But my larger point is whether it is OK as long as I steal from nameless individuals in China – and Pollution is a property violation, inflation steals value (the artificial interest and exchange rates), and just general contract violations (”we’ll take your farm for this factory but you will have a nice job in exchange”).

Mattel found that even if you theoretically own everything and the contracts say don’t use toxic paint, they get toxic paint.

I’m for free trade, and I’ve put it in words that Ron Paul simplified – you don’t need 10,000 pages for a free trade agreement. We both hate NAFTA and the WTO.

Reading “Free Lunch” by Johnston, any agreement is usually to protect the entrenched interests – and actually would prevent more businesses than would be created. But he makes the point several times that subsidy is not free trade. Having the taxpayers bear the cost of externalities is also not free trade.

This gets comic. Jim Puplava on his show complains that if Bankruptcy judges can modify mortgages contract terms that no one will every loan money again. (They won’t except at traditional 20% down with a pay stub which is a good thing). But he is worried about the CDS market and they are all contracts. And will go into bankruptcy. Where judges will modify contract terms.

I think people’s instincts are right – the highly structured experiments (also something like the Monty Hall paradox) don’t represent the real world in the sense that if someone is benefiting too much even if you benefit, there is usually an externality or something else making someone poorer. Sometimes it is possible for people to be lucky, but more often disparate results indicate cheating.

The corporations who take advantage of loosened labor and environmental regulations (and let’s be honest: all of the outsourcers do this) are buying their way out of the system.

They use their investment and management capabilities to buy their way out of the domestic regulatory system, thus, through wage arbitrage, obtaining increased profits, while evading rules that are still in effect “back home”.

This is a big part of contemporary inequality. The corporate elites are financially rewarded (with an ever increasing portion of the pie) for skirting/shirking/evading the rules that we, “back home”, still have to follow.

I think this is part of the collapse of confidence here at home. The law abiding workers of the USA are being screwed by their betters who are so rich and powerful that they don’t need to be law abiding. This is, in effect, in terms of American laws, a massive and unprecendented surge in law breaking by elites.

It is generally the case, in my view, that poor & corrupt societies have low quality elites, prone to predatory and corrupt practices. There is low investment in social capital or the common good because it would threaten their relative position.

I think under globalization our elites have degenerated in quality in a spectacular fashion. That is part of the debt boom, the cultural part. The widespread decline of the middle class is yet another.

Rodrick is completely out of his depth. What he is advocating is feel good explanation of the problems of globalization in the context of public perception.

There are a myriad of problems with globalization above and beyond regulatory arbitrage, that itself, in the end, is almost unenforceable.

But this is what we get from the Ivy League Oligarchy that has given us our last 3 presidents and soon to be a fourth.

It is quite refreshing to read someone stating the obvious (for the reality-based crowd, that is) in such an elegant manner.

Move over Grover!