Post by unlawflcombatnt on Jan 21, 2006 14:43:37 GMT -6
Those who advocate pro-free trade often justify their position by stating a desire to uplift the poor in foreign countries. Not only do I oppose that position on nationalistic grounds, I question the benefits to 3rd world countries. Lack of benefit to 3rd-world countries is a point I'd like to make mainly with "liberals."
Outsourcing does NOT raise aggregate global wages. In fact, outsourcing labor costs to a low-wage country REDUCES global labor wages and income. If a $90/day American laborer is substituted for by $2/day foreign laborer, it reduces aggregate global labor income. Global labor income is what buys production and creates demand. Outsourcing reduces aggregate global labor income, thus reducing total consumer spending world wide. American workers lose income and buying power with outsourcing. That loss is NOT made up for by increase in foreign wages. This is just plain common sense. It's impossible for labor cost reductions to make up for wage losses.
If American workers can't buy America's production, then foreign workers need to pick up the slack. Does anyone really think that's possible? Can $2/day foreign workers make up for the buying power lost by $90/day American workers? That's $88/day/worker in lost labor income per worker. It would take the labor income of 45 $2/day workers to make up for the American labor income loss. Does this seem likely, or even possible?
The only "benefit" is the short-term cost reduction for outsourcing American producers, with a slight decrease in price for American consumers. This becomes a net loss to American workers and consumers.
Global labor competition causes aggregate global labor income to drop. It increases the labor supply available to American corporations, and decreases workers' bargaining power. This is simple supply and demand. If the supply of labor increases 100-fold, it will drive the "price" of labor down. Labor "price" reduction means labor "wage" reduction. Thus, the end result will be a dramatic reduction in American labor income with a smaller, but significant, reduction in global wages as well.
Outsourcing and globalization don't "raise" anybody up. They drag all workers down. Jobs will go to the most impoverished workers, and employers won't pay them a penny more than they have to. We cannot enforce minimum wage laws, or other worker protections in foreign countries. More importantly, however, is that Corporate America doesn't want to enforce minimum wage laws in foreign countries. Such enforcement would increase the price of their exploited foreign labor. The poorer the worker, the more willingly they accept poverty-level wages. Their impoverishment is Corporate America's gain. So Corporate America always opposes minimum wage requirements and worker protections in free trade agreements. Again, it's not the foreign country negotiators who oppose labor protections being imposed upon them. It is the American Corporate investors who oppose such laws. Because it is the American Corporate investors whose profits will be reduced by such laws.
Let's not forget that someone needs to buy the goods produced. Who will buy goods if American worker wages sink to the level of their enslaved foreign counterparts? People can't purchase goods without income. And very low income means very few goods purchased. Demand cannot be created out of thin air. Consumers must have sufficient income to create that demand. Without demand, there is no need for production, and no need to hire workers. (Though the recent decline in wage-financed consumer spending has been compensated for by increased borrowing, this is not a sustainable situation.)
The truth is that the entire world economy would collapse without the Demand created by American consumers. That demand is created by American income and borrowing. We're almost maxed out on borrowing at present. In addition, inflation-adjusted American wages are declining. They've declined 0.5% over the last year, and 1.7% since July 2003. (See Real Hourly Wages.) The last thing the US (and the world) need is a further decline in American wages. An American wage decline hurts the US, as well as the major exporting countries. If aggregate American labor & consumer income declines, so does our ability to buy foreign imports. Increasing American labor competition with enslaved foreign workers is worsening this wage decline. It's not only in our best interests to keep jobs in the US, it's to the advantage of all countries that export to us. We need income to buy their goods.
"Opening up markets" sounds like a good idea. But it's a smokescreen. It's not the real motivation behind "free" trade agreements. The real motivation is "opening up" the American labor market to competition with foreign slave-labor. Bush and his NeoCon-Artist supporters know this. But they hope no one else will. Many of us do, however. Hopefully we can make others see this as well.
_________________
The economy needs balance between the "means of production" & "means of consumption."
Outsourcing does NOT raise aggregate global wages. In fact, outsourcing labor costs to a low-wage country REDUCES global labor wages and income. If a $90/day American laborer is substituted for by $2/day foreign laborer, it reduces aggregate global labor income. Global labor income is what buys production and creates demand. Outsourcing reduces aggregate global labor income, thus reducing total consumer spending world wide. American workers lose income and buying power with outsourcing. That loss is NOT made up for by increase in foreign wages. This is just plain common sense. It's impossible for labor cost reductions to make up for wage losses.
If American workers can't buy America's production, then foreign workers need to pick up the slack. Does anyone really think that's possible? Can $2/day foreign workers make up for the buying power lost by $90/day American workers? That's $88/day/worker in lost labor income per worker. It would take the labor income of 45 $2/day workers to make up for the American labor income loss. Does this seem likely, or even possible?
The only "benefit" is the short-term cost reduction for outsourcing American producers, with a slight decrease in price for American consumers. This becomes a net loss to American workers and consumers.
Global labor competition causes aggregate global labor income to drop. It increases the labor supply available to American corporations, and decreases workers' bargaining power. This is simple supply and demand. If the supply of labor increases 100-fold, it will drive the "price" of labor down. Labor "price" reduction means labor "wage" reduction. Thus, the end result will be a dramatic reduction in American labor income with a smaller, but significant, reduction in global wages as well.
Outsourcing and globalization don't "raise" anybody up. They drag all workers down. Jobs will go to the most impoverished workers, and employers won't pay them a penny more than they have to. We cannot enforce minimum wage laws, or other worker protections in foreign countries. More importantly, however, is that Corporate America doesn't want to enforce minimum wage laws in foreign countries. Such enforcement would increase the price of their exploited foreign labor. The poorer the worker, the more willingly they accept poverty-level wages. Their impoverishment is Corporate America's gain. So Corporate America always opposes minimum wage requirements and worker protections in free trade agreements. Again, it's not the foreign country negotiators who oppose labor protections being imposed upon them. It is the American Corporate investors who oppose such laws. Because it is the American Corporate investors whose profits will be reduced by such laws.
Let's not forget that someone needs to buy the goods produced. Who will buy goods if American worker wages sink to the level of their enslaved foreign counterparts? People can't purchase goods without income. And very low income means very few goods purchased. Demand cannot be created out of thin air. Consumers must have sufficient income to create that demand. Without demand, there is no need for production, and no need to hire workers. (Though the recent decline in wage-financed consumer spending has been compensated for by increased borrowing, this is not a sustainable situation.)
The truth is that the entire world economy would collapse without the Demand created by American consumers. That demand is created by American income and borrowing. We're almost maxed out on borrowing at present. In addition, inflation-adjusted American wages are declining. They've declined 0.5% over the last year, and 1.7% since July 2003. (See Real Hourly Wages.) The last thing the US (and the world) need is a further decline in American wages. An American wage decline hurts the US, as well as the major exporting countries. If aggregate American labor & consumer income declines, so does our ability to buy foreign imports. Increasing American labor competition with enslaved foreign workers is worsening this wage decline. It's not only in our best interests to keep jobs in the US, it's to the advantage of all countries that export to us. We need income to buy their goods.
"Opening up markets" sounds like a good idea. But it's a smokescreen. It's not the real motivation behind "free" trade agreements. The real motivation is "opening up" the American labor market to competition with foreign slave-labor. Bush and his NeoCon-Artist supporters know this. But they hope no one else will. Many of us do, however. Hopefully we can make others see this as well.
_________________
The economy needs balance between the "means of production" & "means of consumption."