What, today?!
Of course, your description of what is happening is a complete fantasy, but feel free to believe, against all empirical evidence, that free trade actually makes us poorer.
Most Americans do not belong to unions. That is especially true of highly skilled, good paying jobs.
It’s not sacred, it’s a simple fact. There is nothing magical about it.
And, of course, you forget to mention that some of the people most opposed to child labor reforms were parents who depended on these wages. I’m not defending child labor, but to simply chalk up its existence to “exploitation” by businesses is historically ignorant.
That’s also a historically ignorant statement. A free market does improve conditions in third world countries. Look at Eastern Europe, for example. Allowing much more freedom in the market has dramatically increased their standard of living and other conditions. A variety of Asian countries, such as Taiwan and South Korea, also contradict your claims.
Read an economics book.
WRT to tariffs or minimum wage. I know there’s some contrary evidence to the assumption that raising the MW always costs jobs, so I can’t believe economists have any general consensus on that point.
This issue is a problem for the democrats. On the one hand, they claim to be a “friend of the working man”-so they should be opposed to cheap imports which threaten American jobs. On the other hand, all of them (including ted Kennedy0 have taken huge amounts of cash from WALMART, TOYOTA, NISSAN, and the CHINESE-AMERICAN CHAMBER of Commerce. These organizations want access (for cheap imports) into the American market. As the old story goes:
-a English judger opened court, and addressed his first case:
“Gentlemen, I fing a draft from the plaintiff in the amount of 100 pounds, and one from the plaintiff for 150 pounds. I propose to return 50 pounds to the palintiff, and decide this case STRICTLY on its merits!” 
And, of course, this also means they would be in favor of forcing the “working man” to pay more for everyday products and services. And also in favor of reducing opportunities for employment in industries that depend on imports.
There IS no ‘global race to the bottom’. People get paid based on their productivity. If Americans are more productive than Malaysians, they will make more money than Malaysians, even if all markets are completely global and trade is completely unfettered.
Now, it’s true that some industries that have been protected by tariffs or other obstacles to trade may see a decline in wages when the barriers that protected them are removed. But in a macro sense, this is a good thing. If Americans are inefficient at making something, it’s better for America if that work is outsourced and the American labor can divert to things it is better at. It’s called the law of comparative advantage.
Capitalism means change. Industries rise, and industries die. Jobs become obsolete. Competition forces some people out of business. Ultimately, populism is about keeping the status quo and protecting people from the stresses and dislocations of a healthy marketplace. Unfortunately, that comes with a cost - a very high cost.
If you want to claim that you support trade tariffs because you’re willing to trade off wealth for stability, that’s at least a defensible argument. Lots of insular societies have made that choice, and their people have chosen to live poorer, yet more stable lives.
Unfortunately, that argument doesn’t sell, so trade protectionists usually attempt to wrap their policies in economic arguments that are borne of ignorance or deception. Or they attempt to tie trade tariffs to social concerns like the environment, ‘sweatshops’, etc. Most of these arguments fly in the face of reality or are simply disingenuous. For example, the people that fight against ‘sweat shops’ don’t really have the welfare of the workers at heart, because they don’t seem to care if the factories close and those people have to back to 16 hour a day subsistence farming or starvation. So long as the evil factory closes.
Heard a report on NPR the other day that might shed some light on the topic. It was about American farmers – specifically, up in Idaho and other Great Plains states – who were moving down to South America to farm because they’d discovered that land was cheap on the high plains in Argentina and so forth and that it had the same climate and soil conditions as Idaho, and could be farmed the same way. So they have. Quite profitably and successfully, too.
The local workers love the American farmers. Why? Because the American farmers do something the local wealthy farmers don’t – the Americans actually PAY them for their labors. The local wealthy farmers just PROMISE to pay them for their work.
Well, from the usual capitalist viewpoint we can see that these American farmers are a bunch of fools. They’re paying more than the market rate for their labor! What idiots!
Of course, I don’t think they’re idiots. I think the Third World owners who won’t pay their workers at all are idiots. Might have a local market for their produce if the workers had two nickels to rub together.
