The Best of Times, the Worst of Times

I've tried to avoid reading and/or commenting on the seemingly omnipresent wailing and gnashing over how bad this past decade - the "awful aughts" - was.  It always struck me as both self-centered ("look at how critical I can be about my decade!") and somewhat progressive ("everyone's miserable, so government must now save us!") to claim that the just-ended year/decade/century was oh-so-horrible.  Moreover, it also seemed to me that the people who believe that the aughts were the worst.decade.ever have intentionally ignored many of the awesome things that these past 10 years have produced, at home and abroad.  And most of this is the direct product - or by-product - of good ol' fashioned free market capitalism.

Fortunately, a few sane individuals have stepped up to rebut the aughts' depressing criticism.  For example, GMU's Tyler Cowen reminds us that not everything is about the United States:

The raging economic growth rates of China and India are well known, though their rise is part of a broader trend in the economic development of poorer countries. Ideals of prosperity, freedom and the rule of law have probably never been more resonant globally than they’ve been over the last 10 years, even if practice often falls short. And for all of the anticapitalistic rhetoric that has emerged from the financial crisis, national leaders around the world are embracing the commercialization of their economies.

Putting aside the United States, which ranks third, the four most populous countries are China, India, Indonesia and Brazil, accounting for more than 40 percent of the world’s people. And all four have made great strides. Indonesia had solid economic growth during the entire decade, mostly in the 5 to 6 percent annual range. That came after its very turbulent 1990s, marked by a disastrous financial crisis and plummeting standards of living.

Brazil also had a consistently good decade, with growth at times exceeding 5 percent a year. There is lots of talk that the country has finally turned the corner, and, within its borders, there is major worry that its currency is too strong — a problem that many other countries would envy.

Elsewhere in South America, Colombia and Peru have made enormous progress and Chile is on the verge of becoming a “developed” country; it will soon be joining the Organization for Economic Cooperation and Development.

To be sure, in Africa, there is still enormous misery. Nonetheless, overall standards of living rose in a wide variety of countries there, with economic growth for the continent as a whole at more than 5 percent in most years. Many basic essentials, like water, sanitation, electricity and especially telephones, are more commonly available.

One lesson from all of this is that steady economic growth is an underreported news story — and to our own detriment. As human beings, we are prone to focus on very dramatic, visible events, such as confrontations with political enemies or the personal qualities of leaders, whether good or bad. We turn information about politics and economics into stories of good guys versus bad guys and identify progress with the triumph of the good guys. In the process, it’s easy to neglect the underlying forces that improve life in small, hard-to-observe ways, culminating in important changes.

In a given year, an extra percentage point of economic growth may not seem to matter much. But, over time, the difference between annual growth of 1 percent and 2 percent determines whether you can double your standard of living every 35 years or every 70 years. At 5 percent annual economic growth, living standards double about every 14 years.

All great points, and Cowen continues to note that these tremendous global gains probably mean that even the United States - despite its obvious and overreported missteps - benefited during the aughts:

To the extent that the rest of the world becomes wealthier, there’s more innovation, as my colleague and co-blogger Alex Tabarrok, professor of economics at George Mason University, argued recently. China, for instance, is moving toward the research frontier in areas such as solar power, scientific instruments, engineering and nanoscience, all of which can benefit the United States. Unlike the situation of just a few decades ago, a genius born in Mumbai now stands a good chance of becoming a notable scientist, whether at home or abroad.

It might be pleasant to boast that America is — or should be — a world leader in every area, but the practical reality is that if some other country solves the problem of green energy, so much the better for us.

The subtler point is that a wealthier China, India, Brazil and Indonesia will lead to more customers for new innovations, thereby producing greater rewards for successful entrepreneurs, no matter where they live. There are so many improvements in cellphones these days because there are so many cellphone customers in so many countries.

To put it bluntly, if the United States takes one step back and the rest of the world takes two steps forward, even in purely selfish terms we should consider accepting the trade-off, if only for the longer run. Most of us gain from the wealth and creativity of other countries, even if we can’t always feel like the top dog.

I couldn't agree more.  Of course, if America's politicians embark on a decade of economic isolationism - taxing imports and exports, while hindering capital and labor flows - most of these benefits disappear. (More on that below.) 

Nevertheless, the miracles of free market capitalism were not isolated to the developing world in the last decade. As Jonah Goldberg reminds us:

[T]he decade of capitalism saw one of the world’s richest men, Warren Buffett, pledge more than $30 billion to a foundation created by another offspring of capitalism, Bill Gates, for the purpose of aiding the world’s poor. Surely capitalism should get some of the credit, since the book on philanthropy in non-capitalist systems is shorter than the guide to cities without Starbucks.

