reddit user TPKM's comment on the sanders-would-have-won-thread:
"Support for Trump, much like Brexit, was based upon an extremely widespread feeling that average people are not getting their fair share of the benefits of globalisation. This is neither a specifically Democrat or Republican problem, and people have been saying it one way or another for years.
It was also the foundation of Sanders' campaign. The difference is that Sanders blamed deregulation and big corporate bonuses while Trump blamed immigration and open borders. I'm sure that there are elements of truth to both of these positions."
i'm sceptical that trump, as a big corp owner, will do much to regulate and reign big corps in; if that's really the case we'll now see if curbing immigration is an actual solution to the problem.
(personally, i doubt it - it has failed in other countries already)
so, let trump do what he promised and see how it works out. if it doesn't, try the other method next. for me it's easy to say because i'm not an u.s. citizen and have no desire to move there (i think my country will be in the same situation in a couple of weeks though); it's not like it wouldn't affect me, but i can't change it anyway.
The reason people don't feel they are getting the benefits of globalization is because the benefits are not as direct as the costs. When prices for goods are lower, it is not obvious to the average person that this is because of globalization. When your factory job is shipped overseas, the cost is readily apparent. No one makes the connection between the lower costs for things and globalization.
Sure people do make the connection. But no amount of lower costs across the board will help a newly unemployed person. For that person, the costs and benefits just don't match up.
Structural unemployment is an inevitable result of globalization, we need ways to mitigate this. Trade from the POV of rich countries is often a redistribution from the poor (uncompetitive labor) to the wealthy (multinational corporations), justified by the "gains from trade". We must be willing to aggressively redistribute these resulting gains back to the disenfranchised or see populist backlash.
I'm generally for free trade, but there has to be a more equitable arrangement than what we've got now.
If the USA is enforcing environmental regulations for their factories, this will obviously cost more than just dumping used chemicals outside in a pit. So the cost of goods in another country will be less if it doesn't have good (or any) environmental regulations. This is separate from labor prices.
So it is not fair to the USA, and it isn't fair to the people living in countries without good environmental regulations.
ignoring environmental protection costs for monetary success is mostly short-term planning and will - i'm a software developer, so i'll take this as a comparison - have the same consequences as short term planning and accumulating technical debt in software development. see it as an indirect investment in infrastructure that ultimately benefits everyone (but also you). you can't run a factory without government funded roads and railways, aka funded by your tax payer money.
it's the same for environmental expenses: skimp now, and you might not have a market to sell to in a decade.
so, if you outsource to another country it wont help in the long term because climate is global.
that much is clear. the rest is sufficiently explained by dawkins stable dove-hawk systems. you might want to try to gamble the system for personal gain, but if everyone does it, it'll collapse and everyone dies. so you shouldn't and protest transgression by others, otherwise the system might collapse.
i'm convinced you can play fair and still make a profit.
The way to ensure that these profits are "redistributed" back to the people of the host country is to eliminate free trade. If the items you sell in America must be produced by an American workforce, then the money is pumping back into the economy as Republicans always claim. If the money is being taken from Americans at the point-of-sale and then shipped out to China, Americans lose.
Trump is proposing that we put a cost-prohibitive tariff on foreign-built goods so that Americans will only buy them if there is truly no decent American competitor.
Sanders and Trump are approximating the same root cause here -- corporate greed is depriving the American worker. They're just extracting the value that belongs to the American worker at a different point of the transaction. It's debatable which is superior, but Trump's approach is more compliant with conventional American laissez-faire capitalism.
Eliminating free trade is precisely the wrong direction to go, in my opinion.
> "If the money is being taken from Americans at the point-of-sale and then shipped out to China, Americans lose."
You can't only look at one side of the equation. American grown soybeans and American manufactured aircraft are being bought in China, and billions of dollars worth of their hard earned yen are being "shipped out" to America. The point of free trade is for everyone to specialize in what they have a comparative advantage in, because this will expand the production frontier overall.
