> Ah, the ideal of perfect labour mobility. Even if we did remove the legal and economic restrictions, we still can't achieve perfect labour mobility without breaking down a person's social ties to family, friends and community. Although some neoliberals have put a lot of effort into doing so.
I wasn't arguing for the ideal of labour mobility. I was pointing out that in its absence, the reality of almost unrestrained job mobility creates a huge disparity between employers and employees.
>In this regard at least, the globalisation of manufacturing is a force for good.
Is it? How? The jobs are still heading to the cheapest economies and they are the cheapest economies because they provide the least amount of workers rights/environmental protections etc.
They may run out of countries to move to eventually, but it's at least equally likely that those countries where wages/conditions had risen when demand was high will have those improved wages/conditions slashed again once the demand has moved elsewhere and the jobs will simply rotate between whichever of these economies is able to offer the least protected, worst paid and move malliable workforce at any give time.
> I am not sure what a solution is, after all these types of temp companies only exist to skirt existing labor laws, suggesting these laws may defy economics a bit too much.
The solution is to limit the labour pool or, in other words, limiting immigration.
> Pulling back from globalization would, but that is bad economics and bad for national security.
How is it bad economics? And what is your benchmark for success? Are you optimising for GDP, for quality of life, GDP per capita, what?
> Or perhaps we should just continue waiting until the rest of the world develops and the supply of labor finally becomes constrained.
> If companies in Country A move some jobs to Country B [...] is the world really worse off?
If the only change is salaries then no. My only objection to offshoring is when the conditions the workers are expected to endure are clearly far below what we'd consider minimally reasonable in developed countries - my basic rule is that "would people still hypothetically buy your product if they had walk through your factory first and observe those conditions first hand?".
And no I don't think it's really enough to say "well at least it's better than subsistence farming" - in that case the conditions aren't (by and large) being imposed on them by others. It's a good thing corporations from developed economies are able to offer new employment opportunities in poorer countries, but for the sake of our own humanity, we still need to treat employees with the same basic decency as we would if they were in our own country.
> This doesn't go away unless there's incentive for companies to pay them more than they absolutely have to, and treat them better than they absolutely must.
So? My company has no incentive to pay me any more than they absolutely have to, or treat me any better than they are forced to. They pay me well and treat me very well, because the market says they have to.
That incentive doesn't limit the upper bound quality of life of employees in any meaningful way, unless changing jobs is illegal.
> ...Gained advantages from production efficiencies are being routed by globalisation - the claimed 'uplifting' force for the poor...
I'm not sure exactly what the argument is there, but America's problems are certainly not linked to new corporations entering the American market due to globalisation. If anything, the problem is that the jobs America would use to make poor people wealthy and satisfied are leaving and going to places like Bengaluru, where they will in time raise local living standards substantially.
It is difficult to argue that globalisation is hurting America and India simultaneously. India is strictly better off, and America is arguably better off under standard economic theory.
> consider now the growing wage disparity in the US
The US does a lot of stupid stuff economically speaking, like everyone else. The zeitgeist of US politics for the last 12+ years has been all about protecting failing institutions from change and they are paying a price for that. But that has not so much to do with globalisation.
> Is cheap labor a legitimate source of comparative advantage?
No, it isn't. Living in the Rust Belt, I find it so obvious that globalization is a race to the bottom that I'm amazed any reasonable person could believe otherwise. All the jobs move to countries with the worst wages, environmental protection, safety, workers' rights, etc.
In economists' language, through labor organization and the democratic process, relatively free countries' workforces created a de facto monopoly on labor, which was able to extract some monopolistic rent (i.e. workers' wages > what they "should" be). Standard economic theory says this has a redistributive effect (labor pulls money from everyone else) plus an inefficiency effect (there's some potential value lost by the artificially high wages).
Standard economic theory says markets should always be free, to avoid the inefficiency effect. This is where I disagree with standard economic theory: When it comes to the labor market, I firmly believe the inefficiency effect is a cost worth paying for the redistributive effect.
If you open up your trade to the rest of the world, fungible jobs all go to the poorest, most repressed people, who can be paid the lowest wages and exploited in the worst ways. It's great for lifting people out of extreme poverty, but as a side effect it slides every country toward moderate poverty while moving all the wealth to the 1%. That's a recipe for potentially dangerous levels of social and political instability.
