That’s funny, because whenever I or anyone else of a liberal bent asks, "Why are wages so low, why can’t we wage raises all we ever hear is, “You can’t artificially raise wages, because others will just hire people at the real lower wage price and beat out those paying higher wages by selling goods at lower prices.” In tones that to may ears always sound kinda celebratory. That could just be me, but I honestly don’t think it is.
In fact, this is one of the repeated justifications for outsourcing, which is a classic example of the “race to the bottom.” You don’t think those firms are hiring Indian IT and customer service people because their wages are HIGHER do you? What effect do you think that has had on IT in the US?
If that is so, why has the middle class suffered so many years of stagnant real wage while productivity has gone up? Surely they are better workers so their wages should be higher, right? Corporations and rich shareholders are rolling in ever-increasing amounts of dough while the middle class’ earning power shrinks. Doesn’t SMELL like higher-skilled workers being rewarded. Smells like something else entirely. Something with the initials BS.
No, other businessmen are TOO STUPID to realize that protecting the buyng power of those whom then want to sell millions of widgets to is the way to make themselves rich. As individuals, the wealthy are capable of being intelligent and kind, as a class they’re a bunch of stupid, greedy pigs. It’s like fishermen, decent hard-working guys as individuals, but as a class they just keep fishing the species they depend on to extinction, or close to it.
But why don’t businesses just all conspire to only offer minimum wage? You’ve made the claim that without the government interfering, there would be a ‘race to the bottom’. If that were the case, wouldn’t all businesses just offer minimum wage, minimum safety standards, minimum vacation time, etc? Whe deviate from the government minimums at all?
Well, it’s your (uncited) claim that this happened, so just making up possible explanations is just a game. Maybe the people being interviewed were lying. Maybe there never was such an NPR story, or you don’t remember it accurately. Unless you give a cite, then it’s a worthless anecdote.
Maybe. And your point is… what? We should put tarrifs on goods from South American because you think peopel are more likely to break the laws there than they are in the US? Who does that help and why?
If this NPR story is the one EC meant, it seems to be about US farmers buying land in Brazil rather than Argentina, but I haven’t listened to the audio so I don’t know if it is the cite you’re looking for.
Well, our standard of living is government-protected in the sense that it’s largely the government that created our productivity-enhancing infrastructure in the first place (roads, schools, security, etc.). But I think what you mean is that it isn’t protective tariffs per se that accomplished that. (And I’d agree on the whole, although I’d be skeptical of claims that our nation would be just as wealthy, or even wealthier, if we’d never had any protective tariffs at all.)
“Frees up our labor force”, though, is a positive-sounding airy phrase that glosses over a lot of hardship for actual workers. Most labor force participants don’t welcome the prospect of being “freed up” by losing their jobs. The time they spend unemployed, and the lost investment of their training and experience in fields where they are now “non-competitive”, constitute serious setbacks for them, no matter how good it may be for “us” in abstract economic-theory terms.
If globalization is moving us into a new norm where jobs on average are less secure, where more industries are at risk for becoming “non-competitive”, and where displaced workers have to endure longer periods of unemployment and spend longer in re-tooling and re-training for a larger number of different careers, this is a negative effect that can’t just be waved away. It may be the best way economically to maximize return on capital investment, but it is not necessarily the best outcome from the point of view of the average employed person.
Okay, now I get you. But actually, I disagree that the average employed person isn’t receptive to arguments in favor of trading some wealth for stability. Sure, the average capitalist who makes money chiefly from maximizing return on capital investment, rather than by salaried employment in a particular industry, won’t be particularly interested in sacrificing any of his/her opportunities to gain wealth for the sake of improving workers’ job security. (And those “investor class” people, I would argue, have an influence on governmental economic policy disproportionate to their numbers.) But the workers who do make their living from salaried employment tend to feel quite differently.
