Globalization Woes

Harold Meyerson tackles the woes of globalization in today's WP. As expected, he comes down on the protectionist side of the debate.

"The total number of current U.S. service-sector jobs that will be susceptible to offshoring in the electronic future is two to three times the total number of current manufacturing jobs (which is about 14 million)." As Blinder believes that all those manufacturing jobs are offshorable, too, the grand total of American jobs that could be bound for Bangalore or Bangladesh is somewhere between 42 million and 56 million. That doesn't mean all those jobs are going to be exported. It does mean that the Americans performing them will be in competition with people who will do the same work for a whole lot less.

The threat of globalization and the reality of de-unionization have combined to make the raise, for most Americans, a thing of the past. Between 2001 and 2004, median household income inched up by a meager 1.6 percent, even as productivity was expanding at a robust 11.7 percent. The broadly shared prosperity that characterized our economy in the three decades following World War II is now dead as a dodo.

Of course there's no discussion of the benefits; lower prices of consumer goods, increased wealth around the world etc., only discussion of the perceived bad. The New York Times recently wrote:

While 2 to 3 percent of American jobs in the field migrate to other nations each year, new jobs have thus far more than made up for the loss.

When you read an article like Meyerson's today, it's easy to be alarmed, and many people are. However, there is never any discussion of the jobs created because of globalization.

I do believe, however, that globalization has brought labor costs down in the United States. The increased competition and supply of labor drives US wages down. But, increasing labor unions will only hasten the pace of jobs leaving the country. Why would a company choose less flexibility and higher labor costs when they can choose to be flexible? Why would the US government see that as a benefit? For evidence of this decreased flexibility look at the news from GM today. Quite simply GM got bloated because of negotiations with the UAW over the years and has to cut deals to pay off the union so it can compete. Never mind GM's underfunded pensions and healthcare, they simply can't afford to pay all these benefits to their workers and the union only stifles their ability to be flexible.