BDL: Really? Whenever I heard Lori Wallach talk about NAFTA back in 1993, one of her big points was that NAFTA was a bad thing because it would *increase* immigration from Mexico to the United States...
I don't think your troops are marching in the direction you think they are... --------------------------------- MM: Well, if "my troops" (ha!) opposed capital export AND labor import, at least they'd be consistent. But more recently even the AFL-CIO seems to have changed direction from "keep them out" to "let them in and organize them". Anyone hear Lori make an argument like that at the debate with Bhagwati et al. in Seattle? Or anti-immigration rhetoric coming out of the left wing of the "anti-neoliberal" movement in the last couple of years?
MM: >First, there's Arthur Lewis's open economy model at the end of
>"Economic Development with Unlimited Supplies of Labor". There,
>because of oversupply of (fixed) labor combined with mobile capital
>and commodities, productivity gains in the tradeable goods sector in
>low-wage economies are captured by lower prices for those goods by
>consumers in high-wage economies. The model, though, doesn't seem
>very robust - while it may work for two countries, it doesn't seemto
>work at all for n countries.
BL: Lewis's model was built with the late nineteenth century in mind. Lewis was trying to figure out why a lot of technology transfer to the periphery hadn't raised real wages in places like Nigeria and Brazil. His conclusion was that outmigration from China and India had pushed wages down in Asian migrant-recipient regions--and the fact that Asian migrant-recipient regions were producing the same tropical primary products as the rest of the tropical periphery kept living standards very low everywhere in the tropical periphery, so that all productivity gains were captured by first-world consumers.
The model looks very promising for explaining what was going on up until 1914 or so. But the big migration flows are then choked off... ------------------------------ MM: The simple model in the 1954 article doesn't depend at all on where the labor comes from, just on whether or not it's in oversupply. After 1914, the population growth rate in these countries comes not from immigration but from a declining death rate and a steady (or much more slowly declining) birth rate, no?
>
MM: >The other way I've tried to think of this is as a low-level
>efficiency wage trap. A low prevailing wage depresses productivity
>by fostering malnutrition, chronic illness, etc. In this kind of
>trap, individual firms can't raise productivity (much) by offering
>higher wages, since the effects of hunger and illness and so on are
>cumulative and kick in before people enter the labor market. This
>would help explain why increased flows of capital and commodities
>have not reduced the wage gap.
BDL: They have reduced the wage gap by a lot in some *places*: Korea... Taiwan... Malaysia... Thailand... Mauritius... Indonesia... China... Botswana... Chile...
But not elsewhere. -------------------------- MM: So conditional convergence a la Sachs & Warner? Awfully tempting to sample on the dependent variable when you make that argument, isn't it? Or, in a slightly more complicated vrsion o