GDP by definition is an abstract measure of the country and not of an individual. It makes no sense to go back and say “hey, this one person is poor despite rising GDP”. Maybe some people are not able to see the big picture and will get stuck on individual examples?
Latvians suffered tremendously in the first years of the post-Soviet period. We never experienced famine, all the services were still working and everybody got basic healthcare and social needs covered. But income, or rather inflation made everyone very poor and limited of what we could buy. And the fact that goods finally were freely available in shops but no money to buy them probably was like psychological torture. Depression, alcoholism, suicides increased, life expectancy decreased.
Eventually the economy grew, people started earning more money, Latvia joined the EU which accelerated growth even more, some industries were restarted, yet many people emigrated to western countries for work because they wanted even higher income now instead of waiting 20-30 years until Latvia catches up with the west.
nopie
2d ago
it sounds like an alien value
To be honest, it could be that some people have so different world view from others that it is indeed completely alien.
For me I cannot reconcile the idea that “societies didn't really need economic growth in the past”.
All societies wanted more, at all times. Obviously, some people are happy to be monks, live life in rejection of worldly pleasures and engage only in reading, talking about philosophy and commenting in online forums (he-he). I can understand them. But majority want more things, not less. It was never that they didn't need it, they simply couldn't have it.
nopie
2d ago
Except the fentanyl trafficked to the United States comes from China and Mexico, not from Purdue Pharma. And I doubt it would reach our shores nearly as easily (particularly from China) without the free trade apparatus we've constructed.
Even without fentanyl they would still be addicts. Fentanyl is just a cheaper option which in a way made those addicts to commit less crime to obtain funds to finance their drug habit. The problem with the fentanyl is that it is so potent that it needs extreme care handling and diluting it. It is too easy to overdose which leads to more deaths. It is sad but most opioid addicts are for life. They could have received opioid replacement therapy from the government and lead somewhat functional lives.
This was clearly government's fault for not regulating opioids better initially.
And that is similarly true in the immediate post-Soviet-breakup aftermath: life expectancy dropped!
This proves again that economic growth is super important. Indeed, GDP dropped substantially in the shock after the breakup of the USSR. People didn't starve but they were very unhappy, alcoholism, depression, reduced healthcare etc. all contributed to shorter life expectancy.
Maybe this shock severely traumatized some people and that's why they still argue after 30 years that the Soviet system was better. Because it was so terrible experience in their lives, they are unable to see that eventually we recovered and greatly surpassed the Soviet baseline.
This was one of the reasons why I was so adamant against widespread lockdowns and closing of schools during covid. It traumatized children too much. In Latvia math results for children who missed this time at school are still considerably lower than to others. The whole generation will be less competitive in job market. Undeveloped social skills were already serious problem in some countries and all this made it even worse.
The economy suffered during covid but this time economists did the right thing by showering people with free money. It caused terrible inflation later on but they knew that effects of suffering from more poverty would cause even greater trauma similar to what people experienced after the breakup of the USSR. By their efforts it didn't happen and at least people were prevented from this trauma. Most people don't even realize that economists are the real heroes in the pandemic.
I think that both left and right makes the same mistake by not valuing economy enough.
Obviously, all people in the past depended on economy 100%. When it was on a subsistence level and they run out of game to hunt, they had to change to agriculture. When crops failed, a lot of people died from famine etc.
Only relatively recently in the history we have something more in our lives than just food to survive. But some of the values that ensure growth are not intuitive, for example, free trade. No wonder people have difficulty getting their heads around.
When Latvia got independence from the USSR, its nationalistic government didn't think clearly about economy, their idea was that we are finally free from the Soviet occupiers we should concentrate on agriculture and close all factories because they pollute. That shows this primeval thinking of economy only as a food source. In a way it is right, we would die without food. But they were unable to grasp the idea that economy is something bigger than that and people got very unhappy when they couldn't get stuff other than food. Food is to survive, what makes life worth living are other things that is not food.
This narrative that the US has not prospered since 1960s is wrong. I used to believe that wages have been stagnant but recent data by economists have proved me wrong. A lot of middle class have migrated to upper class. Even the low earners have seen their incomes grow.
Obviously there are some areas which have suffered like Detroit. It is government's failure to provide sufficient subsidies to them to reorganize their economy. In this sense it is true that some people have it worse due to free trade. But as a country in total it has prospered. These problems could be solved by transfers to those areas. The US needs to build much more infrastructure, for example.
