The Problem of the Liberal Elites Part 1

As I pointed out in this post, conservative elites have completely lost their minds. But liberal elites have problems as well. The problem is more complex with liberals, and it will take several posts of reasonable length to get into it. To make things concrete, I’m going to begin with the liberal approach to trade, which gives me an opportunity to tie together several ideas I’ve raised based on books I’ve discussed here and at Firedoglake:

1. Karl Polanyi’s argument in The Great Transformation that societies can only handle a certain amount of change before they revolt and demand protection. Social changes will come, but the pace of change dictates how much misery will be inflicted on the losers.

2. The absence of a clear definition of market in standard economics.

3. The failure of economic theory to incorporate the impact of raw economic power, including fraud and corruption.

The text for this post is a 1993 article in Foreign Policy by Paul Krugman titled The Uncomfortable Truth about NAFTA: It’s the Foreign Policy Stupid.

Krugman begins by insulting the anti-NAFTA people.

It is as hopeless to try to argue with many of NAFTA’s opponents as it would have been to try to convince William Jennings Bryan’s followers that free silver was not the answer to farmers’ problems.

Indeed, the parallel is quite close. The populism of the 1890s represented a desperate attempt to defend agricultural America against deep economic forces that were changing it into an industrial nation. The choice of a monetary standard had very little to do with the real problems of the farm sector; a burst of inflation might have given some highly indebted farmers a brief respite, but it would have done nothing to reverse or even materially slow the industrializing trend.

Well, as I remember my high school history and related reading, that’s just wrong. My sophomore history teacher, a woman whose name I sadly have forgotten, encouraged us to read the muckrakers, and I chose Frank Norris’ The Octopus and The Pit. They tell an entirely different story, one that revolves around fraudulent financial schemes of a railroad company and traders in the pits of the Chicago Mercantile Exchange. Things haven’t changed much.

Norris’ stories fit better with this analysis published by a site operated by the Economic History Association, The Economics of American Farm Unrest, 1865-1900, written by James I. Stewart of Reed College. He explains that farmers “perceived” that their political and economic status was deteriorating. According to Stewart, farmers had three main complaints: a) farm prices were falling, decreasing their incomes, which they thought was the result of overproduction; b) monopolistic railroads and grain elevators were gouging them; and c) financial conditions, including usury by lenders, an inadequate supply of money and deflation which forced them to repay loans with more expensive dollars. They were not able to get government help for these problems because the legislatures were dominated by financial interests including banks and railroads, the oligarchs and monopolists of the day.

Stewart says that these claims do not match the statistical testing done by economic historians. For what it’s worth, I think his explanations are weak, but I’m no expert, and perhaps those silly farmers didn’t understand their lived situation as clearly as economic historians reading aggregated data decades later. Perhaps, for example, there were no usurious loans in that mix that resulted in mortgage loans averaging 2-3% above the norm in New England. After reciting the contents of several studies, Stewart explains that the real issue facing farmers was a massive increase in uncertainty and risk. As he puts it, farmers might experience one or more of the problems he discusses, or they knew someone who was affected by them, and this increased their concerns.

What were the sources of risk? First, agriculture had become more commercial after the Civil War (Mayhew, 1972). Formerly self-sufficient farmers were now dependent on creditors, merchants, and railroads for their livelihoods. These relationships created opportunities for economic gain but also obligations, hardships, and risks that many farmers did not welcome. Second, world grain markets were becoming ever more integrated, creating competition in markets abroad once dominated by U.S. producers and greater price uncertainty (North, 1974). Third, agriculture was now occurring in the semi-arid region of the United States. In Kansas, Nebraska, and the Dakotas, farmers encountered unfamiliar and adverse growing conditions. Recurring but unpredictable droughts caused economic hardship for many Plains farmers. Their plights were made worse because of the greater price elasticity (responsiveness) of world agricultural supply (North, 1974). Drought-stricken farmers with diminished harvests could no longer count on higher domestic prices for their crops.