Putting cost prohibitive tariffs on goods the Chinese are better at producing (let's just say commodity electronics) may prop up US commodity electronics makers. But we would be subsidizing inefficiency. And if the Chinese put similar tariffs on American exports like commercial aircraft in return, everybody loses. Yes, you can just eliminate free trade, but the point of free trade is to grow the pie. You just have to cut it fairly after it's grown.
There are also swathes of evidence that most of the costs associated with running a typical household have gone up.
So while the goods that are mostly part of discretionary spending (think clothes and electronics) are cheaper, the essentials that can't be outsourced have also increased in price (education, healthcare, housing)
Not true on food.[1] CPI for food has fallen off a cliff in the last year+ compared to core CPI (ex food and energy). It is even negative currently, so yes food prices are decreasing. It seems to have been moderately lower on net since the end of the great recession.
You're right about food, which yo-yos like other commodities and is somewhat tied to energy.
Housing, health care, and college tuition are the great Satans of the economy for the middle and working classes. These have inflated without bound regardless of what wages or employment are doing.
> curbing immigration is an actual solution to the problem.
Curbing immigration won't be a solution to the problem; it's just a highly visible one. Each immigrant that is looking for a job in the US is taking one away from the supply for an American. That is how the Trumpistas see things.
Economically, sure, that's true. The immigrants take jobs from the labor supply. What people don't see is that aside from ones on skilled visa programs is that these jobs are either 1. underpaid by minimum wage or 2. not jobs that these people actually want anyway, so at worse you will see a lot of inflation, or a lot of open job positions. It doesn't make sense, but it won't really make sense.
> Economically, sure, that's true. The immigrants take jobs from the labor supply.
That's not actually true, though. Every immigrant who comes here and becomes employed is, of course, filling a slot that is no longer available to a native-born citizen. However, he or she will also be one more person who needs to be fed, clothed, housed, entertained, protected, and supported. All of those create demand that adds up to substantially more than one job (about 1.2, to be exact [1]).
If there's one thing I'm taking away from this campaign and election, it's that people have big problems reasoning about systems where costs are acute and centralized and benefits are diffuse, even if on the whole they personally benefit substantially from those systems. This seems true for immigration, for climate change, for free trade, for healthcare reform.
I'm sorry if this is a really stupid question but if each person, just by being alive and buying things, creates 1.2 jobs, then why do we still have unemployment?
Shouldn't everyone be able to have a job, even if it's not one they want to do? Is the problem just that they lack the qualifications for the jobs?
I don't know the answer to your question, but I don't think it's stupid. We should trust our sniff tests on these types of studies more often, especially when there is a potentially not-too-distant political, economic, or social consequence attached to the conclusion.
I personally think this is a common tactic by academics -- put out something that has a clearly false-as-phrased conclusion and then get lost in a maze of dense data and opaque language, come out disoriented, and make some conclusion like this that's pretty clearly invalid if you're willing to step away. The authors somehow convince themselves that the obvious conclusion is incorrect (often by redefining words) and then accuse anyone who dares to point out that the conclusion is a sham of being a luddite and anti-intellectual.
Are those 1.2 jobs all domestic? For each resident in the US, do we create 1.1 jobs in China and 0.1 jobs in the US? I honestly don't know this (and I don't want to look it up right now), so I'm not trying to make a counterargument. Just curious.
Well yes, people lose they jobs and have to seek new opportunities. And that's good in the larger scheme of thing.
Just let's not downplay the effect it can have to have to rethink the way you earn your livelihood, it's nothing short of a personal crisis. Some people have a really hard time adapting, others not so much. But that doesn't mean government should protect you from that.
> All of those create demand that adds up to substantially more than one job (about 1.2, to be exact [1]).
So, what would an opponent in good faith say against that? Is this a well known thing among Real Economists, which is just brushed under the rug when a politician wants to appeal to people with an anti-immigration policy? Or is there more to it?