But I also think the basic price the Third World operates on is 'just enough food to keep you and your family, if any, alive." Because the guys who run things like it that way. One of the reasons America is richer than other countries is that guys like Henry Ford figured out that they’d make more money if their workers, and other people’s workers, could afford to buy their products.
Don’t think that lesson has sunk in worldwide yet. Don’t think it’s sunk in at all.
Obviously, some of you think it’s just ‘exploitation’ and that if we can force those factories to provide better conditions, everything will be cool. But that’s not reality. Reality is that those people make less money because that’s what they are worth. An overseas factory has many liabilities that a domestic one doesn’t have - the infrastructure generally isn’t as good, there may be political instability, the risk of natonalization, transportation costs of finsihed goods back to the market where they are sold, etc. Management costs are higher, because the company has to fly management back and forth, and pay them more to relocate in a foreign country.
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The work force may not be as educated, or as healthy. The power grid may be unstable. There may be all kinds of local laws that hurt productivity.
So the only reason to relocate a factory to these countries is for the cheap labor. If those workers made what American workers make, there would be absolutely no reason to build a factory there.
What will protect the wages of those workers is competition and investment. Americans make more money not because they are smarter, or luckier, or more powerful. Americans make lots of money because each worker leverages a huge capital investment that makes him or her more productive. Not just the machinery in the plant, but the infrastructure all around it. Cell phone networks, good roads, an excellent shipping system, good education, local access to markets, a large pool of managerial types to draw from, etc.
If you try to legislate a better standard of living in a poor country that doesn’t have the productivity to sustain it, all you’ll create is a flight of capital, and you’ll cut off the first rung of the ladder to true prosperity. If, however, you let the market work, then over time as factories move in and invest in infrastructure and start competing with each other, wages will begin to rise.
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No, the usual capitalist viewpoint celebrates this. It’s the way markets work. If you want to attract labor, you must have something that makes you different from other employers. In this case, it is higher wages. I’ll bet the Americans get better, more loyal workers and will produce better products. They are being smart businessment.
Companies pay high wages in order to attract a better class of labor. Certain skills and qualities are quite attractive to employers, and they will pay wages that attract these skills and qualities. Workers have an incentive to improve their skills and to cultivate work-friendly qualities. Higher wages also attract a more stable workforce, cutting down on turnover.
You make it seem like businessmen just decide wages based on their whim. Because Henry Ford wanted his workers to be able to afford to buy things, he raised wages. Other businessmen are evil and don’t want their workers to buy anything, so they keep wages low. Sorry, but that’s not how it works.
To all of you who thing that unfettered capitalism leads to a ‘race to the bottom’ in worker’s wages, pleasse answer this one question:
How come only 2% of the over-25 workforce in the U.S. makes minimum wage? If it’s government protection that keeps wages high, why isn’t everyone making minimum wage?
For those of you who think it’s organized labor that keeps wages high, please explain why only a small percentage of non-union workers make minimum wage?
So, these workers kept coming back year after year after year and never made a cent (or peso)? Well, I’ve got this bridge just north of where I live that you might be interested in.
Aregentina, like most countries, has a minimum wage. If those workers were not paid, then the farmers were in violation of the law.
How is that not a “race to the bottom”, though? I understand your theoretical argument that in the long run, once global competition has produced more equal levels of prosperity and all the comparative advantages are being efficiently exploited, the average net effect estimated over all the world’s workers will be positive. But in the meantime—and it looks as though it could be quite a long meantime—if global competition with poorer countries is causing declining wages in industries in richer countries, then ISTM that those industries are in a “global race to the bottom”. The hope and expectation is merely that the race will stop before the bottom is actually reached.
Wait a second. If you claim the argument for trading wealth for stability “doesn’t sell”, then how can you simultaneously claim that “lots of societies have made that choice”? According to you, the argument does sell, in “lots of societies”. (Which societies are you talking about, by the way?)
I don’t think anybody thinks that truly “unfettered”, i.e., ideal, capitalism produces a “race to the bottom”. If we really had ideally unfettered capitalism with perfectly competitive markets, then competition wouldn’t depress wages to any significant extent: workers whose market value had dropped below what they considered an acceptable level due to increased competition would simply switch effortlessly over to a field with less labor competition, the labor oversupply in their previous field would diminish, the downward pressure on wages would decrease, and the whole elaborate economic minuet would proceed on its merry way.