People are very bad at estimating progress. I come from Latvia, which used to be part of the USSR. It was closed economy, better than third world countries due to socialistic programs to ensure education and industries but lagged behind the west. It was behind the “iron curtain” and had to produce everything themselves. I could clearly see that due to lack of competition and free market, the products were of low quality and shortages were everywhere. Even basic things like shoes or furniture were very hard to buy.
Since the dissolution of the USSR, the GDP of Latvia has grown about 10 times. That is very impressive growth and we all notice the difference. During Soviet times very few people had cars. Now practically everybody in my enlarged family have a car. During Soviet times it was very hard to travel even within country, hotels were rare and could be reserved only with special permission. Now every year we go on vacation to European countries, to Paris or London etc. Clearly things are much better even though Latvia is still one of the poorest EU countries. And yet, every time we have a discussion about the economy, there are people always complaining that economy is worse than during the Soviet times. Either they have a poor memory, or are very unlucky, or they are just people who maliciously or naively spread memes online similar to “hitler was actually good”. No amount of data will convince them, they will always find some contra-argument that GDP is a false measure, that data is false, that inequality makes it useless, that true measure is fertility which has fallen and so on and so on. And if that fails, they will quote some examples of poor or homeless people and will say that we had no homeless people during the Soviet times which is true but misses the point.
One specific example that opioid crisis in the US was caused by free trade is wrong. It was caused by Purdue Pharma, an American company, now defunct, that provided misinformation that their synthetic opioids don't cause addiction. Apparently regulators failed to act sooner before damage was done and a lot of people became addicts. The cause is definitely not access to fentanyl because that is the result.
nopie
2d ago
We are totally dependent on global trade. The United States is not, no.
I work with medicines and the US despite being the most advanced in pharmaceutical industry, depend strongly on global trade for their drug supply. The industry is so global that it is not possible to be independent. I remember the situation some years ago when some European companies refused to supply thiopental used in capital punishment, the US had to rely on alternative methods to execute their death row prisoners. Even such a simple drug was not made in the US.
Not necessarily true - in this system there are losers as well as winners, at least proportionately.
The trade makes everyone better off. Maybe you can find an example of some third world country that was exploited for its resources and consider it to be a loser. That is slightly different situation from a voluntary trade. Exploitation could also be caused by bullying – sell us these resources otherwise I will make things bad for you. But discounting those examples, it benefits all. The economy is not zero sum game.
In any case, the US has benefitted the most from global trade. You could consider that, for example, Vietnam leaders are exploiting their workers to produce cheap things for Americans to buy. You could make a moral case about that. But the US is clearly a winner in this situation.
I don't think this is the consensus of economists. At a minimum there appear to be differing schools of thought on it.
This thing is pretty definite. During covid we had a lot of discussions about masks, if they are effective and so on. Cochrane review clearly showed we have no evidence that masks are effective which in other words means that in medicine we don't use them. We use only things that have evidence of effectiveness. You can sometimes use experimentally, but you cannot claim that they are effective. Mask mandates are out of question, just a recommendation for voluntary use.
Yet, a lot of governments and even medical professionals were adamant that masks definitely help. All these different opinions mean nothing. People just don't want to admit the best evidence that we have and follow their own beliefs.
I understand that I am not going to convince anyone. It is just that I haven't seen trustable evidence of the contrary. Economics are different from medicine therefore maybe I am wrong. I still would need to see good reason that would explain why trade deficits are the problem per se.
nopie
2d ago
Sleepy doesn't mean senile.
At the end even Scott Alexander admitted that Biden was senile and had to write a post apologising why he didn't see it sooner.
Now Trump is boasting that he is better than a senile man. If I was a Trump's fan, I would find it disgraceful.
nopie
2d ago
Teensy-tiny would be 1% or maybe 2-3%. That is practically zero. Europe had tariffs towards the US about 2.5% overall. The EU had an agreement with the US to put tariffs on Chinese electric cars, I think the EU decided on 35%.
It means that the EU has already chosen to be the partner of the US instead of China. Why is he now putting tariffs on the EU? He is punishing countries for choosing the US.