Stewart uses the passive voice throughout this passage. But except for growing conditions each of the causes he lists is the direct result of the intentional act of specific human beings either in government or business. In particular, the section on railroads makes it clear that managers took every advantage of their monopoly status, as did the owners of grain silos. There is no doubt that the same is true of bankers and merchants in many places. The deepening involvement of the US in international grain dealings was another opportunity to hurt farmers. In bad years, some of the losses from low harvests were made up from higher prices, until the “integration” world markets. In combination, these efforts of government and business effectively dumped all the risk of bad harvests on tens of thousands of farmers, while increasing the profits of a few shippers, grain merchants and speculators.

In other words, the effect of the policies chosen by the rich and powerful was to make the lives of an important segment of the population worse. Or in Stewart’s bloodless words:

Uncertainty or risk can be thought of as an economic force that reduces welfare

In Krugman’s world, the forces facing these farmers would have been unstoppable. In the real world, as Stewart reports, the farmers organized themselves and forced legislative changes at the State and Federal level that protected them and enabled them to stay in business, the socially important business of growing food for their fellow citizens. They were able to transform the conditions of the markets they faced, using the power of government. They were able to slow the pace of change to a level that didn’t ruin their lives despite the best effort of the powerful. It’s a neat demonstration of Polanyi’s idea about people demanding protection from violent social change.

There were massive changes in the markets facing farmers as they moved from subsistence farming to commercial farming at the local and state and then federal levels, and then into the world market. There were changes in the markets from lenders, railroad companies and other vendors. There was constant change in the terms of the markets during this period, to the point that it would be unreasonable to compare the grain market in 1865 with the grain market in 1895. And Stewart says nothing about mechanization during that period. Economic historians treat the price of wheat as the outcome of market activity without apparently looking at the changes in the nature of the markets. But, as Stewart points out, the regulation of these markets changed steadily over this period, and the outcomes to farmers were improved by those changes.

Third, the central part of Stewart’s story is international trade in grain. The impetus for that change came from the powerful and wealthy shipowners, railroads, merchants and grain speculators, and not from the farmers. The roles of the people who operate railroad and overseas shipping lines, the merchants who import and export grain, and the grain speculators in Chicago is not even touched by Stewart’s account. He does not even discuss the fraud and corruption that dominated the lives of those farmers and all of society. He and other economists neatly hide the power structures that created the problems of farmers and the forces the farmers beat down to protect themselves.

That pattern is repeated over and over in the story of trade.

Index to prior posts in this series.

28 replies
  1. Anon says:

    Whenever I see comments like Krugman’s I am reminded of this quote by another muckraker Upton Sinclair:

    “It is difficult to get a man to understand something, when his salary depends upon his not understanding it!”

    I suspect that Krugman, like Obama and Clinton, is in the position he is in precisely because he does not understand, or care to understand, the role that real power plays in these things. If he did, they would find someone else.

  2. orionATL says:

    if you are happy with the urban myth, now being plied by senator sanders, that the nafta legislation was some sort of economic disaster, read no further.

    if you want to understand that the nafta was, at least, a modest success overall (modest because the u. s. economy is so enormous) you can look at this report:

    see a sort of summary – effects on u. s., p. 14

    and figure 1, p. 11; fig. 2, p. 12; and fig. 3. p. 13.

    see also, with respect to automotive, top 5 trade items, p. 13.

    it is the case that the nafta did, literally, cause the loss of jobs.

    there has probably never been a trade agreement thaat didn’t.

    but then how much will YOU pay for a cannon towel stamped u. s. a. before you switch to a cheaper competitor woven in mexico? or thailand? or vietnam?

    how much did those cheaper automotive jobs and cheaper products do to keep the u. s. automotive industry competitive in the world?

    it is also the case, rarely mentioned, that nafta did create jobs thru trade growth. that is what happens in the case of effective trade agreements.

    there are other benefits never mentioned in domestic political fracasses. in the case of mexico, a population of 100 million with extreme poverty and poor economic prospects is a problem for the much wealthier u. s. nafta mitigated that problem.

    there’s much to be learned when confronted with yet another urban myth firmly fixed in our minds.

