A Giant Machine is Sucking Up Jobs and It Ain’t a Robot Apocalypse: A Great Week for Bullshitting on Trade.

Barack Obama and Donald Trump have their differences, but one thing they have in common is that both of their administrations rested and rest on a lie and that lie was told to the American working class.

With Obama it was “change you can believe in” and “hope.” Obama never had any intention to reform America with a view to curtailing the power of the elites, something clear and obvious from the beginning when he stacked his transition team and administration with New Democrat Clintonites, who did so much for the avaricious in the 1990s and beyond, and, moreover, when he demobilised the grassroots network that helped him get elected.

That demobilisation, knowingly, meant he could do little from the White House even if that was his intent, which it wasn’t. Obama was a con artist.

With Trump, it is that his will be an administration for the working class as he seeks to blunt the impact of globalisation. A Trump White House will be for the forgotten people not the economic and political elites whose interests and concerns have been most peculiarly attended to since 1980.

That too is a lie.

Take, say, trade.

Donald Trump promised on the campaign trail that he will do away with, or significantly curtail, NAFTA, negotiated by Clinton, what Ross Perot called, rightly, a giant machine sucking up jobs.

So, it is only appropriate that Trump on trade is acting in ways that please the corporate and financial elite. This was made clear this week in a letter to Congress from the White House on NAFTA. The New York Times reported that,

Mr. Trump has often said that the United States could abandon Nafta altogether if renegotiating it is not possible. But the hawkish rhetoric of the campaign has given way to more measured statements on trade from the administration that track more closely with the stance of many congressional Republicans, who are avid promoters of free trade and deeply skeptical of policies they view as restrictive or protectionist.
“In terms of what we consider to be President Trump’s economic nationalist objectives and what he has said previously about Nafta, the list of negotiating terms was relatively benign,” said Scott S. Lincicome, an international trade lawyer at White & Case.
American business welcomed the additional specifics on trade policy. “The details in the letter have whet our appetite for more,” said John Murphy, senior vice president for international policy at the U.S. Chamber of Commerce

Trump and Steve Bannon, his key political adviser, make certain noises that please the working class ear and perhaps even enact some measures at the margin that bay the hungry wolves whilst his administration busily pursues the economic agenda of the most rapacious and reactionary wing of the Republican party.

You can see this regarding health care, the environment, financial market deregulation and you can see this on trade too, the supposed signature economic issue of the Trump administration. One of the more pernicious aspects to the so called free trade agreements, like NAFTA, is the investor state dispute settlement mechanisms which give corporations unprecedented rights and privileges that effectively subverts democracy

Rather than scrap Nafta’s arbitration tribunals, regarded by some free-trade critics as secretive bodies that give private corporations unbridled power to challenge foreign governments outside the court system, the letter proposed to “maintain and seek to improve procedures” for settling disputes

Seek to improve is code for making them better serve the interests of corporate power. If the Trump administration were truly concerned about restoring popular and national sovereignty then the investor state dispute settlement mechanisms would be top of the trade culling agenda.

In separate, but also quite revealing, trade news The New York Times, a theme of recent reporting not just there but also in The Washington Post, uncritically reported on economic research indicating that technological advance, not trade and hence globalisation, is responsible for the negative effects that “free trade” has for workers

The industry most affected by automation is manufacturing. For every robot per thousand workers, up to six workers lost their jobs and wages fell by as much as three-fourths of a percent, according to a new paper by the economists, Daron Acemoglu of M.I.T. and Pascual Restrepo of Boston University. It appears to be the first study to quantify large, direct, negative effects of robots…

…The paper adds to the evidence that automation, more than other factors like trade and offshoring that President Trump campaigned on, has been the bigger long-term threat to blue-collar jobs. The researchers said the findings — “large and robust negative effects of robots on employment and wages” — remained strong even after controlling for imports, offshoring, software that displaces jobs, worker demographics and the type of industry

The paper is based on econometric analysis and the favourite stock in trade of econometrics is the inferring of causality upon the basis of statistical techniques. But when you think about the matter conceptually one begins to appreciate that the analysis cannot possibly be correct.

That is, jobs and wages are not declining because of robots. They are declining because of people. People in powerful and wealthy institutions pursuing class war, what is called “globalisation,” to further their interests upon the basis of Adam Smith’s “vile maxim” of “the masters of mankind,” namely “all for ourselves and nothing for other people.”

This is a point well made by the economist Dean Baker

The basic story on automation, trade and jobs is fairly straightforward. “Automation” is also known as “productivity growth,” and it is not new. We have been seeing gains in productivity in manufacturing ever since we started manufacturing things.
Productivity gains mean that we can produce more output with the same amount of work. Before the trade deficit exploded in the last decade, increases in productivity were largely offset by increases in output, making it so the total jobs in manufacturing did not change much.
Imagine that productivity increased by 20 percent over the course of a decade, roughly its average rate of growth. If manufacturing output also increases by 20 percent, then we have the same number of jobs at the end of the decade as at the beginning. This is pretty much what happened before the trade deficit exploded

Since the US trade deficit exploded, caused in part by the shift of manufacturing to low wage and high repression economies, that situation no longer obtained and so jobs were lost and downward pressure was placed on wages given the decline in the structural power of labour.

The thesis that the pernicious effects, indeed the very existence, of globalisation can be put down to technology is a type of technological determinism functioning largely as an ideology to obscure the real causal mechanisms at play. To oppose globalisation, therefore, is to be a flat earther Luddite pining for more simple days.

This ruse was also, successfully, tried regarding inequality. As Paul Krugman previously pointed out

Many economists therefore turned to a different explanation: it was all about technology, and in particular the information technology revolution. Modern technology, or so it was claimed, reduced the need for routine manual labor while increasing the demand for conceptual work. And while the average education level was rising, it wasn’t rising fast enough to keep up with this technological shift. Hence the rise of the earnings of the college-educated and the relative, and perhaps absolute, decline in earnings for those without the right skills

That too inferred causality on the basis of econometric analysis and that too was wrong because it ignored power

Economists struggling to make sense of economic polarization are, increasingly, talking not about technology but about power. This may sound like straying off the reservation—aren’t economists supposed to focus only on the invisible hand of the market?—but there is actually a long tradition of economic concern about “market power,” aka the effect of monopoly

Establishing a correlation between technological advance and whatever effect of globalisation that people don’t like is the easiest game in town. But technology is neutral. The effect that technology has on society and people is determined by those who have the power to wield it.

The purpose of much that passes for economic analysis is to hoodwink whilst those who hold power go about their merry way.

Pretty much just like Donald J Trump.

Now another interesting thing about all this is that the technology line has been peddled by The New York Times for years. Since the election of Trump you’ve seen in its august pages much comment on the irrationality of voters, especially working class voters. Yet it was the New York Times that had marched in lockstep with Bush the Patrician and Bush the Idiot, Clinton, and Obama on international economic policy much to the detriment of the people whose irrationality it now so disgracefully derides.

Those who take out the peoples eyes reproach them of their blindness.

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