the population, the more difficult such a high tax-spend social equilibrium becomes. Muslim migration to Sweden and other Nordic countries must tend to, over time, make that social equilibrium less stable–particularly as such a narrow range of migrants are being imported, making it much less likely that Nordic norms will be adopted by the newcomers and much more likely that Islamic norms will operate as a counter-identity. 

Treating immigration as an unalloyed good, and migrants as an undifferentiated mass, is propagandistic nonsense. That does not stop folk being outraged when the costs of migration are raised, or when folk suggest that there might be reasons to differentiate between sources of migrants. For example, there is no benefit from Muslim migrants that are not available from other migrants. There are costs from Muslim migrants which are either specific to, or particularly intense among, Muslims. Of course lots of folk are sceptical about Muslim migration.

This is not opposition to globalisation. It is not even opposition to migration–a poll that found almost half of Australians thought Muslim migration had been bad for Australia also found that almost 70% were comfortable with more migration. Dismissing the hostility to Muslim migration as xenophobia, racism, anti-immigrant, anti-globalisation simply epitomises the way language taboos are used to discount popular concerns and (worse) do so by degrading the moral status of fellow citizens. The contrast with the po-faced pieties whereby Islamic jihadism is framed until it is not even Islamic screams the contempt for fellow citizens, and the moral mascot/sacred victim elevation of newcomers, involved in so much globalist self-congratulation.

Which is just the sort of smug hostility to citizen concerns that fuels opposition to globalism. Globalists have an interest in framing opposition to their preferred policies, and the ways in which they are pushed, as opposition to globalisation, because it redirects away from critical scrutiny of themselves and their preferred policy outcomes.

There is a lot more of interest in Lorenzo’s essay, which I recommend to those who like reading about difficult stuff — not that his writing is difficult. On the contrary. And I agree with his conclusion.

There is a great deal of not-noticing arrogance in globalism, and a significant strain of hostility to democratic accountability. The self-serving appeal for globalists in parading popular hostility that their failings (and smug arrogances) generate as “hostility to globalisation” is obvious. It is not, however, a parading which should be accepted. The actual story is rather more complicated and, until folk notice those complications, more popular revolts can be expected.

Join the discussion 50 Comments

  • Bryan Roberts says:

    In this context, it’s amusing that the howls get louder as the problems get smaller. Now that there will be almost no ‘asylum seekers’ in detention, the papers are filled with agonised speculations about the fate of people who have been judged not to be refugees, and who are simply, in ‘non PC’ terms, illegal immigrants.
    The arrogance of globalism is manifest in the regular visits of UN bureaucrats chiding us for our ‘racism’, or failure to be exemplary global citizens, while conveniently ignoring the majority of countries that have no interest in UN strictures, and even less interest in obeying them. While I do not necessarily agree with Mark Steyn’s philosophy, his comments on the suicidal propensities of Western cultures in relation to immigration do make a great deal of sense.

  • Nga says:

    ” Where the money is to come from I have no idea.”

    Helicopter money. https://www.bloomberg.com/view/articles/2016-08-05/helicopter-money-is-coming-to-the-u-s

    • spangled drongo says:

      Wake up, enge luv.

      Helicopter money was around in the US before you were born.

      Don, I feel if Obama hadn’t walked away from George W’s position in the ME the world wouldn’t be in half the mess it is now.

      The UN has proved itself to be worse than useless in this current problem.

      As has a similarly elected EU.

      • Nga says:

        “Helicopter money was around in the US before you were born.”

        I’m awake, birdbrain. The term “helicopter money” dates back to a Milt Friedman paper in 1969 although the concept itself has a much earlier pedigree. I studied economics while you were making widgets on the assembly line.

        Don, I feel if Obama hadn’t walked away from George W’s position in the ME the world wouldn’t be in half the mess it is now.

        WTF?

        W’s own brother, Jeb Bush:

        “knowing what we know now, …I would not have engaged. I would not have gone into Iraq.”

