China Beats out Canada as top Exporter to US

[August1991]

Any notion of "class" must require some semblance of a cartel. What's the point of belonging to a particular class if the other class members compete with you?

That's bogus. Interclass competition occurs even in societies with rigidly defined and strictly adhered to class or caste systems.Common interests do not rule out competition, be it for economic superiority or social status.

In the United States, there are many, many examples where American business people undercut competitors, bully opponents and try to take the money and run. Think world.com and Enron. The idea that American capitalists would form a cartel to exploit workers is laughable. American capitalists can barely respect honest deals let alone a deal that would require collective discipline.

Strawman argument.

<{POST_SNAPBACK}>

Why is it bogus? And don't you mean intraclass competition? My point is that for exploitation to occur, people of a certain social class would have to stick together and act as a cartel in dealings with people outside their class.

Strwaman? On the contrary, I think the issue is germane. American "capitalists" are notorious cheats when it comes to cartels.

I think the overall point here is that the US is a porous society. Family fortunes rise and fall. Most Americans couldn't give a damn what your father did for a living. ("I'm a redneck woman, I ain't no high class broad... " )

[Toro]

It is diplacing American manufacturers and suppliers, not Canadian and, therefore is cause for alarm in the US as it is in Canada.

Why is this bad? The economy continues to move more towards a knowledge-based economy, and will continue to do so while manufacturing continues to head off shore. There's nothing magical about manufacturing. A couple hundred years ago, people thought manufacturing was bad, as it supposedly would threaten a way of life. It was better, the critics argued, to remain in an agarian economy. Instead, the application of high-end technology moved away from the farm into the factories, which increased the standard of living. This is occurring again today as higher-skilled labour moves towards information and healthcare technology and the ancillary services they provide while manufacturing moves offshore to lower-tech jusisdictions.

[Yaro]

Social mobility is one of the lowest in the first world. The notion that the US isn't a class-based society is utterly ludicrous, the odds of someone who is poor becoming wealthy in the US is miniscule.

LSE Study

Why is this bad? The economy continues to move more towards a knowledge-based economy, and will continue to do so while manufacturing continues to head off shore. There's nothing magical about manufacturing. A couple hundred years ago, people thought manufacturing was bad, as it supposedly would threaten a way of life. It was better, the critics argued, to remain in an agarian economy. Instead, the application of high-end technology moved away from the farm into the factories, which increased the standard of living. This is occurring again today as higher-skilled labour moves towards information and healthcare technology and the ancillary services they provide while manufacturing moves offshore to lower-tech jusisdictions.

No it doesn't, this is the pipe dream that some keep trying to sell but the notion that somehow north America will keep the most highly mobile job sets (which are the highest paying ones) while maintaining a higher standard of living is ridiculous with no logical basis. Jobs will move to where they will be preformed most cheaply, that is India/Russia/China.

It always makes me laugh when I hear this idea that somehow China and India will be more then happy to keep supplying North America with a steady flow of engineers instead of employing them at home. What possible reason would someone educated in one of the worlds top technical schools (many of which are in those 3 countries) have for wanting to come to an increasingly economically depressed north America? It makes absolutely no sense.

Something else that runs counter to this argument is the rather farcical notion that the inefficiency of this system would be supported by corporations with absolutely no reason to support it in a free trade environment.

I think the overall point here is that the US is a porous society. Family fortunes rise and fall. Most Americans couldn't give a damn what your father did for a living. ("I'm a redneck woman, I ain't no high class broad... " )

Only someone who has never moved in the circles that would care (and they very much do care) would say this. Do you know what the social definition of being "society class" is? Its not having done manual labour for 3 generations. That "society" has grown substantially over the last 25 years.

In addition family fortunes almost never fall, that’s part of the problem a bullet proof aristocracy.

When you consider that China has about 1/3 of the world's population, virtually all of whom are willing to work for a fraction of what we would consider to be acceptable pay, and that they are finally opening their borders to 2-way trade on a large scale, it's only natural that they're going to become THE major player in world economics over the next few decades.