My solution? Every country with high standards in wages, environmental protection, safety, workers' rights, etc. needs to implement tariffs to level the playing field. If your country has high standards, other countries can still choose lower standards and trade with you, but the competitive benefits of those lower standards will be nullified by the tariffs. Which lets you keep your high standards without wrecking your economy (and as a side benefit raises revenue without taxing your people directly, and gives countries with low standards an economic incentive to improve themselves. Which is potentially a great humanitarian breakthrough, improving the lives of lots of ordinary people in countries whose rulers care only for their wallet).
I think the Trump's tariffs are a move in the right direction, although I think he's made a mistake by making the policy more of a negotiation lever than a semi-permanent way to compensate for China's low wages and poor standards.
I believe so strongly in the value of a tariff policy that I used to say that I thought Trump's willingness to implement tariffs more than balances all of his many negatives. Lately I'm not so sure about that, not because I've lost faith in tariffs, but because Trump's done a lot more negative things than I thought he would.
>>>> Why does being in the US matter? How are they demonstrating that they've changed their ways
it matters a great deal because competition for labor is different by country. If you have no competition, I would agree with you, its a very bad situation for the worker.
>>>>>if they're still exploiting their workers when given the opportunity?
People are not exploited because there are companies. People are only exploited if there is opportunity to exploit.
At the extreme, you have slavery, which was at the root a govt directive. Opportunity is not the natural state of things in free societies. Societies decide how much opportunity to exploit they want to give the powerful. That's why people still flee China to come to the US
>>>> the trend does not show them willingly rolling out benefits to the workers.
Yes, but many companies do. My only point is that the trend is pointing to a healthy society, not that society is perfect. Trader Joes, Costco etc come to mind. This is much better than it was even 20 years ago.
>>>> As for Pinkerton, the company still works in the same field. Here's one example.
Its a very bad example. I just read about it - Pinkerton at its height of power was the largest private security force world.https://en.wikipedia.org/wiki/Pinkerton_(detective_agency)#c...
This only reinforces the observation that the general trend is to move away from such services, at least in the USA
> While there are negatives, I appreciate how globalization of manufacturing helps lift poorer economies
Let's be real about those negatives.
It seems as though it's always just the next country in line taking it's turn to provide subsistence-wage labor. The likes of Steve Pinker may argue that living standards continue to trend upwards across the board, but it seems like people are just becoming more and more time-poor (happy to be proven wrong on this point).
If we follow this pattern, once every country has lifted itself up by the bootstraps, the end-game would not be some poorer nations providing the subsistence-wage labor, but the poor population of each country providing subsistence-wage labor. Their living standards might be much higher, but they will pay in hours, or having to give up freedoms, like living on-site at Foxxcon. Why? Because those holding power have the upper hand, and would hardly be motivated to cede their power. Replace power with capital if you want. The only possible countervailing force being collective action, say in the force of democratic institutions, and a socially-minded polity.
But eventually, automation will outcompete everyone... at this point we're then forced to resort to either welfare or artificial means of population control. It seems more humane to consider policy on population and welfare sooner rather than later, but that's just my humblest of opinions.
EDIT: Cowards who downvoted me, might you refute any of my points?
"letting jobs freely flow to the cheapest place in the world, and products to flow tariff free across borders" will happen, no matter what? Does the free will of human beings to choose and pursue their own destiny have something to do with it?
> There is no way to have wages in US 5-10 times bigger than in other countries only because politicians can do such a thing (if they would).
Not higher than everyone of course, but this assumption that everything is going to even out across all countries perfectly evenly seems like a rather extraordinary belief that at least ignores the ability and willingness of humans to go collectively insane periodically.
Does the human nature/culture aspect of this situation not bother you at all? For example, I hope we can agree that certain cultures are better than others at certain things, for whatever reason. For example, the US at innovation, the Japanese at perfecting things, the Chinese at mass production and working incredibly hard (so far, what's next we shall see). Do you think it is absolutely not possible at all that some cultures on earth might lack certain strengths required to compete on a tariff-free global marketplace, or the social cohesion to govern society successfully under these new conditions?
> Capitalism needs to regulated, or we end up were we are now, where CEO make so much money, vs the combined work force.
The CEOs get high pay because their skillset is rare.
Exporting jobs is the opposite of exploitation. How can more choice harm poor workers?
> Also exporting jobs, like IT, to countries to cut the bottom line, when the workers are not skilled enough, and what I feel, don't care enough to learn about stuff beyond what a script tells them, then it's bad.
The quality may be the lower but the price is also lower.
