Forum Post: Effects of Globalism - an economic standpoint
Posted 13 years ago on Oct. 15, 2011, 10:11 p.m. EST by armchairecon
(138)
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Globalism/outsourcing leads to lower domestic salaries.. raises standards of living in the countries where they move to, and as costs increase enough, companies seek out the next lowest cost labor force. The previous country's growth slows. While this decreases the middle class in the previous countries, it increases the world's middle class base.
This results in increased net demand for corporations (Thats why corporations have record profits even though we are in a recession). As labor arbitrage narrows, worldwide standards of living will steadily increase globally. This will require countries to manage their resources carefully, reducing waste and inefficiencies (ie: bureaucracies) to compete.
Alternatively, an individual may opt out of playing this game by learning a skill that creates more value and not becoming dependent on a job anyone can do. Your destiny is in your hands.
Whether globalism is good or not depends on your viewpoint (ie: how important you consider nationalistic growth vs. worldwide growth)
Global net demand has increased (for certain products), but corporate profits are at record levels primarily due to cost cutting measures, e.g., firing workers, reducing benefits and salary levels, outsourcing, etc.
That being said, I tend to agree with your final point. If you want to prosper, then you need to assess the market and act accordingly. Look for opportunities and do your best to avoid the soon-to-be obsolete industries. Most importantly, don't count on the government to be there for you. If anything, expect that they will not be.
Agreed. There are still plenty of opportunities in the US to make money.
It's odd how often the theme of "not becoming dependent on a job anyone can do" crops up. It smacks of elitism.
A ditch digger is considered a job anyone can do, yet how many can dig that ditch so the drainage is correct? A wood cutter is a job anyone can do, yet how many will learn to fell a tree the correct way vs just allowing it to fall to the ground? Not 'anyone' can drive a tractor trailer rig that brings product to market and raw materials to manufacturers, not 'anyone' can teach, not 'anyone' can write books, not 'anyone' can build cars...
However, any job can become obsolete, be it in manufacturing, finance, or any other 'arena' of employment.
Employers will seek the lowest wage they can pay in order to increase profits, which in turn increases the profits of investors.
Imported goods need a viable market, without reasonable wages the market does not exists.
Expendable income is what 'floats the boat', it is the 'extras' people are able to purchase that fuels an economy...basics, food, shelter, clothing do not fuel an economy, they barely maintain one.
Re: your comment on elitism you can view it as elitism , but the market will dictate the salary. Ditch digger and wood cutter jobs may require skills, but its nothing a few years of apprenticeship wont acheive. Currently there is a drive towards 'college' because we are getting soft and there is the (imho mistaken) assumptoin that you are guaranteed a 9-5 cushy job if you get a college degree.
If there are too few ditch diggers, the salary will increase (assuming there isnt a technology that will replace them) accordingly. Consider the pay that oil rig workers get... not too much skill necessary, but very high pay for those who can stand it. The threshold to drive a tractor is much much much lower than that of programming, treating sick patients, or running a corporation, thus there are low barrier to entry, making your market more prone to ups and downs relative to skilled work (where you need a few year head start for college/graduate training etc.). Arguably something like trading stocks/bonds is actually pretty easy.. many sucessful traders didnt go to college (just need balls of steel and an understanding of risk)
I actually think at this point of our economic development, all three of those 'staples' are economic drivers. Currently, clothing is a luxury. You can buy clothing for almost nothing (ie: walmart 5$ tshirts).. but most clothing (ie: branded) is unecessarily expensive.. and there is enough of a value adding via fashion, marketing, specialized fabrics, etc where it is no longer a commodity. the same can be said of food.. where processed food is a HUGE economy.. and processed food is a larger and larger proportion of food consumed relative to uncooked commoditized raw food. Additionally it was shelter that drove the economic growth the previous 10 years via price appreication (however artificially inflated by cheap interest).
That's a common misconception, corporations will usually try to keep cheap labor cheap. See:
"The U.S. Embassy in Haiti worked closely with factory owners contracted by Levi’s, Hanes, and Fruit of the Loom to aggressively block a paltry minimum wage increase for Haitian assembly zone workers, the lowest paid in the hemisphere . . . The factory owners refused to pay 62 cents an hour, or $5 per eight-hour day, as a measure unanimously passed by the Haitian parliament in June 2009 would have mandated. . . The minimum daily wage had been 70 gourdes or $1.75 a day." http://www.haiti-liberte.com/archives/volume4-47/Washington%20Backed%20Famous.asp
This is a great example of corporations corrupting the government, actually.
Isn’t emitting debt bonds through Wall Street considered to be outsourcing manual labor of future generations since the're the ones likely to be paying for it?
Isn’t emitting debt bonds through Wall Street considered to be outsourcing manual labor of future generations since the're the ones likely to be paying for it?
Thoughts on:
a.) Estimates that show we would need 2.5 planets' worth of resources if everyone consumed at the same rate as the average American
b.) Endgame. Where is the last emerging (low cost) market? Does it cycle around until it's us again? How low will our relative position have to go for that to happen, especially considering (a)?
c.) Did we vote for this? Did we accept our sacrifice to the neoliberal gods, for the sake of transnational and Wall St. profits at the expense of real wages that have been static for decades and bleak outlook for long-term continued unemployment? Were we asked whether we wanted to sacrifice so we could help replace traditional rural poverty in China with manic consumerism + aforementioned profits for the oligarchs + cheap goods that nobody needs and that force further pressures on domestic business + an unsustainable global civilization barreling towards a Malthusian chasm?
Nothing?
I liked your post. You forgot: globalism leads to a decrease in price of manufactured goods in importing countries.