What's happening right now is small potatoes compared to what's coming.

Any sensible nation will be trying to anticipate what China is going to need to import over the coming decades, and start gearing up in that direction.

Whoever does so first will get ludicrously wealthy from trade with China.

This is the thing, how exactly are people going to become ludicrously wealthy trading with China? What exactly is China going to want that they can't make cheaper locally?

It’s very painful to watch sometimes when people start talking about the nature of free trade and its advantages. Free trade has 2 advantages:

1) Logistical optimization, I could go into a long-winded explanation about why and how free trade allows a more efficient distribution model but that’s rather pointless.

2) Population Distribution Optimization, in short people migrating towards natural resources which in the modern world is the only source of actual competitive advantage.

At the end of the day the only way for society to actually become wealthier is to make efficiency gains. Free trade in the current world environment isn't about efficiency as the current nation vs. nation competition of subsidizations insure that less wealth then ever will be generated but it will be more concentrated.

This has of course all be obfuscated by the fact that huge trade deficits and massive investment in china has ensured that a significant portion of North Americans have benefited (investors) on the backs of the actual working population. Simply put international free trade with no agreement on taxation/social practices has thrown the economy out of wake (SROI vs. SROL).

Of course anyone with any vision knows that this can't go on forever since logistical costs are sky rocketing the kind of overseas trade that we do know with China will become even less practical even more quickly so once again domestic manufacturing will have to take over to pick up all of that slack and the decade of pain we went through in the 90s to adjust our economy to the current model will once again have to undergo a major shift back to where we were 20 years ago. Of course by then we will heavily indebted to China with no real way of paying off that debt but to export goods at extraordinarily low prices or continue to pay the debt servicing fees.

This of course ignores the very significant fact that both domestic individual debt has never been so high and that the US's national debt and growing social debt continue to fuel what will most assuredly be quite the collapse.

Regardless this article is clearly the work of an economics retard, China is a country of 1.5 billion people whose social structure has allowed them to overtake a country of 32 million in trade despite our location. Who really cares? The US isn't China's biggest trading partner the EU is followed by Japan. If we are worried about our trade circumstances it should be our reletive lack of trade with the EU and our trade deficit with China.

[Black Dog]

Why is it bogus? And don't you mean intraclass competition? My point is that for exploitation to occur, people of a certain social class would have to stick together and act as a cartel in dealings with people outside their class.

You're presenting a false dilemna: either they all stick together or they all fight among themselves. However, cooperation does not require the kind of formal organization of which you speak, nor does cooperation (even in a loose sense) preempt competition.

Strwaman? On the contrary, I think the issue is germane. American "capitalists" are notorious cheats when it comes to cartels

Individual dealings between class equals can be quite savage, I'll grant. But even these intraclass rivaliries can be put aside in the face of a common threat (excuse the pun). It's not either/or.

I think the overall point here is that the US is a porous society. Family fortunes rise and fall. Most Americans couldn't give a damn what your father did for a living.

Right. Tell that one in Kennebunkport.

[Guest eureka]

Excellent post, Yaro. I would have said something like that but, without the economics background, I could not have expressed it that well.

I would add that not so many are getting wealthy from China: some investors and corporations have been burned and more are going to be burnt for rhe reasons you have given. In my thinking, India would be a better bet for investors with its tradition of democracy and the Rule of Law. China will take and not return benefits for the foreseeable future.

I fear that you are only too right in that North America is in decline. Unless there is an early change in trade and production practises, it will not be long before we lag China, India, and possibly Brazil. It is strange to hear the "knowledge economy" constantly touted as North America's future. There has always been a manufacturing base in any economy. We cannot survive without it: or at least only a small nation could. When we move offshore, we shift the production of wealth too.