There are many examples in the manufacturing industry, though unions aren't the only factor.
> Maybe we need to open a gigantic can of worms that “runs counter to globalization” if we’re talking about sending
those jobs to countries with unethical working conditions.
I couldn't agree more, the problem is there are powerful interests that will keep trying to sweep this issue under the rug.
> But this can't be a healthy way for a society to operate: to have the rich get richer and transfer their money to the poor so they don't get poorer.
I mean, it's literally the point of a welfare state to do this, because it's a whole lot more unhealthy to just let the poor get poorer or try to fix incomes
Manufacturing jobs shifting overseas has virtually nothing to do with monetary policy and everything to do with the fact that Asia has got much better at manufacturing and has relatively cheap labour. Similar manufacturing shifts happened in other Western nations whose currencies are not reserve currencies
(Sure, in theory the US could have countered trade imbalances by aggressively devaluing their currency to make buying things from overseas expensive, but less drastic approaches to promoting manufacturing exist...)
> Americans can certainly reshape their society to bring back factory work, but there are practical concerns here.
That's not the policy I was suggesting, but pretending that current neoliberal policies (that aren't shared by all successful countries) are the only option is both false, and the main reason that gave us Trump in the first place.
Lump of Labor is a fallacy, people do find new jobs, and productivity does improve the economy. But none of that implies that the displaced people will be better off in the end!
Similarly, free trade agreements are economically efficient, and boost per-capita GDP. But even aside from implementation issues (i.e. agreements that go far beyond lowering tariffs), there's no particular reason that the extra money ends up benefiting the same people who get hit by outsourcing.
If anything, the studies I've seen say that being displaced by automation or outsourcing causes a permanent wage decline. The original Luddites were right - they probably saw lower wages for their entire lives thanks to automation.
Pretending that overall growth inherently means an economy which works better for the majority of people is frankly dishonest, especially (as you say) in a country so opposed to helping the displaced.
> The problem is that first world labor is totally overpriced and their lifestyle is simply unsustainable.
The thing is, the comparatively high labor cost in Western countries is so high because we can actually have a life on it and feed a bunch of uber rich people with our labor and taxes (because guess what, people like Warren Buffett and his ilk pay a ridiculously low tax rate [1] compared to legitimately employed working class people). In contrast, China, India, Thailand or Vietnam can offer very cheap labor because for the people there even utter pittances and absolutely ridiculous exploitation are better than the life these people had before.
While I do support the efforts China and India both have committed to lifting literally a billion of people out of utter poverty, it has at the same time brought disastrous consequences on our own society. I'd be happier with globalization if we had forced importers of any good to make sure that wages, labor conditions and environmental impact were on par with domestic regulations because the status quo is exploitation on all levels to benefit Western oligarchs (and imagine how the life of Chinese factory workers would be with Western wages!).
> Alternatively stop exporting jobs and outsourcing joining a race to the bottom.
Isn't that's just one half of the problem. Isn't the importing of labor the other half of the problem.
We've exported jobs and imported labor. That's a double whammy for workers and can't help but put downward pressure on wages. But it's great for the wealthy elites. Exploit cheap labor overseas and cheapen labor at home.
> as the cost of hiring domestic labor in developed countries go up, companies begin to off-shore labor as soon as they are able.
Productivity of labor is also much higher in developed countries. What matters is comparative advantage.
Even from a strictly economic point of view, it is often better for rich countries to off-shore a lot of low-level manufacturing. That decreases prices for manufactured goods in rich countries and frees labor for more productive jobs. If you somehow force companies to bring back manufacturing jobs to the US, two things will have to happen:
1. Prices will increase for consumers.
2. People will be transferred from their current jobs to the new manufacturing jobs. You may actually be transferring people from more useful, productive labor into less productive labor, leaving the entire society worse off.
> Let me play the devil’s advocate: you buying those products is measurably better for those disadvantaged blue collar workers, than you not buying it (on a 10 year horizon IIRC - There are some UN studies on this, on phone and can’t find them right now).
Maybe in some cases.
However, you then have labor in those countries trying to struggle for the same protections and advances in wages that workers in the US struggled for, but they are struggling against a far more powerful corporate entity that has the backing of a more corrupt/disfunctional government while also having diversified options to break and weather strikes.
Then you have to add to that all the non blue collar workers who have had their subsistence livelihoods destroyed through land seizures for resource extraction.
Most of the benefits of globalization roll uphill (richer citizens, especially in richer countries extract most of the benefits) the trickle down is minuscule to non-existent.