    • orionATL says:

      i probably don’t need to say this in a population so computer literate as this one, but just tap on “download this file”. the document is a pdf.

    • Anon says:

      I do not have time for a deep read of the report you linked to but I will note a few things that jumped out at me.
      First, their success metrics, as with most proponents of trade liberalization, are high level. That is they note increases, or absent decreases in GDP, and in the volume of trade. I did not find a discussion of increased high-value employment but increases in total trade volume some of which, they note has come in the form of trade deficits with Canada.
      Second, their perspective on what constitutes a benefit differs from Senator Sanders and many of the other trade skeptics. On pages 19 and 20, for example, they argue that NAFTA enhanced the competitiveness of American companies by prompting them to build international supply chains which “take advantage of economies of scale.” They further note the important role that Mexico has taken as a supplier to the U.S. auto industry but they do not discuss what happened to the previous suppliers in places like Flint Michigan.
      A more plain reading of this is that they are celebrating the shifting of jobs to Mexico because it improves the bottom line of the companies that have made the shifts and, at a high level, makes some figures such as GDP and productivity go up. This is all true but it obscures the very real human pain on the ground as jobs leave, and the long-term economic pain as well-paid employees who are in turn customers, become dependent upon the state.
      As I said I did not have time for a deep read but I believe that this report, glowing as it appears to be, has a far different perspective from mine. It notes benefits that appear on the bottom line, and sometimes at the GDP scale like “increased worker productivity.” But that productivity typically comes at the very real cost of lost jobs, lowered wages, and a declining real economy.

      • orionATL says:

        read the report and study it before you belch again.

        don’t try with me to get away with “well, on cursory inspection, blah, blah, blah,…”

        “… As I said I did not have time for a deep read but I believe that this report, glowing as it appears to be… ”

        you just exposed your untrustworthiness; this report is anything but “glowing”; it is a congressional research service report; they don’t do “glowing” – ever.

        that group is, need i say this, under constant critical surveillance. fortunately, this report was issued a year ago, in 2015, before senator sanders felt the need to exploit the issue.

        mostly, the report says the u. s. economy is so large that mexico and canada trade have little impact.

        that does not mean people did not lose jobs; many did. senator sanders left that detail out.

        it does mean that many other jobs were created. that is krugman’s point (and that of many other economists).

        it does mean, also, that only simpletons and politicians point to solely to one side of a policy, economic or other, without discussing or disclosing the other consequences (side) of that policy.

        it is extremely difficult to have an economy that adapts to change under these deceitful, manipulative political circumstances.

        • orionATL says:


          these sentences “… that does not mean people did not lose jobs; many did. senator sanders left that detail out.

          it does mean that many other jobs were created. that is krugman’s point (and that of many other economists)…”

          should read:

          “… that does not mean people did not lose jobs; many did.

          it does mean that many other jobs were created. senator sanders leaves that detail out. that is krugman’s point (and that of many other economists)… “

          • Anon says:

            Where you get your anger from I do not care. Nor do I see any point in being accused of “Belching” merely for disagreeing with you.
            As to your point about “Many more jobs being created” I would ask: where? And what kind of jobs were they. What I have read in defenses of NAFTA from Krugman, the Petersen Institute, and others are claims that overall gains have been made and the implication that increased productivity or supply chains have created jobs. I have yet to see a conclusive breakdown of: a) what jobs were made; b) how those jobs improve upon the jobs lost; and c) whether there are enough of them to supplant the losses.
            It is the nature of economies to change of course and for there to be multiple sides to any policy. That being said there is no guarantee in economic theory that new U.S. based jobs will be created to supplant jobs lost.

            • orionATL says:

              Read the report, ideologue.

              It is about the effect of a national policy, enacted by congress and signed by the president, on the ENTIRE nation.

              What you are looking to discuss i suspect is one serious negative effect of that policy – the effect on existing jobs in some communities. For thousands of workers and their families and their communities, corporations taking advantage of nafta created disastrous consequences. For the nation, however, nfta appears to have resulted in substantial trade increases with Mexico and Canada. Those trade increases represent jobs too.