        Donald Trump:

        “George W. Bush made a mistake,” Trump said. “We can make mistakes. But that one was a beauty. We should have never been in Iraq. We have destabilized the Middle East.”
        “They lied,” Trump continued, referring to Bush administration officials. “They said there were weapons of mass destruction and there were none. And they knew there were none.”

        -A trillion dollar failed war
        -hundreds of thousands of deaths
        -millions of Muslims rocking up in Western countries and the consequent terrorism that will bedevil us for generations
        -destabilisation of the entire Middle East and
        – the creation of ISIS are the key George W Bush legacies.

        George W Bush is the gift that keeps on giving.

        • spangled drongo says:

          Poor, silly, emotional enge.

          Just because you didn’t learn anything studying economics [or history], no need to get upset and display your ignorance.

          Helicopter money was around in the US long before 1969. What do you think financed WW2?

          “George W. Bush made a mistake,”

          Who said he didn’t?

          But the fact was that it was a fait accompli and all those trillions were spent on a much more successful war than Afghanistan yet Obama allowed it to turn into the disaster that we have today.

          That’s not Bush’s fault, you foolish woman.

          All that disaster you list didn’t happen under Bush and never would have.

          It happened under Obama.

          • PeterD says:

            spangled drongo says:
            November 18, 2016 at 9:10 pm

            Occasionally it’s worth examining the quality and substance of some posts, with a view to improving the clash of ideas so I have inserted some comments in brackets.

            Poor, silly, emotional enge.[This can be dismissed quite simply as emotional condescension.]

            Just because you didn’t learn anything studying economics [or history], no need to get upset and display your ignorance. [This is personal abuse delivered from someone who has, apparently, incomparable knowledge/qualifications.]

            Helicopter money was around in the US long before 1969. What do you think financed WW2? [This is moving into some historical perspective but at a fairly general level].

            “George W. Bush made a mistake,”
            Who said he didn’t? [There can’t be too much dispute about these two lines; non-controversial one might say, almost self-evident].

            But the fact was that it was a fait accompli and all those trillions were spent on a much more successful war than Afghanistan yet Obama allowed it to turn into the disaster that we have today.[This moves into the realm of significant debate, touching on the huge cost of war, its disastrous consequences and questions of who is to blame. When one looks at Afghanistan, going back to Russian intervention, and indeed far beyond, complexities emerge. If one looks at the 80s there is much to be learnt. Questions around Iraq, Afghanistan, Shia/Sunni sectarianism, weapons of mass destruction, the idea that war can settle such complex religious/cultural divisions. It seems almost trie to write Obama turned it into the disaster it is today. Does he make solitary decisions?]

            That’s not Bush’s fault, you foolish woman. [The last two words are offensive, sexist and unbecoming in a site where the focus is presumably on seriously debating complex ideas with some courtesy, rigour and precision.]

            All that disaster you list didn’t happen under Bush and never would have.
            It happened under Obama. [This dichotomy – between Bush and Obama – is simplistic. One suspects, after these two names have been forgotten, that underlying issues will still remain unresolved. Russia, Syria, radical Islam [Isis, Taliban etc], Iran, Saudi Arabia, religious sectarianism, the futility of war and soldiers when the deepest problems are around education, religious/cultural attitudes etc.

            My point in commenting on this posting is to expose cheap, emotive comments that have no substance behind them or indeed place in such a forum as this; and perhaps to draw attention to some of the underlying complexities in such debates.