[August1991]

From LSE study above:

Among economists, intergenerational mobility is most commonly measured by an intergenerational elasticity (β) measuring the strength of the statistical association between parent and child outcomes. A higher elasticity indicates a stronger impact of parental outcomes on children’s economic success, meaning higher intergenerational inequality and less intergenerational mobility. If β equals 1 this corresponds to complete intergenerational immobility. If β equals 0, and there is no relationship between incomes across generations, this corresponds to complete mobility. On this basis our research reports an intergenerational elasticity of son’s earnings with respect to family income of .29 in Britain for those born in 1970.

0.29 doesn't sound too bad. Canada is around 0.10. I suspect data sets explain much differences - mobility is notoriously hard to pin down, and I don't even know if you would want to.

In any case, this is all irrelevant and misses the point. Would you want to live in a perfectly equal society? Would you want to live in a society where your children had no better chance than anyone else's kids? (And since when is educational attainment or income the be all and end all of "success" in life?)

As to the other points about trade and China, Yaro's post demonstrates an egregious example of zero-sum thinking. Even Belinda Stronach has a better understanding of the benefits of trade.

[August1991]

Why is it bogus? And don't you mean intraclass competition? My point is that for exploitation to occur, people of a certain social class would have to stick together and act as a cartel in dealings with people outside their class.

You're presenting a false dilemna: either they all stick together or they all fight among themselves. However, cooperation does not require the kind of formal organization of which you speak, nor does cooperation (even in a loose sense) preempt competition.

<{POST_SNAPBACK}>

False dilemma? Cartels tend to be like pregnant women. They either are, or they aren't.

Strwaman? On the contrary, I think the issue is germane. American "capitalists" are notorious cheats when it comes to cartels

Individual dealings between class equals can be quite savage, I'll grant. But even these intraclass rivaliries can be put aside in the face of a common threat (excuse the pun). It's not either/or.

<{POST_SNAPBACK}>

You're avoiding my point. Solidarity is a constant refain in union circles. Well, you know what? American capitalists behave like scabs, and they have absolutely no sense of solidarity. They'll happily undercut their competitors to make a buck.

BD, are you suggesting these capitalists drop their competitive instincts when it comes to labour negotiations and suddenly, all the capitalists form a front of solidarity? Why would they do this with workers when they don't do it with consumers? (Hint: Think Wal-Mart.)

I think the overall point here is that the US is a porous society. Family fortunes rise and fall. Most Americans couldn't give a damn what your father did for a living.

Right. Tell that one in Kennebunkport.

<{POST_SNAPBACK}>

Look, BD, there have been 43 US presidents of which two father/son pairs. All 43 were male WASPs except for one Catholic male.

Among major political parties, there has been one woman VP candidate, one Catholic VP candidate and one Jewish VP candidate. All three were unsuccessful.

Porous is as porous is. But one would be hard-pressed to find more humble origins than Reagan, Nixon, Clinton, Johnson, Truman.

Anyway, Washington is Hollywood for ugly people. No one serious in the States goes into politics. They go into business.

Kennebunkport - sheesh.

----

BD, there are six zillion problems in the world not the least of which are environmental destruction and a truly weird distribution of chances in life. (Born black in Kampala? Go there. Born white in Westchester? Go over there.)

To solve these problems, the theories and ideas of Karl Marx are absolutely useless. It is the equivalent of using world maps drawn before Columbus to plan a round-the-world cruise. Marxism and class-theory and socialism and so on is flat earth.

[Yaro]

In any case, this is all irrelevant and misses the point. Would you want to live in a perfectly equal society? Would you want to live in a society where your children had no better chance than anyone else's kids? (And since when is educational attainment or income the be all and end all of "success" in life?)

Are you seriously asking me whether I want to live in a fair and just society? Because that’s what you're saying you are against, on a scale with heredity at one end and merit at the other, yes I am WAY over on the merit side.

As to the other points about trade and China, Yaro's post demonstrates an egregious example of zero-sum thinking. Even Belinda Stronach has a better understanding of the benefits of trade.

