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Old Feb 20, 2004, 04:37 PM
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Perth Westen Australia
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The global market for labour

Where does it lead when India, China etc, bring down the cost of labour and the jobs walk out the door, all our doors not just the US door.

Will there be the great global levelling of standards of living?

And if so at what level?

Quote:
February 20, 2004
OP-ED COLUMNIST
Dark Side of Free Trade
By BOB HERBERT

The classic story of the American economy is a saga about an ever-expanding middle class that systematically absorbs the responsible, hard-working families from the lower economic groups. It's about the young people of each successive generation doing better than their parents' generation. The plotline is supposed to be a proud model for the rest of the world.

One of the reasons there is so much unease among voters this year is the fact that this story no longer rings so true. Books based on its plotline are increasingly being placed in the stacks labeled "fantasy."

The middle class is in trouble. Globalization and outsourcing are hot topics in this election season because so many middle-class Americans, instead of having the luxury of looking ahead to a brighter future for the next generation, are worried about slipping into a lower economic segment themselves.

This is happening in the middle of an economic expansion, which should tell us that the terrain has changed. In terms of job creation, it's the weakest expansion on record. The multinationals and the stock market are doing just fine. But American workers are caught in a cruel squeeze between corporations bent on extracting every last ounce of productivity from their U.S. employees and a vast new globalized work force that is eager and well able to do the jobs of American workers at a fraction of the pay.

The sense of anxiety is growing and has crossed party lines. "We are losing the information-age jobs that were supposed to take the place of all the offshored manufacturing and industrial jobs," said John Pardon, an information technology worker from Dayton, Ohio. Mr. Pardon described himself as a moderate conservative, a longtime Republican voter who has become "alienated from the Republican Party and the Bush administration" over the jobs issue.

Mr. Pardon does not buy the rhetoric of the free-trade crusaders, who declare, as a matter of faith, that the wholesale shipment of jobs overseas is good for Americans who have to work for a living.

"There aren't any new middle-class `postindustrial' or information-age jobs for displaced information-age workers," he told me. "There are no opportunities to `move up the food chain' or `leverage our experience' into higher value-added jobs."

The simple truth, as Mr. Pardon and so many others have found through hard experience, is that enormous numbers of well-educated, highly skilled white-collar workers are having tremendous trouble finding the kind of high-level employment they've been trained for and the kind of pay they feel they deserve.

The knee-jerk advocates of unrestrained trade always insist that it will result in new, more sophisticated and ever more highly paid employment in the U.S. We can ship all these nasty jobs (like computer programming) overseas so Americans can concentrate on the more important, more creative tasks. That great day is always just over the horizon. And those great jobs are never described in detail.

These advocates are sounding more and more like the hapless Mr. Micawber in "David Copperfield," who could never be swayed from his good-natured belief that something would "turn up."

We've allowed the multinationals to run wild and never cared enough to step in when the people losing their jobs, or getting their wages and benefits squeezed, were of the lower-paid variety. Now the middle class is being targeted, and the panic is setting in.

No one really knows what to do ó not the president, not John Kerry or John Edwards, and most of all not the economists and other advocates who have been so certain about the benefits for American working men and women of unrestrained trade and globalization.

What happens when the combination of corporate indifference and the globalized pressure on jobs and wages becomes so intense it weakens the very foundations of the American standard of living?

The fact that this critically important issue is finally becoming an important part of the national conversation is, to borrow a phrase used in another context by the chairman of the president's Council of Economic Advisers, "a good thing."

Perhaps an honest search for solutions will follow.
http://www.nytimes.com/
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Old Feb 21, 2004, 11:31 AM
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Interesting to me that no Democrat, Republican, or Independent/Other claiming affiliate has agreed or disagreed to this post at all, but everyone takes turns bashing his or hers favorite political enemy. This standard of living issue is a very real issue that will not go away soon. Without strong political leadership at all levels, we're heading for a real mess here in the States. Our kids and their kids future looks a little bleak from my side. Last two times I've called tech support on computer related stuff, I've been handed off to Ireland and India. Ask those folks what kind of money they make when you call. You won't like their answer.
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Old Feb 22, 2004, 07:11 AM
All under control, Grommit!
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United Kingdom, Aberdeen
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Perhaps the lack of response is because it is difficult for any of the advocates of the mainstream political parties to comment on this without some searching examination of the principles that they hold dear.