It seems to be really low hanging fruit to explain that and have massive economic boons by increasing immigration, right? Or is that not the conclusion? Because what you said is really intuitive and some politician should be able to just easily use that. Why don't Clinton/Obama say that when explaining why they're letting illegal immigrants stay?
My guess (and this is only a guess) is that this is the power of anecdote. Within certain communities, everyone knows someone who lost their job or had their business close due to direct competition with someone being paid under the table illegally. Any politician who claimed that it was a good thing would read as so clearly out of touch with lived experience that it's not worth the trouble to look past the soundbite.
It's the same sort of difficult argument as globalization and free trade. It hits you somewhere very easy to notice, so you feel like you're worse off even while you're sitting on your brand new couch watching whatever you want on demand on your 60" TV and eating your steak dinner. Making the link that all those other good things are a result of the same policy requires a small but not automatic intellectual leap that a lot of people clearly aren't prepared to make if they feel like the initial assertion doesn't pass the smell test.
Personally, I wouldn't mind inflation if all workers are paid a decent wage as a result. For far too long inflation has been too low and confined to precisely the wrong sectors (i.e. land, health care, education). It's time for workers to get their share of the action.
True if the inflation is driven by supply shocks (mid-late 1970s) or savings gluts (today). Not if the inflation is wage-driven, as in the late 1960s and early 1970s in the US.
Immigrants really don't take jobs from those who live here. They end up in jobs most natives never look for in the first place. So who do they really displace? Low skilled immigrants work more than low skilled natives, they commit less crime, they use less welfare, and they tend to marry more.
> 2. not jobs that these people actually want anyway, so at worse you will see a lot of inflation, or a lot of open job positions. It doesn't make sense, but it won't really make sense.
Is it your intuition that the labor market would not adjust to a lower supply by becoming more desirable? If not, why?
The average salary of an undocumented immigrant is $36,000[1], which is far below that of the average trump voter, a median American above $50K although he did OK with people in the $40K bracket. The only group likely to see wage increases from mass deportation are high school dropouts [2]. From Wikipedia:
Research by George Borjas found that the influx of immigrants (both legal and illegal) from Mexico and Central America from 1980 to 2000 accounted for a 3.7% wage loss for American workers (4.5% for black Americans and 5% for Hispanic Americans). Borjas found that wage depression was greatest for workers without a high school diploma (a 7.4% reduction) because these workers face the most direct competition with immigrants, legal and illegal. [3]
Assuming ALL recent-ish immigrants are all mass deported and the economy adjusts immediately, you will see a ~7.4% shift of real wages for high school dropouts making the low end of <$36K, most of which voted for Clinton anyway. You'll see almost no issue with those above this rate because they are not competing with illegal immigrants. (This makes it more likely capitalists who see wage increases for non-service positions (eg manufacturing) will automate faster to reduce costs, but I think this is a side point considering that most jobs in the US today are in the service sector and not as easily automated away.)
Of course, you could also give the suppressed income bracket a 7% tax cut and end up in roughly the same spot without mass deportation; the undocumented immigrants aren't paying income tax anyway, and this would be HIGHER than necessary because the above study takes into account legal immigration as well.
In equilibrium, people get paid according to their productivity. (That's why eg China saw such huge wage raises over the last decades.)
So, just excluding or including some more people won't change the level of pay, as a first order effect.
There's no constant demand for labour. It expands and shrinks with supply. (And even then, the federal reserve can make arbitrary large amouts of demand. They can literally print money.)
>In equilibrium, people get paid according to their productivity
But where and when has there ever been this magical equilibrium?
In the real world people get paid whatever they can get away with, and some people can get away with more than others. Telecommunications execs can price gouge you and get a bonus for it.
>For the economy as a whole, abstracting away imports and exports, we can only eat what we sow.
Exactly. And "we" after all is another abstraction. And "I" can eat what "you" sowed.