Well I would love to here the benefits of trade, I am fairly well educated on the subject and have never actually heard someone try to make an efficiency argument for the benefits of trade outside what I have outlined (which was by the way the classical argument of free trade).

I also never argued that free trade was in and of itself a bad thing, but free trade without a common agreement on social structure and taxation doesn't lead to efficiency which is the only way to increase social wealth or NEW, as opposed the oft silly GDP statistic.

To solve these problems, the theories and ideas of Karl Marx are absolutely useless. It is the equivalent of using world maps drawn before Columbus to plan a round-the-world cruise. Marxism and class-theory and socialism and so on is flat earth.

Why do people lump socialism with communism all the time, every country on earth that has worked for more then a decade without total collapse has been socialist (colloquially speaking). The US/Canada/Europe/Japan/Australia/China/Russia/India every single country of import on earth is socialist, clearly its not that ineffective.

[Canuck E Stan]

Canadian Foreign Aid to China is Being Handed Over to Brutal Mugabe Regime in Zimbabwe

“Over the past decade, the Liberal government has given one billion dollars to China in foreign aid and will give another $50 million this year as the communists continue to prop up brutal dictators like Mugabe in Zimbabwe,” said Guergis. “Every dollar that Canada gives to China, no matter how well intended, is a dollar that the Chinese government can use to prop up other corrupt and abusive regimes like Zimbabwe.”

I know,I know this a page from conservative propaganda.

But there is a question in here about why Canada should be contributing aid to China, who is growing in leaps and bound in trade and I believe could easily do without our $50 million bucks.

A bunch of money that could go to some African nation that could use it. Unlike the African nation of Zimbabwe that Chinese give aid to.

Once again the Canadian media didn"t have the nuggets to ask the right questions.No one asked Martin about China's involvement with Mugabe in Zimbabwe, when Martin was speaking to the Chinese leader about human rights abuses.

It was just the media giving Martin another photo op.

So the question is why are we giving aid to China?

[Black Dog]

False dilemma? Cartels tend to be like pregnant women. They either are, or they aren't.

You're the one who brought cartels into it. I'm saying cooperation can exist without cartels.

You're avoiding my point. Solidarity is a constant refain in union circles. Well, you know what? American capitalists behave like scabs, and they have absolutely no sense of solidarity. They'll happily undercut their competitors to make a buck.

Yeah: and what does this have to do with he notion of class? Really, you're mising the point. Class does not necessarily exist only in organized structures of castes and cartels.

BD, are you suggesting these capitalists drop their competitive instincts when it comes to labour negotiations and suddenly, all the capitalists form a front of solidarity? Why would they do this with workers when they don't do it with consumers? (Hint: Think Wal-Mart.)

No. Capialist "solidarity" derives from self-interest: actions taken in one's own interest can benefit other members of the same class, even if those members are in competition.

Look, BD, there have been 43 US presidents of which two father/son pairs. All 43 were male WASPs except for one Catholic male.

Among major political parties, there has been one woman VP candidate, one Catholic VP candidate and one Jewish VP candidate. All three were unsuccessful.

Porous is as porous is. But one would be hard-pressed to find more humble origins than Reagan, Nixon, Clinton, Johnson, Truman.

Anyway, Washington is Hollywood for ugly people. No one serious in the States goes into politics. They go into business.

Kennebunkport - sheesh.

----

BD, there are six zillion problems in the world not the least of which are environmental destruction and a truly weird distribution of chances in life. (Born black in Kampala? Go there. Born white in Westchester? Go over there.)

To solve these problems, the theories and ideas of Karl Marx are absolutely useless. It is the equivalent of using world maps drawn before Columbus to plan a round-the-world cruise. Marxism and class-theory and socialism and so on is flat earth.

Blah blah blah blah. Blah blah blah blah.

[Toro]

No it doesn't, this is the pipe dream that some keep trying to sell but the notion that somehow north America will keep the most highly mobile job sets (which are the highest paying ones) while maintaining a higher standard of living is ridiculous with no logical basis. Jobs will move to where they will be preformed most cheaply, that is India/Russia/China.