              • Anon says:

                Trade increases do not necessarily mean new jobs.
                If the trade is measured in dollars and it is composed of financial services, software, or other easily-copied intangibles, then it may mean far fewer jobs. Huge increases in the number of loans Goldman or BofA makes to Canada or Mexico or cross-border shares will only represent dollar gains to those companies’ bottom lines but they do not necessarily translate into new jobs on a large scale.
                Apple, HP and others, for example, moved their assembly to Mexico and kept software jobs in the U.S., at least for the present. That means that much of their high-volume manufacturing and the lions share of jobs have left. They have compensated for this in part by selling more software to Mexico and Canada but duplicating software does not employ as many people as duplicating machines.
                This is the essential issue with trade “displacement” as it is termed by those who support trade. If the losses are in high-employment sectors like manufacturing and gains are in low-employment sectors like finance then the net loss is still a loss. The loss is also worse if what jobs are created, e.g. Amazon Distribution Centers, pay far lower than what was previously available.
                I make no claims that the volume of trade has not increased, it has. Nor do I claim that some of that trade has not produced new jobs, it has. What I do state is that this report does not appear to separate financial gains from employment gains, nor does it make clear whether or not NAFTA was good for everyone or just for the few.
                The point that Senator Sanders and others have made is that at the end of the day the winners have been few, and the losers many.
                As others here have noted teasing out the exact impact of NAFTA alone is hard because it occurred contemporaneously with other neoliberal policies so these exact details are hard to pin on NAFTA alone but this report does not convince me of your case that it was a gain.
                And at the end of the day I am concerned with the real pain of lost jobs that you have noted. To my mind large dollar gains in financial services trade do not outweigh large numbers of lost middle-class jobs, and I have yet to be convinced that those gains with inevitably trickle down or that TPP and other new proposals will somehow be inherently better.

                  • orionATL says:

                    you are exactly right. i could not possibly agree with you more.

                    my point was different – finding some evaluation of the policy, the nfta, that didn’t treat it ideologically.

                    it turns out the policy that was a small success as a national policy. it was also a rather bold move in the very beginnings of the great international job dislocations that have continuously occured throughout he 2000’s. like a war, those dislocations left many individuals, many families, and many communities the injured victims.

                    this was not a new development in the u. s. check out the history of the new england spinning and weaving mills of the 1800’s. there were many empty factories and devastated communities in those times. where did the jobs go? toward cheaper labor, of course. south maybe :)

                    but neither the nfta policy, nor either clinton, was responsible for that sea change. the nafta was actually a tiny net gain for a giant economy. blaming bill clinton is exploiting hindsight and partial info. blaming hillary clinton is political opportunism.

                    from the supply side, corporate money has always flowed toward lower labor costs at any opportunity. it did so in the 1800’s. it did so from 1996 to 2016 and will continue to do so.

                    from the demand side, there is not a one of us who has failed, in our consumption behavior, to take advantage of the lower costs devolving to us in our purchases.

                    the lesson from nafta is that there has to be some protection for individuals, families, and communities that experience trade-based economic devastation. i think there may have been some effort in that direction, but i don’t know the facts.

                    • Anon says:

                      I would not call NAFTA a national success, even a small one. It was certainly a bold land grab but so far as I can tell from my reading NAFTA’s net impact, in concert with other neoliberal policies, was to transfer middle class jobs out of the country, in exchange for increasing paper wealth through gains to financial services and improved “productivity”.
                      I do not consider that a success, not for most people anyway. Ultimately I feel that this policy has not created new jobs nor improved the country as a whole. It has created conditions that have helped some to improve at the expense of many, and it, again in concert with other neoliberal policies, has left us with empty depressed towns and idled workers that may never recover.
                      I don’t see that as taking an “ideological viewpoint” I see that as deciding what I value, a healthy economy for all, and evaluating NAFTA in that context.