Capitalism doesn’t just create generous wealthy people, but generous poor people, too. Americans give twice as much to charity as the most generous European nations, and the most generous Americans are, in fact, poor Americans....

As it always does, capitalism drove innovation over the last decade. The BlackBerry was introduced in 1999, but the iPhone didn’t exist in 2000, nor did the iPod. YouTube was a fantasy, and no one could even imagine why you’d ever need something like Facebook or Twitter (in fairness, some people still ask that question). iTunes was launched in 2003, and five years later it was outselling Wal-Mart as the No. 1 music retailer. Government-funded basic research in medical science deserves some credit for breakthroughs, but it’s worth remembering that lots of countries invest in basic research. America, with its markets, stands alone as the leading, arguably sole, source of medical innovation. Breakthrough drugs are as American as apple pie.

I'd only add that I first read the Goldberg article on my Kindle, then later pasted it into my blog from my Google reader on my Dell laptop using wireless high-speed internet, while my HDTV (purchased at 0% interest and now paid-in-full) played the NFL Network's RedZone Channel.  Oh, and tomorrow I plan to telecommute to work because I need to meet the Kenmore repairman - scheduled online - at home so he can fix my convection oven.  And all of these cool things were born (or dramatically improved and proliferated) in the aughts.  But like Goldberg mentioned, it wasn't only gadgetry that improved in America, but also the American way of life: for example, today we're living longer and working fewer hours to afford life's necessities than we were only ten years ago.

In short, free market capitalism is awesome, and it was really, really awesome during the last decade.

Of course, not everything's hunky-dory out there today.  But as opposed to the aught-haters, I don't think it has to do with the alleged failures of capitalism or wage-stagnation or the Iraq/Afghan wars or climate change or any other progressive pandemic.  Instead, the darkest clouds on America's horizon are the product of its recent repudiation of the free market, not the market's few, alleged ills.  Goldberg mentions this at the end of his column:

Free markets are in disrepute these days, particularly by the people running Washington. For them, government is the solution and capitalism is the problem. If they have their way over the next decade, they won’t cure what allegedly ails capitalism — people will still steal and lie — but they will impede everything that makes capitalism great. And that will be bad for everyone....

Washington's new anti-capitalist love affair would certainly make Americans and the rest of the world worse off, but Goldberg, I think, misses a related and equally troubling fact - while we diss the free market, many other nations are embracing it and excelling.  As Reason's Ron Hart warns:

Korean automaker Hyundai registered record sales in August. Chinese telecom manufacturer Huawei might soon pass Cisco in sales. Brazil’s jet maker Embraer is, according to Cessna CEO Jack Pelton “scaring us to death.” And more IPOs are happening away from America’s overly regulated capital markets. In addition, India has heart bypass surgery outcomes equal to the U.S. at half the cost, and Singapore is willing to pay U.S. biotech research stars about $715,000 in annual salaries.

In short, we do not have a monopoly on capitalism. We risk losing out to a world market that moves faster and with more resolve today than ever before. Our new political class does not seem to care that innovation and capitalism are fleeing....

This, I fear, is right.  As Cowen noted above, the rising tide of global free market capitalism has the potential to lift all boats, regardless of where the biggest gains are made (and America need not dominate at everything).  And as Goldberg noted, America is still the world's great innovator, market leader and philanthropist.  But developing economies' embrace of most everything that made the United States' economy great - free markets, property rights, labor and capital mobility, technological innovation, free trade, and so on - has allowed them to move up the economic ladder very, very quickly.  While their development - and direct competition - is a good thing for the United States and the rest of the world, the anti-market policies now so en vogue in Washington's snootiest salons threaten to turn the developing world from America's partner to its rival or even its adversary. 

Put simply, the continued enrichment of the developing world is only a good thing for the United States if it continues to embrace free market capitalism. In that case, we might not always lead at everything, but we will be just fine - better even - as the world rapidly develops around (and with) us.  On the other hand, if America goes down the failed road of overregulation, cronyism, nationalization and protectionism, Americans won't benefit from global innovation and development. Instead, the intense competition for capital and talent that we'll face from a gaggle of rapidly developing rivals will only serve to hasten our inevitable decline.

And that would make the next decade far more depressing than the last.

