Globalism, Sincerity and a Desire for a Decent (Not Lavish) Life

The trigger for my topic here is one of Alan Tonelson’s posts today, titled “Why U.S. Globalization Policies Need More ‘Narrow’ Nationalism.”   Actually, it prompts me to make a number of points I’ve wanted to bring up for quite a while.

In the above post, Alan takes umbrage at a recent column by prominent economist Tyler Cowan on the effects of globalization.  Cowan points to research showing that globalization (a category in which Cowan includes immigration, citing George Borjas’ work) has slammed the middle and lower classes in wealthy nations like the U.S. Cowan notes wryly that these findings are “contrary to what many economists had promised.”

Many who read Cowan’s article must have laughed at the economists’ lack of common sense.  And THAT is my real problem with them, even with Cowan, of whom I am a longtime fan.  Most of them have never experienced serious economic hardship, say a period of extended unemployment or a home foreclosure.  Hence, they just don’t get it.

And that’s why Cowan’s second point is rather hollow:  The good news, he points out, is that globalization has generally (though not in all cases) improved standards of living for the world’s poor.  Alan retorts, in essence, “Fine, but don’t ignore people in the U.S.”  Again, to someone who has always had a comfortable life financially like Cowan, Alan’s words sound selfish.  But I believe most other people know exactly what Alan means.

I do agree that the improvement of living standards in the Third World is good news, as Cowan says.  I’ve been passionate about this issue ever since college, and in fact this was one of the main motivations I had for specializing in statistics.  (I’m a former stat professor, and am still quite active in the field even though I’ve taught computer science most of my career.)

And though I’ve written extensively on the problems of the H-1B work visa, I’m far from doctrinnaire about trade issues.  I’ve mentioned here before, for instance, that I’ve always driven Japanese cars, as I believe they are better made (especially important for someone who lives 60 miles from work, as I do).  I feel the same way about services as about goods, and have actively supported bringing in “the best and the brightest” from around the world.

But the key point that Cowan does NOT address is, to what degree is it possible to have a it both ways–continued progress in living standards in the Third World while still maintaining reasonable levels here?  Clearly, if Cowan doesn’t have an answer to that question, then neither do I.  (Though I don’t lack for ideas on ameliorating the negative effects on Americans.) But what we at least CAN ask for is an honest dialog–and we’re not getting one.  The globalists’ rallying cry, “American consumers benefit in lower prices,” is rarely critically examined, even though the information is out there–the research and even “thought experiments” show that the price “savings” accruing from trade are typically quite small. Indeed, occasionally even those with self-interest, such as the National Association of Manufactures, publicly admit it.

Given my work on the H-1B issue, I see this problem up close.  The industry lobbyists excel at manipulating a generally gullible and even innumerate press.  One of my favorite retorts in that game is one I use when the lobbyists say, “The tech industry is forced to hire mainly new or recent graduates, including foreign students at U.S. campuses, because only the young new grads know the latest technologies.  The older engineers don’t have these new skills.”  I reply, “Well, who taught those young people the new skills?  It’s old guys like me!”  Actually, a bright child could see that gaping hole in the lobbyists’ argument–so why can’t the journalists see it?

Sadly, academia, supposedly a bastion of truth and impartial inquiry, is the source of a lot of the industry PR–paid for by them, in the form of research funding.  Call me old-fashioned, but I simply cannot understand why presumably self-respecting economics professors (I don’t mean Cowan) would take industry funding for research that–surprise!–turns out to support the funders’ views.

So we have government and policy making by lobbyists and others with vested interests.  Yes, part of this is due to the generous campaign donations the tech industry makes to Congress, the president and the political parties.  But I’ve had enough interaction with people on the Hill to know that most of them really believe this stuff.  To them, America’s economic strength depends on importing engineers, and evidence to the contrary is simply cognitive dissonance, automatically dismissed.

