Re:Winners and Losers of Globalization (2012)
by force_reboot on Sunday December 06, 2015 @04:25PM
(#10686693)
I think there is broad agreement for you explanation across the political and economic spectrum. In management/MBA speak they refer to the change that is occurring as "climbing the value chain". Each nation must apply its labor to higher value-added industries in order to improve it standard of living. This might seem like an impossible task, but there is no in principle reason why most Chinese coal miners might not be cancer researchers in one generation. Or most Western shelf stackers might not become programmers.
It's easy to move capital, but it's hard to move labour. That's the world we've built.
So what are the main conclusions?
1) The very wealthy are much wealthier 2) The somewhat wealthy are no better off 3) The formerly very poor are now much less poor.
Why would that be?
If you're a business, you can move your production to China (of course that gap has moved in a lot over the years). So as the owner you reap the profits of mobile capital.
The poor folks in China benefit as well, as they now have better paying jobs utilising the moved capital. They benefit a lot, but actually they would be better off if they could participate in the Western labour market. They can't just come here, so they make do with what opportunities they have. By experience a fair few of these people are just as useful as anyone in the West, but that's how the world is built.
The "somewhat wealthy" are the Western middle class. They don't own the capital, the best they can do is hold on to some of the managerial roles if they're upper middle, or lose their jobs if they're outsourced. Since the firms are more profitable having moved production, the managers can do allright, but they're not all buying yachts. The factory workers in the West are a bit buggered. They whole point of moving is to avoid their expense. A lot of people have had to find new things to do.