Hey David Friedman I have a question is there any good data on worker co-ops I think they're less efficient to make less money but I'm not sure about that do you know any good papers on this or have any blog post on it
On #7, while I can't speak to vouchers as they are K-12, I definitely know of a case at the university level where they don't accept Federal funds for the exact string/club attached, see point #3 in the following:
There is a problem to which there appear to be only two possible solutions. Someone demonstrates that one of them does not work and concludes that the other must be the answer.”
I like all of your examples, save this one.
It seems to me that, especially in an election season, you are using this to suggest that both of our two main choices (the only ones that have more than a 0.00% chance of winning the election) are “wrong”.
And that might be true.
But it’s still relevant to decide which one is more wrong.
Now perhaps you put this out there not intending it to be read the way I did. But even if that is so, I suspect I am not the only one who will read it that way.
That was not my point. Actual examples from my course:
The bad consequences of a society with generous welfare, based on an article about the modern US, va the bad consequences of a society without, based on Orwell's _Down and Out in Paris and London_.
The bad consequences of not permitting a free market in organs for transplants, vs the risk that people will be killed for their organs if you do.
In each such case, the unattractiveness of one alternative looks like a reason to accept the other — whichever one you look at.
Does this mean “trading with countries that want to take over your government is no different from trading with countries that share your value system?”
Is there some economic lens through which to view that?
No. It means "trade is exchanging good you produce for goods they produce." Thinking of it in terms of selling them your goods for money and buying their goods for money obscures the connection between the two.
The difficulty with not trading, or using sanctions, which is the equivalent, with somebody you don't like, say your neighbor or another country, is that to hurt him you have to hurt yourself. And, the more you wish to hurt him, the more you must hurt yourself. It's hard to see that the pain one voluntarily imposes on oneself is sufficient to induce the opponent to change his ways.
When there are third countries, the expectation is reasonable that such policies will hurt your opponent little and will hurt you little. So, sanctioning will typically be a feel-good mechanism and do little else.
I think you're generalizing too much here. It should be clear that Italy imposing sanctions on San Marino would be considerably more likely to work than San Marino imposing sanctions on Italy.
Of course! There are plenty of special cases. If you can starve out your opponent at low cost to yourself, for example. But that's not typical in the application of sanctions.
You don't trade with countries. People or firms trade with other people or firms. The only relevant value I can think of for a buyer is that the product is honestly represented, and for the seller, it is to get his payment.
Not true in general — there are lots of private firms in China, as well as firms run by the state. That is part of why China is much richer now than before Mao died.
(Mostly) fair enough. 100% on the richer point, and at least 98% on the individual trading decisions point.
But surely you acknowledge that a) there is the fascistic element where the state exerts some control over all businesses, and b) it’s pretty clear that Xi is at least directionally moving back towards Mao and away from the successes of the last ~35 years.
For a second I was going to argue with you about the “fascistic” point re: the U.S., but then I remembered the Biden Administration pressuring the social media companies to censor information that went against the Party line - and even unelected leftist deep state functionaries in the FBI who in September / October 2020 pressured those same companies to censor “disinformation” like the Hunter Biden laptop story they knew was coming out - and I am forced to agree.
All this anti-China stuff reminds me of the anti-Japanese hysteria of the 1980's. Mercy, they're selling us cheap cars! Japan, Inc.! Zaibatsu, sorry, Keiretsu! They have their own banks! Can you imagine? MITI! Industrial policy! Must be evil. God forbid if anyone sold us cheap food.
If there's serious geopolitical stuff going on, hell, the US has this thing called a navy. Anti-trade hysteria will not do anything to solve any problem.
In fact, there are already internationally recognized rules in place, probably, maybe, or at least hopefully, for better than for worse, that allow countries to defend against non-market competition in individual products or industries. Against countries? As others have stated, makes no sense at all.
Sorry, I don’t agree with the comparison at all. Well, mostly.
Japan at the time was and is a geopolitical ally, period.
No threat to us. No human rights violations. No theft of intellectual property.
So all those Japan arguments were purely bad politics mercantilism.
(Well, perhaps with a touch of force them to open up some of their markets, especially agricultural, to us thrown in.)
With China, while I do not deny that there are some people making the bad economics mercantilist arguments - and Vance seems to do so at least in part - there are legitimate national security arguments, and human rights arguments, as well as “get us a better deal” arguments in terms of basic things like intellectual property theft.
Not saying I have the right answer, or that I agree with the protectionists. because mostly I do not.
But re: China almost alone, tariffs and especially the threat of tariffs to get us better deals, are much more justifiable than with any other country.
There are well established ways, some better than others, of getting others to reduce any trade barriers, namely you reduce yours and I'll reduce mine. It worked, sort of, between 1947 and 2000 or so. This is something the US, and indeed other countries, have opted out of in recent years. I think I know why.
I see the induced hysteria by both political parties in the US as a cheap reaction to the belated realization that the net effect of trade deals, at least since 2001, has been to help tilt the income distribution away from the middle class, where the votes are. [Another cause of tilt has been technical progress. We see the same anti-tech hysteria as anti-trade hysteria. And it's also been the middle most affected.]
