Globalization, like any other free-market reliant economic system, produces both winners and losers. In America, the winners have been the haves while the have-nots have gotten the short end of the stick, according to a report by the Economic Policy Institute. In its State of Working America 2008/2009 report, the EPI found that 34.6 percent of all income growth over the past three decades went to Americans that make up the top one-tenth of one percent of wage earners. Meanwhile, over the same time period, the bottom 90 percent of wage earners realized just 15.9 percent income growth. The social stratification of America is at least partially a result of the era of globalization and the free trade policies that it ushered in, which have caused the decline of manufacturing jobs in the country. More There is a lady who works at a small local bank. The other day, she came in for a food stamp application. This problem is pervasive.
There seems to be a disconnect in your argument. You assume that globalization has lead to the polarization of wealth. Those that earn above some arbitrary point will continue to earn more in the future and those that earn below some arbitrary point will continue to earn less. I will submit this, that globalization has allowed for an unprecedented rebalancing in the returns to capital-labour. Fair or unfair, there are many more out there that are willing to compete for jobs now that the market has become more global as compared with capital growth. This does not only affect the US, but North America, South America and Europe. Given the skill level proportions as well as the population size and economic state of maturity of the BRIC countries as well as the nature of manufacturing jobs, there is an increase in the supply of labour. This leads to a strong downward force on the prices companies are willing to pay for labour. The question that arises is what can be done in the short term and longer term to aid those who are left structurally unemployed or underemployed. This is a difficult question that requires addressing. Increasing minimum wages is a politically popular means of addressing low wages, but this fails to improve the situation as it places the burden on businesses in competitive industries and simply transfers the costs to consumers, often the recipient consumers of such industries. Negative income taxes for those who earn below a certain point helps to more efficiently redistribute income without causing price distortions and is a preferred option. ...... I will have to cut it short at this point. It is much too late to further discuss this topic. The OP brings up an interesting topic, although I think the way it is phrased is rather sensational and implies a narrowness in its scope (i.e. target China and other low cost producers and government policy towards trade -> more trade = bad). Just to finish the point, the OP mentions a bank employee requiring food stamps. I'm sure some bank services are being outsourced, however, for the most part, they are services that currently remain domestic and are not related to the manufacturing topic mentioned in introduction to the OP. It comes back to the points that I had implied that this is perhaps more an underemployment issue that can be resolved through tax and transfer adjustments.
Mod Hat This thread (with "why increasing rich/poor gap in USA" added to name) can be unique, I.e. different from thread "America's race to the bottom" so it will not be merged into that one (as I briefly consider doing in now deleted post two). Post general facts, comments on the downward trends in US economy in thread "America's race to the bottom" and discuss the distribution of wealth etc. here. I want posters to look at first page list of the B&E forum to see if there is a suitable thread for their new post before starting a new thread. If first page is not cluttered with many essentially identical threads, they only need to check the first page of the B&E forum before creating a new UNIQUE thread. The extension to the name I added will help define how this thread is unique.