  • Alan Gould says:

    Thanks Don,
    Limpid and helpful as ever. The UN would give me more satisfaction if it were able to use its role in the safeguarding of nationhood more effectively. This safeguarding might have a range of instrumentalitities from a ‘quick-response’ team that can follow attritional fighting into a war zone to secure civilians and set up civil stability, to longer term guardianship of aspirant nations like Palestinians or Kurds that provide an umbrella by which the first tender and formative processes of setting up a National presence can be made without the mischief of jealous or anxious neighbours. Of course the consensus that a people have a right to become a nation needs to exist with all its accompanying tact. But I cannot see happiness for The Palestinians without the protection of an International Body to assert their moral right to sovereignty while the partial interest of Israel/USA is so strong. And it is heartbreaking to watch how stalwartly those Kurds have fought in Syria and Iraq in the context of the hostility of most of the surrounding Turk or Arab countries to their gaining a blessing to govern themselves. Naturally there are other places in the world where the idea of ‘a nation’ is in a process of disintegration, and a UN deathwatch role might be devised in such circumstances.
    The other area where the UN is immensely beneficial to humankind is in health because it makes possible the coordination between peoples for the eradication of blights.
    Beyond those, I’d tend to leave nations to tend their own gardens, forming alliances where advantage can be seen that does not harm another.
    Starry-eyed as usual, Gouldilocks!

  • Bill Griffiths says:

    I can see three ways in which President-elect Trump might make things better. The first is through reform of the impossibly complicated US tax system. He’s already proposed an outline of the changes he has in mind. The second is reduction in government spending. Removing renewable energy subsidies would be a good place to start. These two proposals are based on the idea that money is best left with the people who earn it rather than having government decide what’s best. The third is repeal pf Obamacare and its replacement with tax free health savings accounts. Again, leaving health decisions and the capacity to deal with them in the hands of individuals rather than government bureaucrats.

    Infrastructure development can be done by the private sector provided the mass of regulations and layers of possible legal and NIMBY challenges are removed helping to make infrastructure development commercially viable. Accompanying this should be tax reductions for companies developing infrastructure projects. Put these all together, add investment in coal, oil and gas mining and the US economy can develop quickly. Attention to detail is essential in each case, of course.

  • Ross says:

    Trump is going to reduce corporate taxes to 15%. I believe Britain is going to lower their corporate taxes as well. I watched Sue Cato say we have to drop our corporate taxes, so as to compete for investment.
    So if America and England drop corporate taxes again , we have to drop lower ours, again….to be competitive for the corporate tax dollar.
    I can see the logic, but how did we get to a position where International corporations with absolutley no interest in our ‘nation state’ decide how the country is run? Lower corporate tax, lower government revenue, less nation building. Less everything.
    More jobs? Higher wages? Like in Detroit? Seems to me it is we, who are paying them!
    I’d love to be a fly on the wall, when a director on a corporate board suggests employing more workers and raising their wages. “Don’t let the door hit you in the ass on the way out, sunshine”.
    I’d say Trump, was on to something, except for the fact he is one of the pigs, swilling wine with the other pigs and farmers. (Thanks George)

    • JMO says:

      “a director on a corporate board suggests employing more workers and raising their wages” – Henry Ford did that very thing, employed more people and raised their wages.

      How does a Homos sapien turn into a Sus scofa domesticus? It is zoologically impossible.

      Ross, please demonstrate you have a modicum of control on this blog.

      • Ross says:

        JMO. Yup, those were the days.
        Where have you been?

      • Don Aitkin says:

        He did so so that they would be able to buy his product, the Model T. And they did, too.

        • Nga says:

          “He did so so that they would be able to buy his product, the Model T. And they did, too.”

          Don, that is a ridiculous old wive’s tale. Here is Tim Worstall explaining why it isn’t so: http://www.forbes.com/sites/timworstall/2012/03/04/the-story-of-henry-fords-5-a-day-wages-its-not-what-you-think/#1cdcb5681c96

          Once again you demonstrate that you do not act or think like a skeptic. Anyway, I have a bridge for sale, are you interested? Jo Nova used to own it, so it must be good.

          • Don Aitkin says:

            Thanks for the link, Nga. One of the links within it no longer works, which is a pity. It seems that Ford raised his wages in order to keep staff. I don’t know where I got the story of his wanting to ensure that his workers could buy a car. Probably something I learned when I was studying economics and history, because it is indeed a long-residing factoid. The article purports to explain why he couldn’t have done it for that reason, but we have no evidence of what he thought he was doing. I’ll see what I can find out.

