Good Source for Free-Market Rebuttals?

[Omphfullas Zamboni]

This video summary is from some viewing material from one of my friends Masters program sociology classes. She is more of a centrist than her classmates on average but she does want to help lower and middle class families, and people who have had a rough start in her community. This is the synopsis of one of the videos assigned to watch for class:

Unnatural Causes

In the winter of 2006, the Electrolux Corporation closed the largest refrigerator factory in the U.S. and moved it to Juarez, Mexico, for cheaper labor. The move turned the lives of nearly 3,000 workers in Greenville, Michigan, upside down.

As middle-class Americans find their health and way of life increasingly threatened by globalization and corporate profit-seeking, those in the top income brackets are reaping the spoils of our winner-take-all society. The typical CEO now earns more than 250 times the salary of the average worker. Today, the top 1% of the population has more wealth than the bottom 90% combined. Economic inequality is greater now than at any time since the 1920s.

In other countries, the situation is vastly different. When Electrolux shut down one of its plants in Vastervick, Sweden, it caused hardly a ripple. Laid-off workers received 80% of their salary in unemployment benefits as well as education and training for new jobs. Electrolux also paid $3 million to stimulate the creation of start-up businesses in Vastervick after pressure from the union and government. The town of Greenville, Michigan, received nothing.

In America, at least for the time being, workers are left to fend for themselves, and we all pay the price in both health and wealth.

Transcript; 30 minute documentary: https://www.google.com/url?sa=t&rct=...7ZpfItNfSbuLu4

What are the counterarguments, if any, to some of the claims in this documentary/synopsis? This is coming from place more of curiosity than to encourage my friend to argue with her professors or anything like that.

[Krugminator2]

All of these income equality arguments miss two significant points- median well being of native born people and the consumption side of a person's economic life

It is true income inequality is higher in the US than much of the world and it has risen over the past few decades (and has risen in most of the western world). The middle class is 11% smaller than it was in the mid 70s, but that is because 7% of that 11% moved up into upper middle class. 4% moved down and three of that 4% can be attributable to low skill immigration. The United States has far more low skill workers (a good thing in my view) than less immigrant friendly places like northern Europe and Canada. A person moving from Mexico to the United States raises income inequality because they have lower skills which means a lower wage but that doesn't mean the median wage of a native born US worker is worse off for it. And it should be obvious that moving out of the middle class because of higher income is a good thing.

Secondly, a company moving out of a jurisdiction might hurt the specific workers but it raises overall well being. Wealth consists of goods and services that people buy. If things are made more efficiently elsewhere it means those products can be bought more cheaply by consumers. Also more efficiently made goods means more capital can be accumulated and reinvested means greater overall productivity. If you look at the cost of goods that make up a person's standard of living, they have fallen dramatically since the mid-70s when you adjust for inflation. People are able to consume much more today. To illustrate this point, I would rather be in the poorest 10% living today than the upper 1% in the 1920 because a lower income person today is able to consume so much more.

As far as wealth inequality, there is one simple driver of wealth inequality that never gets properly accounted- Social Security. People are living longer and interest rates are lower. If you think Social Security as an asset (which it is) and count it toward net worth, wealth inequality has barely risen since the 70s.

Inequality Has Increased Far Less Than You Think (If You Consider Social Security Benefits) https://promarket.org/2020/04/16/inequality-has-increased-far-less-than-you-think-if-you-consider-social-security-benefits/ from U of Chicago site.

Ignoring Social Security Paints False Wealth Inequality Picture https://www.cato.org/blog/ignoring-social-security-paints-false-wealth-inequality-picture

[Omphfullas Zamboni]

Thank you for your reply. I feel like I learned a lot; it's especially nice to have that pro-market site as a resource because I feel like some of the points on the website might not be as widely known as they could be.

I showed what you wrote to my friend to see what I could learn from her. She said she felt that even though there are more goods and cheaper goods, the goods now might be of lesser quality than they were a number of years ago. She was saying how companies make products deliberately designed to fail so that they can sell replacements.

