Gap between classes threatens free trade

The Australian ^ | January 13, 2007 | Krishna Guha

[A. Pole]

THE widening gap between rich and middle-class Americans is undermining political support for free trade in the US, Federal Reserve Bank of New York president Tim Geithner warns.

Mr Geithner told the Council on Foreign Relations the political challenge of sustaining support for further global economic integration may be the greatest economic challenge of our time.

He warned also that the inflow of surplus savings from abroad could be distorting US asset prices and keeping risk premiums artificially low across financial markets.

Mr Geithner's comments came amid growing concern in US political and business circles over the risk of a populist backlash against free trade caused by rising inequality and a protracted period of stagnated wages earned by the average US worker.

Although recent data shows real wage growth has picked up, many economists fear this could be short-lived.

Mr Geithner said maintaining support for open markets would be made more difficult because of "what has happened to the distribution of income and economic insecurity". He cited as big political problems the long-term increase in income inequality, the slow pace of growth in real wages for the middle "quintiles of the population", increased volatility in income and the greater exposure of families to risks involved in financing retirement and healthcare.

[...]

[A. Pole]

maintaining support for open markets would be made more difficult because of "what has happened to the distribution of income and economic insecurity"

Free trade bump

[Redbob]

It's really scary that someone with such a limited grasp of basic economics could get to be a federal reserve bank president!

That's like finding out that your brain surgeon is Jimmy Carter!

[outdriving]

"Mr Geithner's comments came amid growing concern in US political and business circles over the risk of a populist backlash against free trade caused by rising inequality and a protracted period of stagnated wages earned by the average US worker.

Although recent data shows real wage growth has picked up, many economists fear this could be short-lived."

Well duh, them nasty 'ol populists have done figgured out they are getting screwed. So maybe us Rubes are thinkin' "hey we need us a bit 'o backlash!".

[Last Dakotan]

The problem could have been avoided if free trade had been reciprocal between the US and Asia.

[KevinDavis]

WORKERS OF THE WORLD UNITE!!!!

[rockrr]

:"THE widening gap between rich and middle-class Americans is undermining..."

What "widening gap" there krisha?

[taxed2death]

"The problem could have been avoided if free trade had been reciprocal between the US and Asia."

or US and Europe

Or even US and Mexico

The problem is free trade isn't.

[Hydroshock]

Agreed.

[jpsb]

American sorkers aren't happy with the race to the bottom? What a surprise. /NOT