          • Don Aitkin says:

            It didn’t take long. This piece refers to two books, one by a finance writer and the other by Henry Ford himself. It seems that there’s something to be said for workers buying cars too.

            ‘Fortunately, Garrett was able to get an audience with Henry Ford and, over the course of two days, discuss the company’s revolutionary changes. He wrote of his extended interview with Ford in a 1952 book, The Wild Wheel. He recalled asking Ford why he raised wages when every other manufacturer was trying to reduce wages to the lowest acceptable figure. Ford believed he was buying higher quality work from all his employees. “If the floor sweeper’s heart is in his job he can save us five dollars a day by picking up small tools instead of sweeping them out.”

            Higher wages were necessary, Ford realized, to retain workers who could handle the pressure and the monotony of his assembly line. In January of 1914, his continuous-motion system reduced the time to build a car from 12 and a half hours to 93 minutes. But the pace and repetitiveness of the jobs was so demanding, many workers found themselves unable to withstand it for eight hours a day, no matter how much they were paid.

            But Ford had an even bigger reason for raising his wages, which he noted in a 1926 book, Today and Tomorrow. It’s as a challenging a statement today as it as 100 years ago. “The owner, the employees, and the buying public are all one and the same, and unless an industry can so manage itself as to keep wages high and prices low it destroys itself, for otherwise it limits the number of its customers. One’s own employees ought to be one’s own best customers.”

            It might have been just another of Ford’s wild ideas, except that it proved successful. In 1914, the company sold 308,000 of its Model Ts—more than all other carmakers combined. By 1915, sales had climbed to 501,000. By 1920, Ford was selling a million cars a year.

            “We increased the buying power of our own people, and they increased the buying power of other people, and so on and on,” Ford wrote. “It is this thought of enlarging buying power by paying high wages and selling at low prices that is behind the prosperity of this country.”

            In 1919, Ford raised his minimum wage again, this time to $6.00 a day. Again, the wage hike produced higher production numbers. Ford told Garrett, “The payment of five dollars a day for an eight-hour day was one of the finest cost-cutting moves we ever made, and the six-dollar-a-day wage is cheaper than the five. How far this will go we do not know.”

            He learned how far in 1929. In the aftermath of the stock market crash, he raised wages to $7.00 a day, hoping it would spark an economic recovery. But this time, it didn’t work. Orders fell, production slowed, hours were reduced. But Ford didn’t blame the workers for the sluggish economy. The fault lay in business leaders who were “continually putting the profit motive over what he called the wage motive.” Ford told Garrett, “When business thought only of profit for the owners ‘instead of providing goods for all,’ then it frequently broke down.”

            While it worked, though, Ford’s $5.00-a-day policy helped the company achieve record profits. It made its cars affordable to its workers (who could purchase a Model T with four months’ wages.)’

          • Nga says:

            Don:

            ” It seems that there’s something to be said for workers buying cars too.”

            The story remains apocryphal and it does not pass the sniff test for anyone with a skeptical frame of mind. What I mean by that is that a skeptic checks stories that reek of wonderment, nostalgia and fandom before repeating them.

            It is also obvious that this story does not sit well with prevailing right wing theories about how the economy actually works. I have no idea how you think the economy works but your claim that America is “broke” suggests something in the right wing realm.

          • Don Aitkin says:

            Nga, Your great skill is assertion. I gave you two books which recounted the story, one by Ford himself, and you say the story remains ‘apocryphal’, meaning of doubtful authenticity. Now it can’t be that, because the statement was made by Henry Ford himself. You could say he just made it up, or had a brainsnap, or something else denigrating. But apocryphal it is not. That is the reason I remembered the bit about workers being able to buy a car themselves.

