Will globalization make us meet in the middle?
2012-01-31 (Tuesday) § 2 Comments
When goods and information can move quickly, cheaply and easily from any part of the world to any other, is it possible for the labor classes of different countries to indefinitely enjoy very different standards of living?
Right now we do. Nominal currency amounts aside, working people of average means in the US, Canada or western Europe can afford goods and services of both higher quantity and quality than working people of average means in sub-Saharan Africa, Central Asia, or South America.
Famously, this contributes to a lower cost of labor in the latter places, and when that labor is sufficiently qualified compared to its more expensive alternatives in the developed world, employers fire the Americans or Canadians and move shop to China or the Philippines. This is an old phenomenon by now.
Is there a way this kind of movement can go on indefinitely without standard of living rising for the cheap workers and falling for the expensive workers? It seems anecdotally like this is already happening. I read that Chinese factory labor is getting more expensive (or to talk about people as if they were people, Chinese people who work in factories are getting better wages and ancillary benefits). I also hear constant talk in the United States about how job security and limited work hours are luxuries that will slowly bankrupt us nationally if we try to maintain them.
If the gradual convergence of standards of living between the working classes of different countries is an inevitable consequence of easy global trade flows, is there a way we can see that as a good thing for the richer working classes? If it’s not, should we get mad and vote for protectionist trade policies? Or should we just sigh and take it?
If economists are already arguing over these specific questions, I’d love to be directed to where I can follow the arguments.