Wal-Mart signifies all that is wrong in America

[Edit: correct some embarrassing grammatical errors]

Piffka wrote:

And who are these "First World workers" that you don't care about?

I didn't say I don't care about them. I said they're part of a group of people who are affected by technical progress and globalization. I also said that these processesses are on net a good thing. But I didn't say I believe they're a good thing because first world workers lose, because I don't. The reason is that technical progress and free trade are the only known mechanisms that have lifted any Third World countries out of poverty in the last century.

With a wiser government, America would provide poor Americans with a more generous welfare state to share the burden, and it would provide better opportunities to work your way up, yes, by getting a better education. But lacking this support, I prefer current arrangements to the alternative of protectionism, because of the poor countries. We live in a world where the average income is less than half what you get from full-time job at America's minimum wage. So please forgive me that I care about starving people in India more than about Americans so "poor" they can't afford to buy (as opposed to rent) a house.

Piffka wrote:

My purpose is not to argue with you.

Interesting. Why are you doing it then?

Piffka wrote:

You say you're a tenured educator and that you enjoy baiting me.

I never said I'm an educator. I said I had job tenure because I thought "tenure" meant 'to have a reasonably safe job', which I have. After reading your post, I looked up the definition of "tenure" and saw that it means you have an actual job guarantee, which I don't. I apologize for the confusion. "Baiting" was your word for what I did. I enjoy debating with people, and I do enjoy debating with you. You're a good arguer, even when you pretend you're not arguing.

Piffka wrote:

While you are far away and encapsulated in a happy little world of your own, things are falling apart here.

Interesting. I would have said that you live far away and encapsulated in a happy little world of your own. For example, when you told me that many poor people can't afford to own their own houses in America, you didn't seem to realize that this is true for any country in the world. The difference is that in America, unlike in any other place, many of the poor do own their own homes -- many enough that people like you can complain that other poor people can't afford them. Against your intention, your own example gave testimony of how spoiled Americans are, not of how badly poor Americans are doing.

Piffka wrote:

My purpose here is to point out that we make choices with each purchase... choices that go beyond the color & the size & the price. Every single time I purchase something, I am making a choice. I wish people in the country would make more thoughtful, more considered choices.

You are welcome to make your own choices, and I respect them. You are not welcome to define for other people -- including myself -- what constitutes "a more thoughtful, more considered choice". My experience is that "more thoughtful, more considered choices" inevitably translates to "choices more similar to my own".

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Thomas wrote:

For example, when you told me that many poor people can't afford to own their own houses in America, you didn't seem to realize that this is true for any country in the world.

Now, Thomas, this isn't true. In most countries the poor do, in fact, own their homes. Problem is that they have to make them from scrap materials and re-make them after it rains.

I've seen many a proud owner of a mud-and-sticks home.

Laughing

I agree about the fantasy world. Hearing Americans complain about poverty in America is very off-putting to me. The poverty levels in America are what is considered extreme wealth in some other nations.

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Craven de Kere wrote:

I've thought about it overnight but I do not see how you connect education to Wal Mart. Can you elucidate?

The connection works through supply and demand in the job market. In the last 30 years, the rise of the information economy increased the demand for skilled workers, who are good at processing information. At the same time, it decreased the demand for low-wage workers, many of whom got replaced by computers, machines, and Koreans producing labor-intensive products. That alone would have depressed the wages of retail workers.

To make things worse, the quality of America's high school education declined more and more during this time. I don't know the reason for this, but the consequence was that American schools produced more unskilled people and fewer skilled ones. In other words, the supply of unskilled workers increased, demand for them decreased, and the job market created increasing inequality as a result.

That's where education enters the picture. Mechanically stated, schools turn unskilled people into skilled labor, thereby reversing the trend that created (much of) America's large wage differentials in the first place. Good schools are the reason Sweden and Finland have done very well since the early nineties, including their poor people. Crappy education is a major reason poor Americans are doing so badly. As it happens, Boris Kristoff has an op-ed article in today's New York Times that elaborates on the point very nicely.

Does that make it clearer?

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I was with you up to that point. But I guess we'll differ in opinion on whether the education is the main problem or the paradigim shift.

I see it as a natural progression of the move into service-oriented economy. I guess I see less of a decline in education and see the education as less of an issue than the shift to service-economy.

I guess what I'm saying is that while I dislike many elements of modern economy I do not think it's broken in America.

I think people are highlighting legitimate gripes about a system that is working (as opposed to broken).

You said poor Americans are doing badly. I can't help but disagree. Were that the rest of the world's poor so fortunate.

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Craven de Kere wrote:

I see it as a natural progression of the move into service-oriented economy. I guess I see less of a decline in education and see the education as less of an issue than the shift to service-economy.

