The brutal fact is that the interest of the big business and US of workers are very different now. The CEOs and large shareholders want to lower the wages below the minimum US level so they move jobs to poorer countries.
They expect the US taxpayers, families and communities to absorb the social costs of dislocation. Also they expect their country to protect their interests abroad as they are increasingly exposed to the dangers of overt or disgused nationalisation or technology "theft".
They also expect the government to remove the remaining protectionist barriers and secure the "free trade". They want borders to be open.
US workers would have different policies in place if they had more to say.
In engineering, China’s graduates will number over 600,000, India’s 350,000, America’s only about 70,000.
Freemarketeers will put blame on lazy and stupid American students. But why don't they provide some free market explanations for this worrying phenomenon? Or maybe this is all for good in their universe? (See my tagline).
Free market economists will do two things. First, they will explain that free trade is good for everyone. This is true if "everyone" is defined as a nation's GDP. Second, they will state that workers dislocated have the opportunity to change skills and get out of high-labor jobs and into more high-skill jobs.
I basically used to believe this 100%. It's all true in economics class. I also thought it was true when I lived in CT and basically everyone had master's degrees and were very fluid as far as being able to jump from industry to industry and do well.
I largely changed my mind when I moved to Oklahoma, where I saw lots of people who worked at say the local Dayton Tire plant, yet lived better quality of lives then those in the NY area who made ten times as much money as them. That is, they lived in nice little houses in safe neighborhoods with swing sets in the back yard. They didn't work 18 hours per day either.
Of course, these people don't have the best educational background in the world. The dislocations of the free trade model will fall squarely on their shoulders.
Is it really worth it, even at the expense of long term GDP, to cost these people their jobs, wreck their families, etc?
That is a more difficult question than it sounds. You can't just say "no" and leave it at that. Ultimately, for the sake of our national security and well-being, we can't over-protect workers without doing long term damage to the economy. At the same time, however, it does not seem unreasonable to me to let the conversion to free trade be a longer 1-2 generation proces, as opposed to the 15-20 year process that we are seeing now so that there is more warning of the coming dislocations, and more time for people to prepare for it, and to raise their kids to learn different skills and areas of knowledge than what has gotten them through life. Furthermore, while the foreign nations will be competitive in terms of wage costs, it does not seem unreasonable to expect other nations to have minimal standards for pollution, child labor, etc.
Thanks for the ping. WE CAN'T COMPETE
This is like an economy horserace and the Amercian entry is handicapped carrying a much heavier load.
A complete bevy of taxes, regulations and law suits bend the back of American horses while foreign goods come in tax-free.
The cost of American education is out of sight and other countries provide subsidy.
Our best and brightest head for law schools, and Wall Street, not to create for America but to suck out from the producers.
Corporations only think they have transcended nationality, but in reality, are in way, way over their heads. Nationality is going to bite them on the ass.
Apparently it is. Makes me wonder who they are.
Yes, as the article says the correct question is likely not "Can America compete?" as many U.S. companies can compete by going global. The question is "Can Americans compete?" given the much lower cost of living in those poorer countries. It does seem that it should be the government's responsibility to set trade policies such that both U.S. businesses and U.S. workers can compete. Unfortunately, those policies seem to be heavily slanted toward that group from which our government officials receive the great bulk of their campaign contributions.
The truth is that large companies do not produce the breakthrough technology that continually expands and renews our economy and creates world leadership and jobs; they generally obstruct such progress in order to preserve the market dominance of the technologies they sell that would be made obsolete. They advertise progress and research, they don't actually do it. People seem to have forgotten what George Gilder pointed out that was so popular in the Reagan years.