Thanks for the review. Pettis does expound on his theories in his other books, but they are far less fun to read than this (Klein is a good writer). AFAIK the theory has never been written up as an academic theory paper. In his other writings he has called for America to tax foreign purchases of T bonds.
I have read a bunch of books on mercantilism over the years. My conclusion, echoing Noah’s last point, is that liberal democracies should not enter into a liberal-mercantilist trade deficit unless they are trying to promote growth in the other country (eg after WWII). They should particularly not play the game if the mercantilist country turns fascist.
Apr 27, 2022·edited Apr 28, 2022Liked by Noah Smith
Great piece though I would argue that it isn't entirely obvious that it is in middle-class and working-class interests for a cheaper dollar. It most certainly is if you work in an exporting sector (that is highly sensitive to global prices) and don't consume much foreign goods, but an accountant who buys a lot of east Asian consumer electronics or a teacher who wears lots of Bangladeshi clothes, a hairdresser who is partial to imported German beer, or a foie gras loving engineer at Raytheon may have different views about that.
Yeah I was wondering how both the US trade deficit and the Chinese trade surplus could be in the interests of the rich of that country against the poor of that country. It seems more plausible to me that rich and poor service workers in the US and rich and poor manufacturers in China are winning out over their counterparts.
One could compare the dynamics to the free trade vs protection debates in Victorian and Edwardian Britain, in that these clashes tended to cut across class and occupation.
Cheaper prices for consumer goods does not compensate for loss of jobs and no growth in real wages over decades. (for blue collar workers). From a political economy/real world perspective, the loss of manufacturing jobs and the intensity of the transformation is tbe big story. Autor's China shock paper is about that, and so is Angus Deaton's research.
I never said anything about their being no losers, only middle and working classes are more heterogenous than some may think. Although I would argue that if investment in by US firms were higher, then foreign competition wouldn't have been such a significant issue.
Furthermore, many working class people don't work in manufacturing, and their standard of living is more affected by minimum wage laws, trade unions regulations, and aggregate demand levels.
There is no need to end the USD's reserve currency status, even if that were possible (which it is not). The Fed and/or the Treasury could just buy foreign assets to supply the rest of the world with the USD they need, rather than forcing them to sell us stuff and not buy anything in order to get the USD they need to run the globalized economy.
Thanks for this review. I am currently working on getting through this book. I think it should have been 700 pages with lots of stories, illustrations, graphics, etc to help explain the concepts. Way too dense. Some very important ideas and concepts, but this information needs to be way more accessible.
Same here. This pretty much explains what I think is China's strategy that will be difficult for the Western world or other non-autocracies to counter even if it leads to austerity for a few years. To put it crudely, Chinese folks both believe in degrowth (of non-Chinese) goods and the need to increase consumption (and exports_ of Chinese goods and services (which may not look Chinese like with Shein).
>>>What if China’s persistent current account surpluses aren’t just a sop to well-connected industrialists, but also a strategy to build its manufacturing base at the expense of America’s<<<
I do think there's likely some of this dynamic present. However, I always recommend looking at the actions of the Party through the lens of "Which course of action is consistent with their staying in power?"
China has been exporting its way to economic growth for more than four decades at this point. And a big part of why they continue to attempt to do so is path dependency and fear—fear of mass unemployment. A big rise in joblessness might destabilize the system. And so, when it comes to the economy, Beijing is characterized far more by timidity than boldness. They really are terrified of a color revolution. Xi himself has been utterly candid about this. In China there's been plenty of talk in recent years of enhancing the domestic consumption sector. But I don't think they have the stomach for a full-throated effort in this regard. And so in the main, they stick with what has been working tolerably well (although less and less well with every passing year, it seems).
As someone who taught about the Chinese economy for 30 years, I'd add that the central government is constrained by policy tools. Without social services or a safety net, households save a lot for healthcare and retirement. Provision of social services however is intrinsically local, and China's fiscal system is broken at the local and provincial level, they have no independent tax authority.
One side effect is local government involvement with real estate sales which also entangles them with the shadow financial system. Another is the limitation of basic services to official residents, even basic education, tied to the hukou household registration system (which isn't unique to China, but in Japan the locus of the family registry isn't linked to access to services where people actually reside).