So is all the evidence showing chicanery by Microsoft in particular on the H-1B issue, including a recent New York Times op-ed by Bill Gates (plus Warren Buffett and Sheldon Adelson, but I’ll focus on the tech guy here, Gates and the firm he founded). The article told how the H-1B workers are “badly needed” by the tech industry.  Yet days later, Microsoft announced a huge layoff, and then announced that it was going to reduce the work it assigns to its independent contractors.  Microsoft actually has a long history of saying one thing but doing another in connection to the H-1B and alleged tech labor shortage issues.

Folks, Cowan has a point about the up side of trade for the Third World, but I don’t like being lied to by those PR hacks.  Do you?

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14 thoughts on “Globalism, Sincerity and a Desire for a Decent (Not Lavish) Life

  1. Here’s a related topic for another column: the “labor nut” argument. I often comment that jobs are a zero-sum game – each job takes one person, and if huge increases in job visas drive you out of the market, you have lost your job. Ignorant people and economists (is there a difference?) argue that there is no “labor nut”, that increased immigration increases the numbers of jobs. But for the individual, there is one job. If you are driven out of that job, how long does it take to get another? How much does it cost? What about retraining? Is it different than normal job turnover? Losing a job is often a devastating and life-changing experience, leading to financial, marital, and personal crises. Each individual is different. Economists treat individuals like counts in an experiment, and for some purposes this is reasonable. For others, we are not just numbers. As Arthur Miller said, “A man is not a piece of meat”.

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  2. Nice article, Norm. Your blog entry touches on many aspects of the “Golden Rule” – Those that have the gold make the rules. The challenge is to develop solutions that are actually fair to the American middle class. I believe that many of those solutions involve huge downsizings for programs procured by the economic elite, such as H-1B, which as you recall, was allegedly a “temporary” program anyway.

    Liked by 1 person

  3. Microsoft claimed that the acquisition of Nokia would accelerate innovation and help introduce a billion people to Microsoft services. Microsoft has just redefined the word “innovation” to mean “unemployment”.

    So the executives of Nokia and Microsoft smile and pose for cameras while they contemplate how many careers will be destroyed by their actions. Moore’s law states that the complexity of electronic components doubles every two years. There should be another, equally famous law, that states that some percentage of tech workers laid off from their jobs will never find technical employment again. Let’s call it Ballmer’s Law. Ballmer’s law increases the wage disparity between the wealthy employers and the workers they make redundant, because mergers bring higher stock prices to the executives of a company while taking salaries away from the workers.

    Innovation indeed.

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  4. Thank you for your article about globalization.

    Sadly, the more things change, the more they stay the same. Please view Dan Rather Reports exceptional video about the impact of globalization / corporate visas on high skill US talent.

    Dan Rather Reports, No Thanks for Everything http://youtu.be/OeoBWzIRuic

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  5. What about the ‘flat earth’ theory?
    It never existed.
    All globalization accomplished is to make the heights higher and the depths lower.
    It spread inequality on a global basis with the American worker footing the bill.
    As a by-product, a sort of globalization reverse contaminant if you will, it brought the third world concept of “cheapness of human life” and submissive fatalism to this country.

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  6. “Sadly, academia, supposedly a bastion of truth and impartial inquiry, is the source of a lot of the industry PR–paid for by them, in the form of research funding. Call me old-fashioned, but I simply cannot understand why presumably self-respecting economics professors (I don’t mean Cowan) would take industry funding for research that–surprise!–turns out to support the funders’ views.”

    That’s an easy one. They do it all the time — left and right — because either (1) they’re true believers, or (2) they know that if they don’t stick with the granters’ proposals, the money will be cut off. A relative was mildly concerned when he was getting his master’s, but didn’t seem overly critical of it, suggesting that many many others play along with the game. I’d seen it in the consulting work I did for professors in their off-hours jobs, and I’ve seen a think tank or two intentionally avoid large donors to avoid being trapped into it.

    Liked by 1 person

  7. “each job takes one person, and if huge increases in job visas drive you out of the market, you have lost your job.”

    It’s not that simple. “Labor” is non-homogeneous. It takes all kinds. Each person’s skills, knowledge, intelligence is unique. Workers are not perfect substitutes for each, but imperfect substitutes.

