The price of globalization

International Herald Tribune ^ | January 10, 2004 | William Pfaff

[eleni121]

My single posting has more logical argumentation regarding the article than you have put forth in all your postings. It is obvious that the best you can do is link to Ricardo.

[sarcasm]

You most certainly haven't. For a start, let's have your view on Ricardo's Iron Law of Wages and how it relates to globalization and free trade. That is, of course, what the article is about.

[B4Ranch]

Witness the FreeFall to the Bottom, Unrestrained by Reasonable Intelligence or Common Sense.

[westerfield]

It says that wages will tend to stabilize at or about subsistence level. That seemed inevitable to Ricardo, since while workers are necessary, and so have to be kept alive, they have no hope of any better treatment since they are infinitely available, replaceable, and generally interchangeable.

Do you havs anthing specific which will refute the truth of that statement? I'm no economist, but commonsense suggests to me that this will be the ultimate result of our free trade policy unless we reign it in a bit.

[B4Ranch]

Sheeple will not awaken until they themselves are actually at the door leaving the company they have been with for twenty years.

[B4Ranch]

If you think NYS is in bad shape now, just hang on for another twenty years.

[eleni121]

Welcome to Freerepublic.

You copied from the article (good) and did not bother to read the paragraph that comes right after which I agree with. I disagree with the conclusion that follows from this argument.

Deal with this first - tell me why you disagree with the author - and then I will tell you again why I disagree with the author's conclusion.

[westerfield]

I sometimes get the uneasy feeling that you are probably right.

[eleni121]

The economic problems of NYS have little to do with globalization and everything to do with high taxes and an overunionized economy

[A. Pole]

http://www.fordham.edu/halsall/mod/ricardo-wages.htmlDavid Ricardo: The Iron Law of Wages
[sarcasm:]Thoughts?

(His most well-known argument was that wages "naturally" tended towards a minimum level corresponding to the subsistence needs of the workers. The attraction of this idea for factory owners is evident. It also influenced Marx in his early pessimistic views about the possibility of workers benefiting from capitalism.)

In the ideal free market yes, the wages would become a commodity at the lowest possible level. But because the owning class does not have perfect domination and there are religious/moral/political constraints like the Church, the threat of revolution or trade unions, the actual society tends to differ from Ricardo/Marx vision. (The Soviet/Fascist threat and New Deal combined with the Christian influence made USA working class the most prosperous in history.)

But free market fanatics work hard on making Ricardo and Marx right. "As a dog returneth to his vomit, so a fool returneth to his folly." (Prov:26:11)

[Thisiswhoweare]

Actually, 'sarcasm', I have to say that he addressed it very directly:
"Globalization expands economic freedom and encourages competition, increases productivity and living standards of people in countries that encourage the global marketplace."

He obviously believes in globalization, and he is completely honest about it. It sure beats things like hearing Condy Rice say Fox doesn't want to send Mexican's across the border with a straight face.

I would appreciate the same honesty from President Bush. Of course you wont hear it, because the net effect of globalization will be the end of the individual nation state, the dissolution of our current government, culture and system of laws to accomodate the greater needs of the worldwide corporate infrastructure.

We all know why he wouldn't admit to supporting that openly, don't we?

[westerfield]

neither workers nor industry are perfectly mobile

This is becoming increasingly less true as technology advances and the push for increased globalism continues. Years ago people would have thought you insane if you suggested that one day accountants from India would be handling tax returns for corporate America as they have started doing today. There are only a subset of jobs such as government workers and those involved in domestic distibution that can't be farmed out - but the wages of even these people can be undermined by importing more workers or having an open border immigration policy.

[KantianBurke]

Here's how Bush and co. will be living thanks to globalization.

And here's how those of us that weren't lucky enough to have a Yale degree or a relation that is President will live alongside millions of immigrants who hate this country:

[psychoknk]

PROBLEM: In order to enjoy these advantages, nations need to reform their incompetent corrupt immoral power structures and join in a modern banking system that allows the free flow of capital.

Politicians like Chuckie Schumer who argue for restrictions and barriers in order to maintain their power over fearful workers simply need to shut up because they are part of the problem not the solution.

This seems like it will only accelerate our downfall. If we relax our restrictions, it will be a total free-for-all for the corporations to get money out of the country and into developing ones. Here is the second paragraph you refered to when you assaulted westerfield:

Ricardo's wage theory has seemed untrue. The supply of competent workers in a given place is not unlimited; neither workers nor industry are perfectly mobile, and labor demonstrated in the 19th and 20th centuries that it could mobilize and defend itself. The iron law of wages would seem to function only if the supply of labor is infinite and totally mobile.

The issue is that the many high-tech industries, such as software development, are totally mobile, and they can go to places with decent educational systems and large numbers of people willing to work for significantly less for what people are payed here (India and China to name two). This fits the conditions for Ricardo's law to work.

By making it easier for capital to flow, it would appear as though it would flow entirely out of the country, and the problem is that this money is coming out of the pockets of the middle class, for it is they who are losing their jobs.

[eleni121]

...but the wages of even these people can be undermined by importing more workers or having an open border immigration policy.

Yes, but even government workers and those involved in distribution are subject to losing their jobs: The internet allows teachers to teach worldwide; distributers in Japan simply air ship their products to the US (is that what you meant?). Do salaries become affected? Sure and why shouldn't they?

Open borders is an issue that should be less about jobs and lower salaries and more about assimilation in my opinion. There is something to be said about immigrants speeding up the process of increased efficiency and productivity but the main problem I would have with it is that too many people of any one ethnic backgound unwilling or unable to assimilate by the 2-3 generations. I do not think that has happened before but it could in the southwest.

[sarcasm]

Unfortunately, the other poster does not wish to discuss the effects of free trade and globalization on wage levels.

[B4Ranch]

I won't argue with someone so much more knowedgeble than myself. Just remember what you said though. The words will be sweeter when you eat them.

[Thisiswhoweare]

"Unfortunately, the other poster does not wish to discuss the effects of free trade and globalization on wage levels."

Globalist don't want to. To do so, they must admit the final result of globalisation, and they musn't do that to the citizens of a victim country.

The end of globalisation is: no borders, no country, no individual ethnicities, no cultural pride (unless approved by the collective), no religion, no laws (unless approved by corporate management), no individual rights or freedoms (too pesky for corporate management). A handful of corporations will decide your physical and emotional needs and provide them in the most effective, profit motivated manner.

[Thisiswhoweare]

OOPS! mustn't...fingers, fingers.

[eleni121]

The middle class is not a permanent entity that needs to be protected like the sheep from the wolf. The middle class like the upper class and the lower class shifts expands contracts moves around but mostly expands and has been doing so for the last 300 years or so.

The problem with hi tech capital investing abroad is that there will be some dislocation at its point of origin but that is temporary. Good news is that given low tarriffs and multilateral trade agreements, the rising middle classes abroad will be in better shape to purchase goods and services from us.

One more rant: The high tech internet start up world temporarily fell flat on its face because of greed (no profits but customers and sales suffice). No one should feel sorry for them.