From a policy standpoint, addressing such issues would entail a complicated, long-term set of fairly fundamental changes ("reforms"), which would alter the political balance between provinces / big cities and Beijing that prevailed until 1994 fiscal and interprovince commerce reforms. In contrast, pushing money out for central-government-sponsored infrastructure projects, and stoking the finance machine for local government land sales, are within the current policy menu of the party leadership in Beijing.
Note that while local government finance in China is clearly broken, the same could be said of the US and Japan (I don't have much knowledge of any other economies). All political systems face the dilemma that it's easier to tax at the national level, but that many services are delivered at the local level. There is no ideal way to fix how/what to decentralize. All ultimately lead to some level of subsidies and grants and transfers between levels of government, with attendant problems.
哎呀! You had me till the end. Not everything needs to be shaped in the broader context of a power struggle between America and China. Chinese leaders have reasons for doing things other than trying to defeat America.
Yes, the leadership is very focused on staying in power. That has long been true for the Chinese Communist Party as a whole. Xi has now made his personal grip on power central. Stimulate the economy in bad times? Sure, but as per a comment I made above, what Beijing can do in that regard affects investment, both directly (national infrastructure projects) and indirectly (local government land sales, which depend on local development projects), not consumption/savings.
Americans are so immersed in the frame of being the dominant power in the world that it feels as if it something natural. The idea that some other state might be even the equal of the USA is seen as unthinkable or catastrophic. Note, for example, the many discussions (including in this stack, if I am not mistaken) about how the USA can "beat" China.
On sectoral balance identities: aren't those analogous to physics conservation laws (such as Kirchhoff's current law)? They specify the subspace of state space where the system is allowed to evolve, but without separate dynamical equations, actual system evolution is underspecified. For instance, a static economy -- no change in any state variable -- satisfies the sectoral identities but it's not real or anything one should care about. What we care about is the dynamics: what changes when other stuff changes, at what rates, etc.
Every physics conservation law is enforced by a symmetry as per Noether's Theorem. e.g. Conservation of energy is enforced by the fact that physical processes don't depend on when they happen; they're time invariant. One second is as good as any other. I've often wondered if any economic identities are also based on underlying symmetries. That would let the equations give more insight into the mechanisms, not just simple answers. As a lay person who follows physics, I'm often disappointed in how economists use mathematics. It seems used only as a tool for calculating, not as a tool for developing insight.
>>>middle-class and working-class Americans don’t even realize that it’s in their class interests to do it at all<<<
Would a weaker dollar really be in the interests of working-class Americans? To the extent that such a situation makes US exports more attractive to foreigners, it basically means that Americans will be working more for foreigners and less for themselves, right? (That is, the US would be exporting a higher percentage of its output). And imports, of course, would become pricier for Americans. No more fancy European beer for you, Joe Sixpack!
Obviously engineered and/or predatory weakness in other currencies vis-a-vis the dollar can be disruptive, depending on circumstances, and yes, in such times layoffs mount. That is indeed bad for the working class. Krugman (since Noah mentions him) has written a lot about this dynamic as it pertains to the Chinese Yuan during America's Great Recession.
Still, broadly speaking there doesn't seem to be much evidence that the purported excessive strength of the dollar due to its reserve currency role disadvantages Americans relative to people in other high income countries. US growth and employment seem to stack up pretty well against most of the rich world. Productivity is high. Per capita GDP in the US is lofty. And so on.
(I reckon living standards are the median are higher in a number of other rich countries than in the US, but surely that's got little or nothing to do with the strength of the Greenback, and everything to do with policy choices in Washington involving things like the tax code, education, redistributive programs—that sort of thing.)
I don't want to sound glib or pretentious but... isn't that obvious?
Isn't it (in a simple/narrative reading) a matter of supply and demand? When China opened up, it threw on the (international labor) market many tens of millions, maybe hundreds of millions of workers i.e. it massively increased the supply of labor. Prices (i.e. wages) went down.