> I think you and the op are both missing that the vast majority of those mid skilled jobs still exist, they just exist in countries whose labor costs are drastically lower.
They exist in lower income countries, but the work quality is often shoddy and poor at best. The talented ones have already migrated to the West. Case in point, a factory we built for a project in the Middle East with a fully European team took just 9 months to finish from the start of laying the foundation stone. Similar projects in the same country by a Chinese or local company would have taken 3-4 years. Another American team executed a project in Singapore in 2.5 years, but that same project was estimated to take 6 years in India.
>But its not clear that existing American workers would be better off.
There's actually a relatively noncontroversial theorem in mainstream economics that suggests with free migration (or trade), the wages of less-skilled workers in the richer country will fall, and in the poorer country will rise, until they meet in the middle: https://en.wikipedia.org/wiki/Factor_price_equalization. Economists still consider the outcome to overall be positive because the workers in the poor country gain more than those in the rich country lose, and both benefit from increased productivity growth in the long term.
> If you can't afford the labor costs, then your business doesn't get to exist. That's the way the market works. If I could hire people for ten cents an hour, I could start a great software business. I can't. Too bad for me.
Its rather ironic that you advocate for free markets when it suits you but later in your same post you want protectionism. You can't have it both ways, no matter how much you want it.
> Your statement in general is representative of the race-to-the-bottom thinking I referenced in my earlier post - the idea that we have to do this, or the jobs will go elsewhere, where labor is cheaper. Well, that's how you get savage cuts to labor protections, stagnant wages, and massive corporate welfare in the form of tax cuts and subsidies. What's the endgame, here? Essentially, a global, common market with freedom of movement, a world where democratic governments are entirely subordinate to large corporate interests, a world where wages start plummeting because someone, somewhere, is perfectly willing to program for 5k/year and live in a one-bedroom apartment with five other people, all the while the company involved is getting massive tax breaks lest they start move somewhere else even cheaper.
> No thanks.
Eh? The world is heading towards a global common market, whether you are willing to accept it or not. Do you expect the current imbalance in wealth and development between countries to continue in perpetuity? This imbalance has been the product of some very unique circumstances in world history and will not last for very much longer.
Anyways, the example you give is a strawman. Please find me a qualified developer who will work for that amount anywhere. Critical thinking and creative programming skills are hard to develop for most people and its definitely not that easy to find good developers.
> The reality is that American workers are highly educated and there's a huge amount of social capital and financial capital that will keep businesses operating in the US. If they really wanted to, it's already cheaper open foreign offices and hire locals elsewhere - there's more than just immediate financial considerations already in effect. In a future with more expensive American labor, brilliant US programmers will still be starting their companies in the US, because they already live here. They will hire their friends and alumni from their college in the US. They will hire people those people give references for. They will hire people who live near them.
I completely agree with the huge amount of social and financial capital in the US. But I don't believe its the operating factor in keeping businesses local. One of the main advantages of SF is that it acts as a magnet for talent from all over the world. Cut that off, and you won't have that anymore.
The wiser strategy would be to exploit that capital to continue to build on existing structures and strengthen the position of the US economy to attract the best talent. I must admit I simply don't understand why you want to kill the Golden Goose just because you think maybe possibly protectionism will help you when historically it hasn't.
> Most businesses will not leave the US in the near-term, H1-Bs or no H1-Bs. If they choose to go elsewhere to evade American labor prices and American labor protections, there is a simple solution. They can be forbidden from selling their products and services here. Access to the American market can be predicated on worker wages and benefits. I don't see any other solution that prevents a global corporate oligarchy.
That is protectionism. And it never helps. Sure, you can try it, but when the rest of the world retaliates, suddenly you're cut off from the rest of the world and operating in isolation.
I wasn't arguing for the ideal of labour mobility. I was pointing out that in its absence, the reality of almost unrestrained job mobility creates a huge disparity between employers and employees.
>In this regard at least, the globalisation of manufacturing is a force for good.
Is it? How? The jobs are still heading to the cheapest economies and they are the cheapest economies because they provide the least amount of workers rights/environmental protections etc.
They may run out of countries to move to eventually, but it's at least equally likely that those countries where wages/conditions had risen when demand was high will have those improved wages/conditions slashed again once the demand has moved elsewhere and the jobs will simply rotate between whichever of these economies is able to offer the least protected, worst paid and move malliable workforce at any give time.
reply