    One particular job of work might be done by one purple squirrel worker, or by 3 people to the same quality and in the same time, except that the 3 people are likely to accomplish some other things during that time, their skills are likely to have overlaps and differences.

    But, with bodyshopping (domestic or across borders) the employer is focused on the current gig, not tomorrow or next year or the next 3 or 4 decades. He wants all of and only the “skills” needed to do the current gig, no less, and no more, and at a cost that does not consider those “extraneous” values.

    Yes, a person who loses his job has lost his job, and under a bodyshopping regime he’s likely to find himself unemployed or mal-employed for more of his life-time, and he’s likely to find means of advancement and preparation for doing something more or different unavailable for more of his life-time (because that’s not in the employers’ budgets).

    But one job gained by person A does not directly require one job to be lost by person B; there’s some flexibility, some elasticity, and some unpredictable variability in the individuals and what they are doing on the job that will determine whether A or B will cause more or fewer to be employed next month or next year. Many of us have seen periods when the quality of work increased or decreased; times when we’ve had the opportunity to do great things on the job and times when we were stuck doing monkey work because that, too, needs to be done, and there was no one who was a better match to doing it available within the resource constraints of the time and place and organization.

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  8. Here is a systems engineering view of globalization: Diversification, firewalling, and independend redunancy is always safer than monoculture, tightly coupled interconnection, and monopoly concentration. Suppose that the most “efficient” agricultural producers on the planet back in the 1840’s had been Irish potato farmers. They were so efficient they could out-compete corn in the Americas, rice in the far east, wheat from Russia to the Nile valley. According to the princples of globalist economics, the rest of the world should do better by giving up domestic agriculture and importing potatoes from Ireland. But then one day Murphy’s law takes over and a sneaky black fungus is introduced to Ireland by British spies and the Irish potato famine goes global. Point: bad system design can turn a local event into a major disaster. Contagion, systemic risk,2008 financial crisis, etc. Perhaps the pesky protectionist nation states looked down upon by the globalists do serve a defacto safety firewall function.

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  9. Bill Gates used the dismissal of bully boy CEO Ballmer to finally eliminate the hated rank and yank, or stack-ranking of employees at Microsoft.

    http://www.businessinsider.com/microsoft-just-killed-its-controversial-stack-ranking-employee-review-system-2013-11#ixzz2nEpS5azy

    ‘Stack-ranking was a bad system that caused widespread problems for Microsoft.

    Essentially, the way it worked was that Microsoft managers had to rank their employees in order of 1-5 in ranking. No matter how good the employees were, some of them had to get the low ranking of a 5. Seeing even good employees get a 5 hurt morale at Microsoft.’

    This caused paranoia and back stabbing, but Bill was fine with that as long as it kept the employees [and managers] terrorized and working harder.

    He can pick from the best applicants in America, and the world, since he’s a big user of H1-B high tech visas; he constantly screams for more visas, and then he brutalizes employees with his rank and yank, firing some excellent employees who got a 5 because they’re in a top group. This is your great ‘shortage’ of high tech workers that corporate PR invented, and the media supports 100%.

    The media covered the ending of Microsoft’s stack ranking system pretty well, including NYT and WSJ. But god forbid that anyone should mention it as a reason to be skeptical of Microsoft’s constant pressure for more H1-Bs. Any reporter who criticizes increased immigration is tarnishing his ‘personal brand’ where it counts, with the corporations, who are the great money source for the New York – Washington axis of weasels, and the whole American establishment.

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  10. Reading through the most liked comments, ‘Readers Picks,’ on the Cowen editorial, only one of about the first 20 was not critical, and it was simply approval of capitalism generally. The following caught my eye.

    http://www.nytimes.com/2014/07/20/upshot/income-inequality-is-not-rising-globally-its-falling-.html?ref=economy&_r=1

    ‘bes VA 3 days ago
    At http://mercatus.org/all-people/1288, Tyler Cowen is listed as general director of the Mercatus Center at George Mason University. At http://mercatus.org/charles-koch, Charles Koch is listed as a board member.