Now, I think that's both a correct understanding but also very simple and a proper account of the events since 2000 would add a lot of nuance (like, sectors of the economy competing internationally versus domestic focused sectors).
To go further, this is another way of saying that increasing international openness/competition is very similar to opening oneself to immigration.
Aha! will you quickly exclaim. But, as proven by tons of empirical studies, immigration doesn't damage natives' earnings. Your simple Supply-Demand narrative is broken. But is it? Yes, in an economy that is growing (like the US) and that seems to be able to select its immigrants to a degree (seasonal/uneducated workers for agriculture/tourism and educated ones for higher paying jobs), then, yes, immigration is a powerful economic multiplier. But, if an economy is growing slowly and with difficulties, then pouring more labour on it probably won't help - labour isn't the constraining factor.
You can have the same analysis with the addition of women to the workforce. It's obviously a social good but I wouldn't be the first one to suspect that this helped collapsing the possibility of a single salary being enough to sustain a family like it used to...
The Labour quantity theory of wages isn't as helpful explaining cost of living issues compared to house prices (which have a huge impact in determining the standard of living).
Besides, the single family income household was highly overstated phenomena and often ignores the fact that domestic work was very labour intensive until recently, and the jobs most women could get were so poorly paid that it wasn't worth finding a job. Besides, housing was cheaper and kids were cheaper to raise too (as you could send them to work at an earlier age than today).
As I said, it's crude/simplistic. But it doesn't mean it's wrong, it just needs to be nuanced. I think of it as a headwind to wage growth/fighting inequality within a given country...
And, sure, I didn't say women didn't work at all. Domestic work was obviously an integral part of their lives. Still, in a capitalistic setting, a company employing a man wouldn't care either way what his wife was doing. Officially. In practice, life was organised to make this division of labour possible. Again, I'm hardly pining for these days. It was a fucked up set up.
But women joining the workforce at lower salaries than men is bound to have had consequences on workers's ability to extract their piece of the pie from their employers...
Despite the "no lump of labor" theorists, an increase in the work force leads to a transition stage with an uncertain end point. Ideally, if the work pays enough, the economy grows and everyone can wind up better off. There will be a higher unemployment rate in the short term, but, as paychecks clear, rising demand will get more people working and buying stuff. This doesn't have to happen. What force drives those higher wages? Is there a countervailing force fighting the inflation necessary to signal changed resource allocation? Arguing from an accounting identity at a possible equilibrium point doesn't address the economic, social and political forces that would lead to that outcome.
There was an explicit movement to kick women out of the work force and get them to raise children as stay at home mothers after World War II. They were fired en masse. Veteran preferences made sure that men who had served in World War II got job preference. There was a massive propaganda effort with the message being pushed in movies, radio shows, magazines and the new medium of television. There was no argument at the time. The women, at least the white ones, were kicked out of the work force and moved into suburban ranch homes to free up jobs for the huge number of men leaving the military.
It's weird watching Depression era movies where it is clearly understood that the man was supposed to be bringing in the money. I've seen a surprising number of movies where understanding this was necessary for understanding the plot. Even if the woman was a successful businesswoman, doctor or executive, she was expected to ditch her career if it would help her man in his career pursuit. If you missed the point in a few of these movies, there was an entire genre of movies with a man trying to manage child rearing and failing. (It usually involved a big mess and a lot of wisecracks, not a lifetime of trauma.)
Interpret it as you will, but median house prices at the median interest rate (with a 30 year mortgage, zero down) rose in price from about 600 hours of work at the median wage in the early 1970s to over 1000 hours in the 1980s before settling around 800 hours in the 1990s. That, I admit, is a naive computation (zero down!), but housing was at one time cheaper and given the limits of human physiology more accessible to a single earner household before the 1980s.
If you want to comment "OK boomer", go ahead. The timing works out pretty well in explanation.
Seems weird to me to argue the "exorbitant privilege" is actually bad for America. People really want our dollars and we're the only ones that make them. That's good for us! Also it gives us tons of diplomatic power!
Feels like the problem is (as many are), ultimately that the gains are unequally distributed. So we should have some more redistribution.