Political systems here and in Europe have been unable to cope with the tilt, and immigration as an additional endogeneity or proximate cause, in an intelligent, i.e. efficient, manner. So we have the rise of Trump and the New Right, here and elsewhere.
“ belated realization that the net effect of trade deals, at least since 2001, has been to help tilt the income distribution away from the middle class, where the votes are.”
P.S. this is the one thing you said I do NOT agree with you.
The trade deals haven’t made the very large majority of the middle class worse off, they’ve made it better off. Walmart alone has almost single-handedly improved the real incomes of the lower and middle class.
At most you can argue that “trade deals” have harmed a relatively small number of middle class folks whose jobs might have been saved with protectionism. At most. But especially when you add in “since 2001” there is very little chance of even that, as almost all of those jobs would have been lost to somewhere else.
Even if China wasn’t allowed into the WTT this is almost surely true.
As DF says well, it’s just a vision of a return to the 1950s, not an actual truth that could actually happen going forward - or even going back and changing much in the past.
At least without making almost everyone - most definitely including the middle class - much poorer.
On the economics of trade, we are surely (mostly) in agreement.
As for why Vance is saying this, clearly a huge portion of it is politics.
As DF points out in why he wrote this, it does seem likely that a portion of this is Vance’s actual bad economics positions.
As to what he might do if he were in charge, we’ll have to see. Especially how far he would go with it.
With Trump himself, we’ve seen LOTS of evidence that he talks populist but governs as an economic policy conservative. He is willing to use tools like tariffs to get better deals. It worked with the renegotiated NAFTA; it didn’t work with China because they waited him out until they got the leftist Biden Administration in.
I disagree with you re: the political systems, tech and trade, at least writ large. I think the issue writ large is elites abandoning the working lower middle and middle classes.
Most specifically re: immigration. But also with leftists having switched from Bill Clinton’s “I feel your pain” to Obama’s “bitter clingers” and Hillary’s basket of deplorables” to border czar Harris-Biden calling them MAGA racists who are a threat to democracy.
IMO trade is as much a useful way to signal to those folks that they matter.
But we shall see over the next few years, I suppose.
Hey David Friedman I have a question is there any good data on worker co-ops I think they're less efficient to make less money but I'm not sure about that do you know any good papers on this or have any blog post on it
I don't. They are legal and uncommon, which suggests that in most contexts they work less well than other institutional forms.
On #7, while I can't speak to vouchers as they are K-12, I definitely know of a case at the university level where they don't accept Federal funds for the exact string/club attached, see point #3 in the following:
https://www.hts.edu/news_230908_1
I'd argue vouchers are just K-12 equiv of Pell Grants / FAFSA
“5. The Last Alternative:
There is a problem to which there appear to be only two possible solutions. Someone demonstrates that one of them does not work and concludes that the other must be the answer.”
I like all of your examples, save this one.
It seems to me that, especially in an election season, you are using this to suggest that both of our two main choices (the only ones that have more than a 0.00% chance of winning the election) are “wrong”.
And that might be true.
But it’s still relevant to decide which one is more wrong.
Now perhaps you put this out there not intending it to be read the way I did. But even if that is so, I suspect I am not the only one who will read it that way.
That was not my point. Actual examples from my course:
The bad consequences of a society with generous welfare, based on an article about the modern US, va the bad consequences of a society without, based on Orwell's _Down and Out in Paris and London_.
The bad consequences of not permitting a free market in organs for transplants, vs the risk that people will be killed for their organs if you do.
In each such case, the unattractiveness of one alternative looks like a reason to accept the other — whichever one you look at.
You said earlier, “trade is trade.”
Does this mean “trading with countries that want to take over your government is no different from trading with countries that share your value system?”
Is there some economic lens through which to view that?
No. It means "trade is exchanging good you produce for goods they produce." Thinking of it in terms of selling them your goods for money and buying their goods for money obscures the connection between the two.
The difficulty with not trading, or using sanctions, which is the equivalent, with somebody you don't like, say your neighbor or another country, is that to hurt him you have to hurt yourself. And, the more you wish to hurt him, the more you must hurt yourself. It's hard to see that the pain one voluntarily imposes on oneself is sufficient to induce the opponent to change his ways.
When there are third countries, the expectation is reasonable that such policies will hurt your opponent little and will hurt you little. So, sanctioning will typically be a feel-good mechanism and do little else.
I think you're generalizing too much here. It should be clear that Italy imposing sanctions on San Marino would be considerably more likely to work than San Marino imposing sanctions on Italy.
Of course! There are plenty of special cases. If you can starve out your opponent at low cost to yourself, for example. But that's not typical in the application of sanctions.
Your first paragraph applies to war as well, but most people accept that there are circumstances in which war is necessary anyway.
I'm telling you why sanctions are hard to make work. War works! You just may lose one hell of a lot. Nothing ventured, nothing gained.
I misunderstood. Apologies.
You don't trade with countries. People or firms trade with other people or firms. The only relevant value I can think of for a buyer is that the product is honestly represented, and for the seller, it is to get his payment.