That is too general to be completely true. The rich / poor gap, which has historically been large, is narrowing in Brazil. (It was so large that the "mid class" almost did not exist. I.e. there was wealthy class, but only a fraction with extreme wealth. The rest had at least one maid, often a cook and one to take care of the children and dogs, etc. - this was possible because there were many very poor.) Brazil's public education prior to college was very poor - that (and the dominate Catholic Church's position on birth control) helped keep a large supply of cheap workers. Under President Lula, who came from the poor class this is significantly changing. (Lula's parents cannot read. He got his first shoes at age 12. Knew what hunger is first hand. Lost a finger to a factory machine, etc.) The poor are given modest financial aid IF they keep their kids in school until age 18 and they get their free vaccinations, etc. (Program is called "Bolas Familia" and was started by the prior president, HFC, a Ph.D. in sociology, but Lula has more than doubled it.) Brazil now builds airplanes and cars, etc. So skilled labor is in short supply. Their real wages are increasing on the order of 10% annually. Brazil was in recession only two quarters (Barely met the standard definition of recession) and is now booming with increasing need for skilled labor. Following is from today's Folio de Sao Paulo newspaper: Year, Jobs offered* %filled (taken) 2000...1.28...........45 2001...1.43...........52 2002...1.65...........53 2003...1.55...........54 2004...1.67...........53 2005...1.71...........52 2006...1.77...........51 2007...2.06...........48 2008...2.53...........42 2009...2.74...........39 * In millions of jobs As you can see, employers (really the economy) are creating more jobs but the supply of those qualified for them is inadequate, so wages are increasing. Industry has formed associations that with some government aid give vocational training courses. A final comment on how economically beneficial Bolas Familia has been: Prior to it, most rural families took their children out of school as soon as they could read (poorly) and do simple math. They worked with their father in the fields. As there were several kids, the farm could not be divided and support them all so most went to town and begged or stole or worked in a car wash or as a maid, etc. In the long run, like the GI bill which educated many WWII returning farm boys etc., Bolsa Familia will be one of the best investments Brazil has ever made. Even in the short run it is essentially paying for its self, via reduced medical expenses (cost to the state as essentially free to patient in Brazil) and via the "multiplier effect" of circulating cash. I.e. many of the recipients of Bolsa Familia lived essentially outside of the cash economy. They grew the own food, tobacco, and got free hand me down cloths from the church or other agency. Now they have electric lights, buy bottled gas instead of cook on wood fire, and go to town to shop or have a beer, and sell some eggs and homemade cheese etc. Business in the rural towns is doing very well now, and paying much more in taxes. Motor bikes are replacing horses, etc. SUMMARY: With intelligent governmental social programs, the gap between rich and poor can be narrowed, to the benefit of ALL. Brazil’s lowest two economic classes (of 5 well defined) are shrinking in size and now buying goods produced in Brazil. Why Brazil’s economy, GDP, is growing at ~5% - (It is 87% domestic and only 13% exports.) Why Brazil has one of the highest interest rates in the world (to restrain demand /control inflation.) Why the global recession lasted only two quarters in Brazil. etc. It is like Henry Ford understood (and GWB certainly did not): If you policy is to pay the workers well they can buy and support a growing economy. The US is in trouble mainly because GWB reduced taxes on the wealthy* and annually DECREASED the purchasing power of Joe American’s salary. Under GWB, Joe foolishly used his inflated price house as an ATM machine to continue living beyond his means. That is no longer possible. Joe now fears for his jobs and is deep in debt, perhaps with an underwater mortgage, even negative net worth in some cases. Joe is not able to support an economy that was 72% consumer driven, so the government is replacing Joe’s prior buying – spending money it does not have (until China, etc. will not lend more). Then the full destructiveness of GWB’s years will be understood by all. ------------------ *Much of their tax relief saving was invested - did “trickle down” into China to build the world’s most modern factories. Joe’s factory closed as could not compete against these modern ones, especially when they had cheaper labor cost and less environment constraints also. Now China’s labor cost are too high for it to compete with other parts of SE Asia, but China is converting to a domestic dominated economy and can keep it closed to cheaper imports. For most of its history, China has been an closed economy – self sufficient. Now it needs more energy and raw materials than it can produce, so China is signing long term contracts for them all over the Southern Hemisphere. (Also doing this in part to convert US treasury promises into real assets, before the dollar collapses) PS China has same problem as Brazil and is doing the same (raising wages): "Days before its 4,000 employees, mostly migrants, started off upon their annual trips home for the Chinese Lunar New Year, Tiansheng Group, a textile company in the eastern Zhejiang Province, promised pay rises hoping workers would all come back after the holiday. "We are expecting a severe shortage of skilled workers this year," said Wei Guoliang, president of the company's trade union. "We'll be short of at least 1,000 workers in Spring." Fearing it might lose some of its best employees, the company's management offered an average 15-percent pay rise for all workers, plus higher meal allowances and better medical insurance starting on March 1...." From today's People's Daily: http://english.people.com.cn/90001/90776/90882/6894808.html OR: "Labour shortages in the Pearl River Delta are prompting Hong Kong factory owners to offer perks such as films, better food, air conditioning and even bonuses to retain migrant workers and lure new employees. ..." From: http://www.scmp.com/portal/site/SCM...360a0a0aRCRD&vgnextfmt=teaser&ss=China&s=News I am almost sure the same is true in India, but do not know about Russia.** The skilled and semi-skilled workers in most BRICs never had it so good. ---------------- ** Russia may have a surplus of skilled workers because for many decades Russia has had a first class educational system and now its economy mainly is based on oil and gas exports. SUMMARY: It is mainly the declining West that lacks jobs. - Forcing the middle class to shrink and the number of poor to expand.