That’s a pretty narrow way of looking at the infrastructure. How about adding overnight package delivery, cell phone networks, the internet, numerous private training companies, venture capitalism that ensures that money flows where it will do the most good, Wall Street, the myriad means of advertising products to consumers, high quality work clothing and tools, excellent management, access to various consultants to solve problems, the entrepreneur class and the financial system that gives them access to capital, machine shops in enough quantity that one-off parts can be manufactured locally, repair depots, a service class that can respond to emergency breakdowns, many, many trades that do high quality work…
I could go on all day. The infrastructure arose spontaneously when we allowed capital to flow, allowed people to keep their property and the fruits of their labor, and maximized the freedom of choice of individuals. It’s enormously complex, and it’s optimized to maximize the productive capacity of the citizenry. When you allow capitalism to flourish, this is what happens.
When none of these things exist, the simplest things can cost you enormously. A factory breakdown in Malaysia may stop production for days when a similar breakdown in the U.S. might stop production for a few minutes or hours. Graft and corruption in 3rd world countries means massive inefficiency. Second-rate suppliers and shoddy equipment are the norm. Crappy state-run power grids fail. There’s the ever-present risk of nationalization or damage due to civil strife.
That’s why wages in those countries are so low. People just aren’t as productive, so their labor is less valuable. They aren’t productive because the infrastructure won’t support a higher level of productivity, no matter how hard the people individually work.
The social needs of displaced workers is an entirely separate issue. If you want to argue for government job retraining, extended unemployment benefits, or other programs to ease worker transitions in a fluid economy, be my guest. Propping up a non-productive industry is about the worst way I can think of to ‘help’ workers. You just make them another class dependent on the government. Then you wind up with situations where the workforce is being paid not to work, but not being paid enough to make them happy. So you wind up with disgruntled people in dead-end jobs in a non-productive industry. Ask fishermen in the Maritimes. Or farmers in the midwest.
If you let the economy operate at peak efficiency, more wealth is generated. More wealth means a great ability to support dislocated people.
Put some numbers to it, be honest about the cost, and let’s see. For example, tell them that the milk tariff is going to drive up the cost of milk by 30 cents a gallon. Then see if they vote for it. Explain that the ‘protect the auto worker’ tariff means that high-quality foreign cars are going to cost $5,000 more, pricing them out of the reach of the lower middle class, who will then have to make due with crappy domestics who suddenly feel no need to improve their product.
Not when the cost of their basic goods goes through the roof. And I suspect you might find a bit of backlash from the guy making $12/hr when he finds out his car payment is going to be $40/mo more so that auto workers ca hang onto their $35/hr jobs.
The social benefits are not nearly as clear as some would think. Most tariffs have the effect of helping upper middle class workers in high-paying industries with big unions who can afford to buy politicians. The people hurt the most are the ones below them, who have their choices taken away and their costs pushed up. A good Liberal should deplore that, which is why some Liberals like Bill Clinton are free traders.
I should add that an increasingly high cost of doing business in ‘sweatshop’ countries is the PR hit a company takes when the economically-challenged march in protect against it, organize boycotts, and in general damage the company. This is a cost these companies bear, which drives the productivity of these foreign labor forces down even more. Thanks alot, anti-globalization geniuses. I’m sure the guy who gave up his $200/mo factory job for 16 hours a day of scrabbling in the dirt for $300/yr is ecstatic that you care so much.
This is an archived article from the NYT Sunday Magazine, so you have to pay if you want more than the abstract, but I highly recommend it for anyone wanting a fair look at globalization (pros and cons). The abstract makes it look like it’s mostly con, but that’s deceptive.
And if we were to encourage that nation to embrace a 40 hr work day and safety standards through a little economic persuasion, he’d still have a factory job and wouldn’t have to die a premature death, depriving his family of all income because he worked 16-20hrs a day in hazardous conditions.
I’d add to what SAM STONE has said…American cities and towns "work’ because of high-wage jobs. the whole system of expensive free public education, safe drinking water, uncorrupt police, is PREDFICATED upon high wage jobs. When imports cause the loss of these jobs, the tax burden of paying for liveable towns and cities goes away (unless you are a governmenr employee-they make at least 200% of the average wage). So now, people buy cheap imprts at WALMART-they realize an immediate benefit (short term), but when the local textile factory closes (due to the cheap textiles from China), the taxes that that factory paid are gone forever. meanwhile, the Chinese pile up surplus dollars-which they can use to modernize their industry.
