View Full Version : OECD says few jobs lost to free trade.
Swamp Fox
06-29-2005, 11:03 AM
I've been saying that for years. Mind you, just as environmentalists have their agenda when they talk of global warming, so too do economists when they talk of free trade. And both groups, of course, don't like each other. (http://www.iht.com/articles/2005/06/28/business/jobs.php)
That's not quite the whole story (http://www.oecd.org/dataoecd/32/33/35051183.pdf) Stanley. The people whose jobs are outsourced find themselves going back to work for much less money than they were making before the 'realignment' process.
Swamp Fox
06-29-2005, 12:10 PM
Agreed. When the labor supply expands, the price of labor will go down - that's what happened in the 1980's, and it is happening now. But the 1980's were followed by the boom of the 1990's, which saw lots of millionaires and affluent computer professionals make tons of money.
The same process is at work here. Even as jobs go to low-wage China, and those same computer professionals see their average incomes drop, the wages in China are rising, and many companies in China and India are now hiring in North America.
The point is Stan, globalization is not necessarily a good thing for established economies, especially when it's being financed by huge trade deficits in those economies. Sure, global businesses make out, but it's the workers who are getting phuqued in those economies. They are, after all, the backbone of those economies. A global payscale for everyone, substantially beneath the payscales in the previously established countries isn't all that good a thing, unless you happen to be Chinese or Indian.
Swamp Fox
06-30-2005, 03:55 AM
A global payscale for everyone, substantially beneath the payscales in the previously established countries isn't all that good a thing, unless you happen to be Chinese or Indian.
Unless you're Chinese or Indian, eh? Well, as a matter of fact ...
Actually, wages dropping can lead to the wealth effect - under normal conditions, if wages and prices drop, then the benefits of lower prices outweigh the cost of lower wages. There can be exceptions to the rule, but that's the rule, if I'm correct.