            America is, in ordinary terms, broke. Its national debt is more than 19 trillion USD, while GDP is less than 19 trillion. The Fed deals with that through ‘quantitative easing’, which is a fluffy way of saying it just prints more money. To give you a sense of the size of the debt, each person in the US owes $61k and each taxpayer $166k. That’s when I last looked. It changes all the time, as you can see if you search on the Internet for US National Debt. No business could survive if it owed more than a year’s earnings — unless, like governments, it could simply print money.

            You could try politeness as a style.

          • Nga says:

            Ford raised wages to retain workers. What he said “years after the fact” is not the point. Anyone who takes autobiographical rationalisations seriously is a fool. The reason cars became affordable for your average Joe was the massive productivity boost that to mass industrial production, most notably the assembly line.

          • Don Aitkin says:

            That’s it for me, Nga. You evade the point and slide off elsewhere. There are others who comment here who do the same, and after a while one just gives up. I’m sure you have other things to do that are more useful than commenting here. But if you stay, avoid insults. They actually reduce the value of your contributions, such as they are.

          • beththeserf says:

            Tom Worstall argues that Ford paying his workers
            an extra $ 9 million to buy $7 million worth of
            company products would not be economic.
            Seems to me that what ever motives Ford had
            for raising wages, he was not paying workers
            an extra $9 million just to buy $7 million of
            company products. In August, 1913, these
            workers on the moving assembly line were
            producing 1000 cars daily By 1916 the
            Highland Park Plant was cranking out 2000
            T models per day. Of course Ford’s main
            motive re $5 per day would be keeping the
            assembly line efficient but that doesn’t mean
            that selling cars to the workers couldn’t be
            another motive.
            http://www.caranddriver.com/features/fords-assembly-line-turns-100-how-it-really-put-the-world-on-wheels-feature

        • margaret says:

          Closer to home than Henry Ford – cognisant of his theories, Fletcher Jones chose to follow Brotherhood economics in his business and invited Toyohiko Kagawa to Warrnambool where the Fletcher Jones co-operative began.
          http://adb.anu.edu.au/biography/jones-sir-david-fletcher-10638
          “Jones had long been fascinated by American industrial efficiency. A subscriber (from 1922) to Herbert Casson’s Efficiency Magazine, he was acquainted with the ideas of Henry Ford, Andrew Carnegie, Frederick Taylor and Lillian Gilbreth. The traditional methods which dominated tailoring left him frustrated, not only with the time-wasting but with the depressed nature of the craft and worker exploitation. Yet, he distrusted schemes which encouraged a spurious identification between worker and business, and which seemed designed merely to extract more labour without increasing job satisfaction. Spiritual growth, he believed, was achieved through productive and satisfying work, and the object of business should be social advance rather than individual profit.”
          “Wondering during the depths of the Depression ‘why the rich were getting richer and the poor poorer’, he read (with self-confessed difficulty) analyses of capitalism by Victor Gollancz, Harold Laski, J. B. S. Haldane and the Webbs, and studied the history of the co-operative movement. Fabian socialism, being eclectic and pragmatic, appealed to him. He became acquainted, too, with the work and writings of the Japanese Christian pacifist and socialist Toyohiko Kagawa, who succoured the homeless of Tokyo’s slums and pioneered consumers’ and farmers’ co-operatives and student credit-unions. Jones arranged for Kagawa to speak at Warrnambool during his 1935 Australian visit; in 1936 he visited Kagawa’s Japanese co-operatives. He was influenced by Kagawa’s Brotherhood Economics (1937) and that year issued his own statement, ‘Co-op Pie’.”

        • Nga says:

          Don, I wasn’t saying you are a fool. My apols if you took it that way. My point is that the autobiographies of blokes with big egos aren’t worth a red cent. Many other folk have made the same point and it is kinda obvious. Even if you don’t have an inflated ego, hindsight necessarily involves reconstructing the past.

        • beththeserf says:

          From Saturday Evening Post 01/03/2014.

