http://www.amconmag.com/blog/potemkin-america/
Ironically, when the Soviet Union collapsed in 1991, the consequence was to initiate ruin within the U.S. economy. “The end of history” caused Chinese communists and Indian socialists to join the winning side and to open their economies to First World capital. For the first time, American corporations had access to massive supplies of unemployed low-wage labor. The huge excess supply of labor in India and China meant that workers could be hired at wages far below their productivity, and the difference would flow in profits to executives, shareholders, and Wall Street. The offshoring of American manufacturing separated Americans’ incomes from the production of the goods and services that they consumed. The advent of the high speed Internet made it possible to offshore professional service jobs, such as software engineering, which drove down the returns to a college education and the employment prospects of graduates. In an offshored economy, the profits of corporations are not a measure of the economic welfare of the population.
What do you guys think of this bit?
I think that this effect is over-emphasized. Of All major countries from 1991 and on, the West had the most advanced economies in the world, and the highest productivity. Wouldn't a higher productivity imply that the greatest demand would then be for Western labor?
I'm highly skeptical of these types of claims because I've never seen any meaningful or even borderline-trustworthy firgures regarding such as "jobs gained in India and lost in the US due to outsourcing"
It's that zero sum thinking again.
The market economy is not a zero sum game, the pie isn't constant, it can be enlarged.
And I'm sure most Americans prefer office jobs to factory jobs anyway, who wouldn't? Conditions are better, there's little chance of losing limbs, and pay is usually higher.
Quick point: I think part of the problem has been that we've been creating money and racking up government debt at a highly increased rate since the 1980's. We exchange our money for hard goods. This has allowed a lopsided exchange where, instead of exchanging product for product, they're simply building stuff and giving it to us because they trust the value of the US dollar. Then, in turn, instead of buying American products, they give it back to us by buying more debt. WIth hard money this effect would be much more diminished, and with a lessining of barriers to entry and lowering the cost of employment, we would have never been in the position we are now.
Giant_Joe:http://www.amconmag.com/blog/potemkin-america/ Ironically, when the Soviet Union collapsed in 1991, the consequence was to initiate ruin within the U.S. economy. “The end of history” caused Chinese communists and Indian socialists to join the winning side and to open their economies to First World capital. For the first time, American corporations had access to massive supplies of unemployed low-wage labor. The huge excess supply of labor in India and China meant that workers could be hired at wages far below their productivity, and the difference would flow in profits to executives, shareholders, and Wall Street. The offshoring of American manufacturing separated Americans’ incomes from the production of the goods and services that they consumed. The advent of the high speed Internet made it possible to offshore professional service jobs, such as software engineering, which drove down the returns to a college education and the employment prospects of graduates. In an offshored economy, the profits of corporations are not a measure of the economic welfare of the population. What do you guys think of this bit? I think that this effect is over-emphasized. Of All major countries from 1991 and on, the West had the most advanced economies in the world, and the highest productivity. Wouldn't a higher productivity imply that the greatest demand would then be for Western labor? I'm highly skeptical of these types of claims because I've never seen any meaningful or even borderline-trustworthy firgures regarding such as "jobs gained in India and lost in the US due to outsourcing"
He's right, in the last twenty years the free world had like two billion people added to it. They were hidden behind a wall of socialism and now they can compete on equal terms. The law of supply and demand being what it is, that's going to drive down wages. But what practically everybody is wrong about is whether this is bad for Americans. Wages go down, but all the stuff those Indians and Chinese produce makes us richer, standards ofliving rise! The reason this leads to unemployment in the US is because unions and wage laws keep wages from adjusting. We are trying to cling to nominal wages of the past and by doing that we are pricing ourselves out of competitiveness.
We are trying to cling to nominal wages of the past and by doing that we are pricing ourselves out of competitiveness.
That's how I see it.
But when I tell people that if everyone got paid less in nominal terms, we would
1) Get higher employment
2) Drive more exports
3) Prices within the country would fall, as firms are able to be more competitive since they pay less in wages
No one ever, ever seems to understand #3.
Well, that's because whenever wages go down, it's because the employer is just taking that money and making himself richer? Didn't you know that? [/sarcasm]
I'm not sure what exactly he's implying here. Did this effect the US balance of trade? No. Did this effect US unemployment? No. Did this make the average American worse off? No. It increased the division of labor and made many vital goods and products much cheaper. This is a positive development.
One has to remember that the balance of trade is regulated by currency transactions. If an American is buying something from China, he has to trade his USD for Chinese RMB. The result is that the Chinese RMB appreciates in relation to USD, making US goods cheaper. The counterargument is that China has pegged their currency to ours, so every time the USD falls in value, they push the value of the RMB down as well. So what? That means that Chinese workers are subsidizing American consumers. That's a good thing for Americans.
Political Atheists Blog
Is this a post about Pokemon or did I misread the title? My favorite is Charmander.
Essentially the message is that when China and India opened up to foreign capital, foreign capital owners (global corporations) could obtain a much higher return on their capital than they could at home. Hence, capital moved East, while the West stagnated.
At the same time, governments in the West have increased the costs on capital, accelerating the trend. For corporate executives, however, the returns on the capital they managed increased anyway and this resulted in an increase in their wealth, while the "workers" saw their returns plummet and grew poor.
The fallacies of intellectual communism, a compilation - On the nature of power