It always makes me laugh when I hear this idea that somehow China and India will be more then happy to keep supplying North America with a steady flow of engineers instead of employing them at home. What possible reason would someone educated in one of the worlds top technical schools (many of which are in those 3 countries) have for wanting to come to an increasingly economically depressed north America? It makes absolutely no sense.

You miss the point. Wages have, and probably always will, be determined by productivity. As the difference in productivity closes between the first and the third world - which is what we want, right? I mean we don't want large swaths of people living in abject poverty, do we? - the wage differential will close. And as the wage differential closes, more engineers will stay in China and India (as if those are the only places that produce engineers.) In fact, the wage differential has closed. From 1980 to 2000, real wages in China rose 440% compared to 60% in the United States. Wages in China rose from 3% of the American to 12% of the American wage during that time. Yet, during that time period, American wages rose. Its simply a false notion that economic growth is a zero sum game. Also, jobs do not move to where they are done cheapest. Rather, capital goes to where returns are highest. And the biggest capital flows over the past decade have been into, first information technology in the United States, then into biotechnology in the United States, where the highest wages in the world are paid.

This is the thing, how exactly are people going to become ludicrously wealthy trading with China? What exactly is China going to want that they can't make cheaper locally?

They used to say the same thing about Japan.

[Toro]

You're the one who brought cartels into it. I'm saying cooperation can exist without cartels.

Of course they can. Virtually all industries are not cartels.

This is such an odd argument. I have to believe the people who make this argument do not have actual experience in business.

[Toro]

Well I would love to here the benefits of trade, I am fairly well educated on the subject and have never actually heard someone try to make an efficiency argument for the benefits of trade outside what I have outlined (which was by the way the classical argument of free trade).

I also never argued that free trade was in and of itself a bad thing, but free trade without a common agreement on social structure and taxation doesn't lead to efficiency which is the only way to increase social wealth or NEW, as opposed the oft silly GDP statistic.

Well, I'm fairly well educated on the subject of trade as well and I will make the standard classical argument for trade. But since you already know that, why don't you make the argument that a common social and taxation structure is the only way that leads to efficiency. That should be interesting considering A.) such a structure has never existed, and B.) essentially establishes a monopoly across different jurisdictions - and we all know how efficient monopolies are! Essentially, what you are saying is that trade is only efficient within a common political structure. That is almost certainly wrong.

[Riverwind]

They used to say the same thing about Japan.

Toro, I keep reminding myself of that whenever I read doomsday stories in the media about China or India. However, there are two trends that worry me:

1) There is a huge amount of 'untapped' labour in places like India and China - this pool is 25x the size of Japan and larger than the US and Europe combined. This pool of labour will drive down the wages of almost every job category because the supply is so much greater than the demand. The only job categories which are not potentially affected are jobs that must be done locally (i.e. construction) or jobs which are protected (i.e. upper level managers will never outsource their own positions even if it makes good business sense to do so).

2) Technology transfer happens so fast now that it is not possible to maintain higher wages by simply having better technology. In many cases, the new technologies are developed and immediately deployed in 'low cost' jurisdictions so there is no opportunity for the currently wealthy societies to benefit from these technologies.

So the question becomes. How can the currently wealthy societies compete if there are no jobs that cannot be done cheaper elsewhere and it is impossible to maintain any technological lead?

It seems to me the only logical outcome is the gradual decline of the real standard of living of the middle class in the wealthy countries and the creation of an underclass which provides a poor of dirt cheap unskilled labour for jobs that must be done locally.

[Guest eureka]

I am very skeptocal of the statement that real wages increased by 60% in the US between 1980 and 2000. I have not looked for information, but I have had occasion to do so for Canada.

Here, real incomes began to decline in 1977 and did not regain the levels until 1998. We are now only slightly better than in 1998. The lowest levels are still behind the 1977 level. Also, the small increase comes at the price of longer working hours.