          ”Higher wages were necessary, Ford realized, to retain workers
          who could handle the pressure and the monotony of his assembly
          line. In January of 1914, his continuous-motion system reduced the
          time to build a car from 12 and a half hours to 93 minutes. But the
          pace and repetitiveness of the jobs was so demanding, many
          workers found themselves unable to withstand it for eight hours a
          day, no matter how much they were paid.

          But Ford had an even bigger reason for raising his wages, which he
          noted in a 1926 book, Today and Tomorrow. It’s as a challenging a
          statement today as it as 100 years ago. “The owner, the employees,
          and the buying public are all one and the same, and unless an industry
          can so manage itself as to keep wages high and prices low it destroys
          itself, for otherwise it limits the number of its customers. One’s own
          employees ought to be one’s own best customers.”

          It might have been just another of Ford’s wild ideas, except that it
          proved successful. In 1914, the company sold 308,000 of its Model Ts
          —more than all other car makers combined. By 1915, sales had
          climbed to 501,000. By 1920, Ford was selling a million cars a year.

          “We increased the buying power of our own people, and they increased
          the buying power of other people, and so on and on,” Ford wrote. “It is
          this thought of enlarging buying power by paying high wages and
          selling at low prices that is behind the prosperity of this country.”

      • Nga says:

        JMO, wake up and smell the coffee. Henry Ford lived in a much earlier era, literally during the dawn of industrial mass production.

        Wages for non-management workers in the USA flatlined five decades ago: http://www.pewresearch.org/fact-tank/2014/10/09/for-most-workers-real-wages-have-barely-budged-for-decades/

        • JMO says:

          NGA Surely you mean dawn of industrial mass production of cars, using the concept of a production line.
          Mass production started much earlier, its called the Industrial Revolution.
          I was just making the point that a director seeking to pay workers more did happen. Yes I know workers’wages have stagnated! Despite this we are now living at a much higher standard of living due to the industrial mass production revolution
          And had the Greens and climate casandras been in power then we would still be stuck in the middle ages and suffering worse for the wear when extreme weather events happen.

          • Ross says:

            @JMO The fact that you had to go back almost one hundred years to prove your point (which was wrong, in any case), doesn’t ‘prove’ my point. But gosh, it sure helps.

            Perhaps you could demonstrate a modicum of knowledge, on this blog. No?

            But let’s talk about Henry. He was indeed a giant of the Industrial Age.
            But as history shows…
            All car workers in America had decided they wanted to be represented by unions. After a bit of for and against, General Motors and the other motor companies agreed.
            But not Mr Ford. He had another bargaining tool.
            It involved hired goons, baseball bats,, rifles, and blood. Workers blood, JMO.
            A pay rise, to buy Shiny new Model T Fords, was not mentioned…..oddly enough.

        • spangled drongo says:

          Enge,luv, when the world contains billions of capable, intelligent people who were living in poverty a few short decades ago and who, since then, have been increasing our standard and reducing our cost of living considerably, it is not surprising that wage-growth of workers has been a little diluted of late.

          It is now mainly by union-type restrictions, non-free markets or govt largesse at taxpayer expense that any worker can get an increase.

          When you realise that during these same recent decades intelligent robotics have also been taking over [and contributing to our living standards] I think things could have been a lot worse than they have turned out, income wise.

          But if and when we take the next step of mass, artificial intelligence robotics, wages will be much more seriously pressured.

          • margaret says:

            What an exciting time it is for the poor to know that they are the richest poor people ever!

          • Bryan Roberts says:

            I realise you think you’re being sarcastic, margaret, but in Australia, and many other Western countries, it is perfectly possible to live your entire life without doing a single day’s work., so your statement is literally true. Even our resident economics graduate would have to agree, though it would doubtless be a significant blow to her pride to do so.