I would suggest two pieces of evidence against this: 1) The West-European economies are no less service-oriented than America's, yet income inequality is much milder here, and our poor people are richer than yours. 2) According to the Statistical Abstract of the United States, hourly wages in services are about the same as in manufacturing. (PDF file here. See table 608.) Weekly earnings are lower, presumably because the service industry offers more part-time jobs than manufacturing. But the common wisdom that service jobs make you poor seems to be mostly hype. Judging by the Statistical Abstract, the hourly wage difference between low-skill service jobs like retailing and high-skill service jobs like banking seems to be much larger than the difference between service jobs and manufacturing jobs. Which is evidence for my point, but against yours.

Craven de Kere wrote:

You said poor Americans are doing badly. I can't help but disagree. Were that the rest of the world's poor so fortunate.

It depends on who you compare them with. They are doing badly compared to poor people in Europe, Japan and Taiwan, but they are still doing much better than the lion's share of humanity. I should have been more precise, sorry.

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Thomas wrote:

1) The West-European economies are no less service-oriented than America's, yet income inequality is much milder here, and our poor people are richer than yours.

Don't you think European social contructs have to do with this? That the "socialist state" that Americans deride Europe as is responsible for the disfference in the quality of life of the poor?

I'm sure that translates into education as well, but I see it as a more wide-ranging difference that goes beyond education.

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Craven de Kere wrote:

Don't you think European social contructs have to do with this?

They certainly have something to do with our lower inequality. But Europe had more generous welfare states than America 30 years ago, and Europe has more generous welfare states today. Morever, manufacturing gave way to services in Europe just like it did in America. The difference in how our countries changed is that the quality of American education declined more than in Europe, and that American inequality rose more than Europe's. Which suggests that education could have caused the change in inequality, but that the size of the welfare state, and the shift from manufacturing to services, had little to do with it.

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What measure do you use to assert a decline in education?

Because the way you are approaching it needs the decline to be axiomatic to then fault it.

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Craven de Kere wrote:

What measure do you use to assert a decline in education?

Decline in SAT scores, which I think are documented in the Statistical Abstract. (SATs are calibrated to be comparable between years, but I don't know how they do it.) Decline in performance relative to foreign students, as measured in tests that compared pupils across nations. (No source -- I read about these international studies in a dead-tree copy of the Sueddeutsche Zeitung .) I haven't studied the details of these comparisons, but basically took the statisticians' word for the correctness of the summaries.

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I wonder if graduates from college are a better measure. Especially when making a connection to a shift to services.

That's is a statistic I don't know about.

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Craven de Kere wrote:

I wonder if graduates from college are a better measure. Especially when making a connection to a shift to services.

I guess it depends on what you are trying to find out. If you want to know how income depends on education, you want to compare incomes of high school dropouts with high school finishers, college graduates, and people with advanced degrees, and how they vary across time. If you want to compare incomes by occupation, the table in the Statistical Abstract that I linked to should be a good start.

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Actually what I wanted to compare is the percentage of college graduates over time.

I think that would be the stat the correlates the closest to service-based jobs.

The reasoning is that service-based jobs don't take SAT scores into consideration as much as degrees.

Another thing I wonder about is whether we can rely on the education axiom at all.

For example, I think globalization affects America more so than Europe as we are more geographically isolated. Offshoring services is something I think might affect America more so than Europe.

Anotehr stat I'd like to know about is average wage. I suspect there's a greater discrepancy between American and third world wages than between European and third world wages.

A greater discrepancy would imply a greater service drain from America.

Another element I'd look at is dependence on transferrable services. Some services are less prone to migration and I wonder if America has a disadvantage in that we developed some services that are now moving elsewhere.

Some of our technological strongpoints have been moving offshore quite quickly. Is that the case for Europe? Did Europe even have a dot com boom?

I'm not sure Europe and other nations relied on these transferrable services as much.

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Craven de Kere wrote:

For example, I think globalization affects America more so than Europe as we are more geographically isolated. Offshoring services is something I think might affect America more so than Europe.

I don't understand this argument. True, there's no ocean between Germany and Russia, so it's not technically offshoring when we outsource computer programming jobs from Paris to Moscow. But what difference does the non-existence of a shore make to the availability of such jobs in Western Europe? You might have a point about things like call centers. But this has more to do with the availability of low-wage, English-speaking countries such as India. I wouldn't expect the effect to be large though. France, Spain and Portugal can outsource call centers to Africa and South America, but Italy and Germany can't. Income inequality is pretty much the same in all five countries, and much lower than in the USA.

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Elsewhere I asked if there was a similar dot com boom in Europe. That question would better address the offshoring thing.

