Yes! Yes! Yes! All that the US's schizophrenic immigration policy is going to do is keep what factories we do have out of the US. Without cheap labor coming into our borders, every company in the US with an iota of common sense will head to other countries for their manufacturing.
That's very true, but manufacturing was just the beginning, it's already a heavily outsorced industry and there's few opportunities left. As technology becomes available more services are getting outsorced. For example, today I learned of a technology that allows a surgeon to operate some one in Washington while he himself is in Germany. Using robotics and virtual reality sessions. So even services such as medicine could be outsorced.
Yes and no. Remember, though, that some technologies have MUCH greater barriers to entry than manufacturing. Manufacturing in many case is really a lower level business. That's why it is a commodity business and margins are low. Let's take gaming: it takes an army of designers, programmers, visionaries and other creative and technological geniuses to put together a blockbuster game. This is not something that some company in China can easily do. This is true also for movies. The world loves American movies because the quality and special effects is very high. (Not always the content - but that's another story.) And let's take a database engine. Easy, right? Well, follow the history of MySql and you'll see that it has only taken away market share in the lowest levels of the IT departments. The database engine technogies in Oracle, Sql Server and Red Brick would be very difficult to backward engineer. And even if you could - it would take decades to for all the converstions to take effect. I could go on and on, but these discussions usually ignore the incredible barriers to the upper tiers of technology, biopharmaceuticals and information technology that American now enjoys. Of course, we can lose our edge if we don't pump out good grads with a lot of cerebral horsepower. But right now we're still king in many key areas. Don't give up yet: US exporters from Merck to Oracle to Microsoft to Coke to Pepsi and even McDonalds are doing extremely well. It has been one excellent report after another. We are doing, in spite of the press to the contrary, very well in the global market place and can compete head to head with the best of them. (Well, let's don't talk about Detroit...)
Only if we plan on competing with them head to head in commodity manufacturing which, of course, is not the case. Read my previous post: we are kicking butt in many key areas and salaries and not going down in these industries. Start learning Mandarin, Hindi, Spanish and French and get yourself a grad degree and you've got it made...
You guys bring up a lot of good points. Nonetheless, the end result of free trade is that Capital in the Industrialized country gets rewarded, Labor in the emerging market gets rewarded (but worked hard and mistreated nonetheless) and the Middle Class in the US is the sacrificial lamb. Funny how things are different when an emerging market/nation "mistreats" capital or resources. Examples: nationalization of resources by Castro, Chavez, Iran in the 1970s (they tried earlier, but the gov't was overthrown by us) Libya, etc... How do we treat these countries? We cut them out of "free trade" and slap sanctions and embargos on them. Note: I am not criticizing this. However, when these emerging markets/nations mistreat labor - almost to the level of slavery, WE REWARD THEM WITH MORE JOBS!!!! Lesson learned - fuck with capital/resources - you're on our shitlist. Fuck with your middle class - WE REWARD YOU AND CRAP ON OUR OWN. Wasn't it only a couple years ago that Bank of America laid off 300 IT people, and in order for them to "earn" their severance package, they had to train their Indian replacements? Double standard isn't it? Gee. I guess the average Joe 6 Pack as we all derisively call him pays the highest price, while the plutocrats get either rewarded or protected. And then I read EMRGLOBAL whine about "the death of capitalism" and how versed in western literature he is. What a crock.
The globalisation/comparative advantage theory assumes that there is no overlap in skill levels between countries. What may appear to be mutually beneficiial is not when viewed on a skills plane basis. People who are of a certain skill level cannot en masse retrain upwards, nor would there be any point in retraining sideways, so they become unemployed or underemployed e.g you cannot as yet outsource McDonalds counter staff, although you can of course pay just (just) enough to make it worthwhile for those from lower income economies. The idea that those laid off by global labour arbitrage can retrain and the everything will be fine is BS. There will be a minority of staggering success stories as a tiny handful of people awaken talents in themeselves but they will be too much of a minority. Unfortunately, the 1% or so who do make the transition will be held up as living proof that it can be done, and allow the ignoring of the reality that for the reaining 99% it is too much to realistically expect.
Think about what you said here. If I understood you right, you were saying that capital, i.e. American corps, get rewarded but they keep a lot of their manufacturing base in other countries but the company does well overall. Okay, but that is an oversimplification imo. Yes, some manufacturing goes overseas. But tons of jobs are grown here because the company itself is growing. I think everyone pictures only the headquarters building with a floor of board members and executives here in the States. But that's not the case. The last two companies I've worked for have had tremendous global growth. Both companies are doing great with solid balance sheets because of it. And NEITHER company was looking to great of their American IT workers or any other kind of worker. They are growing so fast they don't have time to think of that because of globalization. They both have had employees all over the globe. But the base of the jobs is here state side and if you were an American employee, you had more work than you could handle. Trust me: good American companies with solid balance sheets aren't looking to shed their middle class "knowledge workers". It's all hands on deck. It's only the lumbering, non-competitive behemoths in commodity markets that are struggling...
I'm not saying this is going to happen next week at a massive scale, I'm looking at a long term picture founding my observations on the economic principles of the classical school. What I discribe is no the norm, it's signs that a trend might be developing. For example: Nasa only has 1 lab were it outsources the development of plasma engines... and it happens to be here... The barriers of entry are purely educational as most of the companies who have the hardware to do their tests in the US are able to set up labs off shore. Regarding Hollywood, it's still hot, it's still #1. But European films are catching up. I don't see a change in leadership happening in the next six months but the horses at the back of the race are picking up momentum and catching up to the leaders. Detroit... well I know, every country has "special ones"