one of the main problems isnt profit margins its executive saleries. Profits going to shareholders might be quite reasonable, the amount spent on wages quite acceptable and the price paid quite low and yet the employees are still getting screwed, not by the coustimers and not by the shareholders but rather by the CEOs. If the person at the botom of the company is earning $6 a hour and the CEO is earning $3367 PER HOUR (based on a 7,000,000 salery and a 40 hour week) how is that fair? Is the CEO REALLY doing 560 times more work than the botom of the rung worker? This is why linking executive rates of pay to the lowest pay in the company would be such a good idea because its a more equatable balance between what management earn and whats paid to the rest of the employees. While we continue to simply suck up the lies that come from these very CEOs we will continue to have a race to the top for CEO salery which will mean a concurent race in increased prices, lower employee saleries and lower returns for share holders
That is some messed up shit! That top 1/10 of 1% must ONLY think about how they can make and squander more money from people. What a bunch of losers.
Well with the return of higher taxes on those making more than $250,000 per year (expiration of GWB's tax breaks for the rich) some progress is being made in reducing the gap between rich and poor. I think it much too little. As discussed in my post 4, intelligent government intervention can improve the lot of all by a more equitable distribution of productivity gains. (As Henry Ford did years ago) Perhaps a law the limited total salary and bonuses paid to anyone in a company with public shares (one with stockholders) to be no more than 100 times greater than the lowest paid employee is needed. Hopefully that law could be adopted by all countries. Perhaps those countries with the law could have their UN fee reduced by 10x[(N-n) / (n +N)]% and the loss of revenue be restored by increasing the UN fee on those that do not adopt this law. N is the total of countries in the UN and n is the number which have adopted the law. I.e. the first to adopt this law gets nearly a 10% reduction. When half have adopted it, they each get a 10x(0.5 /1.5)% or ~3.33% reduction (and the other half approximately a 3.33% increase.) etc. so rule is "income neutral" to the UN. The US problem is that shareholders do not control the companies in the US. THE SELF SERVING BOARD OF DIRECTORS DOES. Their objective seems to be: Screw the share holders and keep those multi-billion dollar bonuses and golden parachutes coming. American has been, and to some extent still is, a fantastic wealth generation machine. That wealth only goes to a few percent of the population. The US needs to look at Brazil (see post 4) to understand that instead of being on the edge of economic collapse, a more equitable distribution of wealth would help even the wealthy in the long run. Or understand what was Henry Ford’s real contribution to the US – not the assemble line –that was in limited use more than 100 years earlier. Henry understood that a mass-production, efficient, economy was only possible if the average worker could afford to buy what is produced.
I agree 200% with this. That is effectively what Brazil's "Bolsa Familia" is; but it does impose requirements on those getting support. (See discussion in post 4.)
Brazilian Businessman Eike Batista on Charlie Rose show - worth watching http://www.charlierose.com/view/interview/10851