Globalisation is the natural consequence of rampant capitalism and the growth of the multinationals, made possible by new technology. As the article points out there was always the next great job just over the horizon, which would replace those jobs lost to cheaper labour. Concepts like looking after your employees, protecting their rights and offereing some sort of security have gone out of the window and the harsh bottom line rules. So, if salaries of tech support can be lowered to a quarter or less of what they were by locating those telephone support jobs in India, then that is where they'll go.

To comment negatively on that would be illogical for supporters of capitalism raw in tooth and claw- because they advocate that the market should decide and the market has decided.

On the other side of the coin it is difficult for any but the hardest core socialist to comment, because the international spread of those jobs and spreading of the economic benefits to the poorest in world society must surely be something that underpins their thinking.

Those people who you would most expect comment from- those caught in the middle who are actually most affected by this - have problems in articulating their response because after all they don't want to be seen to be taking the food from the mouths of those poor saps in India and yet they presumably aspire to the dream of capitalism. Those are the people who ultimately lose out in this, as pointed out in the article.

The winners are the owners and shareholders of those multinationals- who reap ever larger profits - and those towards the bottom of that labour system to whom winning a job that is very poorly paid by western standards is like winning the Lotto by some local standards.

Brian
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Old Feb 22, 2004, 07:13 AM
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So perhaps then the answer for the modern failing western worker is to become a shareholder and join in the exploitation, in a truely capitalist sense, of this new source of cheap and intelligent labour. Buy enough shares, and use enough services and bingo a new self supporting system...until these ugly forigners want your standard of living.....and you can't supply the services anymore yourselves and you don't have the infrastructure to even try to start to try again.....so it's starve whitey starve....... hoist on our own petard, typical.

hugh
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Old Feb 22, 2004, 08:13 AM
Alarm Bells Continuing!
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Arizona
Joined Oct 2001
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What we need is one person, or perhaps a group of really smart people, to decide what jobs can be outsourced overseas. They should also decide how many jobs a rampant capitalistic corporation should have, and how much money those workers should make, oh and to make it all work what products the company should make and how much they should sell for.

Oops, I forgot, the Soviets tried that for 70 years and it didn't work.

Oh, and isn't it interesting that everyone is so concerned over jobs that didn't exists anywhere just a few years ago!
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Old Feb 22, 2004, 08:24 AM
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Maybe instead of bellyaching over jobs leaving industrial countries, said countries should take a good look into why those jobs are leaving .... lower labor costs and less regulation.

Unless countries like the US want to continue to drive buisness and jobs out, they had better start changing some policies and start makeing this country "Buisness Friendly" again.

Logan5
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Old Feb 22, 2004, 12:19 PM
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Wilkes-Barre/Scranton, Pennsylvania, United States
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Mr Logan
You have hit the nail squarely on the head. This country has regulated the labor market to near extinction. Every governmental regulation costs the employer dollars. Those costs are additive to production costs and in a global market can make your product too expensive to compete. There is also the educational gap that is ever widening. Students in countries that are taking these jobs away from the U.S. and others are head and shoulders above in math and sciences. As we are getting worse they are getting better. Even before the exodus of jobe many U.S. firms were importing labor in the computer and science fields simply because our home grown people couldn't hack it. And finally there is worker greed. Seems no one wants to start low and climb the success ladder. Every one wants to start at the top.

So the easiest solution--move the jobs to an environment that is less regulated--where education results are more in tune with corporate needs and where worker greed has not yet reached its peak.

But there is a bright spot. We have the best lawyers money can buy---and a whole lot more than we need.

BM
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Old Feb 22, 2004, 04:33 PM
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Perth Westen Australia
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So the answer is, there will be a great levelling?


And the answer is that the level will be set by the market at a level a lot lower than current level?

If so the next 20-30 years should be interesting as our level of expectations is demolished.
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Old Feb 28, 2004, 08:32 PM
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Perth Westen Australia
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Just reading the Sunday paper and having breakfast.

Came across two articles on the same page of the paper

1 that the > $100000 PA earners in the US who supported free trade slipped from 57% in 1999 to 28% in Jan 2004.
http://www.sundaytimes.news.com.au/c...55E950,00.html

2. That the Oregon Department of Corrections through Inside Oregon Enterprises has set up a call centre business where the prisoners work for $170/month the business would have gone overseas otherwise.
Reported in SundayTimes but not on website so here it is on another site http://www.guardian.co.uk/uslatest/s...787019,00.html


Interesting juxtaposition of articles.

