Monthly Archives: May 2017

Saving globalization’s losers

This boy is Ignorance. This girl is Want. Beware them both,
and all of their degree, but most of all beware this boy,
for on his brow I see that written which is Doom, unless the
writing be erased.   — Charles Dickens, “A Christmas Carol”

America is witnessing the consequences of a failure to educate and retrain globalization’s losers.  For 25 years, the globalists, including myself, have presumed that technology and trade will eventually make everyone better off.  It’s taking too long, and the natives are restless.  Americans without the right kind of education, increasingly unemployable in a world of low-wage offshore manufacturing and low-skill illegal immigration, are rebelling.

This, more than anything else, is why Trump won.  As his administration appears to go down in flames, don’t be too sure that we’ve seen the end of the forces that unleashed him.  One charlatan may go, but the basic problem is not addressed.

In designing policy, we must first understand that globalization is inevitable, because it is driven by technology, not policy.  Globalization has been under way, slowly but inexorably, throughout recorded history.  Horses and carts allowed regional trade, which created larger economic regions.  Then shipping.  Then canals.  Then rail.  Then telegraph.  Then phone.  Then superhighways.  Then the Web.  Each step increased the size, and lowered the transaction costs, of trade areas.

Larger trade areas have always made everyone better off on average.  This comes straight from Adam Smith:  the bigger the trade region, the greater the economies of scale for a given specialization, hence higher productivity than otherwise would be possible.  This has always been true, and will continue to be true.  It’s an arithmetic truism.

But larger trade areas don’t make every individual better off.  If you’re uncompetitive, you get whacked.  The US, and especially Clinton-era Democrats, gambled for a quarter-century that globalization would eventually make everyone better off.  It hasn’t happened yet.  That’s what brought the Trump/Sanders rebellions.

Unfortunately, both Trump and Sanders have the wrong answer:  retreat.  Both mistakenly think of globalization as a policy choice, rather than a technological inevitability.  Withdrawing from a large trade area would only ensure the US is left behind in future trade-driven prosperity.

The only thing that could save us from more Trumps and Sanderses:  access to free Web-based education.  Huge shortages exist in skill sets that can be learned online for free.  Making those skills even a little more accessible to globalization’s losers could make a huge difference politically.

What kind of accessibility?

  • Universal internet access.  Just as the Rural Electrification Act in the 1930s brought Kentucky and Tennessee into the industrial age, a Rural Webification Act might bring them into the internet age.  Computers are already cheap:  $100 will buy you enough computing power to do real work.  The roadblock is the internet service provider:  $80/mo for decent bandwidth is an insurmountable barrier for a poor family.  But imagine if someone demonstrating an income under $40k could get 1Mbps internet for $10/mo.  It could permanently transform his fortunes, at low cost to the rest of us.
  • Road map to skill shortages and free resources.  How do you know where to start? or what to study?  There are endless online resources to learn, for example, Ruby on Rails coding — but to begin, you need to know, first, that Rails coders are in tremendous shortage, and, second, where to find the free online resources to learn Rails coding.  Government and charitable foundations could provide this road map.
  • Awaken globalist American charitable foundations to an existential threat. For all their brilliance at providing the greatest good to the greatest number worldwide, groups like the Gates Foundation seem not to appreciate that they cannot function, nor even survive, unless the United States remains politically stable and engaged with the world.  Thus it is in their existential self-interest to participate in the rescue of globalization’s losers.

Notice what I’m not advocating:  universal income, trade barriers, immigration barriers.  These are all forms of retreat, and should be viewed with skepticism.

I’m also not advocating for “free college,” which is a high-cost, uncertain-benefit misapplication of archaic forms of general education to address the narrow, specific skill shortages, learnable for free, that would most rapidly improve the fortunes of globalization’s losers.  A degree in English remains socially useful as ever, and classroom debate is as enriching as ever.  However,  on average, it will not reliably improve the fortunes of Pennsylvania’s urban unemployed at minimum cost.

The highest-leverage solution is to point people to free sources of useful skills, and give them just enough resources to access them.  It’s the lowest-cost, highest-benefit approach, and we should maintain laser focus on it.

Our crazy, undemocratic immigration policy

US immigration policy is deeply confused.  Neither party thinks clearly about it, and as a result, laws have gone unenforced for decades, corroding the integrity of our rule of law.

Democrats, traditionally the party of labor, would once have opposed low-skill immigration:  it brings in ultra-low-cost labor, weakens unions, and ultimately hollows out the traditional base.  We’ve watched that hollowing for decades.  Yet Dems have mostly wanted to go easy on illegal low-skill immigration, partly for fear of offending constituencies, and partly because of a well-founded belief that free trade and loose immigration will eventually make most Americans better off.  The Democratic party has been staunchly globalist for 25 years, and they’re not wrong.  But they haven’t acknowledged, nor taken decisive action to mitigate, the consequences for their traditional labor base.  The strain is showing.