I don't think that the US experience is very much different.

[Canuck E Stan]

Canada Steamship Lines

Mr. Réal Lapierre (Lévis—Bellechasse, BQ): Mr. Speaker, while our shipbuilding industry is experiencing difficulties, Canada Steamship Lines, which belongs to the Prime Minister's family, has decided to have two new ships built in China.

Despite Canada Steamship Lines' claims, the shipyard in Lévis is very capable of doing the job. Unfortunately, the lack of a marine policy undermines its competitiveness against aggressive competitors such as the Chinese shipyards. In any case, CSL did not invite that shipyard to tender.

Canada Steamship Lines registers its branches in tax havens, to avoid paying taxes here. Its ships fly flags of convenience to circumvent environmental, labour and marine safety laws. Now it is abandoning our shipyards.

Instead of implementing a marine policy worthy of the name, the Prime Minister is contributing to the decline of our shipyards. This speaks volumes about the true interests of the Prime Minister and his family.

Martin gave a speech yesterday to senior civil servant workers in which he stated:

"Canada will look very different. Fifteen years from now, China and India will have altered the face of global power politically and economically. The world will look very different."

"We must make it our mission to keep Canada ahead of the curve, so that 15 years from now, even with an older population, even in a world in which much larger nations are competing for political and economic power, our standard of living will continue to be among the world's highest, our quality of life will be second to none, our country and our confidence will be strong," he said.

One of his needs for action was;

"We must encourage private sector investment and job growth in innovative sectors."

It would have been nice if he started his encouragement with his own family and set the example close to home.

[August1991]

There is a huge amount of 'untapped' labour in places like India and China - this pool is 25x the size of Japan and larger than the US and Europe combined. This pool of labour will drive down the wages of almost every job category because the supply is so much greater than the demand.

Sparhawk, this idea you express is so common, and so false, it makes me want to cry or scream. It demonstrates a fundamental misunderstanding of economics, markets and how the world works.

Imagine that Indian workers were so cheap they would work for pennies, or even nothing! They send us goods and we send them nothing in return! Would that impoverish us? Would our wages fall to nothing too?

Well, Sparhawk, the sun sends us light and heat for nothing in return every day and sunlight does not impoverish us. Think of trade as a new technology, like the invention of the light bulb. How could such a thing be bad and make us poor?

I also never argued that free trade was in and of itself a bad thing, but free trade without a common agreement on social structure and taxation doesn't lead to efficiency which is the only way to increase social wealth or NEW, as opposed the oft silly GDP statistic.

Yaro, Finland and the Soviet Union traded for many decades, both to their mutual benefit, without having anything like similar social structures or taxation. I have no idea how my local dépanneur manager is at home. Maybe he's a miser who never takes his wife out to dinner. But that doesn't prevent he and I from both benefitting from trades.

Why do people lump socialism with communism all the time, every country on earth that has worked for more then a decade without total collapse has been socialist (colloquially speaking). The US/Canada/Europe/Japan/Australia/China/Russia/India every single country of import on earth is socialist, clearly its not that ineffective.

It was called the Union of Soviet Socialist Republics. To characterize the US or Canada as socialist is a bit of a stretch. I, for one, am not opposed to the existence of government.

----

I disagree with this argument but it is so good I quote it at length:

