Bruce Greenwald: Does Globalization Have A Future? Does It Matter?

Bruce Greenwald: Does Globalization Have A Future? Does It Matter?

Bruce Greenwald, Robert Heilbrunn Professor of Finance and Asset Management and Director, Heilbrunn Center for Graham & Dodd Investing discuss cheap labor and if globalization has a future and if it matters.

Joseph Stiglitz, University Professor, Columbia University; Executive Director and Co-founder, Initiative for Policy Dialogue; and 2001 Nobel Laureate in Economic Sciences

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investThe latest Robinhood Investors Conference is in the books, and some hedge funds made an appearance at the conference. In a panel on hedge funds moderated by Maverick Capital's Lee Ainslie, Ricky Sandler of Eminence Capital, Gaurav Kapadia of XN and Glen Kacher of Light Street discussed their own hedge funds and various aspects of Read More


Glenn Hubbard, Dean and Russell L. Carson Professor of Finance and Economics

Bruce Greenwald On Cheap Labor: Does Globalization Have A Future?Does It Matter?

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Q3 hedge fund letters, conference, scoops etc


OK first of all I'd like to disagree with the most fundamental statement here about Trump bringing people together. It did bring one NGO closer together. Nothing brings anybody closer to me. So what. Well I think what I'm going to try and sort of emphasize here is largely that Trump is much more irrelevant than most people think he is. I mean I'm already impressed by what he's done. I had thought when he got to be president in four years he successfully ordered a tuna salad sandwich from the White House. I was going to be impressed. And he's done more than that. But the striking thing about the trade policy is we have been here before. That all the analogies that you were hearing and I think there are the appropriate analogies are to the depression where the United States tried to protect U.S. jobs for political or other reasons. And the reason for that is that the jobs that were valued that were agricultural jobs. And they tried to protect them they tried to erect agricultural tariffs to do that and they didn't succeed. It is in a time of transition when jobs are disappearing that you tend to see what are really crazy actions.

I mean the idea that China wants to sell us a lot of goods are really cheap prices and we say no no no no. We want to pay more. Back when it comes to saving jobs under these circumstances you get these irrational policies. What's happening today is just as agriculture died at that time. Manufacturing is dying and it's nobody's fault. Productivity growth is four to five percent a year. And global demand growth is 2 percent a year and those jobs are disappearing now. As the automation takes place. Actually it advantages U.S. manufacturing because China's advantage is cheap labor and as you get less and less labor in the manufacturing process the value of cheap labor goes away and we are in fact. And you wouldn't know it listening to Trump. We are in fact experiencing a manufacturing revival in the United States.

It's just that there are no jobs associated with it. It is an automated revival and nobody's going to say things so Trump is trying to do something that people have tried to do before in a different context. And I think it's not just Trump I think there's a lot of sympathetic reaction but ultimately it's hopeless. Second thing I'd like to emphasize this and this is I guess one of the lovely benefits of Trump is that he's going about it in a way that's almost certainly going to make no difference. Trying to stop bilateral trade when trade and sources of goods in a global environment can move from China to Vietnam to Thailand is never going to work. So as long as he keeps trying to do that don't worry about it

All right let me get to a point Joe is starting to make about politics and workers because what's actually going on in this is a serious point it's not just the United States. It's all over the world is while trade does benefit people on average that is economies are better off. That doesn't mean everybody individually is better off. If you look at two big forces for workers of globalization and technological change how do you think that. How do you rank those factors that are disrupting work and jobs and the politics that go with it.

Bruce Oh I think it's overwhelming with technological change. I think that we are in the middle of and you see it in Europe you will see it in China. You've seen it in Japan for 30 years an extraordinarily.

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