But this hinges on the premise that employers are receptive to older retrained workers. In my life time I have never seen this, and I have long considered it to be one of the biggest lies in economics. This has never happened on a large scale, and is an academic theory. Whats more, this would only be possible with a some kind of glut of jobs. Starting at the bottom of another career hierarchy at the age of 40 is a complete disaster, you will be out-competed by 22 year olds who cost alot less, are easier to train, have less grievances about a low salary, are okay with the bottom rung, and do not have huge expectations. Even more than that, shifting X00,000 people from one career to another would flood the labor market and destroy wages. The whole thing makes literally no sense.
My point is that creative solutions are possible, if we dispense with the notion that the only solution possible is the free market.
That's about $50 million wasted per job.
Also I don't think Oracle should be allowed to hide behind the Phoenix name. This was Oracle PeopleSoft. Why would you pay billions for a piece of software when the maker isn't even willing to put it's name on it?
Pretty sure it was simply a time and materials contract, as is standard. No competent software company will accept a fixed price contract without tightly specified and unchanging requirements, which is something very few customers are able to provide (especially not government agencies).
The issue is it’s hard to scale that up to a multi year 2 billion dollar contract. However, I think individual large scale software projects are inherently a bad idea, which is probably a larger issue.
Just delivering something for the sake of it leads to atrociously bad public infrastructure, be it software or a stretch of pavement.
It is astounding nobody was fired for this.
What would your estimate be to: "rewrite facebook in language L, with the same behavior, bugs and all".
When people think of buying business software systems, they often imagine it's like buying a car or a an app on their phone. A better metaphor for software infrastructure is the renovation or replacement of floors in a skyscraper.
To function properly, business software usually needs to interact or interface with data, software and hardware infrastructure that is in countless existing systems.
The complexity in today's IT infrastructure is mind boggling. It is the result of decades of evolution. The data in existing systems is often held in tens of thousands of individually defined formats and schemas, it flows through thousands of specialized channels that have evolved over years with mechanism for propagation of errors, for dealing with exceptions, for ensuring constraints are in place for security, while allowing special cases when needed. There are rules to ensure redundancy, high availability, backups, to support different user interfaces, different types of computers and mobile devices. There are compatibility layers for different systems, hardware, operating systems, databases. In the case of Canadian government payroll, in the old code there were embedded rules about thousands of different positions negotiated over decades by a bunch of different unions. The business rules in the old code took into account, different programs created in different areas by different governments in different regions.
Skyscrapers can also seem simple from the outside, often being made of flat surfaces forming plain rectangular shapes. But a lot more lies under their skin. There are miles of electrical wires, of plumbing, heating and ventilation, security systems that have to connect and work together. There are stairwells, elevator shafts that have to be planned and positioned for safety.
When parts of skyscrapers get old and outdated, you never see anyone suggesting buying a pre-made piece of skyscraper and shoving it in place of the floors that are outdated. Yet this is what people try to do with software infrastructure.
It's as if an organization having a building with floor 20 to 30 needing updating decided to buy a 10 floor building to put in it's place. They sign the contract and then start working on the details. Putting one building inside another is not easy. You will have to renovate the five floors bellow the new floors and also above, so that the wiring, plumbing stairwell and elevator can connect. The elevators from the two buildings is a particularly difficult problem. They won't connect. As a workaround you might get people to take a detour and a stairwell for one floor to the old elevator, ah and add a two floor high elevator for handicap access next to the stairwell. After a few runs of sewage pipes on the outside wall of the building and running electrical wires in the air crossing from the building next door, your floor twenty to thirty now satisfy the contract and the company that sold you the ten floors considers the job done. Of course it works much worst than the old 10 floors and of course you also now have 20 barely functional floors instead of 10 outdated one. But what are you going to do? You already paid way over budget to hack this mess together. It is now very unstable, if you change anything the whole building might collapse and the company you contracted has pulled a trick. The blueprints to the building (aka. the source code) is proprietary so no other company can work on it.