I've often had that thought. I ask myself, what if we had subjugated China and turned it into a colony. What would be different from the current situation? We'd still be exploiting their great resource of relatively low priced labor. We'd still have exported much of our manufacturing base. We'd still be arbitraging their lack of environment and safety enforcement. Economically, it would be very similar except that the American China Company (ACC) would be running things instead of the CCP.
It has to make some difference to Joe-Walking-Around-Shanghai who would much rather be exploited by fellow Chinese than by foreigners even if the beneficiaries are people overseas. National pride is a real thing. The CCP is much more likely to go for a more even split of the benefits than a hypothetical ACC. The COVID lockdown based supply chain problems in Shanghai notwithstanding, the CCP wants to get everyone fed while a colonialist corporation would be more than glad to profit from mass starvation. We've seen that in Ireland and India.
In some ways, this thought experiment supports a class warfare hypothesis. The ruling class in each country benefits from colonialism or the current system in much the same way and at the expense of the lower classes in both nations.
The historians’ consensus is that capitalists in all major WW1 belligerents opposed the war. The notion this war was fought to please the upper classes is absurd and ahistorical.
Not to mention Ivan Bloch’s contemporary articulation of the (pre-war) widespread view that great power war made very little sense for national economies.
Maybe I'm misunderstanding but I'm not seeing the disagreement?
Noah wrote "there are many examples of nations engaging in self-destructive wars to serve the interests of their ruling classes" (n.b. not "upper classes" are you wrote)
But the link you provided says "A deeper cause was the authoritarian regimes of the Central Powers and Russia"
The ruling classes weren't capitalists. But it served the interests of the ruling classes. "What ruled the leaders’ calculation in every country was the idea of the national interest." Or is the disagreement that the phrase "classes" isn't appropriate here given that the decisions seem to have been decided by a much smaller coterie of people?
A group of 20 people in Berlin making poor choices is definitely very far from the spirit of the book’s thesis, which is that international trade imbalances fundamentally arise because they are in the interests of Chinese and American wealthy people writ large.
Thanks for the review. Pettis does expound on his theories in his other books, but they are far less fun to read than this (Klein is a good writer). AFAIK the theory has never been written up as an academic theory paper. In his other writings he has called for America to tax foreign purchases of T bonds.
I have read a bunch of books on mercantilism over the years. My conclusion, echoing Noah’s last point, is that liberal democracies should not enter into a liberal-mercantilist trade deficit unless they are trying to promote growth in the other country (eg after WWII). They should particularly not play the game if the mercantilist country turns fascist.
Great piece though I would argue that it isn't entirely obvious that it is in middle-class and working-class interests for a cheaper dollar. It most certainly is if you work in an exporting sector (that is highly sensitive to global prices) and don't consume much foreign goods, but an accountant who buys a lot of east Asian consumer electronics or a teacher who wears lots of Bangladeshi clothes, a hairdresser who is partial to imported German beer, or a foie gras loving engineer at Raytheon may have different views about that.
Yeah I was wondering how both the US trade deficit and the Chinese trade surplus could be in the interests of the rich of that country against the poor of that country. It seems more plausible to me that rich and poor service workers in the US and rich and poor manufacturers in China are winning out over their counterparts.
One could compare the dynamics to the free trade vs protection debates in Victorian and Edwardian Britain, in that these clashes tended to cut across class and occupation.
Cheaper prices for consumer goods does not compensate for loss of jobs and no growth in real wages over decades. (for blue collar workers). From a political economy/real world perspective, the loss of manufacturing jobs and the intensity of the transformation is tbe big story. Autor's China shock paper is about that, and so is Angus Deaton's research.
I never said anything about their being no losers, only middle and working classes are more heterogenous than some may think. Although I would argue that if investment in by US firms were higher, then foreign competition wouldn't have been such a significant issue.
Furthermore, many working class people don't work in manufacturing, and their standard of living is more affected by minimum wage laws, trade unions regulations, and aggregate demand levels.
There is no need to end the USD's reserve currency status, even if that were possible (which it is not). The Fed and/or the Treasury could just buy foreign assets to supply the rest of the world with the USD they need, rather than forcing them to sell us stuff and not buy anything in order to get the USD they need to run the globalized economy.