And so I listened to her tell me about planned obsolescence is for a little bit, and how people choose the cheapest item because it's all they can afford to get by, even if in the long run the item is less durable.

Thank you for your comments though. I feel like if we were living in some kind of free state utopia/dystopia, I would end up agitating for some kind of socialism, just for intellectual variety. It's always good to see another side of things because people who think differently than you'll probably have a reason for it.

[Krugminator2]

Thank you for your reply. I feel like I learned a lot; it's especially nice to have that pro-market site as a resource because I feel like some of the points on the website might not be as widely known as they could be.

I showed what you wrote to my friend to see what I could learn from her. She said she felt that even though there are more goods and cheaper goods, the goods now might be of lesser quality than they were a number of years ago. She was saying how companies make products deliberately designed to fail so that they can sell replacements.

And so I listened to her tell me about planned obsolescence is for a little bit, and how people choose the cheapest item because it's all they can afford to get by, even if in the long run the item is less durable.

Thank you for your comments though. I feel like if we were living in some kind of free state utopia/dystopia, I would end up agitating for some kind of socialism, just for intellectual variety. It's always good to see another side of things because people who think differently than you'll probably have a reason for it.

Planned obsolescence isn't a thing or at least car manufacturers didn't get the memo.

Cars are largely made overseas. Cars used to be rusted out piles of junk after five or six years and 100k miles was a big deal. I could probably drive my car for 300k miles if I wanted to.

Cell phones are better and cheaper. Computers cost a fraction of what they used to and are much higher quality.

It can't be stressed enough that innovation benefits everyone even if they don't work to make it and even if it produced outside the borders of a country. Google is a massive boost for people around the world. A person in Ireland no longer needs maps or encyclopedias or newspaper subscriptions.

[Krugminator2]

Thank you for your reply. I feel like I learned a lot; it's especially nice to have that pro-market site as a resource because I feel like some of the points on the website might not be as widely known as they could be.

I showed what you wrote to my friend to see what I could learn from her. She said she felt that even though there are more goods and cheaper goods, the goods now might be of lesser quality than they were a number of years ago. She was saying how companies make products deliberately designed to fail so that they can sell replacements.

And so I listened to her tell me about planned obsolescence is for a little bit, and how people choose the cheapest item because it's all they can afford to get by, even if in the long run the item is less durable.

Thank you for your comments though. I feel like if we were living in some kind of free state utopia/dystopia, I would end up agitating for some kind of socialism, just for intellectual variety. It's always good to see another side of things because people who think differently than you'll probably have a reason for it.

She also mentions unions and Europe. They do have stronger unions and more employer restrictions and benefits they need to provide. A lot countries cap hours and have longer mandatory vacations.

How is they working for them? European wages and productivity has lagged the US since the early 90s. And that has happened with a much more highly educated work force without the influx of low skill workers.

Here is Pew Research showing the massive chasm in after tax disposable income a middle income person in the US makes vs every European country except Luxembourg. https://www.google.com/amp/s/www.pewresearch.org/fact-tank/2017/06/05/through-an-american-lens-western-europes-middle-classes-appear-smaller/%3famp=1

[Omphfullas Zamboni]

So what I'm understanding is that, according to your Pew research article, if you define middle-class by US wealth standards, we see that in Europe the middle class is larger but they have less wealth than the US middle-class.

Then we can think of the comparison as a trade-off between having a slightly broader, slightly less wealthy middle-class or having a slightly smaller, slightly more wealthy middle-class, yes?

I appreciate your points about planned obsolescence, which somewhat echoed this BBC article I found: https://www.bbc.com/future/article/2...scence-of-tech

I would be curious what my friend would say but I would like to remain deferential toward what my friend told me about the shortsightedness of certain business folk aiming for easy money with replaceable products. I can definitely understand where she's coming from.

But it has been wonderful to speak with you, Krugminator. If you have any other free-market economic resources that don't come off as too ideologically driven, or that site primary sources, basically anything that strives to be a little more rigorous than a blog which cites zero sources, I would be interested.