Well, I'm here now, and I'm lookin' at you, and you wouldn't believe me if I told you what you wanted to hear in any case, right? So let me tell you this: No politician can bring these shipyard jobs back. Or make your union strong again. No politician can make it be the way it used to be. Because we're living in a new world now, a world without borders -- economically, that is. Guy can push a button in New York and move a billion dollars to Tokyo before you blink an eye. We've got a world market now. And that's good for some. In the end, you've gotta believe it's good for America. We come from everywhere in the world, so we're gonna have a leg up selling to everywhere in the world. Makes sense, right? But muscle jobs are gonna go where muscle labor is cheap -- and that's not here. So if you want to compete and do better, you're gonna have to exercise a different set of muscles, the ones between your ears. And anyone who gets up here and says he can do it for you isn't leveling with you. So I'm not gonna insult you by doing that. I'm going to tell you this: This whole country is gonna have to go back to school. We're gonna have to get smarter, learn new skills. And I will work overtime figuring out ways to help you get the skills you need. I'll make you this deal: I will work for you. I'll wake up every morning thinking about you. I'll fight and worry and sweat and bleed to get the money to make education a lifetime thing in this country, to give you the support you need to move on up.

Governor Jack Stanton (aka Bill Clinton) in Primary Colors

If you're the visual type, you can rent the DVD.

[Toro]

1) There is a huge amount of 'untapped' labour in places like India and China - this pool is 25x the size of Japan and larger than the US and Europe combined. This pool of labour will drive down the wages of almost every job category because the supply is so much greater than the demand. The only job categories which are not potentially affected are jobs that must be done locally (i.e. construction) or jobs which are protected (i.e. upper level managers will never outsource their own positions even if it makes good business sense to do so).

2) Technology transfer happens so fast now that it is not possible to maintain higher wages by simply having better technology. In many cases, the new technologies are developed and immediately deployed in 'low cost' jurisdictions so there is no opportunity for the currently wealthy societies to benefit from these technologies.

Three things Sparhawk. First, though China and India are developing, it doesn't mean they will develop (especially India). I believe both countries will do so, but it is not a given. Second, there is no gaurantee that simply because America (and Canada) have this tremendous technological edge that we will have it in the future. However, though technology transfer definitely accelerates a developing country's growth, it shouldn't be overexaggerated either. For example, there is still much of India with terrible infrastructure. My friends who have been there recently tell me of 300 mile trips that take 8 hours over dilapitated highways. Finally, as corporations have become leaner, they have taken out layers of middle management. This may not be an actual transfer of jobs overseas but it certainly comes about because of competition overseas as corporations keep their cost structure down to compete.

I will say this though, the returns to labour will probably lag growth in the economy because of that huge pool of labour in Asia. Returns to assets will do better.

So the question becomes. How can the currently wealthy societies compete if there are no jobs that cannot be done cheaper elsewhere and it is impossible to maintain any technological lead?

It seems to me the only logical outcome is the gradual decline of the real standard of living of the middle class in the wealthy countries and the creation of an underclass which provides a poor of dirt cheap unskilled labour for jobs that must be done locally.

<{POST_SNAPBACK}>

I have to disagree with your assessment about no jobs. There have been few jobs in western Europe created over the past three decades while the US has created 60 million jobs since 1970.

ftp://ftp.bls.gov/pub/suppl/empsit.ceseeb1.txt

By protecting jobs, economies fail to adapt. This raises the cost of labour, which stunts the labour market, which is part of the problem with Europe IMO. Certainly there has been a disparity in the US over the past few decades as wages of the poor have not kept up with the middle class and wealthy, but they have still risen. As for the middle class, there is no gaurantee that they will be better off in the future - as there never is. But climbing into a shell and trying to protect ourself from the outside world is almost certainly a recipe for failure.

[Riverwind]

This whole country is gonna have to go back to school. We're gonna have to get smarter, learn new skills. And I will work overtime figuring out ways to help you get the skills you need.

I bought this logic ten years ago. Now companies are firing people with university educations and a lot of technical skills because there is cheaper labour in India. Trouble is today there are no more 'jobs' to train for because literally everything can be done cheaper overseas. The only jobs that will stay are service jobs that require direct interaction with people (like store clerks and hairstylists) and jobs that are high enough up the management tree where hypocrisy can overrule 'good' business decision making.

And entrepreneurs won't/can't create many jobs here anymore. People who want the get money for a start-ups are often told to out source work to India or China before they can get funding from angel investors.

