China's Threat To Jobs: Death-knell For The Wto?

[FreeTrader]

Name a single country (as opposed to interest groups within that country) that was ever impoverished by the ability to buy goods cheaper from outside itself than internally?

I totally agree with your arguments re globalisation with respect to national wealth. Globalisation isn't a zero sum game.

However, the jury's still out on whether the distribution of wealth gains that is occurring as a result of the current profound changes in global trade is desirable for society as a whole. This time round the 'interest group' that is being impoverished is essentially the majority of the labour force, at the expense of owners of capital.

Americans, Working Longer for Less

GLOBALISM'S TOLL? The other possibility is that this really is the age of capital, not labor. With so many new Chinese and Indian workers entering the global labor market, wages in the U.S. could continue to be beaten down. In that case, the benefits of higher productivity will mainly flow to investors, rather than workers, for the foreseeable future, as U.S. pay starts its long, slow convergence down to the global norm.

Of course, as wage rates fall in developed economies as they converge with rising wages of workers in developing ones, this should be offset by even faster falling prices. Overall, workers should be better off. But there's a problem - it's not being allowed to happen. Western central banks are largely following targeted inflation rate policies to achieve monetary stability. As Anatole Kaletsky points out (yep, he does make sense sometimes), if the central bank is targeting a *positive* inflation rate, then by definition some prices will have to rise well *above* that rate if foreign imports are getting progressively cheaper. The central bank must generate inflation elsewhere in the economy. This leads to further disparity between wealthier members in society and the rest.

[Murray Rothbard cited this problem as a significant contributory cause of the Great Depression. The Fed in the 1920's was patting itself on the back for having achieved price stability throughout the period as it followed a targeted inflation policy. However, there were also enormous productivity gains occurring during these years. Prices should have been falling.]

It might be argued that the answer to this is redistributive taxation policies to transfer wealth from capital to labour, but here we see the flip-side of globalisation - not only can labour be offshored, but so can capital. A government which squeezes the corporate sector and wealthy indivduals too hard may well find their targets relocating to a country where taxation policies are more favourable. What's left then for everyone else?

I believe BTB is right, and ultimately we will all benefit from the changes we're seeing. In the short and medium term however we could well experience some highly destabilising effects if wealth disparities become too great.

I hope I don't hear "Let them eat cake" in my lifetime.

[backtoparents]

I wouldn't mind outsourcing the odd politician.

/btp

[Mushroom]

I wasn't putting forward any logic, I was simply refuting the flawed logic of Levy Process that because China is getting richer we would need to scale back our wealth expectations. Why? That is illogical and not in line with history. Name a single country (as opposed to interest groups within that country) that was ever impoverished by the ability to buy goods cheaper from outside itself than internally?

I thought Ludditism was dead in the UK. Fortunately amongst policy makers it largely is.

Ok, I accept your rationale in that context as you have introduced the factor of having a currency that others will accept for trading. It can go pear shaped though. Do you want Zimbabwean Dollars? Extreme I know.

However, and this is probably where we have a fundamental disagreement, I am not convinced that the past is a guide to the future.

Ludditism is alive and well here, well in my view, evidenced by the tenacious clinging to the first past the post electoral system, a planning system that restricts rather than enables, public sector inefficiencies and what I feel is an attitude of things will carry on much as before.

[BoredTrainBuilder]

...

However, the jury's still out on whether the distribution of wealth gains that is occurring as a result of the current profound changes in global trade is desirable for society as a whole. This time round the 'interest group' that is being impoverished is essentially the majority of the labour force, at the expense of owners of capital.

...

It might be argued that the answer to this is redistributive taxation policies to transfer wealth from capital to labour, but here we see the flip-side of globalisation - not only can labour be offshored, but so can capital. A government which squeezes the corporate sector and wealthy indivduals too hard may well find their targets relocating to a country where taxation policies are more favourable. What's left then for everyone else?

I believe BTB is right, and ultimately we will all benefit from the changes we're seeing. In the short and medium term however we could well experience some highly destabilising effects if wealth disparities become too great.

I hope I don't hear "Let them eat cake" in my lifetime.