Undoing the damage would mean completely rebuilding 20 floors (and the building needs to keep operating while this is happening and there is only one company that has access to the blueprints so they can charge anything they want and do a dismal job at it and leave you in a position where you have to perpetually give them more money to keep things minimally functional.
When you go to them because nothing is working, they will steer you towards replacing more of your floors with more of their buildings and break more floor above and bellow while taking away your access to the blueprints and securing their monopolistic position.
Successful businesses never allow themselves to be put in such a bad position for very long. Just recently Amazon announced that they got rid of all their Oracle databases. Governments should start that work as soon as possible. Yes it may require expensive rebuilding of parts of the infrastructure piece by piece, but in the long run it will be much less expensive.
Always renovate room by room, floor by floor while making sure the blueprints remain available so you can use different contractors when one turns out to be a lemon.
I was not proposing the above example as a foolproof plan applicable to every situation, so much as an example of a type of plan that has worked in some scenarios in the past.
I should also point out that part of the plan for the Scandinavian plan wasn't the replacement of government workers with locals, as much as the expectation that by moving so many jobs into such small areas, they were guaranteed to majorly shift the local economies. Numerous jobs opened up overnight supporting all these well paid government employees moving into the area.
Nonetheless, I am happy to learn about the counter-example, thank you!
It would be nice if you could name the failure you cite, too.
Government experts will live in a lot of places. NASA has major operations in a metro area in Alabama with only ~500k people, for instance: https://en.wikipedia.org/wiki/Marshall_Space_Flight_Center. That's more periphery than center, in my mind.
Sorry, should of course named it as that's what I was asking. It was the move of the Finnish Medicines Agency from Helsinki to Kuopio. Checking the latest status, they do now have presence in both cities so it wasn't cancelled in the end; I guess they pushed on but ended keeping the Helsinki office for the experts refusing to relocate.
Do you have the name of your example?
Except: 1) UBI is unproven and 2) it strikes me as a bit of a band-aid solution designed mainly to avoid confronting certain ideological assumptions.
1. doesn’t cover the rising costs of medical care and insurance (in the us at least)
2. won’t keep up with inflation
3. sets up private markets to potentially inflate prices “because people have 1000 dollars extra to spend”
UBI in concert with price limits for basic goods and services, insurance reform, and medical costs limits might have a chance.... but then you are now confronted with the potential that it’s now the “rich and large corporations” who are subsidizing everyone, giving them extraordinary political power over the govt/people
i’m still skeptical of UBI
1. UBI (including some fractional amount per child) 2. Free universal healthcare (i.e. Medicare is no longer age-limited) 3. Better education & free public universities 4. Some kind of higher tiers of UBI for disabled people who really need it (judged strictly)
And then get rid of every single other means-tested benefit (including Social Security), as well as tax-advantaged retirement plans (which overwhelmingly benefit the already well-off), and get rid of the favorable tax on LTCGs and carried interest; everything pays full-freight income tax. After this, benefits are either free to everyone (i.e. healthcare) or you pay full freight out of your UBI. And UBI is not scaled by CoL, because it doesn't make sense to subsidize landlords in expensive cities.
And even with all of that, it's not clear that it won't be vastly more expensive than the current system, making it effectively unaffordable. There's also the issue that some people will not spend their money correctly, e.g. they'll fritter it away on drugs/alcohol and not have enough to pay rent or buy food. So you'd need some kind of combination of food stamps and Section 8 housing vouchers, paid out of UBI, for people who need to be forced to allocate their money correctly (as there will no longer be any separate means-tested food stamps or housing assistance).
I could see something like this working in smaller, well-connected, yet independent communities, but I'm struggling to see how it could scale up to a country the size of the US. The rich would be paying so much more in taxes to essentially subisidize many people who might choose not to work at all, that I think it's inevitable they'd manage to overthrow it.
Like you, I think from a realpolitik view of things (if nothing else), that it can't work.
How much would UBI reduce the crime rate? How much would it increase the rate of entrepreneurship? How much would it reduce anxiety and depression? How much would it increase average education levels? Upward mobility? Democratic participation and voter turnout? Volunteer work and charitable giving?