Anti-Globalization Movement Stays Classy, Becomes Tiny

Breaking reports of violence and mayhem in advance of the WTO's ministerial meeting in Geneva are utterly unsurprising and par for the course these days:

Anti-capitalism protesters smashed the windows of banks, shops and cafes in central Geneva and set cars on fire on Saturday during a demonstration against the World Trade Organisation.

And do you know what else is apparently par for the course for today's anti-globalization crowds? Absurdly tiny numbers. Here's the same Reuters/NYT report:

The violent protesters were a minority in an otherwise good-natured crowd of about 2,000 people, accompanied by a dozen tractors and a marching band, who were demonstrating against a three-day WTO conference starting on Monday.

Now, 2000 people might sound like a lot, but it's actually rather small when compared to earlier manifestations of anti-trade animus. As I noted a while ago, "The granddaddy of the modern anti-globalization movement - the 1999 protests against the World Trade Organization's Ministerial Meeting in Seattle - drew over 40,000 protesters.... The follow-up to Seattle - the April 2000 protests against the annual World Bank and IMF meetings in Washington, DC - featured at least 10,000 protesters, summoned about 1,500 additional cops, and shut down most of DC."  Indeed, today's marchers are even less that the 4500 or so protesters that showed up to the September 2009 G20 meetings in Pittsburgh.

The large and (unfortunately) influential protests of Seattle and Washington also featured similar acts of vandalism and general anarcho-stupidity.  And while that protest-staple remains, there are far fewer attendees.  When seen through this prism, it becomes clear that, while the protesters' sorry act might be the same as a decade ago, their numbers have shriveled to the point of turning such anti-capitalist protests into nothing more than a pathetic sideshow rather than a (supposedly) eye-opening event.

Oddly, the NYT/Reuters article above fails to provide this perspective.  Gee, I wonder why?

(Ed. note: I don't  actually wonder why.)

Kowtowing to Protectionists, Fool's Errands, ctd.

A quick question to you Section 421 apologists who swore up and down that the President's decision to impose prohibitive tariffs on Chinese tires was magically going to restore professional protectionists' faith in the overwhelming benefits of globalization:   

So how's that working out for ya?

Here's the latest from BNA (subscription):

Public Citizen, the Citizens Trade Campaign, and the United Steelworkers Union Oct. 19 launched a campaign to “turn around” the World Trade Organization, in an effort to change the administration's path on the WTO.

The Obama administration will be facing a political decision point on Doha Round negotiations, with a smaller negotiating meeting starting Nov. 28 and a full WTO ministerial in Geneva scheduled for Nov. 30-Dec. 2, Lori Wallach , director of Public Citizen's Global Trade Watch, said....

She said the current U.S. agenda on the Doha Round and WTO remained the Bush administration's agenda, and that multinational corporations were seeking to push an expansion of the WTO through the Doha Round to the detriment of the general public.

As part of the campaign, the coalition has an online petition, addressed to President Obama, that says: “Time is overdue to turnaround the WTO. We supported your campaign commitments to create a new trade policy that works for all of us, not just the special interests. That is why we are calling on you to replace Bush's more-of-the-same WTO expansion agenda. We're ready to fight for a WTO turnaround plan we hope you will lead.”...

Leo Gerard, president of United Steelworkers Union, endorsed the Trade, Reform, Accountability, Development, and Employment Act or TRADE Act (H.R. 3012) introduced by Rep. Mike Michaud (D-Maine), which would expand congressional oversight, replace trade promotion authority, and analyze existing trade deals to amend those deals to address who has benefitted and who has been left behind, and what it is that the WTO does and doesn't do.

Gerard said he was pleased that the Obama administration had enforced the rules in the Section 421 case imposing a safeguard on tire imports from China, but said the Steelworkers did not have other Section 421 safeguard cases to file at the moment.

Andy Gussert, director at the Citizens Trade Campaign, rejected any attempt by the Obama administration to move pending free trade agreements with Panama, Colombia, and Korea through Congress. He said there was no political will to do the FTAs, and that they needed to be renegotiated.

Gerard said that no “cosmetic” changes would render the agreements acceptable to the U.S. Steelworkers, Public Citizen, and the Citizens Trade Campaign. He said there was no way to solve the problems in the agreements, citing violence against labor unionists in Colombia, tax havens in Panama, and problems with autos trade in the South Korean FTA.

