> "The study suggests
> that trade is leading to a massive shift of jobs
> around the world, with a limited pool of winners and a
> growing mass of losers in every country, including the
> U.S."
Why is it not a shrinking number of losers and a growing number of winners? I thought trade often brought increasing returns? Is it 1.) there are no increasing returns here, 2.) there are increasing returns but the new wealth is kept by a shrinking number, or 3.) something I haven't thought of?
> The
> estimated number of jobs lost as a result was as high
> as 34,900, compared to 26,267 jobs lost to Mexico and
> 9,061 lost to other Asian countries.
It is reasonable to state that these losses overcount the losses by not counting additional jobs that might have been created in America due to cheaper capital goods (say, electronics) becoming available from China?
> o In the corporate quest for lowest production costs
> and higher profits, shifts to China (as well as to
> other countries) have led to stagnating wages,
> decreased employment and increased income inequality
> in the United States and abroad where similar
> production shifts have occurred.
If trade leads to decreased emploment how did America acheive high employment in the late 90s? This was some 30 to 40 years after American corporations first began to shift production overseas. On the issue of income inequality the president of Deutche Bank had an editorial in the New York Times, I think last year, in which he argued that income inequality was a wholly domestic issue, untouched by trade. Agree? Disagree?
> o U.S. companies that are shutting down and moving to
> China and other countries tend to be large,
> profitable, well-established companies, primarily
> subsidiaries of publicly-held, U.S.-based
> multinationals ..........
> ......data provide further evidence that
> U.S.-China trade and investment policies have had, and
> will continue to have, a significant impact on
> employment and wages for workers in the United States
> and other countries actively involved in trade and/or
> investment with China.
Why doesn't trade with China raise wages in America? Again, are there not increasing returns? (Is new wealth created through trade with China?) The report seems to suggest that there is no new wealth, merely old wealth being moved around, from America to China and then into the pockets of the multinationals that invest there and then back to America, perhaps, in the form of repatriated profits. Like some giant shell game.
Here is, perhaps, the crux of what I'm not getting. There seems to be an implication here that there is only a limited amount of investment funds, and therefore if a company invests in China, that is lost money for America, it is an investment that can not then happen in America. But when discussing the Federal deficit you said, if I understood you right, that the deficit counted for little but what it was spent on counted for a lot; if it was invested in infrastructure that might raise future growth rates then it might well pay for itself many times over, and that deficit spending was not inflationary unless the country was already at full employment. Admittedly, that was about the government and not corporations, but does it follow that total private sector debt also doesn't matter, only the question of whether the investments pay off in the form of higher productivity? I've read that the average German company carries 5 times more debt than the average American company. If America was not at full employment and some company invested in China, could not some other company simply take out a loan and make the foregone investment in America? And if America was at full employment, then wouldn't jobs have to go overseas anyway, since no one would be left here to work?
Is there any particular reason why the minimum wage couldn't be raised to $12, other than political reaction? If the minimum wage was $12, McDonalds would have to pay its workers a much larger percentage of its income, and once it could no longer pay for the wage increase out of profits, then McDonalds would have to raise prices, but this is simply how the minimum wage has always operated? My understanding of the minimum wage was that it was a way to shift wealth first from capital to labor, and then when the limits of productivity were reached, to shift wealth from high productivity sectors to low productivity sectors (for instance: the minimum wage goes up, McDonalds raises prices, well paid factory workers who eat at McDonalds are now shifting more of their income to the workers who work at that restaurant)? Have I got that right?
I really don't know enough basic economics to form fine grained opinions on this subject, though I have the impression that some people on the left are exaggerating the negative effects of trade. If America had strong unions we could force through higher wages and demand labor be given a higher percentage of new wealth, wherever that new wealth was coming from. Yes?
--lk