America relied on a new service that is not very "offshoreable". Did Europe? I don't think India speaking English is as big a factor as India being poor and having the greatest number of programmers in the world.

Programming and web development are going to India and it's not just call centers.

I wonder if Europe has as much of an IT boom to offshore in the first place.

As to the geographic isolation that is a comment about just that. Geographic isolation.

I'm suggesting that Europe is better suited to adapt to a smaller world because European geography was always conducive to "small world" elements.

Do you think that trans-national services for European countries has the same effect as for America? I have the impression that Europe's history with trans-national services is stronger than America's. But I really don't know how Europe has handled this.

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Craven de Kere wrote:

I wonder if Europe has as much of an IT boom to offshore in the first place.

Europe doesn't have much of a computer industry, but most programmers aren't hired by the computer industry anyway. Even in America, most programmers are hired by companies in other industries for in-house jobs. (Though it may look different if you live in Silicon Valley.) A lot of in-house programming jobs are getting outsourced to Eastern Europe and India these days.

Craven de Kere wrote:

Do you think that trans-national services for European countries has the same effect as for America?

There's a limit to services that require talking, where outsourcing is often limited by language barriers -- I used call centers as an example. But for services that don't -- computer programming, banking, etc -- I'd say transnational services play about the same role. It's more of a two way street here. For example, Western Europe insures much of Eastern Europe. But that's because our private and public budgets are more balanced than yours, so imports don't exceed exports as much as they do in America.

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Thomas wrote:

Europe doesn't have much of a computer industry, but most programmers aren't hired by the computer industry anyway.

I think there migth be a relation between how often this occurs and the computer industry.

i.e. with a computer industry more programming is done all around.

Quote:

Even in America, most programmers are hired by companies in other industries for in-house jobs. (Though it may look different if you live in Silicon Valley.) A lot of in-house programming jobs are getting outsourced to Eastern Europe and India these days.

I bet. But how much did the European economy depend on IT at all?

This goes beyond programming. In America the IT boom wasn't fueld by programmers but also by non-brick-and-mortar business.

I guess what I'm ultimately asking is how much of Europe's economy depended on IT? I doubt it was as much as America's. I don't remember European dot coms topping stock markets and taking on brick-and-mortar businesses.

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I'd say transnational services play about the same role. It's more of a two way street here.

But that's exactly what I'm saying. If it's more of a two-way street is that not a crucial difference?

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For example, Western Europe does a lot of banking for Eastern Europe. But that's because our private and public budgets are more balanced than yours, so imports don't exceed exports as much as they do in America.

I don't understand this.

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Craven de Kere wrote:

I guess what I'm ultimately asking is how much of Europe's economy depended on IT?

Based on subjective impressions from visits, I'd say it's about the same. It's just organized differently in terms of making vs. buying.

Craven de Kere wrote:

Quote:
For example, Western Europe does a lot of banking for Eastern Europe. But that's because our private and public budgets are more balanced than yours, so imports don't exceed exports as much as they do in America.

I don't understand this.

If countries as a whole run a budget deficit, they spend more money than they earn (by definition), so import more stuff than they export (again, by definition). America as a whole is running a large and growing deficit in both its public and private budgets, so it's running a large and growing trade deficit, part of which is reflected the flow of outsourced jobs. Balance the budget, and the inflow of jobs will equal the outflow again -- as it does in Europe.

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Where do you make the leap from budget deficit to trade deficit?

Can't the budget deficit be spent internally in theory?

I've always thought the trade deficit had more to do with being the leading currency and having less competitive wages.

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Incidentally I really don't think American and European IT inductries are comparable. This is also based on subjective observation.

I just don't see European powerhouse dot coms. I see American dotcoms over there, American ISP etc. But I don't see European IT startups.

I really do think the IT implosion left Europe relatively unscathed. I've not heard of European F--ed companies.

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Craven de Kere wrote:

Can't the budget deficit be spent internally in theory?

The government's budget deficit can, but the whole country's budget deficite (public+private) cannot.
Deficit = Expenditure - Income. If the government pays a dollar to the private sector, the government's expenses go up one dollar, and the private sector's income goes up one dollar too. Hence, the deficit of the whole nation is not affected.

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I've always thought the trade deficit had more to do with being the leading currency and having less competitive wages.

Whenever that is the case, the exchange rate of the dollar falls and makes American wages, measured in foreign currency, competitive again. Insofar as American wages are too high, the problem is self correcting within months. The non-self-correcting part is caused by private and public borrowing. A search for "competitiveness" on the inofficial Paul Krugman page, www.pkarchive.org, should turn up the economic reasoning behind it in more detail.

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Wal-Mart signifies all that is wrong in America

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