No one knows the answers to these and many other similar questions, but it seems plausible to me that the cumulative effect could produce drastically more wealth than it costs to implement.
Our country (not to mention our world) is facing many extremely severe and worsening problems, many of which are rooted in economic inequality. We are, in my opinion, highly unlikely to solve these problems by incrementally chipping away at them, and the prospects for leaving them unsolved look increasingly bleak. So I think we need to be willing to consider big solutions if the cost-benefit analysis is favorable, even if they do require huge investments. We know UBI is technically affordable based on the amount of wealth that exists in our country—the question is whether it would really work (something we can test), and then if it would, whether we can summon the political resolve to make it happen.
Not attempting such things doesn't mean we avoid the risk of such wealth destruction; it just means we have nobody to a point a finger at when it happens. Politically this is easier because of how people think and the dynamics of our social discourse. See Appeal to Nature Fallacy (https://en.wikipedia.org/wiki/Appeal_to_nature). This is especially true the more cynical and ideological we become as we're more likely to pounce on failures of action, but excuse failures of inaction as inevitable natural events or limitations.
> Such a strategy failed utterly in Canada.
It's possible the strategy is good, they just utterly failed at executing it for other reasons.
A challenge is that many solutions to problems like unemployment have difficult to quantify primary effects - e.g. actual jobs created - while they have easy to quantify opportunity costs - expected return of investing capital in ETFs, or something.
My point is not the details, or to say that creative solutions can’t return more to the community or country than the financial costs of creative solutions - merely that those in the positions to propose these solutions are frequently unable to adequately model the return.
In another post a few months ago, there was a discussion that the government shouldn’t have to propose an ROI (in the context of building new infrastructure)- but it was pointed out that frequently these projects are financed with debt, and that lenders dictate a return.
If we want to move away from ROI calculations, and worrying about unquantifiable primary effects, a critical component IMO is that we can’t really pay for them with debt.
If you pay with debt, you are beholden to a real, quantifiable cost of capital. If you fund with cash, or equity, it gives you the freedom to pursue preference over return, or theory ahead of evidence. Startup funding works this way for a reason. Creative solutions require freedoms not always afforded by a time-bounded and certain cost of capital.
ROI is just one kind of utility function, but converting everything to said resource-equivalent works pretty well.
It's always a nasty burden to decide between hospitals and roads, but it's a neccesity also, because building just hospitals without roads doesn't help much, because ambulances can't get to them. And vice versa.
Sure, ROI in itself is a bad metric, and the problem is that developed nations are frequently get caught in an overly simplistic financial modelling situation. Because politically a more complex model is very hard to defend and the simple model gives simple answers, which are usually not optimal.
As you said, creative solutions are what's needed, but they are harder to quantify.
But there's always the risk of a pathological co-dependency on government employment. You can see this in many developing countries. So for partly legitimate reasons, the Civil Service has long been the boogeyman of Republican politics. Specifically, that civil servants are reliable "big government", Democratic voters. Better to 1) pack their voting power and 2) prefer private out-sourcing. This is one major reason (if not the major reason) why government agency activity and policy have migrated to D.C., and why the headquarters of so many corporations have moved to the D.C. metro area.
Those that choose not to move can leverage their experience in private industry.
This shouldn't matter in a liquid, competitive economy. If employers are not receptive to competent older retrained workers, they'll bid up wages for young workers and hold down workers for old workers. This opens up a market opportunity for some of those older workers to take the opposite side of the trade, start companies in new growth sector, and hire mostly older workers at lower prices, thus outcompeting their younger competitors.
In the short term it rarely works like this because VCs and other primary capital firms are just as susceptible to bias as hiring managers. In the long term it very frequently works like this, which is why you have firms like Whatsapp getting bought out for $19B while all the recent college grads that entered the social networking fray in 07-08 (myself included) got flushed out and took jobs in big tech.
The equivalent in a computer would be a bunch of processors sitting idle, because the programmers couldn't figure out multi-threading.
Only if those 40 year olds believe they're entitled to higher pay just because they're older. The number of available jobs in a given career hierarchy shrinks pretty quickly as you ascend, which means that most people won't rise very far. Start at the bottom rung, stay at the bottom rung for the rest of their life.