Clearly we concur. What's happening is what's happening. There is no policy decision that the UK government could take that will change it. The government could, however, pretend it wasn't happening at all and pander to populism (of the sort exhibitied by the occasional HPCer it is sad to say) by reintroducing protectionism. This will result not in a series of bracing tremors but (in the end) in an earthquake.

On balance, based on all of previous history, the increasing wealth of China, India and other countries will be an overall good. However, there will be deeply uncomfortable and destabilising effects within our society and managing this is a legitimate subject for concern and debate.

Edited December 7, 2005 by BoredTrainBuilder

[BoredTrainBuilder]

Clearly we concur. What's happening is what's happening. There is no policy decision that the UK government could take that will change it. The government could, however, pretend it wasn't happening at all and pander to populism (of the sort exhibitied by the occasional HPCer it is sad to say) by reintroducing protectionism. This will result not in a series of bracing tremors but (in the end) in an earthquake.

On balance, based on all of previous history, the increasing wealth of China, India and other countries will be an overall good. However, there will be deeply uncomfortable and destabilising effects within our society and managing this is a legitimate subject for concern and debate.

Do I hold the world record on HPC for killing threads? Are you all trying to tell me something?

[MarkG]

As Anatole Kaletsky points out (yep, he does make sense sometimes), if the central bank is targeting a *positive* inflation rate, then by definition some prices will have to rise well *above* that rate if foreign imports are getting progressively cheaper.

Indeed: the whole concept of inflation targetting is absurd, since it requires the government to go all out to create inflation in deflationary periods.

[dogbox]

Clearly we concur. What's happening is what's happening. There is no policy decision that the UK government could take that will change it. The government could, however, pretend it wasn't happening at all and pander to populism (of the sort exhibitied by the occasional HPCer it is sad to say) by reintroducing protectionism. This will result not in a series of bracing tremors but (in the end) in an earthquake.

On balance, based on all of previous history, the increasing wealth of China, India and other countries will be an overall good. However, there will be deeply uncomfortable and destabilising effects within our society and managing this is a legitimate subject for concern and debate.

BTB, your posts are so lucid, it makes me sick with jealousy

You must be a professional writer?

On the point 'there is no policy decision that the UK gov' could take that will change it (job flight)', I would like to say that I think a massive cull on regulation would help a little. Regulation has all kinds of hidden costs and in the real world the benefits are outweighed by the costs in terms of lost jobs.

I am aware of employers offshoring so as to avoid well meant sexual equality measures. The 'crowd' welcome such measures until that is they see the price label on the goods, at which point they reach for the Chinese equivolent.

[Duplex]

Offshoring moves up the 'job chain'. Do'oh must mean they have smart people in China and India.

Offshoring

[BoredTrainBuilder]

BTB, your posts are so lucid, it makes me sick with jealousy

You must be a professional writer?

On the point 'there is no policy decision that the UK gov' could take that will change it (job flight)', I would like to say that I think a massive cull on regulation would help a little. Regulation has all kinds of hidden costs and in the real world the benefits are outweighed by the costs in terms of lost jobs.

I am aware of employers offshoring so as to avoid well meant sexual equality measures. The 'crowd' welcome such measures until that is they see the price label on the goods, at which point they reach for the Chinese equivolent.

Dogbox, not a professional writer just a bored train builder. But thanks anyway. And I'm jealous of your little corner of Berlin.

I'm obviously not that lucid because what I wrote was not exactly what I meant. There is nothing UK govt can do to stop globalisation, the rise of China, India etc (what the other posters appear to be wanting to somehow prevent). It fills me with great pleasure to see the French continually trying to get the world to slow down and wait for it to catch up.

I entirely agree that a regulatory bonfire would help to keep the country competitive although perhaps some regulations are worth having. For example, in the early days of railways there were no regulations - and endless accidents. Every accident since has given rise to more regulations and more safety (and of course more cost). Equally the Chinese might be wondering whether or not to introduce regulations to ensure that chemical plant managers who blow up their factories and poison entire river systems should be required to mention it promptly. These issues are up for discussion in society, but not trying to stop globalisation in its tracks a la francaise.

[jackalope]

Take another example - Dubai; Massive resource gone in yet somehow all theyve achieved is a kind of Wacko - Jacko taky chitzy Las Vegas. We just wouldnt have produced such a monster in this day and age.

