The current direction capitalism is going is politically unsustainable - Very good article

[astro]

Article here

Democracy And Capitalism May Be Headed For Divorce - Inequality is fueling global political unrest.

The article crystalizes a lot of the thoughts and concerns I’ve has about the direction capitalism is going in modernity. It’s short but very much (IMO) worth reading. If we do not change course serious troubles lie ahead.

“Those of us who wish to preserve both liberal democracy and global capitalism must confront serious questions,” Wolf writes. “One is whether it makes sense to promote further international agreements that tightly constrain national regulatory discretion in the interests of existing corporations. My view increasingly echoes that of Prof Lawrence Summers of Harvard, who has argued that ‘international agreements [should] be judged not by how much is harmonised or by how many barriers are torn down but whether citizens are empowered.’ Trade brings gains but cannot be pursued at all costs.”

The global economic order of the past three decades has privileged a few elites ― who have seen their incomes and political power expand ― at the expense of a far greater number of working people ― who have seen their incomes stagnate and their political influence wane. Global economic rules allow jobs to be offshored and capital to be reallocated in ways that do not benefit the vast majority of people who vote in elections. The idea that markets promoting individual choice are compatible with democratic forms of government has become an open question, according to Wolf.

[puddleglum]

I find it odd that he restates Trump’s position on trade as the main argument of the book and then later in the article calls Trump a fascist.
I also find it odd that the past thirty years which have seen the greatest decrease in poverty in the history of the world are referred to as a time where only the elites have benefited.
I hope the actual book is better than that summary.

[Sage_Rat]

Opening borders to countries with a cheaper workforce is an action which reduces inequality across the planet.

Imagine if the government tried to establish a law saying that certain jobs, schools, locales, etc. were going to be solely the provenance of the wealthy and others would be limited solely to the rest of society, and generally constrain the means by which these two groups could cooperate and intermix. Just proposing the idea would get you laughed off the stage. And, if instituted, do you think that this would be a law which improved or diminished the relationship and income disparity between these two groups?

Domestic income inequality may be an issue in the US and Europe in the future, but I do not believe that this has anything to do with internationalization. Most complaints about globalization seem to stem from people who have been put out of work due to it, or fear such a thing. But, factually, the employment rate has been unperturbed by it.

There are reasons to not open trade and borders to various nations. For example, these:

1. Maintaining a Democratic/Capitalist economy requires a certain amount of cultural continuation from generation to generation. Most countries which try to embrace one or both of these features for the first time end up doing it wrong and going off the rails. If you swamped the country with too many people from another culture, it might wreak havoc on the nation. (As of yet, this has never occurred that I know of. But it is a theoretic worry.)

2. Brain drain from the source economies can cause those countries to fail to develop despite the incoming capital. (Puerto Rico, Mexico)

3. Dumping money into countries where they don’t really practice Democracy and Capitalism can just help fuel the insanity. (See the Middle East)

[drewder]

There is almost nothing which all economists agree on. The main exception is on the subject of global trade. Almost without exception economist agree that free trade leads to innumerable benefits to all countries that participate poor and rich alike.
Indeed even if one side has enacted numerous trade barriers it behooves the other side to lower them to the maximum amount possible.

[mbh]

@Sage_Rat

If you swamped the country with too many people from another culture, it might wreak havoc on the nation. (As of yet, this has never occurred that I know of. But it is a theoretic worry.)

American immigrants wreaked havoc on the Mexican territories of Texas and California, and the Kingdom of Hawaii. British and Dutch immigrants wreaked havoc on the Bantu nations of southern Africa. Franks, Goths, Vandals, and Lombards wreaked havoc on Rome.

[Voyager]

@puddleglum

I find it odd that he restates Trump’s position on trade as the main argument of the book and then later in the article calls Trump a fascist.
I also find it odd that the past thirty years which have seen the greatest decrease in poverty in the history of the world are referred to as a time where only the elites have benefited.
I hope the actual book is better than that summary.

No he does not restate Trump’s position. Wolf approvingly quotes Summers -

Trade brings gains but cannot be pursued at all costs.

What they are saying is that the impact of freer trade on the people must be included in considerations of new treaties, which hasn’t been happening. It seems that the negatives are greater than economists have been saying - even if there is still a net positive.
Trump’s position, such as it is, is to impose tariffs to bring back manufacturing even if it makes no economic sense. Only a blithering idiot would think it makes sense for Apple to manufacture in the US. That must be one of the reasons no member of the Presidents Council of Economic Advisers back to Nixon supports Trump.

[puddleglum]

@Voyager

No he does not restate Trump’s position. Wolf approvingly quotes Summers -
What they are saying is that the impact of freer trade on the people must be included in considerations of new treaties, which hasn’t been happening. It seems that the negatives are greater than economists have been saying - even if there is still a net positive.
Trump’s position, such as it is, is to impose tariffs to bring back manufacturing even if it makes no economic sense. Only a blithering idiot would think it makes sense for Apple to manufacture in the US. That must be one of the reasons no member of the Presidents Council of Economic Advisers back to Nixon supports Trump.

Trumps position is that we have been negotiated bad trade deals and he will negotiate better ones. He also has hyperbolic claims about the benefits of the new trade deals. The position of the book seems to me to be that the trade deals we have been negotiated are bad and we need to negotiate better ones. The details are different but not the core message.

[Voyager]

@puddleglum

Trumps position is that we have been negotiated bad trade deals and he will negotiate better ones. He also has hyperbolic claims about the benefits of the new trade deals. The position of the book seems to me to be that the trade deals we have been negotiated are bad and we need to negotiate better ones. The details are different but not the core message.

That’s the trade deal part. And it is easy for someone who has never negotiated a trade deal in his life to think he can do better. But he has also objected to offshore manufacturing, which certainly is made easier by trade deals - but which have preceded the current round. He seems to want to slap high tariffs on products to force companies to bring manufacturing back - and no trade deal is ever going to allow that, no matter how much he yells at or insults our partners.
Do you support him on this? I don’t want to waste my time listing the zillion ways his ideas are idiotic if you do not.