Thanks for this review. I am currently working on getting through this book. I think it should have been 700 pages with lots of stories, illustrations, graphics, etc to help explain the concepts. Way too dense. Some very important ideas and concepts, but this information needs to be way more accessible.
Yay! I've been waiting for this.
Same here. This pretty much explains what I think is China's strategy that will be difficult for the Western world or other non-autocracies to counter even if it leads to austerity for a few years. To put it crudely, Chinese folks both believe in degrowth (of non-Chinese) goods and the need to increase consumption (and exports_ of Chinese goods and services (which may not look Chinese like with Shein).
Thanks for this
>>>What if China’s persistent current account surpluses aren’t just a sop to well-connected industrialists, but also a strategy to build its manufacturing base at the expense of America’s<<<
I do think there's likely some of this dynamic present. However, I always recommend looking at the actions of the Party through the lens of "Which course of action is consistent with their staying in power?"
China has been exporting its way to economic growth for more than four decades at this point. And a big part of why they continue to attempt to do so is path dependency and fear—fear of mass unemployment. A big rise in joblessness might destabilize the system. And so, when it comes to the economy, Beijing is characterized far more by timidity than boldness. They really are terrified of a color revolution. Xi himself has been utterly candid about this. In China there's been plenty of talk in recent years of enhancing the domestic consumption sector. But I don't think they have the stomach for a full-throated effort in this regard. And so in the main, they stick with what has been working tolerably well (although less and less well with every passing year, it seems).
As someone who taught about the Chinese economy for 30 years, I'd add that the central government is constrained by policy tools. Without social services or a safety net, households save a lot for healthcare and retirement. Provision of social services however is intrinsically local, and China's fiscal system is broken at the local and provincial level, they have no independent tax authority.
One side effect is local government involvement with real estate sales which also entangles them with the shadow financial system. Another is the limitation of basic services to official residents, even basic education, tied to the hukou household registration system (which isn't unique to China, but in Japan the locus of the family registry isn't linked to access to services where people actually reside).
From a policy standpoint, addressing such issues would entail a complicated, long-term set of fairly fundamental changes ("reforms"), which would alter the political balance between provinces / big cities and Beijing that prevailed until 1994 fiscal and interprovince commerce reforms. In contrast, pushing money out for central-government-sponsored infrastructure projects, and stoking the finance machine for local government land sales, are within the current policy menu of the party leadership in Beijing.
Note that while local government finance in China is clearly broken, the same could be said of the US and Japan (I don't have much knowledge of any other economies). All political systems face the dilemma that it's easier to tax at the national level, but that many services are delivered at the local level. There is no ideal way to fix how/what to decentralize. All ultimately lead to some level of subsidies and grants and transfers between levels of government, with attendant problems.
哎呀! You had me till the end. Not everything needs to be shaped in the broader context of a power struggle between America and China. Chinese leaders have reasons for doing things other than trying to defeat America.
Do they really though...
Honest-to-God question: is your comment meant to be sarcastic?
Yes, the leadership is very focused on staying in power. That has long been true for the Chinese Communist Party as a whole. Xi has now made his personal grip on power central. Stimulate the economy in bad times? Sure, but as per a comment I made above, what Beijing can do in that regard affects investment, both directly (national infrastructure projects) and indirectly (local government land sales, which depend on local development projects), not consumption/savings.
Americans are so immersed in the frame of being the dominant power in the world that it feels as if it something natural. The idea that some other state might be even the equal of the USA is seen as unthinkable or catastrophic. Note, for example, the many discussions (including in this stack, if I am not mistaken) about how the USA can "beat" China.
On sectoral balance identities: aren't those analogous to physics conservation laws (such as Kirchhoff's current law)? They specify the subspace of state space where the system is allowed to evolve, but without separate dynamical equations, actual system evolution is underspecified. For instance, a static economy -- no change in any state variable -- satisfies the sectoral identities but it's not real or anything one should care about. What we care about is the dynamics: what changes when other stuff changes, at what rates, etc.