  3. bloopie2 says:

    I’ve read this post twice now, and I‘m still not sure of the point. Is it that economists are wrong? Is it that people who write “history” about economics are wrong? Is being wrong the same as being “elite”?
    Who, in your opinion, did something wrong and should now be doing something different (other than the monopolists)? If no one, now, then, so what?
    What is a liberal “elite”, and what is the “liberal approach to trade” that you say in the first paragraph will be the topic of the post? Am I supposed to know those things without you defining them, in order to be able to get something out of the post? To a lay person, these terms are meaningless as you use them. (If you intend this post to be for only non-lay, please say so and I will politely leave.)
    What is your Thesis? That the farmers got screwed when the world changed from subsistence farming to trade farming? That the effect of the policies chosen by the rich and powerful was to make the lives of an important segment of the population worse? Agreed, but so what? How could that have been prevented? Even if there had been non-monopolist railroaders and shipper etc., wouldn’t trade still have become globalized? Or do you think that for all of history people could have prevented that from occurring? Can economies change over the centuries without one group or the other getting left behind?
    And again, what is a “liberal elite” and what does that have to do with farmers and global trade? Can you answer that in four plain English sentences? Please? Or do I have to wait a few weeks?

  4. bevin says:

    The most interesting thing about Krugman’s comments is that they represent a pure form of economic determinism: the course is set, it cannot be altered. “We live in the best of all possible worlds.”

    The populists, about whom he appears to know nothing (no historian would dare to be as ignorant of economics as Krugman clearly is of his own country’s modern history), were far from being semi literate rural clowns. They were well organised, very successful politically in breaking the duopolies and developed a sensible, viable and progressive policy platform. They set out to protect not subsistence farming-there was very little of that in the C19th except in the temporary circumstances of the frontier- but peasant agriculture based upon family holdings. Sooner or later it will probably be realised that such agriculture, oriented to local markets and using organic methods of husbandry are the only ones with a future.

    Bryan was right about one thing: what ended the populist era was the sudden enthusiasm for imperialism, riding a wave of racism, howling down reformers for their treachery and un-Americanism.

    • orionATL says:

      oh for christ’s sake, bevin, can’t a london school of economics graduate do better than calling a calculation of real effects “determinism” ?

      if i tell you that the 1996 (sanders is arguing, purely out of political desperation, about a policy set in motion 20 yrs ago, now made irrelevant by intervening economic events, solely for the purpose of associating hillary clinton with her husband bill clinton’s now 16 yrs defunct administration),

      the recently passed north american free trade agreement would cost X jobs but create Y jobs,

      is that what you would call economic determinism?

  5. lefty665 says:

    That’s “for HUNDREDS of thousands of workers and their families and their communities… NAFTA created disastrous consequences”. On the Mexican side of the border the consequences were just as disastrous for millions of small farmers who were exposed to US agribusiness. That’s a lose lose for people and a win win for the fat cats. It sucks.
    Ed’s post shows that when US farmers were screwed by monopoly and corruption in the late 19th century they were able to organize and restore equity through Government regulation of markets. Sanders is working to do that again to rectify modern abuses. Hillary is corrupt and a tool of corruption. It’s a pretty simple contest this time. Which side are you on, corrupt fat cats or real people?

      • binky bear says:

        Report=mush. “some studies say X, while other studies say Y”. No historic context for considering the concurrent impact of Chinese liberalization. Tacit acceptance of the fact that the entire purpose was to crush labor costs and thus pick the losers by shifting production to the lowest labor cost area on the continent. little consideration of the huge amount of innovative modeling done during the negotiations by economists of many stripes.

        I think it is not the conclusive win for NAFTA that Orion ATL seems to think it is, further troubled by the forced quasi-journalistic balance, forced narrowing of perspective, inability to draw substantive conclusions and precarious situation of the researchers working at the whim of a politically extremist Congress. Weisbrot has a case here.

        a Canadian perspective finds that against the context of China North American free trade is dwarfed; however the loss of jobs in the automotive parts sector shows that your efficiency is that community’s jobs.
        DeBlock and Rioux 2010 NAFTA: a model running out of breath.

