RE: WTO the rampage! (fwd)

Josef Dietl (
Mon, 13 Dec 1999 20:28:46 +0100

Hmmm.... this turns into a fairly closed conversation. Probably we should
continue in private email. Please also note that I sometimes can't resist to
play the devil's advocate in order to progress and learn (which I do in this

But: I try to deflect what Dilbert once called "the big picture attack":
Just look at it from a higher perspective and you'll see it all makes sense.
I did look at it from a higher perspective. From there it makes sense, but
there are others, justified points of view, where it doesn't. Lemme note
that my personal perspective is that of working towards global balance
(which has driven me into the internet to begin with), but I'm trying to go
there intelligently. In physics, I have learned that to achieve equilibrium
you may have to go through a time of high-amplitude swings. What I'm doing
here is: trying to find out how to avoid the swings.

You say further down that you see only two possibilities. The reason why I
insist on this thread is that I want to know whether there are more or not.

But first you get your four answers:

1) No zero-sum game - but it's also not capitalizm that generates wealth,
it's generally economic activity. To an invention, it's the same where it
has happened. To a production, it's the same where it has happened. Both are
the stuff wealth is made of. Our current experience is that capitalism is
the most effective way to create wealth, but it is far from the only one.

2) counter-question: "local" or "global" view? - if the "short-term"
suffering extends beyond the lifespan of an individual, that individual is
probably going to object. This question (as opposed to the one above) does
not only deal with economical wealth, but with individual, subjective
well-being. Do we have to sacrifice one person's well-being in order to
produce more of that for others?
I do think the people suffering from a measure by and large have to have at
least a fair chance to benefit from it, too. With the gap on timescales that
I have been describing, I see that one endangered.
On a "global" scale (comparing economies over the decades), the past decades
suggest that life is a inverse payout game. On a local scale (individuals,
timescale years), it looks more like a zero-sum game to me. It depends on
which game you play: the game of nation against nation with about 150
players, or the game of worker against worker with a few billion players.
Please keep in mind that I don't argue for either perspective. I only
complement the information you provide and answer the questions you ask.
(I'd appreciate you answering some of mine in turn :-)

Hmmm... with some second thought: it appears very counter-intuitive to me
that a quasi-random process has a strong outcome (inverse payout over the
decades) macroscopically, but strongly linked results microscopically... On
the other hand, in a glass of milk, molecules are subject to Newtonian
mechanics, but the system as a whole still follows statistical laws.

3) Planning is not deterministic. If done well, it is a feedback cycle and
adjusts to changing conditions (like "results")

4) I have no moral preferrence for efficient economies, I have a preferrence
for regions/govt styles/economic styles where people are happy. This is
fairly easy in principle to measure: Ask - and fairly difficult in practice,
as some govt styles tend to distort the measurment process, be it through
prescribing the sample or through blackmail. But I do not swallow the usual
"economic wealth == well-being" equation without further qualification. I
have seen happy people, rich and poor, and I have seen unhappy people, rich
and poor. It does correlate (particularly being really poor almost certainly
means being really unhappy - but "really poor" again is relative to the
local standards of living), but it's not equal.

I have seen the notion of "short term" crop up in your message occasionally,
but I'd like to know more about what you consider as "short term".

I agree with you that protectionism can contribute to more problems in the
employment structure than open market perspectives, but I have seen
companies been turned around in a year, and I have not seen e.g. steel
workers in Europe find a job in the past decade. That's why I feel something
is wrong with the process. And I do not agree that big business doesn't move
away. The tendency is clearly visible in Europe in several sectors. Industry
doesn't move away right away, but industry is subject to a certain
evolution. It "evolves" away. Job cuts here, a new factory in another
country - this does happen.

Besides, as a consequence of rising structural unemployment in almost all
European countries the socialists are currently on the rise, working against
globalization. (Democracies are apparently not governed by reason.) Another

I DO NOT want to just take the money of the rich and redistribute. That
would take away the incentive, and experience shows that while industry
moves slowly, rich people move quickly. But this is roughly where I see one
element of a third alternative in addition to your self-sufficience and
globalization at all cost, at any speed. I'd like to note that there are
also economists on record claiming that the US stockmarket (more precisely:
stock option) practice has been a critical factor in the economic expansion
too: If you allow a company to print its own money... - but we will hardly
have an opportunity to observe whether it were stock options of the liberal
labour market that caused the US economic expansion. Anyway, it is doubtful
whether the US can sustain their foreign account deficit, and the question
just starts to be really interesting when we look into sustainability in the
hypothetic case of open economies all around. Again a question that we
likely will not find an answer to.