My mother lost her job as a factory worker (bottom rung) when Samsung stopped manufacturing CRTs in Germany. She was 50 at the time and retrained as a call center agent, working for the same pay as 22 year olds. She kept working there until her retirement, while new 22 year olds had to be trained every few months because they hadn't yet learned how to hold down a job. Talk about "out-competed".
> Even more than that, shifting X00,000 people from one career to another would flood the labor market and destroy wages. The whole thing makes literally no sense.
Only if they all retrain for the same job. Spread it over all industries that have room for growth and the effect becomes much less catastrophic.
1) Older workers have naturally benefited from annual pay increases over the course of decades, so that even if they're in a non-senior role, they would take a sizable pay cut if forced into a new career entirely.
2) Older workers often need higher salaries because they have families to support (along with the many costs associated) which young workers do not. It's a naturally unbalanced situation.
I don't think there is a solution that doesn't screw over a double-digit percentage of the workforce in at least some way. UBI might be a mitigation strategy, but as long as there's an endless supply of young people, older workers who lost the career game for whatever reason will get screwed.
2) It's true that supporting a family requires a higher salary, but younger people can have families, too, and in any case retraining for a job that allows you to barely scrape by is better than nothing. Better to get mostly screwed than to get completely screwed.
2) In a purely rational way, yes. However,
a) I'm most interested in discussing average scenarios which in this case is young people = generally mortgageless and childless, older people = generally have children and associated costs
b) It often ends up more complicated than that when you factor in social safety nets. You could very well do better by not taking a job that allows you to barely scrape by and instead take the government assistance.
c) Rationalizing away a massive decrease in standard of living for a significant number of people as, effectively, "at least they're not homeless" is one of the ways you end up with massive inequality and eventually the populism push we're seeing now leading potentially to something akin to the French Revolution.
I think we can find a better solution. This is exactly the kind of discussion that has been missing on a national level until very recently.
If they don't care then there is no problem. If they are unwilling to take paths toward self improvement maybe it's for the best to not force them to do something they don't want?
And at the risk of stating the obvious, it is in society's best interest to support families, because children are literally the next generation and everything will quickly collapse if it becomes economically untenable for most to have children. So society has to set itself up in a way that promotes the ability for most people to have and support families.
That's completely illogical. What you need doesn't matter. The only thing that matters is what type of work is available for you and retraining expands the availability of work. If retraining is unattractive because you see higher paying opportunities elsewhere then you don't even have the problem that retraining is supposed to solve.
So your solution is to delegate a 40 year old replaced by trade policies to the bottom of the economic rung. This is the exact situation that the article is saying is a problem. Don't think you read the article.
My point was that we should tilt economic policies so that this situation does not occur. And make no mistakes, this situation is avoidable, and caused by the destruction of that 40 year old's career.
I think they should be given sufficient support to bridge the gap while they retrain; potentially even before their jobs disappear. That seems strictly preferable to unemployment.
The point is that economic policies can make it so that a career in manufacturing in the United States does not need to compete with a career in manufacturing in China. To keep standards of living high in the USA, we need to wall off companies from undercutting and destroying our workers wages. It doesnt matter if it can be done cheaper in China, when we allow that it ruins the quality of life for American citizens. The only people it benefits are the people running the companies here in the USA and the people in China. The rest of the United States slips further towards being a third world country.
Literally this article was about how its possible to defend jobs in a country
It's sort of like saying that if we want to avoid global extinction we need to acquire space travel and populate distance worlds. Not knowing how to get to space, let alone travel to distance worlds, doesn't change the logic. The alternative is that we accept extinction.
We're exceedingly myopic about what strategies like re-education imply. We associate it with a small number of particular programs and are quick to conclude they're ineffective. But re-education can mean many things, things we haven't even explored yet. We could look to German countries with a stronger history of apprenticeships and union labor programs, though that only scratches the surface. And maybe it does require incentivizing or even mandating age-based affirmative action. And maybe re-education (and education policy more generally) will ultimately prove to be relatively limited and constitute only a small part of a larger constellation of strategies. The point is that we have to stop pushing back and earnestly move forward.