Every physics conservation law is enforced by a symmetry as per Noether's Theorem. e.g. Conservation of energy is enforced by the fact that physical processes don't depend on when they happen; they're time invariant. One second is as good as any other. I've often wondered if any economic identities are also based on underlying symmetries. That would let the equations give more insight into the mechanisms, not just simple answers. As a lay person who follows physics, I'm often disappointed in how economists use mathematics. It seems used only as a tool for calculating, not as a tool for developing insight.
>>>middle-class and working-class Americans don’t even realize that it’s in their class interests to do it at all<<<
Would a weaker dollar really be in the interests of working-class Americans? To the extent that such a situation makes US exports more attractive to foreigners, it basically means that Americans will be working more for foreigners and less for themselves, right? (That is, the US would be exporting a higher percentage of its output). And imports, of course, would become pricier for Americans. No more fancy European beer for you, Joe Sixpack!
Obviously engineered and/or predatory weakness in other currencies vis-a-vis the dollar can be disruptive, depending on circumstances, and yes, in such times layoffs mount. That is indeed bad for the working class. Krugman (since Noah mentions him) has written a lot about this dynamic as it pertains to the Chinese Yuan during America's Great Recession.
Still, broadly speaking there doesn't seem to be much evidence that the purported excessive strength of the dollar due to its reserve currency role disadvantages Americans relative to people in other high income countries. US growth and employment seem to stack up pretty well against most of the rich world. Productivity is high. Per capita GDP in the US is lofty. And so on.
(I reckon living standards are the median are higher in a number of other rich countries than in the US, but surely that's got little or nothing to do with the strength of the Greenback, and everything to do with policy choices in Washington involving things like the tax code, education, redistributive programs—that sort of thing.)
I don't want to sound glib or pretentious but... isn't that obvious?
Isn't it (in a simple/narrative reading) a matter of supply and demand? When China opened up, it threw on the (international labor) market many tens of millions, maybe hundreds of millions of workers i.e. it massively increased the supply of labor. Prices (i.e. wages) went down.
Now, I think that's both a correct understanding but also very simple and a proper account of the events since 2000 would add a lot of nuance (like, sectors of the economy competing internationally versus domestic focused sectors).
To go further, this is another way of saying that increasing international openness/competition is very similar to opening oneself to immigration.
Aha! will you quickly exclaim. But, as proven by tons of empirical studies, immigration doesn't damage natives' earnings. Your simple Supply-Demand narrative is broken. But is it? Yes, in an economy that is growing (like the US) and that seems to be able to select its immigrants to a degree (seasonal/uneducated workers for agriculture/tourism and educated ones for higher paying jobs), then, yes, immigration is a powerful economic multiplier. But, if an economy is growing slowly and with difficulties, then pouring more labour on it probably won't help - labour isn't the constraining factor.
You can have the same analysis with the addition of women to the workforce. It's obviously a social good but I wouldn't be the first one to suspect that this helped collapsing the possibility of a single salary being enough to sustain a family like it used to...
The Labour quantity theory of wages isn't as helpful explaining cost of living issues compared to house prices (which have a huge impact in determining the standard of living).
Besides, the single family income household was highly overstated phenomena and often ignores the fact that domestic work was very labour intensive until recently, and the jobs most women could get were so poorly paid that it wasn't worth finding a job. Besides, housing was cheaper and kids were cheaper to raise too (as you could send them to work at an earlier age than today).
As I said, it's crude/simplistic. But it doesn't mean it's wrong, it just needs to be nuanced. I think of it as a headwind to wage growth/fighting inequality within a given country...
And, sure, I didn't say women didn't work at all. Domestic work was obviously an integral part of their lives. Still, in a capitalistic setting, a company employing a man wouldn't care either way what his wife was doing. Officially. In practice, life was organised to make this division of labour possible. Again, I'm hardly pining for these days. It was a fucked up set up.
But women joining the workforce at lower salaries than men is bound to have had consequences on workers's ability to extract their piece of the pie from their employers...