    At http://en.wikipedia.org/wiki/Mercatus_Center (although I hesitate to use Wikipedia as a source) there is this information: “After the Koch family provided more than thirty million dollars[4] to George Mason University, the Center moved to George Mason in the mid-1980s before assuming its current name in 1999.[4]’

    If this is all correct, and I assume the Mercatus site must be, Tyler Cowen is a bit more than a professor of economics at Mason, and NYT readers should be told of such a major affiliation as the one Professor Cowen has with the Mercator Center,

    28 Recommend’

    Association with the Koch brothers does not automatically condemn, but Norm is right, there is so much corporate / wealth influence on thought today, Academia, media…

    People have the choice of jumping on the Globalization / Immigration gravy train, or staying aloof and facing dim career prospects, suspicion, and accusations of xenophobia.

    Politicians who jump on board are hailed as statesmen in the media, along with the shower of K Street cash they receive, and those who don’t are derided as Tea Party extremists. [Much thanks to liberal Senator Bernie Sanders, a true independent, who has expressed skepticism.]

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  11. I drive a Japanese car too, a Subaru, but it was assembled in Indiana. There would be more products manufactured in the US if we followed the Richmans’ idea for balanced trade – you may want to check that out: http://www.idealtaxes.com/post3768.shtml

    I think a similarly balanced approach might make sense for migration: X people can immigrate here from Country Y as long as X Americans migrate there. If no Americans want to migrate to your country, your country needs some work – and your most talented citizens should stay and help improve it, rather than coming here to work.

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  12. “The older engineers don’t have these new skills”

    One of the impacts of technology is the effort to master the new technology is usually, but not always, less than it took to master the old technology. Compare acquiring the skill set needed to shoe a horse with that needed to install tires on an automobile.

    Closer to H-1B skills consider sorting an array. In the old days you would have to come up with a sorting algorithm and then code it. You might have to do something like this FORTRAN sort routine:

    SUBROUTINE SORT(N,A)
    INTEGER N
    REAL A(N)

    INTEGER I,J,INC
    REAL V
    INC=1
    1 INC=3*INC+1
    IF(INC.LE.N) GO TO 1
    2 CONTINUE
    INC=INC/3
    DO 11 I=INC+1, N
    V=A(I)
    J=I
    3 IF(A(J-INC).GT.V)THEN
    A(J)=A(J-INC)
    J=J-INC
    IF(J.LE.INC)GO TO 4
    GOTO 3
    ENDIF
    4 A(J)=V
    11 CONTINUEE
    IF(INC.GT.1)GO TO 2
    RETURN
    END

    A modern version like PERL would be

    @a = sort @a

    With no need to be concerned about how it is done.

    When industry says the older engineers don’t have these new skills they are saying the guys who know how to do the former are not capable of doing the latter,

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  13. All of us want a decent life, and I support that for all people from all countries.

    Problem is, this game of musical countries is destroying that prospect for all people in all countries.

    Sadly, my Keep America At Work site is down because I can’t afford the hosting fee, so I can’t link to work I have done on the subject, but picture this.

    Picture a bell curve with the middle class of America being the beginning one.

    Now as we transfer our high paying jobs from America to the BRIC countries, the middle class has leveled off, and is now on the downward slope of this bell curve.

    At the same time, the BRIC countries are on the upward slope of their own bell curve.

    Problem is, the very same hedge funds, corporations, politicians, and media that are playing this scam on Americans are also doing the very same thing in the BRIC countries which will cause their middle class to level off and begin the downward slope as countries such as vietnam and cambodia and others are brought into this game of musical countries, and at every step of the way, the average middle class wages will be lower.

    Another way to look at it is this.

    These corporations, etc. are pursuing the sales in China and India because there are billions of people over there, and from a short sighted point of view, they are right.

    But lets put it in a dollars and cents perspective.

    In America and Europe we have nearly a billion people making an average wage of $50,000 each
    In china we have a billion people making an average wage of $5,470 each
    In India we have a billion people making an average wage of $1,860 each.

    First lets’ total up the disposable wages for each of the 3 rows above.
    Now lets put all American and European people out of work by sending their jobs offshore, and lets now total up the bottom two rows.

    Do you now see the flaw in their theory?

    Like

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