Wednesday, June 20, 2007

So the Answer to One Bad Idea Is...

Another! From Arts and Letters Daily, a pointer to an article entitiled: A New Deal for Globalization.
Summary: Globalization has brought huge overall benefits, but earnings for
most U.S. workers -- even those with college degrees -- have been falling recently; inequality is greater now than at any other time in the last 70 years. Whatever the cause, the result has been a surge in protectionism. To save globalization, policymakers must spread its gains more widely. The best way to do that is by redistributing income.
Protectionism is an abysmal practice brought about fear of competition and desire to mollycoddle workers and voting blocks. I once read (and I wish I had a link to it) that given the additional money all Americans shelled out to pay the protectionist taxes on foreign cars to assuage the autoworkers union, the government could have given each autoworker $20,000--and that was a number of years ago. Here is a link that states the costs of protectionism for job-types and each job saved as well as a pointing out the true and final cost of protectionism--freedom.

Computer scientists were one of the first groups in America hit by the effect of outsourcing (a side-effect of globalization). It seems to me that higher wage earners will take an initial hit because of the greater supply of workers available. At the same time, as people flock toward the lower wage workers, they will recognize the demand is increasing and begin raising their own prices until some level of equilibrium is met. In that case, once some level of equity is acheived, all things being equal, work will move back because it's easier to deal with someone nearby. Of course, not all things might be equal and the foreign government may impose less over-head business cost (less regulations means less overhead) and the foreign company will still come out ahead. Though that is really a problem of the massive government regulations that this country has to deal with.

I won't even talk about the obvious problems with income redistribution!

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