        Free trade is a religious tenet of economics and its utopian id; political economy is about avoiding free trade and/or forcing your competitors to compete in free markets. The author’s post here is an illustration of the various perspectives: the farmers at the point of the spear, the market controllers who extract rent until the farmers’ squeak, the economists with their depersonalized god-like view from orbit, and the governments that oscillate back and forth to service oligarchs and prevent the larger system from crashing by occasionally mitigating the abuses of the rentiers.

        • orionATL says:

          “… I think it is not the conclusive win for NAFTA that Orion ATL seems to think it is,…”

          read what i wrote, will you.

          “… orionATL on March 14, 2016 at 9:43 pm

          if you are happy with the urban myth, now being plied by senator sanders, that the nafta legislation was some sort of economic disaster, read no further.

          if you want to understand that the nafta was, at least, a modest success overall (modest because the u. s. economy is so enormous) you can look at this report:… ”

          there is no “win for NAFTA” stated or implied. the whole point was that nafta was a small., modestly successful trade policy, not the monster presented in political rhetoric.

          and rember this crs report and my part of this discussion. you are almost certain to have reversed your position and be them to defend a democrat this coming fall.

  6. lefty665 says:

    I have, and it’s nice rhetoric designed to obfuscate with a fog of numbers. It dodges every negative impact with “golly gee, look at all these numbers, we tried so awfully hard, but we just can’t tell”.
    However, included graphs show increasing trade deficits with NAFTA countries every year since ’93. The report also tells us that US auto exports to Mexico have increased 251% since ’93 while auto imports have increased 679% over the same period. That roughly parallels the graphed data. Auto imports from Mexico now substantially exceed those from our long time auto mfg partner Canada, so along with US workers Canadian workers have lost the race to the bottom with Mexico.
    While declining to quantify US job losses, the report also ignores NAFTAs impact on US wages and benefits. It does discuss that NAFTA has not helped Mexico close the prosperity gap with the US, while ignoring the drag that has on US prosperity. As Ross Perot predicted, That giant sucking sound you hear is US jobs and wages headed south of the border.
    In all it’s a report clearly designed not to offend its Republican Congressional audience, and in its conclusions to support other anti labor legislation and trade pacts like TPP.
    You’re free to believe any damn fool thing you want to. Please don’t insult the rest of us by asking us to swallow this nonsense too.

    • orionATL says:

      “… orionATL on March 14, 2016 at 9:43 pm

      if you are happy with the urban myth, now being plied by senator sanders, that the nafta legislation was some sort of economic disaster, read no further.

      if you want to understand that the nafta was, at least, a modest success overall (modest because the u. s. economy is so enormous) you can look at this report:…

      the crs report demonstrates precisely what i said earlier that it demonstrated, that the nafta was not the economic disater it has been portrayed as being. its effect on the u. s. economy has been tiny and neutral to slightly positive. its effect on relations with canada and mexico are discused only slightly but positively.


      However, included graphs show increasing trade deficits with NAFTA countries every year since ’93… ”

      that statement is flat out false.


      again, this report supports the thesis that the now 20-yr-old nafta policy has had a small but positive effect on the american economy.
      nafta has also had a positive impact on relations with mexico and canada. it greatest impact may have been in helping the mexican economy grow, thus forestalling a time of mass immigration from a uniformly poor mexico.

  7. mzchief says:

    From ‘Pentagon “Arsenal Plane” Likely to be Modified B-52’ at

    Carter unveiled the “Arsenal Plane” concept during a recent 2017 budget drop discussion at the Pentagon wherein he, for the first time, revealed the existence of a “Strategic Capabilities Office” aimed at connecting and leveraging emerging weapons and technology with existing platforms. This effort is aimed at saving money, increasing the military’s high-tech lethality and bringing new assets to the force faster than the many years it would take to engineer entirely new technologies.

    ‘“I created the SCO (Strategic Capabilities Office) in 2012, when I was Deputy Secretary of defense to help us to re-imagine existing DOD and intelligence community and commercial systems by giving them new roles and game-changing capabilities to confound potential enemies — the emphasis here was on rapidity of fielding, not 10 and 15-year programs,” he said.

    Carter said “Arsenal Plane” development would be funded through a $71 billion research and development 2017 budget request.’