Gerard's statement re: not bringing any more 421 cases is interesting, and while I'm suspicious, I'd be quite happy to be proven wrong on that prediction.  But I digress.  The point of this post was to, once again, point out the awfully bad strategy that is placating professional protectionists like Public Citizen and the USW in order to advance a free trade agenda.  Now, about a month after the President's 421 decision, after his refusal to repeal or resolve the Buy American and Mexican trucking disputes, and after his shelving of pending FTAs and the the United States' negotiating mandate in the WTO's Doha Round, the anti-traders are demanding no less than the complete dissolution of modern US trade policy.  (Is that all?!?!)

So one more time (in bold!) for those of you who missed it: the "anti-trade crowd" is called the ANTI-TRADE crowd for a reason, and no amount of kowtowing is going to change that.  Ever.

Has The American Anti-Globalization Movement Jumped the Shark?

Last week's G20 meetings featured anti-globalization protest shenanigans that have become routine since the genre began in Seattle 10 years ago - anarchists, arrests, misguided vandalism against Starbucks and other alleged symbols of corporate global-greed, English majors unintentionally demonstrating why they're English (and not Economics) majors, etc etc.  But lost in the routine media coverage of the anti-trade protests in Pittsburgh was their striking impotence relative to earlier iterations of the "movement."

According to the AFP, Pittsburgh police estimated that up to 4,500 "protesters on Friday flooded into city streets lined with police in full riot gear, still tense after violent anti-G20 protests in the eastern US city late Thursday." Those violent Thursday protests featured only about 400 hooligans and a few dozen arrests, the AFP also reported.

Sounds pretty big, huh? Well, it's actually pretty insignificant when you provide some perspective (instead of just focusing on the protesters' attention-grabbing violence and tomfoolery):

• The granddaddy of the modern anti-globalization movement - the 1999 protests against the World Trade Organization's Ministerial Meeting in Seattle - drew over 40,000 protesters, according to similar local police estimates.  Those protests - featuring the strange bedfellows of US labor unions, anarchists, environmental "advocates," socialists, and "consumer groups" like Public Citizen - really flooded Seattle's streets and literally shut down both the city of Seattle and the WTO meetings themselves.

• The follow-up to Seattle - the April 2000 protests against the annual World Bank and IMF meetings in Washington, DC - featured at least 10,000 protesters, summoned about 1,500 additional cops, and shut down most of DC (although the official meetings still managed to happen).  I was working in DC at the time and vividly remember how most people stayed home that day in fear of violence (or just really, really bad traffic).
  

Compared to these protests, the G20 ruckus was pretty tepid.  Granted, the devolution of the American anti-globalization movement is not a brand new phenomenon: compared to last April's World Bank/IMF protests - which apparently drew only 150 protesters - the G20 protests were huge.  Nevertheless, the G20 meetings were highly publicized, came in the midst of a global recession that's (unfairly) being blamed on "free market policies," and were located in a traditional "rust belt" city with large numbers of folks that are highly skeptical of free trade (Pittsburgh is the national headquarters of the United Steelworkers union, afterall).  And the March 2009 G20 protests in London drew "tens of thousands" of protesters. 

Yet the G20 meetings attracted a little more than ten percent of the numbers in Seattle.  What gives?  Has the anti-capitalist movement been replaced by cooler protest movements on the nation's liberal arts campuses?  Or have the USW and its anti-trade bedfellows grown complacent in the face of declining US foreign trade activity and a recent victory against Chinese tire imports gifted to them by President Obama?

Well, maybe.  Although I have another theory that's at least equally plausible: the vast majority of America's young people (and a lot of other Americans) just don't fear globalization anymore.

Since 1990, the share of US GDP represented by trade - imports and exports - has exploded from a little over 15 percent to almost 30 percent before the onslaught of the current recession.  And the share of foreign-owned companies on US soil also has expanded dramatically in recent years.  This trend means that today's young Americans - those most likely to be enamoured with protest "movements" (and have the parentally-funded free time to participate in them!) - grew up and now live in a much more globalized America than did their flannel-wearing, Pearl-Jam-loving counterparts of the late 1990s.  And because more "potential protesters" own an iPod assembled in China (but designed in California), or have a parent who works for a foreign-owned company, or drive a Toyota Camry made in the US (or a Ford Focus made in Mexico), they're just not buying the anti-globalization hype.

So they, and a lot of similarly-affected older Americans, politely delete the mass-organizing email from Socialistworker.com, and the only ones left at the anti-globalization protests are the anarchists, the diehard unionists, the career protesters, the plain ol' nutjobs, and the professional protectionists.  Such a "coalition," while kinda entertaining, does not an official protest movement make, and thus the relatively small numbers on the streets of Pittsburgh.

Either that, or there was a wicked kegger/Dave Matthews concert/global warming protest that day.