If corporations have record-high profits, while workers get stagnating salaries while housing prices raise, someone is going to realize what "we" entices after all.
I think you mean they fill labor demand or that they diminish the supply of jobs by providing labor. This however incorrectly assumes that the demand for labor is fixed. That demand is affected by supply + cost of labor and demand for goods and services. Immigrants consumer goods and pay of services so more immigrants means more aggregate consumer demand, which leads to higher demand for labor. In the end immigrants result in a net labor demand increase due to consumption. Immigrants no matter how frugal still get haircuts, buy groceries, see doctors, pay for tax help, call plumbers, by pants, go to bars, buy used cars etc.
When people are looking for jobs is great, America was founded upon immigrants looking for good working conditions. Some people will end up unemployed because they aren't able to adapt, yep, but that in the end makes production cheaper and more competitive.
The problem happens when government burdens a group of people with taxes and makes their livelihood more expensive, and becomes the cause of such inability to compete in the market. Limiting immigration is the dumb man's solution to that problem, the real solution would be a yuge cutting of expenses in order to reduce tax burden, and consequently the size of government.
And I suspect that for skilled visa programs, labour demand is actually somewhat elastic, so that one additional skilled worker creates some fraction of a new job. The supply of jobs isn't fixed.
Consider a company like Google, who doesn't hire on quotas, but just grabs all the talented engineers they can. In what sense is a visa worker taking a job away from an American, when Google will gladly hire both?
I'd mostly agree with you on this point and it's divergent from the one that the Trumpistas care about.
That said, I have seen companies that were "H-1B dependent", ie, they have paid the fees for visas to hire from outside the country, because they were able to get lower salaries from doing so even after paying the legal fees. Clearly not the Googles of the world, but they do exist.
Yeah they definitely exist. And the ratio of those vs. the Googles will affect how elastic it is. Anywhere between 0.1 and 0.9 for the elasticity sounds plausible to me (not an economist, I could be not even using the right concepts, so take that for what it's worth).
I don't think anybody is sitting at home unemployed because Google's $140k offer wasn't good enough for them.
Yes, Google might be able to hire more employees with higher salaries by poaching them from elsewhere. But that just shifts the labor shortage to some other company, it doesn't get rid of it.
The way I see it, it's bad for everyone (the employer, the Indian, the American taxpayer) when an American $100k job opportunity stays unfilled and a willing qualified Indian is working at an Indian company for $30k instead because they won't let him into the USA.
Come on, I think it was clear that by "jobs locals don't want anyway" OP was talking about low wage-low status jobs filled by immigrants instead, that would otherwise offer higher and higher salaries until the supply curve met the demand one if interest group didn't inject immigrants into the supply -at least that's kind of the trump supporter angle-.
And in your deal I can see someone getting the short end of the stick:
The employer gets lower costs and higher profits. The Indian gets a higher salary and access to infrastructure he didn't have to pay for. The local gets a lower salary, and the rest of taxpayers get one more body consuming the public services he had to pay, more people competing for housing and ~40$K less in demand for whatever he has to offer.
I often question if anyone on HN actually grew up blue collar...
Locals want those jobs. I worked them when they actually made a relatively decent wage. Now they simply are not worth my time even as side jobs they pay so little.
I was making $22/hr at 16 years old in the mid-90's as a landscaping laborer. This pay range was quite common for such jobs, and most of my co-workers were 20 and 30 somethings supporting families. Good luck getting even half that today, 20 years later.
If you started paying roofers $50/hr, you would have an unlimited pool of labor willing to take those jobs. At $10/hr I'm not interested because I can barely make a living at that rate, so it's certainly not worth the wear and tear on my health.
Unskilled immigration is largely a wealth transfer from the most vulnerable in our society to the most privileged. There is very little to be gained in these practices for the typical underskilled American - most all the benefits are accrued elsewhere in the economy.
