“The CEOs of companies like Fannie Mae, Freddie Mac, Citigroup, Wachovia and other major financial institutions have shown themselves to be almost completely without skills, having cost their companies hundreds of billions of dollars of market capitalization, yet they were paid hundreds of millions of dollars for their work.”

I agree with most of your post but have an issue with this sentence. They do have skills, unfortunately, they are in the “sales” category. Basically they are skilled at persuading others to buy whatever snake oil they are selling. Unfortunately, in modern America, that skill set commands a massive market premium. The outrageous market value of that skill set does appear to me to be a market failure of some sort.

"If any newspaper did pursue this policy, it would almost certainly face serious fines and would almost certainly be forced to either pay the prevailing wage or fire the foreign workers."

How, exactly, would this work? What crime would the newspaper be guilty of? Thanks.

I agreed with Douglas on what crime(s) the newspapers would be guility of?

"Congress in 1986 passed a landmark law intended to discourage the hiring of illegal immigrants. Under the law, employers who knowingly hire illegal aliens are subject to civil and criminal penalties,"

http://query.nytimes.com/gst/fullpage.html?res=9D0CEFD7143EF934A3575BC0A967958260

From back in 91 referring to the 1986 immigration law. I'm sure you could dig up more info w/google

Business Week ran an article recently on how the Orange County Register (a newspaper) is outsourcing some of its copyediting and page designing work to...India! No lie.

JSmith wrote, The outrageous market value of that skill set does appear to me to be a market failure of some sort.

Agreed: tens of millions of dollars to what we called, back in the day, "bullsh*t artists."

T.Rex Bean makes a valid point, which I'll take the liberty of rephrasing as: while one could protect many workers via tarriffs/quotas or by immigration restrictions, it might be a real challenge to protect workers whose product can be transmitted easy over the internet.

Here are the lobbying dollars spent in the last 10 years (from opensecrets.org) by the failed lenders Fannie and Freddie.

Freddie Mac $94,854,048
Fannie Mae $79,497,000

They spent this money to screw us, and now the rethuglicans want to hand them our money to bail out their corrupt asses so they can "loan" it back to us at ridiculous interest rates.

They need to go f@#@ themselves!!!

I ask again: why would the newspaper face fines and/or punishment? Simply because the workers we're hypothesizing are illegal immigrants, and a newspaper couldn't get away with hiring them as easily as a cleaning agency, say, could? (This is what Steven seems to suggest.) Or are there specific laws protecting higher skilled workers from foreign competition? Thanks.

"It is difficult to get a man to understand something when his salary depends upon his not understanding it."

A quote that has been a bit overused, but I think quite relevant to this post. Of course, most Times reporters probably think they are paid so well because they are so smart. I mean, how difficult is it to clean a condo (not that they would ever do it)?

I've seen this article (or a variant on this general theme) in a few places this week. It suggests that at least in medicine the market is getting freer.

Or are there specific laws protecting higher skilled workers from foreign competition?

People keep asking this question even though it's been answered here again and again. Here's me answering it back in May of this year:

Type "H1 visa" (or just "H1" for several posts) into that little search box above Dean's picture and read the posts, then, as one of those posts suggests, read "Doctors and Dishwashers" chapter of The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer, which is available as a free e-book." You'll find the link for the book in the post titled "Confusion on "Free Trade".

Check out the geography of the by lines on Reuters, AP, etc. For those commenters referring to illegal aliens, you don't have to be in the U.S. to write for the Times.

Dean,

You constantly try to undermine people who disagree with you on issues of inequality or trade by assuming their disagreement with you arises from their self interest. This is an ad hominem fallacy, and the reverse can be applied to those who agree with you: rich people who attack globalization benefit from the sense of self-righteousness they feel by appearing to take the noble position.

It's nonsense to argue that objective reporters should present as factual your view that globalization is a prime cause of inequality, when in fact 72.8% of economists disagree with you*. That's a strong consensus amongst academic economists that you're wrong.

You should make your criticisms based on empiricism or theory, not ad hominem attacks and anecdote.

*http://www.indiana.edu/~econed/pdffiles/fall03/fuller.pdf

I agree with most of your points, but I differ in some respects. Globalization has become the culture of today, so you just can not keep on selling burgers from Mcdonalds in developing countries at exorbitant prices and make a huge cry when someone employs 'cheap' skiled labor from those countries.

@AO - until there are reliable metrics on the utility of a "sense of self-righteousness," it's going to be easier to use things like employment, food, and shelter to raise questions about possible bias. It's not any more an ad hominem fallacy to look at possible sources of bias, separately from your examination of the actual argument, in people who take a particular position, than it is an argument ad populum when you say that 72.8% of economists disagree with Baker, therefore it's absurd to expect that his views would be presented as fact.

