We spent about one-half of the meeting on globalization, and the other half on whether and why the American middle class has declined in recent years. We had a sharp split on the “whether,” as well as the why.
Since it was an unusually contentious meeting, I’d like to use a great idea that Jim W. had to give people an opportunity to continue the debate on-line if they want. So: Does anyone have anything to add that they did not say last night? I’ll start. I have two.
The first has to do with Ron’s idea that the international community should require poor countries to set a living wage and/or an appropriate wage for their people, to be determined by experts. This is a principled and moral idea, to be sure. But, here is my issue with it. The biggest cause of the huge gap between wages in poor nations and wages in rich ones is that workers in the former simply are far less productive. This is absolutely true. Obviously, I don’t mean, say, factory workers in Vietnam don’t work hard. They work almost unimaginably hard under sometimes poor conditions. But, each of those workers produces a lot less per hour than a factory worker in the U.S. does. This is mainly because Vietnamese factories are much less efficient in the use of technology and automation than their highly automated American factories do. By some estimates, 80% or more of the wage differential between poor and rich countries is because of this.
But, wait as minute. Why, then, do we buy so much stuff from these countries if they’re so inefficient? Because they’re also paid so much less! In Vietnam, Worker Productivity X Wage is a better deal (business-wise, for JC Penney and Nike) than America’s mugh higher Productivity X Much Higher Wage. That’s the way it works: When it’s true, we import the product; when it’s not, we make it here.
The point for the purposes of Ron’s idea is this: If we step in and raise Vietnamese wages so that they’re not in line with their productivity, then their goods will be priced out of world markets and their factories would close. Vietnam never develops and it’s back to the rice fields where living standards are even worse because it’s so labor-intensive. Our good intentions get trumped by globalization and capitalism.
So, what to do? Well, nothing is one idea, and its basically what we’ve done under Capital-G Globalization. But, it’s unacceptable to both Ron and me. So, IMO, we should do two things:
- Help Vietnam to increase its productivity, which is just a jargony way to say, “help them to develop economically,” because that’s what economic development means. It’s how we raised our productivity and our wages above 19th century levels — not hjust because we broke thge power of the robber barons. And;
- Since Vietnamese companies, its corrupt government, or multinational corporations (Hi, again, Nike!) will try their best to keep all that extra productivity for themselves and not ever pay wages in line with workers’ true value, we should pressure such countries and the multinationals to do the things that give the workers a fighting chance to demand their fair share of an expanding pie. One way to help do all of this is by creating a rules-based trading system that embeds these practices in internationl law.
Those things would be, for example, allowing workers to unionize and requiring governments to respect those rights, requiring governments to adhere to basic health and safety standards (which are more humane and raise productivity in the long run), and — the point I actually was trying to make last night – become real democracies. Only in democracies can the fruits of economic growth and development be fairly shared, although it doesn’t happen automatically with us in the last 30 years being a case in point.
Gee, that rambled on. I’ll make point #2 in another post or in comments if someone starts a conversation thread.