I agree that from a theoretical perspective free trade makes everyone richer, however, even the most ardent free trade supporters acknowledge that individuals are hurt by the 'transition'. My fear is the 'individuals' hurt by the transition will be the entire middle class in Canada. That is an awfully high price to pay in the name of making people in China and India richer.

[Toro]

I am very skeptocal of the statement that real wages increased by 60% in the US between 1980 and 2000. I have not looked for information, but I have had occasion to do so for Canada.

Here, real incomes began to decline in 1977 and did not regain the levels until 1998. We are now only slightly better than in 1998. The lowest levels are still behind the 1977 level. Also, the small increase comes at the price of longer working hours.

I don't think that the US experience is very much different.

<{POST_SNAPBACK}>

eureka

I believe this is World Bank data. I referenced it from a book by Martin Wolf, who has worked for the World Bank and is the chief economics commentator for the Financial Times. The data is on page 149.

Why Globalization Works

[August1991]

You're avoiding my point. Solidarity is a constant refain in union circles. Well, you know what? American capitalists behave like scabs, and they have absolutely no sense of solidarity. They'll happily undercut their competitors to make a buck.

Yeah: and what does this have to do with he notion of class? Really, you're mising the point. Class does not necessarily exist only in organized structures of castes and cartels.

Cartels have everything to do with the notion of class.

Take OPEC as an example. The oil producers form a cartel, restrict supply and the rest of us are exploited - we pay more for gasoline than we otherwise would.

Take capitalists as an example. They form a cartel, restrict demand and labour is exploited - workers get lower wages than they otherwise would.

How does the capitalist cartel work? (What enforces the cartel?) "Class", and "class membership". I think that is the essence of Marxist analysis.

[Guest eureka]

It does not make much sense to me, Toro. I can't check but I do not see how the US can have had such an increase unless it was far behind Canada in 1980. I know the Canadian situation that I mentioned is accurate since I have researched that several times.

I would need something better than a reference to someone who thinks Globalization has worked. The reality of this Globalization is that the powers behind the push have brought us as close as they dare to the 19th. cy "Iron Law" of the market and its "Free Trade."

we all know what that achieved, don't we? The Irish misery of death and emigration of about 4million in total. The later devastation in India with its far greater , in numbers, of deaths and starvation of many millions.

Globalization has never worked. Anyone who believes it has would not be too accurate in calculating favourable statistics.

[Guest eureka]

This does not answer the question, but it is an intresting commentary on incomes from The World Fact Book.

Since 1975, practically all the gains in household income have gone to the top 20% of households.

[Guest eureka]

Perhaps the statistics are measuring different things. Household income in Canada in 2002 was $54,300, about a $2000 increase over 1977 or 3.8%. They reachedd 1977 levels in 1996 and increased to 2001 but have benn static for the last 4 years.

I really do not think the US has outperformed that by much.

[Toro]

It does not make much sense to me, Toro. I can't check but I do not see how the US can have had such an increase unless it was far behind Canada in 1980. I know the Canadian situation that I mentioned is accurate since I have researched that several times.

You say you have, but you also say that you are not an economist nor a statistician. If that's the case, how do you know what you are referencing is correct? I know nothing about cars, so I know that I would not know what to look for when my car stops running.

I would need something better than a reference to someone who thinks Globalization has worked. The reality of this Globalization is that the powers behind the push have brought us as close as they dare to the 19th. cy "Iron Law" of the market and its "Free Trade."

Why? That sounds like someone with a preconceived notion who dismisses any information that contradicts that person's own dogma.

Globalization has never worked. Anyone who believes it has would not be too accurate in calculating favourable statistics.

That is false. I can quote and/or link document after document from various institutions staffed with incredibly intelligent Ph.Ds, all of whom are extremely well-trained in statistics and economics, that supports my view.

Understand that I do not believe that markets are a cure all for everything. There are times when markets fail. But markets are the single best mechanism for creating wealth. Markets are not perfect, but they create the most wealth for the most people most of the time.