Agreed. We don't have the guts, imagination or self confidence to do things like that anymore. Western Europe is insular, decadent and exhausted.

[BoredTrainBuilder]

Agreed. We don't have the guts, imagination or self confidence to do things like that anymore. Western Europe is insular, decadent and exhausted.

I don't accept that for a moment, it is decadent and lazy thinking to say so. Even in my own field, railways, the last few years have seen some wonderful, audacious and exciting projects that don't imply a lack of guts to me.

Go up to Kings Cross St Pancras if you don't believe me. Here, building on the outrageous self-confidence of the Victorians, the world's busiest land transport terminal is being built. Track from this wonderful new/old interchange will speed trains at nearly 200 km/h all the way to Paris or Brussels in a couple of hours, passing deep under the sea in the process.

Insular? Heathrow is the world's busiest international airport.

And that's just the UK. The new Haubtbahnhof in Berlin, opening in a few months, is also jaw-dropping. And I suppose the French have done some pretty neat stuff as well.

?

Japan

Japan? Impoverished??

Edited December 8, 2005 by BoredTrainBuilder

[Fancypants]

I don't accept that for a moment, it is decadent and lazy thinking to say so. Even in my own field, railways, the last few years have seen some wonderful, audacious and exciting projects that don't imply a lack of guts to me.

Go up to Kings Cross St Pancras if you don't believe me. Here, building on the outrageous self-confidence of the Victorians, the world's busiest land transport terminal is being built. Track from this wonderful new/old interchange will speed trains at nearly 200 km/h all the way to Paris or Brussels in a couple of hours, passing deep under the sea in the process.

Insular? Heathrow is the world's busiest international airport.

And that's just the UK. The new Haubtbahnhof in Berlin, opening in a few months, is also jaw-dropping. And I suppose the French have done some pretty neat stuff as well.

Japan? Impoverished??

BTB are you feeling ok? All these apocolypts around and you're veritably thriving!

[BoredTrainBuilder]

BTB are you feeling ok? All these apocolypts around and you're veritably thriving!

Sorry, perhaps I am getting a bit carried away by my own lucidity, but don't you think all this apocalypse now stuff is utter testicles? It's just lazy, recycled thinking. There to be squashed.

Edited December 8, 2005 by BoredTrainBuilder

[Fancypants]

Sorry, perhaps I am getting a bit carried away by my own lucidity, but don't you think all this apocalypse now stuff is utter testicles? It's just lazy, recycled thinking. There to be squashed.

there's lazy thinking on both sides of the debate (not in your case though). I'd dearly love to explore this in much greater detail right now but I have to chip off and tend to my macrobiotic organic allotment before ferreting some more gold away in my bunker.

Joking aside, I wouldn't say it's utterly testicular. It's worth considering - the human race does seem to have lost its humility, which does not bode well. We should remember that we are here through sheer fluke (or so it seems) and that we have no divine right to continuously dominate and grow.

Yes, I do think the potential for apocalypse is overplayed in many quarters, but I also think we should be wary of complacency. There are warning signs that should be heeded, although that's all they are for now.

This kinda leads back to the "zero sum" game argument - is it or isn't it? After all, there is only so much space and resource on this planet.

Dammit, sorry I really need to stop I have to disappear, but I hope we can re-start this debate sometime in the future.

ttfn

[bob monkhouse]

[stupid comment removed by author]

Edited December 8, 2005 by bob monkhouse

[BoredTrainBuilder]

Dammit, sorry I really need to stop I have to disappear, but I hope we can re-start this debate sometime in the future.

If there is one.

[dogbox]

We should remember that we are here through sheer fluke (or so it seems) and that we have no divine right to continuously dominate and grow.

I'm label'd a bull, but I have to say I'm full - on apocalyptic when it comes to the future of us all. The planet is'nt designed to support billions upon billions of pooing, polluting Humans. A bug will get us all in the end, just in time for the last tree standing to disperse its final seedling.

How can the South China sea go on feeding billions of Asians thier daily fish?

[frugalista]

Agreed. We don't have the guts, imagination or self confidence to do things like that anymore. Western Europe is insular, decadent and exhausted.