  • Nga says:

    Don:

    “America is, in ordinary terms, broke. Its national debt is more than 19 trillion USD, while GDP is less than 19 trillion. The Fed deals with that through ‘quantitative easing’, which is a fluffy way of saying it just prints more money. “

    America’s debt is less as a percentage of GDP now than it was after WW2. Quantitative Easing is a little more involved than just printing money: http://www.economist.com/blogs/economist-explains/2015/03/economist-explains-5

    I would like to see Trump “create money out of thin air” and use that to finance an infrastructure spending program. Provided it does not cause an outbreak of inflation, which is highly unlikely, this would be a sensible way of utilising currently underutilised economic resources.

    By the way, it is not a good idea to think of the government in the same way as a firm or a household. The logic that applies to each is very different.

    • Don Aitkin says:

      Yes, as long as the government is that of the USA. The rest of us have to be more careful.

      • Nga says:

        “Yes, as long as the government is that of the USA. The rest of us have to be more careful.”

        This is quite obviously false. Australia’s debt after WW2 was 104% of GDP and nobody panicked and it melted away quite quickly. Unfortunately the Murdoch stable of economists and pundits have been pushing debt phobia and the usual suspects, who ignore history, have fallen for it.

  • JimboR says:

    “No business could survive if it owed more than a year’s earnings — unless, like governments, it could simply print money.”

    That’s pretty silly Don. Debt equity ratios and debt _repayment_ to income ratios are what matter. As a very simple example…. most young families buying a house have debt way in excess of a year’s earnings and don’t lose any sleep over it.

    • Don Aitkin says:

      Yes, I should have been more careful. Rule 1: think first.

      • Nga says:

        Don, this may be a bigger problem:

        “Over the past 20 years, total household debt in Australia has climbed from about 75 per cent of total disposable income to more than 180 per cent – one of the highest debt-to-income ratios in the developed world.”

        http://www.smh.com.au/business/the-economy/australians-warned-of-risks-of-soaring-household-debt-20161006-grw8oe.html

      • Chris Warren says:

        Maybe the thought was that the annual debt servicing costs should always be less than annual incomes.

      • JimboR says:

        If you want to compare the US government to households, about 6% of US Federal expenditure goes towards paying interest on debt, a position many Sydney mortgage holders would love to be in. Don’s claim that “the USA has been broke for a long time” is about as well thought out as Barnaby’s claim that Australia was about to default on its debt:

        http://www.abc.net.au/news/2010-02-09/credit-experts-line-up-to-rebuff-joyce/325556

        Curiously, both the debt and deficit are significantly worse since Barnaby moved from opposition finance spokesman to deputy PM, but the crisis appears to be over.

        • Don Aitkin says:

          Jimbo, that’s interest on debt. Not paying off the debt. Sydney householders are paying off the debt as well as paying the interest (unless they’re in an interest-only situation). Apples and oranges. I agree that it is a difficult business, and my supposition is that in our country and the USA people are waiting for another surge in the economy so that there will be a surplus and debts can be paid off. It is not only Barnaby Joyce and his colleagues who are worried about long-term debt. here is a long piece:

          [Oh dear, the table didn’t arrive]

          Sources: 2011 actual spending totals from President’s FY 2013 budget, Congressional Budget Office, USDA. All figures are for 2011 except Medicare, Medicaid, and interest spending, which are estimates for 2012.

          What does it all mean? How daunting that $220 billion figure [for interest payments] is depends on how you frame it. Compared to other government spending, it might seem like an exorbitant price to pay—at more than double annual federal outlays for education. Compared to interest spending, federal outlays on food stamps and the Corporation for Public Broadcasting are also dwarfed. And it’s one-third the size of the Defense Department’s massive annual spending.

          But viewed another way, it can seem much smaller, at around 6 percent of the total federal budget and 1.4 percent of GDP. Low interest rates are one key factor helping to keep the government’s interest burden low. Dean Baker, codirector of the Center for Economic and Policy Research, a Washington, D.C.-based economic think tank, pointed out in a blog post earlier this year that interest as a share of GDP is actually relatively low right now and is not projected to leap to unprecedented heights anytime soon.