Eventually, the USA will become a third-world economy, except for the rich and the government elite. These people are enjoying the best of all possible worlds, and they can’t understand why the peons aren’t happy with their minimum-wage jobs!
Well, I’m just going by what you emphasized as important when you brought up the infrastructure issue in the first place back in post#35:
Most of those factors—political instability, possibility of nationalization, workforce education and health levels, electricity networks, levels of regulation—are either totally or heavily government-dependent. Yes, I agree that private industries contribute a lot to infrastructure as well, but I don’t think you’ve said anything that contradicts my claim that infrastructure is largely government-dependent.
No, I can’t agree that it is. Like it or not, it’s the nature of human beings that the work they do, the place where they do it, the people they do it with, the things they learn and the skills they use while doing it, etc., become integral parts of their lives and identities. A job is a powerful economic and social factor in a worker’s life.
Investing one’s time and labor isn’t like investing one’s money, which usually has no direct impact on the investor except in terms of financial profit or loss. It’s the nature of capital that it’s much more mobile and transferable, and people feel much less personal connection to what it’s doing.
Radical pro-globalization positions are based on the premise of treating jobs like capital: i.e., as assets where rapid mobility is much more important than long-term stability, and easy interchangeability among different uses and contexts is assumed. This is not an accurate representation of what jobs are like. (Not good jobs, at least: the jobs that do rely on rapid mobility and transferability, with minimum training and skills requirements, are generally considered the most undesirable kind of jobs.)
Now, I think it’s well worth thinking about how we might try to create a society where meaningful work does actually integrate well with a minimally-regulated capitalist (what you call “fluid”) economy, with high levels of career instability and job insecurity. But I can’t agree that we should just singlemindedly pursue the fluid economy while ignoring its impact on work and workers by pretending that that’s an “entirely separate issue”.
ISTM that in fact you’re contradicting what Sam Stone has said. Sam argues that increased trade liberalization and globalization will ultimately have an overwhelmingly positive net impact on our economy and society as a whole. You seem to be arguing that it will turn the US into a “third world economy”, where wealthy capitalists and government elites are prosperous but everyone else is stuck in that “race to the bottom”. Unless that’s a scenario that Sam would regard as overwhelmingly positive, you and he aren’t in agreement.
Libertarianism? Were we talking about libertarianism? AFAICT this is a discussion about whether government should get out of trade regulation and job protection, not whether government should get out of all other governmental functions except law enforcement and national defense, which ISTM is what libertarianism advocates.
Heck, Sam Stone is even on record as saying that an expanded government role for things like job retraining and unemployment benefits would not conflict with his anti-tariff position in this debate, which sounds to me pretty far removed from hard-core libertarianism.
No, we’re meddling with their internal economics. Chinese banks are withholding credit, etc., to make South Korea behave in a more politically agreeable way. It’s their politics we may be concerned with, but it’s their economy, such as it is, we’re meddling with.
Because they’d get busted for such collusion? So far as I know, the only place where businesses are allowed to control wages like that is the Marianas Island. And I don’t think even YOU approve of that situation. Though you’re welcome to defend it if you like.
I heard it in the last few weeks, and the story is dated January 2006, so it doesn’t seem likely unless they were re-broadcasting an archived story as they sometimes do. I can’t get my computer to open it right now to verify, I’ll try again with different computer later.
No. Witholding credit is not medling in it’s internal economic policies. We’re not making any demands on NK that it change its economic system. We’re not telling it to raise the MW or set up better working conditions or allow the private ownership of propoerty or anything at all.
Libertarianism? Were we talking about libertarianism? AFAICT this is a discussion about whether government should get out of trade regulation and job protection, not whether government should get out of all other governmental functions except law enforcement and national defense, which ISTM is what libertarianism advocates.