I think Western Europe is balanced, cultured, innovative, relaxed, tolerant, democratic, pretty, just, happy, organised and just generally pleasant. How many other parts of the world are like that?

frugalista

[gabor]

I think Western Europe is balanced, cultured, innovative, relaxed, tolerant, democratic, pretty, just, happy, organised and just generally pleasant. How many other parts of the world are like that?

frugalista

subtract oil and natural gas ( for which soon Eu has to compete with China and India ) and you get the 30's when Europe was inbalanaced, barbaric, innovative (in terms of weaponry), intolerant, antidemocratic, angry and generally on the brink of the most terrible war in human history.

Where is the logic that says if country A gets richer, countries B, C and D need to get poorer? Overall world GDP growth is typically 4%pa. Country A getting richer will make other countries richer as well.

The answer is simple. Because natural resources ( land, oil, coal, uranium, iron, copper, etc) are limited. So far it has been OK, but nowadays with the arrival of 2 billion Indians and Chinese to the world markets these resources start to get depleted.

Until now about 80% of these resources were consumed by the rich West with 20% of the world population. Unless you find out how to make oil and food from limestone, you have to share these resources with the other 40% of world population now emerging, your consumption MUST drop.

[BoredTrainBuilder]

subtract oil and natural gas ( for which soon Eu has to compete with China and India ) and you get the 30's when Europe was inbalanaced, barbaric, innovative (in terms of weaponry), intolerant, antidemocratic, angry and generally on the brink of the most terrible war in human history.

The answer is simple. Because natural resources ( land, oil, coal, uranium, iron, copper, etc) are limited. So far it has been OK, but nowadays with the arrival of 2 billion Indians and Chinese to the world markets these resources start to get depleted.

Until now about 80% of these resources were consumed by the rich West with 20% of the world population. Unless you find out how to make oil and food from limestone, you have to share these resources with the other 40% of world population now emerging, your consumption MUST drop.

I accept that these are valid arguments.

[Mushroom]

Anyone here really up on the potential of nanotechnology?

I can remember a TV programme some 5 years ago which presented it as a real saviour for the future.

There doesn't seem to be much mention about it in the mainstream media now.

I suspect military applications are being explored of course.

One example suggested in the TV programme was machines that could decontaminate land and waste.

To be bullish, just as in the past a new technology may surprise us.

To be simplistic, without coal we'd have run out of trees, without oil and the internal combustion engine we'd be submerged under horse manure. Without telecommunications we'd have to write letters for heaven's sake.

[jackalope]

I think Western Europe is balanced, cultured, innovative, relaxed, tolerant, democratic, pretty, just, happy, organised and just generally pleasant. How many other parts of the world are like that?

frugalista

Precious few, but how sustainable is this golden age for Western Europe? What basis is there for predicting that this state of affairs will last more then a decade or two? WE is relatively poor in energy and other natural resources and the Indians, Chinese and to a lesser extent the Eastern Europeans are cheaper and just seem to want it more. The EU-15 are taxing themselves into oblivion to afford their precious 'social justice'. Unless we start to place greater emphasis on innovation and enterprise while legislating accordingly I see no reason to be optimistic on the long term prospects of Westerm Europe.

[IPOD]

Western Europe is balanced, cultured, innovative, relaxed, tolerant, democratic, pretty, just, happy, organised and just generally pleasant.

It must be so nice to spend the majority of your adult life on hallucinogenic drugs.

Balanced: how can a continent (or any portion of it) be "balanced"? It's not a set of scales.

Cultured: yes, if by culture you mean wearing an England shirt and vomiting on the pavement every Saturday night.

Innovative: name ONE innovation developed wholly in the UK in the last 5 years which has affected the lives of more than 1 million consumers (random measure of success/market penetration).

Relaxed: no-one I see on the trains or on the pavements looks relaxed. The standard-issue facial expression in the UK is a sullen scowl.

Tolerant: hmm, what platform did the Tories run on in the last election? So at least 30% of the electorate agree with their views. (also see recent riots in France where Sarkozy described immigrants in the suburbs as 'scum')

Democratic: Tony Blair got back in with only 22% of the popular vote. Democracy my ****.

Pretty: the Cotswolds are pretty. Birmingham is not.

Just: tell that to Jean Charles de Menezes.

etc.

Edited December 10, 2005 by IPOD