Support for free trade up in prisons down on the outside, itís a mad world
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Old Feb 28, 2004, 09:40 PM
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Wilkes-Barre/Scranton, Pennsylvania, United States
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From a very simplistic point of view no company exists for the purpose of creating jobs. Companies exist only for the purpose of creating a profit for the owners. Jobs are an expense or at least the wages the jobs demand are. Therefore they must be controlled as any other expense. In other words the company must get the most output for the least cost. While this sounds cruel to the average person it is a fact of competition. .

For many companies the solution was moving to less expensive areas.

BM
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Old Feb 28, 2004, 09:42 PM
Go get them Meg!
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Quote:
Originally posted by gtstubbs
So the answer is, there will be a great levelling?


And the answer is that the level will be set by the market at a level a lot lower than current level?

If so the next 20-30 years should be interesting as our level of expectations is demolished.

If history is any indication then "A great leveling" must take place. In America, new manufacturing facilities were most often placed not in the middle of a metropolitan area, but in nearby "Company towns" where the corporation was the (For a time) the only source of income, and so could pay lower wages than would have otherwise been the case, but higher then had previously been locally available.


As scary as out sourcing is, (To me as well !), the backlash of going to a country like Chine or Vietnam for cheap labor has already started. Manufacturing jobs are leaving China faster than they are arriving.

http://www.bizjournals.com/dayton/st...3/daily49.html


As soon as a multinat starts injecting capital into a "Poor" economy as a way of lowering labor costs, there comes an inflationary pressure. New workers need more housing, then want nicer consumer goods themselves, and the laws of supply & demand work their magic. China has a huge new middle class that makes even more bass akward countries financially appealing, so the multinats are pulling out of China, and going to wherever.

Just like it happened in America and England, labor prices will stabalize as the laborers become consumers themselves. Eventually the Multinats will have both their most fervent dream, and their worst nightmare. World wide markets for their products, and no more cheap labor to exploit.


And I'd bet it will happen a lot faster then twenty or thirty years.
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Old Feb 29, 2004, 05:01 AM
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Perth Westen Australia
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Quote:
Originally posted by lrsudog
If history is any indication then "A great leveling" must take place. In America, new manufacturing facilities were most often placed not in the middle of a metropolitan area, but in nearby "Company towns" where the corporation was the (For a time) the only source of income, and so could pay lower wages than would have otherwise been the case, but higher then had previously been locally available.


As scary as out sourcing is, (To me as well !), the backlash of going to a country like Chine or Vietnam for cheap labor has already started. Manufacturing jobs are leaving China faster than they are arriving.

http://www.bizjournals.com/dayton/st...3/daily49.html


As soon as a multinat starts injecting capital into a "Poor" economy as a way of lowering labor costs, there comes an inflationary pressure. New workers need more housing, then want nicer consumer goods themselves, and the laws of supply & demand work their magic. China has a huge new middle class that makes even more bass akward countries financially appealing, so the multinats are pulling out of China, and going to wherever.

Just like it happened in America and England, labor prices will stabalize as the laborers become consumers themselves. Eventually the Multinats will have both their most fervent dream, and their worst nightmare. World wide markets for their products, and no more cheap labor to exploit.


And I'd bet it will happen a lot faster then twenty or thirty years.
Got to say I like,"giant sucking sound" as a turn of phrase

"Canada and Mexico, the report says, are among five countries that gained manufacturing jobs in the seven-year period.
Merely lowering operating costs is not enough for businesses to survive today. Enormous gains in technology have raised the bar on global competitiveness, punishing firms with outmoded facilities regardless of their location," the report continues. "The giant sucking sound being heard today is not just in the U.S., but across the globe."
http://www.bizjournals.com/dayton/st...3/daily49.html


Interesting thing about all this is that I'm left feeling that one is going to get through the market what the 'right' rail against and the 'left' think will only come by the managed economy, the great levelling.


Can't help but think that the level will be quite a few rungs down the ladder from where we are now. However living in an island nation with a small population and an abundance of natural resources I have to say, in my economic ignorance, I'd rather be here than anywhere else.

I wonder where the local niches of riches will be in this new global economy?
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Old Feb 29, 2004, 12:17 PM
Go get them Meg!
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Quote:
Originally posted by gtstubbs


I wonder where the local niches of riches will be in this new global economy?
Global economy = global niches. Every major city will continue to have it's "Beacon Hill".

It's become clear to me that the only way for the "Common man" to have any financial security at all is to be a multinat partner via equities ownership.

As far as how high the bar will be for the standard of living, If one accepts that our various forms of capitalism will remain become the norm, then in the long term, it will be the same. In the short term (Your twenty to thirty years) hang on tight.
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Old Feb 29, 2004, 08:15 PM
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Quote:
Originally posted by lrsudog
Global economy = global niches. Every major city will continue to have it's "Beacon Hill".