Maybe Trump means something else by “choose us”? From all other talks it could mean that he is not happy about trade deficit and he means that the EU should buy more from the US and not the other way around. I already explained that trade deficits are imaginary problem. In a free market conditions any country cannot force people to buy from the US. You have to offer things for good price for that to happen. You cannot bully customers to buy from you. But he is trying to do exactly that. Even if we could regulate the market to buy more from the US, such intervention is not good, it would make all of us poorer.
We are totally dependent on global trade. That is a good thing, makes us all better off. People who worry about that don't understand this point and also don't have an alternative except start producing everything locally, which means that we become poor again.
The world is worried about China exerting its military power, therefore China needs to be restricted somehow. The good idea would be to make a block against China, remove any tariffs between countries except China and put sanctions and tariffs on China.
But punishing countries for trading with the US makes no sense. It strengthens China's position. Trump's policy was so absurd that currently many countries have already given up and believe that this will be China's century. We hope the US will change its mind but we never know.
nopie
3d ago
I think nothing is more important than economy. People talk about different values and in that sense we need more than economy, for example, democracy and pure air (ecology). But economy is a central thing that allows the country to thrive because everything is based on it. It is just that historically the growth was non-existent (0.01% per year) therefore not many past thinkers have mentioned it in the list of good values. We need to add this to the constitution of every country that achieving growth is very important.
nopie
3d ago
It is stupid. Trade deficit is basically about buying things on credit. Not good in itself, but it doesn't mean that you are buying bad things. Americans buy that stuff because they really like it. It is a good deal.
Now you could argue that going deeper into debt is problematic. You buy too much cheap staff from Walmart with the credit card? What can you do? Maybe stop buying (austerity policy, increase of taxes) or get a better paying job.
Growth supporters suggest the second but maybe sometimes the first is also needed.
Trump suggest a different way. Put a tax on cheap Walmart stuff, even so much tax, so that you would quit your well paying job and start making all these Walmart things yourself. It will make you poorer because Chinese provide this stuff by paying their workers less. You will lose your salary in your high tech job and instead will get paid much less in some factory. And nobody outside the US will buy the stuff you make because initially it will be of low quality. It takes many years to learn to manufacture quality things. The learning curve is real.
Tariffs were used 100 years ago and abandoned like we abandoned ineffective treatments in medicine. Some poor countries still use them because they are so bad at collected tax that tariffs is the only way they manage to finance government.
If you go to countries and say "we are going to slap you with a massive tariff if you choose China, or a teensy-tiny one if you choose us" it...makes total sense?
It doesn't.
Any tariff increase is an incentive to sell more to China and/or other countries and not to the US.
Because tariff towards said country is meant to reduce imports from said country. It is not meant to increase trade with the US.
Basically, Trump is bullying countries. He is saying, I am going to punish you for no reason, but I will punish you less if you do this another nonsensical thing for me about which I will change my mind two days later.
Now all countries need to find other export markets to replace lost exports to the US. The US role in going to diminish, China is going to become stronger which is a threat to the world stability and peace.
How can anyone find sense seeing Trump doing this?
P.S. Notice that China has increased tarifs towards the US as well. Which means that Chinese people will buy less from the US. All the other countries have a perfect opportunity to reroute lost exports to China instead. The US imports will decrease, but its exports will also decrease. The US will become isolated.
nopie
3d ago
To me this sounds a specious reasoning. People with dementia often continue doing the same things that there doing in their lives and have internalized them. Even with half-rotten brain some patterns are so strong that they can do those things quite well. It is just that they loose a plot how it relates to the reality.
Trump is famous for his deflecting and highly confusing talk. He has done it whole life and it has brought him success. He can still do it, it just doesn't relate to anything real anymore. He is on autopilot to throw the interviewer off. Too bad that it doesn't make any sense. But people are used to Trump not making any sense therefore they don't notice any difference.
I used to listen to Trump and previously he made all sense. It was just people found a fault with his manners and way of speaking that they criticized him unduly for things that he actually didn't meant too. The classic example is that Trump encouraged drinking bleach. He didn't, he only said something expressing wishes to find a scientific way to disinfect lungs from pathogens with UV light or some other method. Which is actually what the science to actively trying to do (it is a hard problem, no good solutions so far). Accusations of him were completely unjust, tribally driven. If you discarded this mentality and tried to be neutral, you could easily see that.
