Wednesday, October 13, 2010
Steve Pearlstein's isn't challenged ...... on his main point: (emp add) There are lots of reasons why American companies ... have lost market share ... but one is that in too many industries, our labor costs are now too high to be globally competitive. Reducing wages and benefits in those industries would not only help to create and save jobs, but would also force a further reduction in consumption and living standards that is necessary to bring the U.S. economy back into balance. Neither economist Dean Baker, nor neo-liberal Matt Yglesias and his free-trade-buddy Brad DeLong*, disagree with that central assertion. * DeLong's excerpt of Yglesias omitted the observation that lowering-wages, devaluing the dollar, and inflation (all responses to globalization): ... are ... all ways of cutting the real wages of Americans I wonder why?
posted by Quiddity at 10/13/2010 01:23:00 PM
5 comments
That's being a bit hard on Dean Baker.
He says government subsidizes, and protects from foreign competition, the financial and media elites by writing the rules at their behest.
By implication, government could rewrite the rules to subsidize and protect working people.
Tariffs built our economy. We should bring 'em back.
Perhaps no-one agrees with that assertion because it's likely to be true. But that does not inevitably lead to the conclusion that restrictions on global trade provide a solution.
U.S. living standards might decline even more precipitously if international commerce is restricted and cheap stuff becomes expensive, while fewer foreigners buy stuff from us. People in other countries that make the cheap stuff would suffer too, and you may see that as a bug or a feature depending on your orientation. But making like Smoot–Hawley again could easily be a lose-lose proposition.
The relative decline of living American standard was inevitable, and is not really a bad this for this U.S. per se - it's just a natural function of improvements in other countries. Unfortunately, the decline is being exacerbated by severe mismanagement at the political level, which now functions almost exclusively for the benefit of plutocrats. That is the root cause of the unnecessary decline in the economic well being of the non-rich, and that is where we should focus our ire. Not on the fact that foreigners are selling us cheap stuff, and providing cheap labor, in a perfectly reasonable attempt to catch up with us economically. The sooner they catch up, the sooner this distraction will disappear.
And you'll still need to find a way to deal with the plutocrats.
but haven't these same people argued the government needs to put money into the economy with a bigger stimulus in order to jumpstart demand? they then flip and say workers are paid too much? isn't that a contradiction? a decent wage is needed in order to support a consumer driven economy.
we have to start challenging the premise that we have to be globally competitive. this country was pretty prosperous before all these trade deals got passed.
U.S. living standards might decline even more precipitously if international commerce is restricted and cheap stuff becomes expensive,
cheap foreign goods comes at the price of lost jobs. it's a bad bargain. if americans actually manufactured things again, sure those products would go up in price, but we would have jobs back in this country and with a salary that would be able to buy things again. isn't paying a few extra dollars for a product worth keeping jobs at home?
why can't we be like germany?
According to Geoghegan, "Since 2003, it's not China but Germany, that colossus of European socialism, that has either led the world in export sales or at least been tied for first. Even as we in the United States fall more deeply into the clutches of our foreign creditors -- China foremost among them -- Germany has somehow managed to create a high-wage, unionized economy without shipping all its jobs abroad or creating a massive trade deficit, or any trade deficit at all. And even as the Germans outsell the United States, they manage to take six weeks of vacation every year. They're beating us with one hand tied behind their back."
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