It's become clear to me that the only way for the "Common man" to have any financial security at all is to be a multinat partner via equities ownership.

Does Beacon Hill = lots of money

Iím also looking for local niches where geographic isolation, abundance/lack of resource etc will give a clear advantage to a local

For example I would think that video/DVD rental stores (local) have a limited life span with broadband and higher speed internet connections. Eventually, say 5-10 years, you will download what you want and have little need for the store. So is it a good idea to buy a video store I donít think so.

Is it a good idea to buy into Fox, CNN, and Disney etc. I think so because the middleman can/will be cut out. Is it a good idea to consider Bollywood probably? So in this case go international with a good risk spread.

OTOH bricks mainly dirt, water colouring and energy. We have lots of energy and lots of dirt. It would I think take a lot for an Asian import to get into the market but OTOH with an aging population will demand hold up. In this case undecided go local but go small to minimise risk.

Water, not much of it here but people will pay to drink and manufacture. Wait for it to be privatised and get in.

Energy, lots of it here and people will whinge but will pay to keep the lights on. Go large

Tourism, clean open space we have lots of it and the well off in the world love it OTOH requires lots of energy to get them here but the well off will pay to get away. Maybe an opportunity for business.

Aquaculture huge Asian markets at top prices but dependent on cheap air transport. Worthy of consideration as a local business opportunity.

So I am looking for international directions to invest in because as you say financial security will be linked to ownership. But I also want to discern local niches for business that will be less or positively affected by the global economy.


Quote:
Originally posted by lrsudog
Ö As far as how high the bar will be for the standard of living, If one accepts that our various forms of capitalism will remain become the norm, then in the long term, it will be the same. In the short term (Your twenty to thirty years) hang on tight.
Have some problem with, ďin the long term, it will be the sameĒ based on the level of energy consumption required to sustain the current AUS standard.
http://www.ecoworld.org/Energy/Artic...s2.cfm?TID=294
http://gristmagazine.com/grist/books/nemtzow121201.asp


But since Iíve only got another 30 years Iíll hang on for the ride.
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Old Feb 29, 2004, 09:06 PM
Go get them Meg!
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Quote:
Originally posted by gtstubbs
Does Beacon Hill = lots of money
"Beacon Hill" is an archetype of the Broadlawn gentrified area that every metropolitin area seems to eventually generate.

Quote:
Iím also looking for local niches where geographic isolation, abundance/lack of resource etc will give a clear advantage to a local
Unfortunately, the advantage a local would have will only last so long as the financial opportunities remain "Below the radar" for larger, better funded non-locals.

Quote:
Water, not much of it here but people will pay to drink and manufacture. Wait for it to be privatised and get in.
Even with a good fresh water supply, there are usually several privately held fresh water suppliers. How long you figure until the Chinese will be sucking down San Pelegrino & Perrier?

Quote:
Energy, lots of it here and people will whinge but will pay to keep the lights on. Go large
Frought with risk. Entirely to much Government regulation in power generation to be a worthwile risk for me.

Quote:
Tourism, clean open space we have lots of it and the well off in the world love it OTOH requires lots of energy to get them here but the well off will pay to get away. Maybe an opportunity for business.
Perhaps, but rather high financial exposure due to the vagueries of global trends (Terrorism, War, SARS)

Quote:
Aquaculture huge Asian markets at top prices but dependent on cheap air transport. Worthy of consideration as a local business opportunity.
Man, you think Golbal manufacturing pollution controls are something now, wait until Greenpeace starts paying attention to the muck massive aquaculture operations put directly into the sea. Add to that the scary bio engineering angles, and I'd bet that Aquaculture is going to end up more regulated then nuclear power.

Quote:
So I am looking for international directions to invest in because as you say financial security will be linked to ownership. But I also want to discern local niches for business that will be less or positively affected by the global economy.

The best bang for the buck in the global economy seems to be in emerging market equity funds. Instant diversification, but with still a bit of betting on the new kids on the block.




Quote:
Have some problem with, ďin the long term, it will be the sameĒ based on the level of energy consumption required to sustain the current AUS standard.
http://www.ecoworld.org/Energy/Artic...s2.cfm?TID=294
http://gristmagazine.com/grist/books/nemtzow121201.asp


But since Iíve only got another 30 years Iíll hang on for the ride.

By the time your thirty years rolls around, Petro based energy production will be second tier. Oil is far to valuable as a portable power source and for chemicals to be used for making electricity.
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