While I think there is at least some validity to the "immigrants take local jobs" argument, it's really not the core of Trump's immigration platform. At the moment, the "took our jorbs" element is primarily being addressed by criticism of free trade.
First, Trump is not anti-immigrant. Two of his wives have been immigrants and the new First Lady-elect (?) is an immigrant with a very noticeable accent.
Trump is not anti-immigrant, he's anti-illegal-immigrant.
Let me first say I sympathize with the plight of Central Americans and if I was in that position, either pay $20k and wait 5 years for approval, I would probably take the chances and run the border too, especially knowing my children would be U.S. citizens automatically. However, there are risks incumbent in doing that.
Illegal immigration removes our ability to process and distribute new migrants. It makes it so we can't track whether they're having a disparate or unexpected economic impact, either on the nation as a whole or on specific areas. Illegal immigrants may have trouble finding jobs without SSNs, which may cause them to resort to crime, become dependent on welfare programs, or both. An insecure border allows people with impure motives, like terrorism, to enter. There can be substantial differences in social and cultural norms, which can affect their employability and ability to assimilate. While these people are illegally crossing the border, they're already committing a major repudiation to the social order of their intended new home by mocking rule of law and entering the country without authorization.
All of these things need to be managed and that's why immigration law exists. Americans in border towns are getting overrun and there's no reason they should have to be. They're sick of it.
People usually won't admit to this because SJWs come in and accuse them of being racist for wanting to preserve their traditions, social norms, employability, and language. The election of Trump is a resounding rejection of that hostile sentiment from the self-righteous elite class.
Most Americans have no problem at all with immigrants from other cultures, races, religions, etc., as long as they are given the tools to manage, understand, and direct it so that it's not disruptive to the existing social and economic order.
What all this really boils down to is something that both Republicans and Democrats agree on: our current immigration system is clunky, slow, and expensive, and badly needs rectification. Let's focus on fixing that instead of getting at each other's throats.
He also blamed the tax code, claiming many times to have taken advantage of it, and boasting of paying insanely low taxes on his businesses. This was seen as horrible by a lot of the left in this country - proof that "he doesn't want to shoulder his fair share of the burden"- but served as evidence to what a lot of middle America has suspected for years, that the tax increases Democrats proposed to pay for welfare programs weren't effecting the rich and were being paid for by the middle class. (Yes, this is a simplification of the issue.) Trump's 'I broke it and I know how to fix it' approach to the tax code the reason a lot of people who don't trust corporations voted for a tycoon.
Trump won despite his status as a corporate tycoon because the people basically believe he's a double-agent. A corporate tycoon born with the heart of a worker. I think there's an argument that could be made there: Trump has a long history of being looked down upon by high society.
Trump's also credible, because as someone whose attempted many different lines of business, he's seen what it takes to be competitive, and as someone with the heart of a worker, he didn't like it and wanted to even the playing field.
Trump is the epitome of "Don't hate the player, hate the game". Trump was in a very unique position, shared perhaps only by a few dozen other living souls, to see the game, hate it, and be able to make a credible attempt to fix it.
"Support for Trump, much like Brexit, was based upon an extremely widespread feeling that average people are not getting their fair share of the benefits of globalisation. This is neither a specifically Democrat or Republican problem, and people have been saying it one way or another for years.
It was also the foundation of Sanders' campaign. The difference is that Sanders blamed deregulation and big corporate bonuses while Trump blamed immigration and open borders. I'm sure that there are elements of truth to both of these positions."
i'm sceptical that trump, as a big corp owner, will do much to regulate and reign big corps in; if that's really the case we'll now see if curbing immigration is an actual solution to the problem.
(personally, i doubt it - it has failed in other countries already)
so, let trump do what he promised and see how it works out. if it doesn't, try the other method next. for me it's easy to say because i'm not an u.s. citizen and have no desire to move there (i think my country will be in the same situation in a couple of weeks though); it's not like it wouldn't affect me, but i can't change it anyway.