In the case of China, China *is* the firm…
Not true in general — there are lots of private firms in China, as well as firms run by the state. That is part of why China is much richer now than before Mao died.
(Mostly) fair enough. 100% on the richer point, and at least 98% on the individual trading decisions point.
But surely you acknowledge that a) there is the fascistic element where the state exerts some control over all businesses, and b) it’s pretty clear that Xi is at least directionally moving back towards Mao and away from the successes of the last ~35 years.
That element surely exists in China — and in the US. I agree that Xi appears to be moving back towards more state control.
For a second I was going to argue with you about the “fascistic” point re: the U.S., but then I remembered the Biden Administration pressuring the social media companies to censor information that went against the Party line - and even unelected leftist deep state functionaries in the FBI who in September / October 2020 pressured those same companies to censor “disinformation” like the Hunter Biden laptop story they knew was coming out - and I am forced to agree.
All this anti-China stuff reminds me of the anti-Japanese hysteria of the 1980's. Mercy, they're selling us cheap cars! Japan, Inc.! Zaibatsu, sorry, Keiretsu! They have their own banks! Can you imagine? MITI! Industrial policy! Must be evil. God forbid if anyone sold us cheap food.
If there's serious geopolitical stuff going on, hell, the US has this thing called a navy. Anti-trade hysteria will not do anything to solve any problem.
In fact, there are already internationally recognized rules in place, probably, maybe, or at least hopefully, for better than for worse, that allow countries to defend against non-market competition in individual products or industries. Against countries? As others have stated, makes no sense at all.
So, no worries!
Sorry, I don’t agree with the comparison at all. Well, mostly.
Japan at the time was and is a geopolitical ally, period.
No threat to us. No human rights violations. No theft of intellectual property.
So all those Japan arguments were purely bad politics mercantilism.
(Well, perhaps with a touch of force them to open up some of their markets, especially agricultural, to us thrown in.)
With China, while I do not deny that there are some people making the bad economics mercantilist arguments - and Vance seems to do so at least in part - there are legitimate national security arguments, and human rights arguments, as well as “get us a better deal” arguments in terms of basic things like intellectual property theft.
Not saying I have the right answer, or that I agree with the protectionists. because mostly I do not.
But re: China almost alone, tariffs and especially the threat of tariffs to get us better deals, are much more justifiable than with any other country.
There are well established ways, some better than others, of getting others to reduce any trade barriers, namely you reduce yours and I'll reduce mine. It worked, sort of, between 1947 and 2000 or so. This is something the US, and indeed other countries, have opted out of in recent years. I think I know why.
I see the induced hysteria by both political parties in the US as a cheap reaction to the belated realization that the net effect of trade deals, at least since 2001, has been to help tilt the income distribution away from the middle class, where the votes are. [Another cause of tilt has been technical progress. We see the same anti-tech hysteria as anti-trade hysteria. And it's also been the middle most affected.]
Political systems here and in Europe have been unable to cope with the tilt, and immigration as an additional endogeneity or proximate cause, in an intelligent, i.e. efficient, manner. So we have the rise of Trump and the New Right, here and elsewhere.
There, apologies, I feel so much better!
“ belated realization that the net effect of trade deals, at least since 2001, has been to help tilt the income distribution away from the middle class, where the votes are.”
P.S. this is the one thing you said I do NOT agree with you.
The trade deals haven’t made the very large majority of the middle class worse off, they’ve made it better off. Walmart alone has almost single-handedly improved the real incomes of the lower and middle class.
At most you can argue that “trade deals” have harmed a relatively small number of middle class folks whose jobs might have been saved with protectionism. At most. But especially when you add in “since 2001” there is very little chance of even that, as almost all of those jobs would have been lost to somewhere else.
Even if China wasn’t allowed into the WTT this is almost surely true.
As DF says well, it’s just a vision of a return to the 1950s, not an actual truth that could actually happen going forward - or even going back and changing much in the past.
At least without making almost everyone - most definitely including the middle class - much poorer.
Glad you feel better!
On the economics of trade, we are surely (mostly) in agreement.
As for why Vance is saying this, clearly a huge portion of it is politics.
As DF points out in why he wrote this, it does seem likely that a portion of this is Vance’s actual bad economics positions.
As to what he might do if he were in charge, we’ll have to see. Especially how far he would go with it.
With Trump himself, we’ve seen LOTS of evidence that he talks populist but governs as an economic policy conservative. He is willing to use tools like tariffs to get better deals. It worked with the renegotiated NAFTA; it didn’t work with China because they waited him out until they got the leftist Biden Administration in.
I disagree with you re: the political systems, tech and trade, at least writ large. I think the issue writ large is elites abandoning the working lower middle and middle classes.
Most specifically re: immigration. But also with leftists having switched from Bill Clinton’s “I feel your pain” to Obama’s “bitter clingers” and Hillary’s basket of deplorables” to border czar Harris-Biden calling them MAGA racists who are a threat to democracy.
IMO trade is as much a useful way to signal to those folks that they matter.
But we shall see over the next few years, I suppose.
Again, glad you feel better!