I have always been skeptical of the concepts of “globalization”. Especially of the part for free flow of labor across all countries. It seemed only natural to me that business would move production to the areas where it could get low cost labor, and repeat this process until the cost of labor across the world was equal in all countries. With all due respect to David Ricardo, comparative advantage doesn’t apply when you are dealing with a fairly homogenous human race scattered across a world where the only difference in production costs was transport of the product to its respective market.
The prospect of unilateral wages across the world doesn’t seem like a bad idea unless you are a high wage country, such as the US was, because the inevitable consequence was that your wages would fall. Obviously if you were in a low wage country you would think globalization was a terrific idea as your wages would go up.
The results of globalization the last few decades has been fairly consistent with the above observation, and have moved a considerable number of jobs out of the United States to lower cost labor markets. The result has been a loss of income for a majority of US workers and a scarcity of employment for the displaced workers, which are now numbering in the millions.
The geniuses’ of globalization have always had that mantra going that said displaced workers would find new jobs, but have never had a good answer to the question “Doing What????”. Without the production of “something” where are the jobs?
We can’t all make a living cutting one another’s hair or doing one another’s nails. Without an income how do you pay for the haircut or the toe job?
Again the geniuses had an answer, higher productivity and technology. Well, in case you haven’t checked out technology lately, most of it says Made in China. And as it goes for productivity it turns out most other people are just as productive as we are.
In such an economy as ours, where the only people making any money to speak of are overpaid executives of questionable character running barely profitable companies that sell elaborate worthless paper schemes to hapless investors, how can you continue to exist as an economy?
Please send all answers to the Econophil, in care of this station.