A better question would be why a view that is disagreed with by 27.2% of experts would be presented as fact, rather than presenting the facts that are agreed on by both sides, and the theory that leads all sizable fractions of expert opinion to their disparate conclusions.

Makes me wonder if there's a reason to look for possible sources of bias...

Academic consensus, and 72.8% is a strong majority consensus, is an important heuristic for determining what the current best science says about a particular theory. Systematic biases as well are important in putting critiquing consensus and putting it into context.

However, your argument that "reliable metrics" exist does not mean reliable tests or empirical evidence for self-interest as a systematic bias against globalization based theories of inequality. Therefore it stands on equal ground with the argument that self-righteousness creates a bias for globalization based theories of inequality.

Anti-foreign, pessimistic, and anti-market biases as explanations for opposition to free trade do have empirical and theoretical basis. I would love to see Dean call people out on those biases, which contra his theory, have empirical foundations.

AO wrote, Academic consensus, and 72.8% is a strong majority consensus, is an important heuristic for determining what the current best science says about a particular theory.

Except that economics is hardly a science.

It certainly fails Kuhn's definition of a science in a normal period, where the community has complete consensus on fundamental issues.

Then there's the problem that, if you accept economics as a science, you are lead to an interesting result: economics itself predicts that economists will pervert their theories so that they favor the rich and powerful, because they have an incentive to do so (financial rewards from the rich and powerful).

AO,

I actually don't know why reporters can't recognize that people like themselves benefit from protection, although I can state as a fact that they either don't recognize how they benefit, or they opt not to write about. I posed a question, I'm open to any answer that you or anyone else chooses to give.

As far as the 72 percent consensus within the economics profession that globalization is not the "prime cause" of inequality, I am not sure what this has to do with the time of day. I am not sure that I would say that it is the prime cause of inequality, as opposed to say anti-union laws or the corruption in corporate governance. I certainly think it is an important cause of inequality.

As a logical point, regardless of how important or unimportant one views trade policy in affecting inequality, it is almost definitional that protection of highly paid professionals is every bit as harmful as protection of the textile or steel industry. It is the same model. If any reporter is troubled by the latter form of protection, then if he/she is honest, they must also be troubled by protection of highly paid professionals.

Btw, in terms of the value of the consensus within the economics profession -- it ain't worth much. Most economists in the 90s thought the CPI substantially overstates inflation. They didn't make major changes to the index since then, but most economists don't seem to think it overstates inflation anymore. (If they do think it overstates inflation, they don't take it into account in their research for some reason.) I argued against the consensus on the CPI, the stock bubble, the housing bubble and more than a few other issues. My record is much better than the consensus within the profession.

"Check out the geography of the by lines on Reuters, AP, etc. For those commenters referring to illegal aliens, you don't have to be in the U.S. to write for the Times."

Posted by: dallas

And that will be the issue of the next decade, for US reporters (and editors). Why hire a US fool to rewrite press releases, when you can hire a guy from India to do it at 1/4 the cost?

Dean,

I think you really get at the crux of my chief objection to your brand of "media criticism"; that is your assumption that reporters should weight your opinions not only greater than those of other equally prestigious and skilled economists, but greater than the collective wisdom of all of them put together, and any failure agree with your outside-of-mainstream opinions must certainly be due to their selfishness or ignorance. "My record is much better than the consensus within the profession" is typical professorial entitlement that explains your righteous indignation. "How dare they not listen to me?" is what this sounds like.

You argument that high skilled trade barriers are a chief cause of inequality, and the insistence that reporters who don't buy that are simply self interested or ignorant ignores all the empirical evidence.

Krugman's latest* argues you can't disentangle the data enough to say whether trade effects wages. Katz and Goldin find that immigration explains less than 10% of the growth in the wage skill premium. Broda and Romalis show that trade with the Chinese may be a net positive factor on low-skilled real wages because they keep costs down for the things low-skilled workers buy. Almost every direction you look the new evidence suggests that the effect of trade and foreign competition on absolute and relative low-skilled wages is exaggerated.

This is all a shame, because it detracts from the great points you do make, such as the idea that protection for high skilled jobs is as bad as protection for low skilled jobs.

Trade and Wages, Reconsidered. Krugman, 2008

Inequality and Prices: Does China Benefit the Poor in America?. Broda and Romalis, 2008.

The Race between Education and Technology: The Evolution of U.S. Educational Wage Differentials, 1890 to 2005. Katz and Goldin, 2008

Give me a break. Newspapers have been outsourcing their writing to freelancers for a hundred years or more. However, it's hard to outsource writing. Foreign writers may not be fluent in American English (most of the world teaches British English). They won't have the flavor and experience in the community because they don't live there.

That's not to say that the bean-counters won't push as hard as they can to off-short as much "content creation" as they can.