          “Interest rates have fallen through the floor,” says Baker. “What that means is at the moment our interest burden is pretty low.”

          But low interest rates will eventually disappear as the economy recovers. And if investors should decide that U.S. debt is a risky investment, that would also drive interest rates up, making U.S. debt increasingly difficult to manage. Credit rating agency Moody’s earlier this year warned that it might downgrade the rating on U.S. debt if lawmakers do not find a way to avoid the coming fiscal cliff. A downgrade could go a long way toward driving up interest rates.

          Whatever spurs growing interest rates, the prospect of $1 trillion in annual payments is daunting, says one expert.

          “That’s a lot of money to be spending on something that doesn’t do anything for you,” says Marc Goldwein, senior policy director at the Committee for a Responsible Federal Budget. Still, he explains that it’s not time to panic just yet.

          • Nga says:

            “Jimbo, that’s interest on debt. Not paying off the debt. Sydney householders are paying off the debt as well as paying the interest (unless they’re in an interest-only situation).

            Yes, but so what? Houeholders usually only have 35-40 productive year to pay off the principal as well as the interest. Government doesn’t have a productive year limit and can therefore pay down the interest and allow the principal to be eroded by inflation. How do you think Australia, America and so on took care of their much bigger post WW2 debts?

            Some economists point out that if Australia was a corporation it would be accused of having a lazy balance sheet. You really do need to ignore the ahistorical junk spluttered by Murdoch hacks like Terry McCrann and Alan Moran.

          • JimboR says:

            “Sydney householders are paying off the debt as well as paying the interest ”

            And even then, way more than 6% of their total monthly outgoings is being spent on interest.

            “It is not only Barnaby Joyce and his colleagues who are worried about long-term debt.”

            You won’t hear much from Barnaby on that crisis now that he’s in government… it’s one big pork barrel now:

            http://www.canberratimes.com.au/national/public-service/costbenefit-analysis-not-enough-to-support-moving-public-servants-to-armidale-barnaby-joyce-20160901-gr6i2x.html

          • Don Aitkin says:

            Jimbo, you are a new version of the Artful Dodger! Yes householders at the beginning of their loan are paying mostly interest. That is true. But no one is paying of the close-to-$20 trillion US National Debt, and there seems no interest in doing so.

          • JimboR says:

            “But no one is paying of the close-to-$20 trillion US National Debt, and there seems no interest in doing so.”

            That is a reasonable comment to make, while “the USA has been broke for a long time” is as silly as “Australia is in imminent danger of defaulting on its government debt.”

          • Don Aitkin says:

            Hmm, Jimbo. When people have a lot of debt and not only aren’t paying it off, but also aren’t even trying to, they are declared bankrupt. Their creditors are angry with them, too. Now the US is not ‘people’ but a sovereign nation, and for the moment the possessor of the global currency. Once it used to be the £sterling…

            And whose is the second quote? It’s not me, though a reasonable reader could infer that it was.

          • JimboR says:

            “When people have a lot of debt and not only aren’t paying it off, but also aren’t even trying to, they are declared bankrupt. Their creditors are angry with them, too.”

            That is absolute nonsense. The creditors bought those bonds because they want a steady income stream from the interest payments, and that’s what they’re getting. The creditors aren’t angry provided the US govt. continues to meet its obligations and it is nowhere near defaulting on any of its payments.

            You’re declared bankrupt when you can no longer meet your obligations. I own perpetual notes from many leading Australian companies, and I receive my interest income every quarter as promised. They’re never going to pay me back the capital. I’m happy and the issuers are happy.

  • margaret says:

    There was a great deal of ‘not-noticing arrogance’ in the twentieth century, and the new millennium has brought us to this.

    https://www.theguardian.com/commentisfree/2016/nov/16/globalization-trump-inequality-thomas-piketty

  • Ross says:

    Anyhoo, there’s this thing called financial globalisation…

Leave a Reply