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"Globalization" for Americans is Really About Income Distribution
By Mark Weisbrot
“Globalization” is
one of the major challenges facing American workers –
which includes not only factory and office workers but
more than 80 percent of our 144 million-person labor
force. But it is widely misunderstood. Most of the
people writing and talking about globalization for the
major media know little about economics, and of the few
who know something, most are dodging the most important
issues.
The central issue
for Americans facing the global economy is income
distribution. Whether it’s international trade or
investment, or immigration, the main impact on most
Americans’ lives has been on the distribution of income.
And that distribution has gotten dramatically worse over
the last 30 years: the rich have gotten a lot richer,
the poor have languished, and the middle class has
shrunk.
From 1972 to 2001,
the bottom 20 percent of wage and salary earners got
only 1.6 percent of the increase in this income over the
three decades. The majority got less than 11 percent.
But the richest one percent received 18.4 percent of the
increased income – vastly more than went to the majority
of Americans.
The “managed
globalization” designed by our political leaders has
contributed very much to this upward redistribution of
income. The key word here is “managed.” It is not, as
the pundits argue, simply the result of market forces
combined with technological changes in communication and
transportation.
The architects of the global economy have not thrown
their friends and neighbors – the doctors, lawyers,
executives and other professionals – into brutal
international competition with the tens of millions of
highly-educated, English-speaking people who would be
willing to do their jobs at half the salary. That is
why, for example, our doctors earn twice as much as
their counterparts do in the rich countries of Europe.
Instead, our
political leaders have devoted decades of careful and
often protracted negotiations to rewriting the rules of
international commerce so that the nearly three-quarters
of Americans that do not have a college degree would
face lots of global competition. Partly as a result of
these changes, the real wage for most workers in the US
has barely grown over the last 30 years – about 9
percent – while productivity, or the amount that is
produced by an hour of labor, has grown more than 80
percent.
Immigration policy
follows the same rationale – foreign citizens who want
to work in restaurants or as construction laborers can
do so by the millions, but the same is not true for
foreign dentists or engineers.
The result of this
“protectionism for the few, international trade and
competition for the many” has been exactly what
economists would expect: the gains from a growing
economy have gone increasingly to the protected and
privileged few.
Of course, managed
globalization is only part of the story. Political and
legal changes have undermined the bargaining power of
organized labor and its membership has steadily fallen.
Health care costs have been allowed to spiral – the
United States now spends about twice as much per person
as other developed countries and has worse health
outcomes – and these burdens are increasingly shifted to
employees. And the tax code has been rewritten to favor
the upper classes.
The Federal minimum wage, in terms of purchasing power,
is now at its lowest point in half a century. The
majority of Americans have so little influence in our
political system that despite the overwhelming support
for an increase, the party that controls Congress
believes it can get re-elected in November while
refusing to even allow a vote on the issue. We shall
see.
Reform in all of
these areas will be necessary if this country is ever to
return to an economy in which most Americans share in
the gains from economic growth.
Source:
http://www.cepr.net/columns/weisbrot/2006_09_04.htm
posted 6 September 2006 |