But now what he says is mostly rubbish. Or maybe you are right that his goal simply is not to achieve anything but troll us all. Which could also be a sign of dementia because he was trolling people all his life and has internalized that behaviour. But at least he had some goals before. Now only trolling remains.
nopie
3d ago
I see, thanks.
I am not big fan of laughing at people with dementia like Trump or Biden though. We all might one day become senile and deserve some dignity despite everything.
nopie
3d ago
Imagine you knew in advance that covid restrictions would get introduced all around the world in 2020. Would you predict that the stock market goes down? Of course, you would.
I happen to believe that these restrictions were mostly unnecessary and due to overreaction. But at least covid was real to elderly and risk groups. Increased mortality among them was real due to covid (but also from misapplied restrictions).
Even if covid wasn't real and it was all Chinese hoax the same restrictions would have caused stock market to drop.
Tariffs are exactly like that. If you knew in advance that such tariffs would get implemented, you could bet safely that the stock market is going to react very negatively. That they are introduced to imaginary problem, doesn't change their effects.
Eventually people will have enough and will remove Trump from office and it will recover. I predict that Elon Musk will come out as a winner despite all his mistakes because he seems to be the one disagreeing with Trump (by openly stating that he wishes for zero tariffs between Europe). His loyalty to free market will be rewarded in long term even if we don't see how it could happen now.
nopie
3d ago
that seems to be shaping up, as reported, of essentially forcing countries to choose between the US and China does make sense.
Yes, it forces other countries to choose China instead of the US. How does it make sense?
nopie
4d ago
Some still believe that general tarifs apart from specific cases could be a reasonable policy, not great but somewhat reasonable.
I see them as if the hospital director decides that some medicines are too expensive and have many side-effects and suggests replacing them with some complementary medicine (such as homeopathy or any other alternative treatment without evidence base). Trump or his handlers basing his idea about tarifs on 100 year old use cases is exactly like that.
In some third world countries the medical system still uses such treatments. In India it was common for politicians to say that they want to improve healthcare but also dedicate more funds for Ayurveda. It is a total waste of money though and can harm by denying people effective treatments. Poor countries are poor because of corruption and incompetence of leaders.
Any such hospital director in the western country however would be swiftly fired or let to retire. It would be too obvious that he is no longer competent. Otherwise the staff would revolt.
Trump is offering homeopathy to treat cancer. He has lost his plot.
Trump doesn't even remember that Biden had dementia. Biden wasn't just incompetent, he was clearly senile. It was the only reason why Trump got elected.
Now Trump comparing himself with Biden (saying that he is better, of course) is funny because that way he acknowledges that he is in the same boat, i.e., both with dementia.
I can almost hear him boasting – I have the best dementia, it is great, you wouldn't know how great it is... But he didn't because he couldn't remember that word.
nopie
4d ago
Less intelligent decisions are one thing but doing senseless things are completely another.
Trump's dealings with tariffs make no sense. Some people continue to refer to hidden motives but by now we are aware that this is not the case. He is not capable to fulfil the duties and is greatly harming the US. It's only going to be worse with every day. A lot of loyal people will be in denial. Just like many still believe in Havana syndrome as real or something like that. And his election was mostly luck. Democrats hid Biden's dementia and people felt cheated and decided to punish them for this. It just happened that Trump was the candidate. Could have been any other guy. Now people will be even more angry when they realize they have been cheated again.
nopie
4d ago
People have been expecting Trump comebacks all the time and somehow he always did. At least with elections, he still had his genius. But ultimately everyone succumbs to old age and loses everything. It is very hard to accept the ultimate demise but with Trump it is now. With Biden most people including Scott Alexander managed to live in denial until the end of his term. Could happen the same with Trump.
How would you differentiate “lost a step” and “suffering from dementia”? Dementia is exactly like that, initially mildly losing a step, with some better days and some worse days. Trump has always been very erratic and that's why many people don't notice. But if you are able to separate his rhetoric, you could see that now he has lost a plot.
The US had the Great Depression. I think post-Soviet dip was even deeper than that but clearly Americans have experienced something similar. It is just that people who experienced it are no longer alive, so you don't think that it was a big deal.
I really hope that Trump doesn't cause something similar to great depression. But you should listen to those who warn about that possibility and work hard to prevent it. It is a serious matter.
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