Sunday, August 1, 2010

Jobs: What Comes Around Goes Around

“The misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all”. -- Joan Robinson, Cambridge Economist

“Are the American People Obsolete?”
Michael Lind in Salon Magazine asks, “Are the American People Obsolete?” It’s an interesting question.
The offshoring of industrial production means that many American investors and corporate managers no longer need an American workforce in order to prosper. They can enjoy their stream of profits from factories in China while shutting down factories in the U.S.
He raises some legitimate concerns about globalism, but he comes unglued talking about “privatized armies” and America’s elite “shutting down every factory in the United States.” Despite such broad brush hysterics, I still recommend my conservative and libertarian friends read it all to see the world through the eyes of the fevered left. 

As a bonus, this economic naif unwittingly answered his own worries about labor, wages, and worker displacing worker:
"And if Chinese workers have the impertinence to demand higher wages, American corporations can find low-wage labor in other countries."
Precisely! Well, almost... Supply and demand works in the job market as well. But low wages isn’t the whole story. There are other factors like productivity, technical skills of the workforce, infrastructure and taxes and regulations.  If wages were the only factor, unemployment would be over 60% in the developed world as every last shred of production moved to China and Bangladesh. .

China has problems of its own
"They seem less willing to “eat bitterness”, as the Chinese put it, without complaint."
Suicides, pollution, ageing workforce, social unrest, and workers demanding a bigger share of the economic pie are bringing changes to China, reports The Economist. As the workforce become more efficient and skilled, wages must rise, turning the Chinese into a consumer economy achieving par with the “developed” world, and that’s a good thing all around.

Bye Bye Cheap Chinese Labor

As China advances, the global economy will benefit:
Higher Chinese wages will have a similar effect to the stronger exchange rate that America has been calling for, shrinking China’s trade surplus and boosting its spending. This will help foreign companies and the workers they have idled. A 20% rise in Chinese consumption might well lead to an extra $25 billion of American exports. That could create over 200,000 American jobs.

China will have to increase its supply of skilled workers. That will require a stable workforce, which stays with its employers long enough to be worth investing in.(The Economist)
Put another way, employers cannot exploit their workers if they want to reap profits. By the same token, nations cannot exploit their companies; CEOs will simply pack up and head for greener pastures. Progressive dreams of punishing outsourcing corporations or holding them down and making them submit to burdensome taxes and regulations are a fervid mirage. Just ask California or Michigan.

2 comments:

  1. We all want to blame greedy companies and politicians for the fix we're in, but if no one bought the overseas junk, we might all still be working.

    ReplyDelete
  2. Our Leviathan simply refuses to understand what counter productive means.

    And our businesses seem not to understand that their greatest resource is their productive people.

    And government wants to loot and business want handouts in the form of subsidies.

    It's a crazy mixture.

    ReplyDelete

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