Meanwhile, traditional pro-business Republicans should logically support unskilled immigration, because it brings low wages, making everything cheaper to produce.  Yet they generally oppose it — partly, it seems, out of simple xenophobia.  The GOP has pandered to xenophobes for some time, and naturally this won’t be publicly admitted either.

Result:  the two parties are not just unable to hammer out a compromise they can stick to, but unable even to openly acknowledge their own de facto platforms to their own constituents.

For lack of openness and compromise, we are left with laws on the books we don’t actively enforce.  That’s a failure of democracy, and corrosive to the rule of law.

What laws are not enforced?  The simplest example is that it is a crime to be in this country without permission.  We’ve let this slide so long that we almost forget.  We begin to draw a mental distinction between “in the country for 10 years without permission,” and “actual crimes.”  But there is no such distinction in law.  Illegal immigration is illegal.

This is true in every country.  If I drove to Mexico and stayed there for a year with no visa, I would be in that country illegally.  That is a crime.  El Policía Federal could arrest and deport me. Would it become less a crime if I stayed there 10 years, learned fluent Spanish, and obeyed all other Mexican laws?  No.  If anything, would become more a crime, because I had stayed there illegally for longer. This is obvious. Yet in the US, municipalities often direct police not to enforce this law.  The years turn into decades, and we begin to forget what is legal and what is illegal.  Dangerous precedent.

We rationalize this lack of enforcement because it would be cruel to deport someone who has already built a life here — or, even crueler, to deport someone to who came here as a child, and may know nothing of their legal home country or language.  It’s true.  That would be cruel.

But it’s important to understand that this cruelty is not caused by suddenly enforcing the law.  It is caused, instead, by the systemic failure to enforce the law, for decades, allowing lives to be built in the US outside the rule of law.  This is a fundamentally shady way of operating, anathema to the rules-based approach that made the US successful in the first place.

The only non-shady way to operate is to legislate a policy we are prepared to enforce, and actually enforce it.  That requires a process of open legislative debate and compromise.

Which brings up the second point:  we got to here by a failure of democracy.

To reach a policy compromise on immigration, Republicans and Democrats would first have to openly reconcile their own platforms with the interests of their constituencies.  This reconciliation been so long in coming that it feels foreign.

For example, one thing does make sense about the surprise Trump victory:  his opposition to illegal unskilled immigration and manufacturing imports, right or wrong, was popular with unskilled men, whose jobs are most at risk.  Traditional union Democrats, abandoned by a globalist Democratic Party that offered no solutions to their plight, defected to Trump.  Yes, there are racists and xenophobes out there too, but that would not explain the suddenness of the defection.  The logical explanation is that unskilled men finally found a candidate who claimed he would eliminate their toughest competition in the unskilled labor market.

When Trump proposes to enthusiastically enforce existing law, he puts Democrats and Republicans alike in an untenable position.  He is calling them out for failing to compromise and enforce.  What possible counterargument is there?  “No, we will continue to let municipalities ignore existing law, fail to produce laws we can stick to, and fail to confess our own party platforms.”  Checkmate.  It is ironic that the US president most likely to undermine the rule of law has gotten this one thing right, even if by accident.

Dems in particular are suffering from a failure to be open about their pro-trade, pro-immigration globalism, and to offer real alternatives for Americans who are left behind.  Coming clean about this, and offering help to globalization’s losers, would be a first step to real legislative compromise, which could then be more enthusiastically enforced on the ground.  This would then restore the rule of law that brought America so far.

Later today, I’ll post a potential platform to help those left behind by globalization.

Tech and the new generation gap

The “fewer, nicer” credo — elegant simplicity, few assets — is partly generational.  People born before 1960 simply do not get it.  Like past generation gaps, this is driven by changes in tech.

1960s:  the Generation Gap was essentially “before pills” and “after pills.”  After World War II, changes in technology rendered venereal diseases curable, and pregnancy avoidable.  People who reached puberty after about 1960 then simply acted on human instinct, unrestrained by a millennia-old social rule, “don’t commit adultery,” that suddenly carried no real consequences.  Older people, acting on the old social rules out of habit rather than rationale, were shocked.

2017:  here we go again.  The mobile internet has turned old assumptions upside down.  For any type of knowledge work, you can now live and work anywhere you can find high-speed internet.  So-called “millennials” are simply responding to this new landscape of capabilities and constraints.

Houses and cars look like boat anchors, limiting flexibility and mobility.  Luxury goods in particular are unmasked:  while aesthetics still have value, luxuries are in effect much more expensive than before, because they reduce mobility.  Fixed offices have less utility when you can work and collaborate from anywhere.  Landlines, checkbooks, bank branches, cable TV — there is a very long list of things that suddenly don’t make sense in the modern technological landscape.

And people born before about 1960, or even 1965, simply do not get it.  Since most politicians are on the wrong side of that divide, they are unable to forge policy that makes sense in today’s conditions.