Thomas Friedman is correct, as far as he goes. In certain arenas, the world is indeed flat. And it doesn't matter if the guy answering the tech support line, or taking a plane reservation, or reading my x-ray, is in India, or anywhere else.
On the other hand consider this quote from a speech given by Pat Buchanan (Address to Chicago Council on Foreign Relations, 11/18/98 full text available at
http://www.chuckbaldwinlive.com/read.freetrade.html )
Here, then, is the first cost of open-borders free trade. It exacerbates the divisions between capital and labor. It separates societies into contending classes, and deepens the division between rich and poor. Under free trade, economic and social elites, whose jobs and incomes are not adversely impacted by imports or immigration, do well. For them, these have been the best of times. Since 1990, the stock market has tripled in value; corporate profits have doubled since 1992; there has been a population explosion among millionaires. America's richest one percent controlled 21 percent of the national wealth in 1949; in 1997 it was 40 percent. Top CEO salaries were 44 times the average wage of their workers in 1965; by 1996 they were 212 times an average worker's pay.
How has Middle America fared? Between 1972 and 1994, the real wages of working Americans fell 19 percent. In 1970, the price of a new house was twice a young couple's income; it is now four times. In 1960, 18 percent of women with children under six were in the work force; by 1995 it had risen 63 percent. The U.S. has a larger percentage of women in its work force than any industrial nation, yet median family income fell 6 percent in the first six years of the 1990s.
Something is wrong when wage earners work harder and longer just to stay in the same place. Under the free trade regime, economic insecurity has become a preexisting condition of life.
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In the 1950s, "Engine Charlie" Wilson immortalized himself with the remark, "What's good for America is good for General Motors, and vice versa." What Engine Charlie said was true, when he said it. We see that now as we watch GM closing factories here and opening up abroad. GM's four newest plants are going up in Argentina, Poland, China, and Thailand. "GM's days of building new plants in North America may be over," says the Wall Street Journal.
GM used to be the largest employer in the United States; today, it is the largest employer in Mexico where it has built 50 plants in 20 years. In Juarez alone, there are 18 plants of Delphi Automotive, a GM subsidiary. Across from Juarez, El Paso is becoming a glorified truck stop, as Texans watch their manufacturing jobs go south.
Even though Mr. Buchanan almost sounds like a "socialist", what he's really talking about is what he calls "Economic Nationalism". And what he means by "Economic Nationalism" is this: "In these unique national economies, critical decisions are based on what is best for the nation." His next sentence is "Only in America do leaders sacrifice the interests of their own country on the altar of that golden calf, the Global Economy."
There is a story, perhaps apocryphal but often repeated in Michigan, about a visit then UAW President Walter Reuther took to one of the first Ford plants to start using robot welders. During the visit, a Ford VP looked at the robots, turned to Reuther and said "Walter, none of these robots pay dues to UAW". Reuther's immediate response was "Yeah, and none of them buy Ford cars either".
In Time Magazine Lee Iacocca said, about Henry Ford, "Ford instituted industrial mass production, but what really mattered to him was mass consumption. He figured that if he paid his factory workers a real living wage and produced more cars in less time for less money, everyone would buy them.".
Is it possible that there is a correlation between Ford, Chrysler and GM experiencing difficulties and "Between 1972 and 1994, the real wages of working Americans fell 19 percent."? Does it make sense for Delphi to offer a plan to cut wages to $9 per hour if this is the effect:
"If autoworkers at Delphi get paid $9 an hour, the rest of society will have to subsidize them. At $9 an hour, a worker would earn below the federal governments poverty level for a family of four. This means that other Americans will pay for food stamps, housing vouchers, Medicaid and other poverty supplements to sustain Delphi workers at the poverty level." (
http://www.epinet.org/content.cfm?id=2219 )
And if you make $9/hour, how many new GM vehicles are you buying?
Schen's commented "...I saw our company go from shipping exclusively to the Carolinas and Georgia to 85+ % over seas! My dad in the meantime basically had to retire since there were no more mills for him to run." And my question is what did all the workers in the mills do to pay their bills if they weren't old enough to retire?
K. Eng stated "Service professions like doctors, lawyers, and teachers are also pretty immune. These are jobs that are highly state-regulated and require the person to actually be present with clients, patients, and students." which is true, but service professions like lawyers, plumbers, and electricians, require the client to be present with cash. And when you concentrate wealth ("America's richest one percent controlled 21 percent of the national wealth in 1949; in 1997 it was 40 percent.") the pool of clients with cash is smaller. In Michigan, even teachers aren't immune as virtually every school district is feeling an economic pinch.
I'll close with one more quote from Pat Buchanan, who I would have never guessed I'd not only be quoting but agreeing with:
What is the wealth of nations? Is it stocks, bonds, derivatives - the pieces of paper traded on Wall Street that can be gone with in the wind? No, the true wealth of a nation lies in its factories, farms, fisheries, and mines, in the genius and capacities of its people. Industrial power is at the heart of economic power, and economic power is at the heart of strategic power. America won two world wars and the Cold War because our industrial power and technology proved beyond the ability of our enemies to match.
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Yeah, I'm a history teacher, but I mostly gained my perspective from being the son of a Chinese Engineer who grew up in West Texas. My dad and I have lived globalization. He was a Textile engineer all his adult life. After the Communist decided to thrust China's head in the sand for half a century, he and his colleagues worked in places like Hong Kong, Africa, India, Pakistan, Indonesia, New Zealand and finally United States. The late 60's and early 70's (when we moved from HK), was the last years of American Textile industry (cost of labor, cost of litigation- very dangerous industry, and OSHA) effectively moved all production overseas by the late 80's. I was a fresh graduate with an Agricultural Economics degree (read Agri-Business) in West Texas cotton country and went to work for a Cotton company. I the 2 years before I decided I hated the work and went back to school to get a Masters Degree, I saw our company go from shipping exclusively to the Carolinas and Georgia to 85+ % over seas! My dad in the meantime basically had to retire since there were no more mills for him to run.