There's simply no choice in the matter; we have to be open-minded. Unless we're comfortable continuing to roll the dice to see how many more generations the United States can go fecklessly chasing fantasies. What someone like Trump and the cast of opportunists across the spectrum he has ushered in have shown is that we're not immune to the political pathologies that have afflicted so many other countries in the Americas and around the world.
"It's sort of like saying that if we want to avoid global extinction we need to acquire space travel and populate distance worlds. Not knowing how to get to space, let alone travel to distance worlds, doesn't change the logic. The alternative is that we accept extinction."
My point, and the point of the economics article, is that this is not the case. We created this situation by shipping jobs over seas and enacting NAFTA/pushing for trade with China. Economic policies as well as other measures can protect and mitigate the devastating effects of offshoring all jobs. As the world becomes more connected wages will converge to an equilibrium, so the point of non free trade is to stop the equilibrium. If you don't, the USA becomes something like a third world country. It's that simple.
The decrease in US wages is offset by the decrease in prices (due to the increased efficiency of the whole global and local economy).
The problem is that individual workers are not strongly incentivized to relocate, retrain, rethink their life.
Just look at Appalachia. There are still villages/towns where people sit around on welfare and do basically nothing plus moan about how that particular mine has run out. This has been going on forever. Humans are not that strategic masterminds when it comes to planning for the future. See also how paradigm shifts coincide with a new group rising in power because the old guard is too wedded to their ideology.
Compared to staying jobless it's a hell of a good deal.
Well not quite. Free trade is better for every nation after they have achieved development and wealth. Pretty much all of whom got wealthy by pointedly ignoring free trade.
There's a decent book from 10 or 15 years ago by Ha-Joon Chang called Bad Samaritans that explores globalisation, free trade and in particular the insistence of WTO, World Bank and developed nations forcing free trade on the developing world as a condition of loan, or agreements.
He makes a pretty decent case that free trade is only suitable after you've arrived. More to the point, it's not mere theory, but an exploration of what has actually happened in various nations around the world.
Edit: https://www.goodreads.com/book/show/1032019.Bad_Samaritans
Summary:
Step 1: Mechanize agriculture, to free up people for an industrial labor force
Step 2: Support export-oriented industries.
Step 3: Transition to a developed country.
Trouble comes when you botch step 2.
Steps 1 and 2 are increasingly frowned upon with WTO or trade agreement requiring acceptance of foreign finance into your markets, preventing the levels of subsidy most of the developed world went through, or trying to require honouring of foreign IP. Which seems to look increasingly like taking away the ladder the developed world used to "get there".
The honouring of IP is particularly comical (and to read about here seeing outrage at China borrowing some overseas IP), as from what I can remember everyone who managed to develop did so by stealing IP, subsidising etc whilst providing enough walls to ensure the fledgling industry couldn't simply be bought up by someone higher up the food chain.
Everybody interested in economics should read Ha-Joon Chang and study the South Korean phenomenon. Those who haven't and still feel obliged to put down their 2 cents praising free trade / markets are talking out of their asses.
The fact that people are still willing to listen to Krugman (even this FP article is sympathetic) rather than cast him out as a colossal buffoon - not quite Alan Greenspan status but close - whilst geniuses like HJC wallow in relative obscurity is beyond sad.
Basically he argues using survivor bias. All the countries that tried to pick the winners (support X industry) and levy high tariffs but did not make it are simply not discussed.
https://eh.net/book_reviews/kicking-away-the-ladder-developm...
Completely executed trade policy works but so does free trade if you have rules of law and security of contract and property.
She also had the unique position of the free-port whilst being allowed better access to China than the rest of the globe had. Those refugees were the reason she grew, as they were mostly highly educated and skilled anti-Communists fleeing China's civil war, and the ugly repressive aftermath. The doctors, bankers, merchants and financiers rushing in surged the population from a minor town supporting the port and little else, to major offshore centre.