Despite the "no lump of labor" theorists, an increase in the work force leads to a transition stage with an uncertain end point. Ideally, if the work pays enough, the economy grows and everyone can wind up better off. There will be a higher unemployment rate in the short term, but, as paychecks clear, rising demand will get more people working and buying stuff. This doesn't have to happen. What force drives those higher wages? Is there a countervailing force fighting the inflation necessary to signal changed resource allocation? Arguing from an accounting identity at a possible equilibrium point doesn't address the economic, social and political forces that would lead to that outcome.
There was an explicit movement to kick women out of the work force and get them to raise children as stay at home mothers after World War II. They were fired en masse. Veteran preferences made sure that men who had served in World War II got job preference. There was a massive propaganda effort with the message being pushed in movies, radio shows, magazines and the new medium of television. There was no argument at the time. The women, at least the white ones, were kicked out of the work force and moved into suburban ranch homes to free up jobs for the huge number of men leaving the military.
It's weird watching Depression era movies where it is clearly understood that the man was supposed to be bringing in the money. I've seen a surprising number of movies where understanding this was necessary for understanding the plot. Even if the woman was a successful businesswoman, doctor or executive, she was expected to ditch her career if it would help her man in his career pursuit. If you missed the point in a few of these movies, there was an entire genre of movies with a man trying to manage child rearing and failing. (It usually involved a big mess and a lot of wisecracks, not a lifetime of trauma.)
Interpret it as you will, but median house prices at the median interest rate (with a 30 year mortgage, zero down) rose in price from about 600 hours of work at the median wage in the early 1970s to over 1000 hours in the 1980s before settling around 800 hours in the 1990s. That, I admit, is a naive computation (zero down!), but housing was at one time cheaper and given the limits of human physiology more accessible to a single earner household before the 1980s.
If you want to comment "OK boomer", go ahead. The timing works out pretty well in explanation.
Seems weird to me to argue the "exorbitant privilege" is actually bad for America. People really want our dollars and we're the only ones that make them. That's good for us! Also it gives us tons of diplomatic power!
Feels like the problem is (as many are), ultimately that the gains are unequally distributed. So we should have some more redistribution.
I've often had that thought. I ask myself, what if we had subjugated China and turned it into a colony. What would be different from the current situation? We'd still be exploiting their great resource of relatively low priced labor. We'd still have exported much of our manufacturing base. We'd still be arbitraging their lack of environment and safety enforcement. Economically, it would be very similar except that the American China Company (ACC) would be running things instead of the CCP.
It has to make some difference to Joe-Walking-Around-Shanghai who would much rather be exploited by fellow Chinese than by foreigners even if the beneficiaries are people overseas. National pride is a real thing. The CCP is much more likely to go for a more even split of the benefits than a hypothetical ACC. The COVID lockdown based supply chain problems in Shanghai notwithstanding, the CCP wants to get everyone fed while a colonialist corporation would be more than glad to profit from mass starvation. We've seen that in Ireland and India.
In some ways, this thought experiment supports a class warfare hypothesis. The ruling class in each country benefits from colonialism or the current system in much the same way and at the expense of the lower classes in both nations.
The historians’ consensus is that capitalists in all major WW1 belligerents opposed the war. The notion this war was fought to please the upper classes is absurd and ahistorical.
Really? What's a good example of a historian who says this?
https://voxeu.org/article/four-myths-about-great-war-1914-1918
https://pseudoerasmus.com/2016/05/08/bm/amp/
Not to mention Ivan Bloch’s contemporary articulation of the (pre-war) widespread view that great power war made very little sense for national economies.
Maybe I'm misunderstanding but I'm not seeing the disagreement?
Noah wrote "there are many examples of nations engaging in self-destructive wars to serve the interests of their ruling classes" (n.b. not "upper classes" are you wrote)
But the link you provided says "A deeper cause was the authoritarian regimes of the Central Powers and Russia"
The ruling classes weren't capitalists. But it served the interests of the ruling classes. "What ruled the leaders’ calculation in every country was the idea of the national interest." Or is the disagreement that the phrase "classes" isn't appropriate here given that the decisions seem to have been decided by a much smaller coterie of people?
A group of 20 people in Berlin making poor choices is definitely very far from the spirit of the book’s thesis, which is that international trade imbalances fundamentally arise because they are in the interests of Chinese and American wealthy people writ large.