    • mzchief says:

      Ed wrote:

      “The impetus for that change came from the powerful and wealthy shipowners, railroads, merchants and grain speculators, and not from the farmers. The roles of the people who operate railroad and overseas shipping lines, the merchants who import and export grain, and the grain speculators in Chicago is not even touched by Stewart’s account.”

      I take it that Stewart doesn’t also apparently account for the influence of the emerging “telecommunications” operators and their relationships to the bankers, but it seems the above parties are the motivators of what we loosely call “financialization” of a market of actual goods.

      I bring up the non-democratically created “Strategic Capabilities Office” mentioned in the except I previously posted at Comment #15 because I think it is a modern example of a “financialization” strategy. The difference here is that the financialization is of a “false” market– the artifact of a “military infrastructure”– which is also bloated and corruption-ridden to begin with.

      Futher, instead of establishing a new recurring cost on the Federal ledger of $71 billion for yet another essentially unaccountable office in the essentially unaccountable Pentagon, why not meet real needs with the $71B by ensuring natural resources management that delivers clean, lead-free water to all the country’s communities?

  8. lefty665 says:

    orion @17 Figure 1 page 17. Actually shows it getting wider every year through 2008. While a little smaller since then, the spread is getting wider with each year as we get beyond 2009.
    As for the rest, pure bullshit. You can believe that propaganda if you want to, but don’t expect anyone with any sense to do anything but laugh at you.

    • orionATL says:

      figure 1, lefty, includes petroleum, which canada and mexico export to the u. s. in great quantity.

      thus figure one hides the effect of all other trade goods.

      it’s the “all other trade goods” that are what is relevant to nafta’s bad reputation and the related urban myth.

      that’s in figure 2, readily available to you on the next page.

  9. JohnT says:

    I’m gonna have to save this so I can read it later, when I get home. But this looks like another interesting post in the series, thanks Ed
    If you continue on this the agriculture theme, I hope you delve into the Non Partisan League
    You mentioning your history teacher made me think of my HS senior english teacher, Sister Hugo

  10. earlofhuntingdon says:

    Frank Norris, an ardent, progressive reporter, had some of his facts wrong, but I think he correctly described the culture of the Big Four and their and their peers’ endless financial machinations. The dominant railroad capitalists of the latter half of the 19th century extracted money through government bribery; resultant massive government loans and land grants; self-dealing; unregulated often deceptive promises concerning land sales; and endless stock manipulation. It wasn’t until Harriman in the mid-1890’s that running a railroad for profit came to be seen to be as important as extracting profits through promoting and endlessly refinancing one. Financial manipulation didn’t go away, but it was supplemented by monopoly freight pricing, domination of weak regulators, and operating profits. This was decades before FDR’s SEC reforms, such as the requirement that companies publicly disclose accurate accounts, a move vehemently resisted by the great capitalists of the 1930’s.

    I think Stewart has been proven correct. Because of the series of depressions, starting in 1873, American farmers were much worse off than before. Midwestern farmers specialized in export food, and became victims of both Eastern bankers’ priorities and global trends toward what we now call globalization. Serial depressions followed serial weather extremes and recurrent large-scale labor unrest. We, but not Mr. Krugman, are likely to experience much more of all three.

    Mr. Krugman is blithely and I think wrongly dismissive of both NAFTA opponents and Bryan’s Progressive-era campaign for moving off the gold standard toward the use of silver. The choice of metal to back the US dollar, silver vs. gold, was shorthand for choices about complex priorities, principally low vs. moderate inflation, tight credit vs. more readily available credit (and who could get it). Inflation, for example, would lower returns for often anti-farmer, anti-retail banking titans. The govt resolutely backed the bankers. It was not until A.P. Giannini’s early Bank of Italy/America (c. First World War) that banks began catering to smaller businesses and retail customers, a move Eastern bankers strenuously fought. Empowering hoi poloi by lending to them would merely encourage them to want an economic and political voice, a move that Morgan and his successors derided as self-harming to their dominance. As is evident in today’s BofA, Morgan’s priorities won out.

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