Besides, I do not believe in an essential pain (which could be reformulated
to be a zero-sum-game :-), but that's only a marginal question. The famous
US "service economy" has some significant downsides, too. I can't find the
economist article anymore where they show that the lower class in the US is
forced to take on two or three jobs to survive. Agreed, in Europe we don't
have a human collecting dollar bills at the parking, we have an machine.
Just cutting social aid after five years is also more free-market than many
individuals can respond to. Instead of moving upstreams, the US has just
broadened its scope: more very rich people, more very poor people. In other
words: biting the bullets the past 30 years has helped the country - but did
it help the people?

Don't get me wrong: Sometimes I wish the hardships were harder in Europe to
provide an incentive for people to go back and improve their education or to
move home. A colour TV (--> information have and have-nots) is not a basic
human right, and IMHO shouldn't be. So, the many European welfare economies
exaggerate a bit. But going down to the level of raw survival appears a
little rough the other direction.
Then again I realize that "we Europeans" can't make life harder (at least
not much), otherwise our societies become politically unstable. Another
question of balance that makes a crucial difference.
I think tax reforms would _really_ help. But that only opens another can of

Note also that whenever I write about a "civilized world" worker, I try to
think about whether the argument holds in the other direction, too (even
though I don't write about it). Usually it does. It really all boils down to
the timescale: I'm ready to take hardships into account when creating
change. But the people suffering have to have a fair chance of gaining from

Philosophical question: Can we make politics while thinking of the citizens
only as "the people" (one people), or should a politician think of "the
citizens" (~250M in the US, ~85M in Germany, ~55M in France, much more in
India and China etc.), too?

As so often, the truth is somewhere in the middle. And I'd still like to
know more precisely, where.