1949 through to about 1970 whilst there was no formal economic policy, there emphatically was subsidy. The administration was providing social housing for those refugees, education for their children, infrastructure programs that were often more ambitious than in the UK - providing complete new industrial towns, and land reclamation. There was a policy to limit cost of living increases as far as possible as the fledgling industry relied on low labour cost to compete.
There were also export restrictions on textiles and clothes - the backbone of the HK economy up until the seventies, perhaps longer. Those restrictions were certainly in place with the UK and Europe, not sure about the wider world.
The large subsidy during development merely wasn't direct to industry. Yet with textiles and cheap plastics, the two industries that formed the bulk of HK's exports, they happened to be two with low startup capital costs. As a result the HK economy was heavily skewed toward small and medium businesses and low startup costs.
More than that, free markets guarantee nothing at all. But the historical record is that free markets have lifted far more people out of poverty than anything else.
The most recent example is China turning to free markets, and the resulting vast improvement in their economy.
The US taxpayers who invested trillions (largely in the guise of military expenses) in inventing the tech [1] didn't get to decide freely how the business to be conducted or how the profits to be shared. The Chinese workers (or similar ones elsewhere) didn't get to move freely to places for work with competitive wages.
The rich had the freedom to take the publicly funded tech, to exploit the confined sweatshops, all the while without even paying regular taxes that the ordinary Joe has no way to avoid [2].
[1] https://www.ineteconomics.org/perspectives/blog/what-the-ste... [2] https://www.washingtonpost.com/news/business/wp/2016/03/04/w...
China hasn't turned to anything like textbook Anglosphere free markets. Yeah they loosened up and turned away from classical central planning, but state-owned firms still control 30% of assets and their government does quite a to set economic policy and direction. They didn't privatize everything and let the free market run amok.
[1] http://blogs.worldbank.org/eastasiapacific/state-owned-enter...: With all these evidences in hand, we can now answer the question raised before: How big are Chinese SOEs? Even though their share in the economy continued to decline in the past decade, SOEs still make up a substantial part of the national economy – roughly controlling 30 percent of the total secondary and tertiary assets, or over 50 percent of total industrial assets.
https://scholars-stage.blogspot.com/2014/08/passages-i-highl...
> Westerners often describe China's explosive economic growth as a product of its export sector. This sector, however, is not "in the system": “The private export oriented sector suffered massive losses in jobs, earnings, and the closure of small companies in 2008 and 2009. But China’s banks were not exposed in any material way to this sector. It is simple fact that China’s financial system and its stock, bond, and loan markets cater only to the state sector, of which the “National Champions” represent the reddest of the Red. These corporations, the heart of China’s state owned economy, are “inside the system.” The private economy, no matter how vibrant is “outside the system,” and in fact serves the will of the system.” (p. x)
Free trade did the world a lot of good. At the same time it caused a lot of problems, mostly offset by the good but not all of it. It's a bit like controlling a model airplane before the days of proportional control. You get to 'yank the lever' every so often and you always end up overcorrecting. And that's before we get into even more complex issues such as corruption (which is part and parcel of every political system in one form or another) and simply dealing with human nature.
Tariffs as a weapon in the fight against climate change would sure make free trade look at LOT more equitably distributed.
the other tool we tend to overlook is immigration. grow the economy through internal demand and upstart labor rather than external. but that means the possibility of more non-white people--unfortunately a real roadblock here (in the US).
The thing about immigration is that it can be good or bad. Immigration of entrepreneurs and skilled workers can grow the local economy, but immigration of unskilled workers into a country that already has an oversupply of unskilled labor only serves to suppress wages and increase the unemployment rolls.
And advocates of increased immigration typically use the numbers from legal immigration, which is (by design) disproportionately immigration of the first kind. But increasing immigration implies relaxing those sort of restrictions, and then the numbers change.
Immigration also can't be a global solution since it's a zero sum game. You take a doctor from one country and move them to another, it helps the destination country but harms the source. It's not helping us to take in another country's cab drivers, but it's also not helping poorer countries when we take their engineers away from them.