The trouble is that we don’t have ideal “unfettered” competitive markets. Real-life markets get “de-fettered” only in partial and asymmetric ways. For example, when the building construction labor market is “de-fettered” by increasing the labor pool to include lots of illegal immigrants, wages for construction workers decrease.
That’s not what I’m saying at all. You don’t need everyone to be equally productive before everyone benefits. In a totally unfettered market, it’s still certain that an American will make more producing the same goods as will someone from Malaysia. As I said, Americans as a whole get paid more not because they are protected from low cost labor, but because their effort is simply more valuable.
If you were a chair manufacturer in a totally free market, and had a choice between a guy who can make 1 chair an hour for $5/hr, and another guy who wants $10/hr, but he can make three chairs in that hour, which one would you hire?
To bring the analogy closer to home, let’s say that the first person will make the same number of chairs, but you’ll have to ship the raw materials halfway around the world to him, and ship the finished chairs halfway back. This costs $3/chair. Then, you have to factor in the times when the factory will be shut down because the power grid is unstable. And you’ll have to factor in the risk that the country’s government will change and they’ll nationalize your factory and take it from you. Or that a war might break out and destroy your factory. Now how much is that other worker worth to you?
This is the nature of the global market. People are paid different wages because people are worth differing amounts of money. In North America, we have expended untold trillions of dollars building a modern infrastructure that makes us all more productive. That’s why we have a higher standard of living. Not because the government protects us.
Now, in specific industries, we truly are non-competitive. Some of those jobs will go elsewhere. But this is a good thing for us, because it lowers the cost of those goods, and frees up our labor force to do things that we have a comparative advantage at.
Comparative advantage does not require an even playing field. It just means that we’re all better off if we all focus on the things we do best relative to everyone else. Tariffs prevent that.
It doesn’t sell to US. The societies I’m thinking of are people like the Hutterites, who cut themselves off from society to protect their status quo lifestyle. But even they are starting to change.
Illegal immigrants are a different matter. By entering the US, they have the same infrastructure advantage as American workers. But they don’t have to pay the taxes required to maintain it, and of course didn’t contribute a lifetime of taxes to help build it. In addition, they work outside the rules, which means the employers don’t have to carry the paperwork burden, contribute their share of social security withholdings, etc. This is a completely different issue.
No, really. Cite?
Partly because states are enacting the laws on their own.
Also when a person gets a 25 cent raise they are not at min. wage but their std of living has not changed. It seta a bottom line from whence we slowly move in time. Companies that actually pay min wage are not usually generous with raises. When you start at 5.25 ,when do you actually escape poverty. Are you suggesting 5.50 is different.That 2 % is a misleading statistic.
No, really, read an economics text. This isn’t some new idea that was just dreamed up in the last few years. There isn’t going to be an on-line cite.
Countries meddle in each other’s economic policies all the time, often for political reasons. What exactly do you think the sanctions now being used against North Korea are, if not economic meddling for political purposes?
We’re not meddling with the internal economic poilcies of NK. We’re “meddling” with their external, foreign relations policy.
Could be they just got fed, with a new crop of workers coming in every year, or they were paid a penny for every dollar they were promised. The report did say the workers preferred the North American farmers because the North American farmers paid them, period.
I don’t think breaking the law is a really big deal in a lot of South American states, if you have money and the people you victimize don’t. Prolly true of the Third World in general, with some exception of course.
Because the minimum wage is so low that in most markets, it’s well below the living wage. In Atlanta, the living wage has been estimated at $10.5o per hour cite.. The Federal minimum wage is $5.15 an hour.cite.
The only people who can afford to work at minimum wage are people who have their expenses covered in other ways (frex, retirees with Social Security income and illegal immigrants who live 16 to a two-bedroom apartment) and even THEY have a hard time of it.
So the answer is, only 2% of the over-25 workforce lives on minimum wage because the feds have set the minimum wage so low that it’s not a realistic wage in any sense at all.