> -----Original Message-----
> From: Ernest N. Prabhakar []
> Sent: Friday, December 10, 1999 7:03 PM
> To: Josef Dietl; dan kohn;; fork
> (e-mail)
> Cc: Alexander Blakely (E-mail); Mary O'Dell (E-mail); Mark Kuperberg
> (E-mail)
> Subject: Re: WTO the rampage! (fwd)
> I think there's a couple of key issues.
> 1. Is life a zero-sum game, or does capitalism really create wealth?
> 2. Is long-term gain are worth certain types of short-term suffering?
> 3. Is planning deterministic, or is it all a matter of managing risk?
> 4. Is there a moral preference (even if not absolute) for efficient
> economies?
> I agree that globalization can create hardships. The question is whether
> the end result is a bigger pie for everyone, *and* whether the kinds of
> hardships created are "morally positive". Some short-term hardships are
> inappropriate, but other arguably have moral value, even if they're
> economically unfavorable.
> > Many governments, at least in contemporary Europe, are (and probably
> > have to be) more open to the tangible argument of domestic
> unemployment as
> > they are to the philosophical arguments of free trade or
> environmentalism.> At
> structural (!) unemployment rates between 10% and 20% and most cosmetics
> > already applied to the statistics, they may not have much
> choice, as hard as
> > it may be for other parts of the world.
> But the real question is whether they have any choice in the other
> direction. Does artificially protected domestic employment really help
> people in the long run, or does it just make things worse?
> As I always say, there is an "essential pain" which is conserved. If you
> decrease pain now, it will just last longer. Conversely, you can speed up
> the process, but only at the cost of increased intensity. Just ask any
> counselor.
> I'm no economist, but my simplistic interpretation of the past 30 years is
> that U.S. decided to "bite the bullet" and restructure its economy to
> compete globally. This caused an enormous amount of pain during the
> seventies, but the end result is probably the longest economic
> expansion on
> record. Conversely, Europe largely focused on protecting itself,
> which many
> would argue is more a cause than an effect of high unemployment!
> I really see only two alternatives. One is to attempt
> self-sufficiency and
> maintain some sort of internal status quo. The other is to do whatever it
> takes to become competitive in the global marketplace, and have faith that
> it will work out in the end, even if certain people end up losing
> while the
> majority gain.
> To wit: As someone pointed out, big business always screams about the
> minimum wage hike, but in practice it doesn't really seem to slow down
> economic expansion. But the same confusion exists on the other
> side. The
> protectionists always scream about the loss of jobs to free trade (cf.
> NAFTA). However, I think it is demonstrable that the end result of all
> those opened barriers has been an increase in total employment, even if it
> is a shift from unionized manufacturing jobs to service jobs.
> As I said, it gets back to what you believe. Is life a zero-sum
> game, where
> I have to make sure I grab my piece? Or is it a game of risk and reward,
> where if you give up something today you have a chance (but no
> guarantee) of
> a much greater prize in the future? Or more extreme, is it an inverse
> payout, where "He who seeks to save his business will lose it,
> but He who is
> willing to lose his business will save it."
> The latter is surely the case in Silicon Valley, where companies
> that try to
> protect their existing market end up being swallowed by those who
> create new
> markets, and only those which "self-cannabalize" can survive.
> The question
> is whether this is an aberration, or the general rule merely speeded up so
> its easily observable.
> -- Ernie P.
> > Ernie,
> >
> > thank you for your reply. I fully agree that, once we leave the
> ground of
> > economics, there are a lot of moral philosophy discussions to
> be pursued. I
> > also agree that if people are fighting for self-interest, they
> should say
> > so. Many governments, at least in contemporary Europe, are (and probably
> > have to be) more open to the tangible argument of domestic
> unemployment as
> > they are to the philosophical arguments of free trade or
> environmentalism.
> > At structural (!) unemployment rates between 10% and 20% and
> most cosmetics
> > already applied to the statistics, they may not have much
> choice, as hard as
> > it may be for other parts of the world.
> > So, all that remains undisputed, but there is a question of
> implementation:
> > the "economic part" of my argument: globalization creates a
> "valley", a span
> > of time during which companies are able to benefit from it, but
> individuals
> > are not, because labour markets collectively compete for the
> attention of
> > multinationals, but multinationals are not yet involved in price wars in
> > these countries. As this valley may well last for the duration
> of an average
> > work-life in the so-called civilized world, I wonder whether
> there are ways
> > to reduce this valley in duration or intensity.
> >
> > In other words: I'm not arguing the moral right to a well-paying job,
> > because the term "well-paying job" is defined only relative to
> the regional
> > standards and costs of living. When I use the term "relative"
> below, I mean
> > to say "relative to their regional standards and costs of living". And
> > "well-paid" is more than I'd fairly expect, "normal" is
> probably more up to
> > the job. Normal means: it is possible within the regionally
> usual working
> > hours for the parents to earn enough money to provide food, shelter,
> > clothing, health care for their families and for their own
> future to feed
> > them to the end of their life expectancy.
> >
> > That said, I think everybody has a right to
> > - a "fair chance"
> > - to get a relatively normally paid job.
> >
> > [This cries for a definition of "fair chance". What about the following:
> > without leaving his natural habitat and move into other language /
> > significantly different climate / fundamentally different
> cultural zones.
> > Requiring additional or different education is OK within reasonable
> > limitations. Trying to "upgrade" a steel worker to university
> professor is
> > IMHO not reasonable and marks the "black end" of the scale,
> giving everyone
> > the job he has learned at age 16 is the "white end". Everythig
> in the middle
> > is up for discussion.]
> >
> > It is the local relativity that is temporarily but
> significantly distorted
> > by globalization. I know that working for US$1 a day is
> perfectly reasonable
> > in some regions on this planet, but I also know that the
> unemployment that
> > would result from naive opening of the markets in some first
> world countries
> > (Europe...) can create huge national political tension,
> affecting foreign
> > policy as well.
> >
> > I agree, Ernie, that much of that is people's own fault: rejecting job
> > offers that would require to move home within the limitations above, or
> > negligence to pursue education opportunities is their own
> fault, like plenty
> > of other, similar examples of bone-headedness. But ...
> >
> > Now into the religious bit of the debate (in other words:
> please add "IMHO"
> > to every sentence): I do not believe (sic) that we should try to achieve
> > that through a trade among the poor. The right mentioned above is not
> > negotiable and not tradable. I don't see why the poorest in the
> "civilized
> > world" have to become poorer again (even if only temporarily) for the
> > benefit of the poor somewhere else, when both in the "civilized
> world" and
> > "somewhere else" there is a relatively small (relatively small
> here means:
> > few people if compared to the number of "poor" people by the above
> > definition in their own country) group of people holding the
> majority of the
> > capital. As a rule of thumb, access to capital is distributed
> by an 80-20
> > rule: 80% of the capital are controlled by 20% of the people,
> give or take
> > (obviously) up to 20% on both counts. You have acknowledged
> this fact among
> > others in your message yourself, but you may disagree on the argument at
> > large. Do you?
> >
> > The social tension growing for example in Europe may well spoil
> the process
> > as a whole (among other undesirable side effects like generally
> nurturing
> > extremism etc.), so the integration of their needs is vital to
> making the
> > process as a whole work: For the benefit of people in the "third world",
> > people in the "civilized world", governments and companies.
> >
> > Any ideas on that one? I have been talking about education and
> motivation to
> > pursue it, willingness to move home and access to capital (in
> other words,
> > contemplating redistribution by other means). Implementation
> suggestions,
> > anyone?
> >
> > Josef
> ------------
> Ernest Prabhakar <>
> Darwin Product Manager, Apple Computer, Inc.