What you need is a market maker for labour hours that has to buy the hours of people at the living wage from anybody who offers them. If the central bank did that, rather than trying to prop up circulation by pushing loans onto people via interest rate targeting, then we may be able to let free markets do their thing. (Any business that doesn't like central banks buying hours need only make a superior bid to stop it).
We run society at the core by exchanging labour hours with each other. If you are to use your finite time on this planet to produce A to surplus (rather than just stopping work on Tuesday when you've made enough A for yourself and your suppliers), then I need to give up my finite time on this planet in exchange for A - and hopefully produce a B with the time that you consider at least appropriate use of that time to continue the exchange.
We have to set something like that up - presuming always we don't want to go down the road of entertaining philosophies that 'trim the excess population'.
"Industrial policy" in this environment would merely mean determining what mechanical processes to have human bodies implement while they despair under the specter of realizing their fake-need make-work tasks could be destroyed at any moment by the snap of a ruler's finger.
Some parents tell their children to start a lemonade stand or get a paper route. Teaching self-sufficiency is economically useful for any time period.
The best and brightest of the world are educated in the United States. 85000 get to stay and the rest can GTFO according to a lottery, the number haven’t increased for 20 years.
Einstein wasn’t born in America, Von Braun wasn’t either. But they all managed to work here somehow, all that the United States need to do to ensure a dominant technological position is to retain the people that it trained. But no, H1Bs are stealing jobs, as if they don’t contribute to the US economy.
Only because economists' only metric is GDP with the baked-in assumption that exponentially increasing natural resource usage is a good thing.
This is the crux of it. The notion that economics, as a field, was blindsided by the rapidity and extent of economic dislocation doesn't match the history. Such a narrative is a whitewashing of a particular clique of superstar economists, which explains why Krugman is so committed to it despite his current policy views.
I was studying International Affairs as an undergraduate in Washington, D.C. in the late 1990s. These issues were well known and heavily discussed, domestically and internationally. By the late 1990s the notion of controlled, incremental trade expansion as espoused by people like Prime Minister Mahathir of Malaysia was already on the upswing in the international community and cemented after the 1997 Asian financial crisis. That is, while mainstream economists were highly skeptical about the efficacy and unintended consequences of such industrial strategies, not to mention of the leaders like Mahathir who espoused them, it was impossible to deny the fundamental premise that the existential risks of too-rapid global trade expansion were very real.
The problem in the U.S. was much the same problem we've always had: free trade became synonymous to opposition to government intervention. All the free trade bills in the U.S. invariably included funding for re-education and R&D to help manage dislocation and build competitive advantages, but they were meager financially and suffocated by neglect. And that's because these measures were considered "government intervention" and hedges to preserve "big government", which as we all know as Americans (and, to a slightly lesser extent, everybody else in the Anglosphere) meant naivety, ineffectiveness, and corruption. So it's no surprise that the American public and politicians drifted toward a fundamentally broken policy situation.
This is no less true today even as we've soured on the notion of free trade. We'll put up trade barriers, but we still refuse to heavily invest in re-education and R&D, and not even our most liberal policymakers have proposed an industrial policy aimed at managing globalization. Just the same 20-30 years ago, these things are synonymous with big government, corporate subsidies, etc. Instead, we limit free trade presuming that the domestic industrial economy will naturally restore more equitable employment and wealth distribution.
Nothing about free markets guarantees "equitable" distribution; indeed, history has proven that they often tend to distributions that are untenable democratically. But we're even less prepared to effectively manage this stuff for our domestic economy than we are for international trade. Anybody expecting our social equities to substantially improve simply because we're limiting free trade is delusional, though they're in good company.
The thing is, we can never put the free trade genie back in the bottle. And the truth is, on balance free trade is better for the world and for every nation in it; just as with free markets more generally. The problem as always is managing dislocation and wealth distribution. We need to learn, as a society and as economists (armchair or otherwise--I'm not an economist), to stop equivocating industrial policy with government control. Until we do that, we'll never be able to discover and identify the levers and strategies available for mitigating the disruptive aspects of free markets while minimizing the risks of corruption.