Hug the Asian who's taking your job
Saturday, 28 July 2007
Tom Plate
Clichés can aid in understanding complexity. Consider the always-helpful cliché that every coin has two sides. So, in this spirit of the obvious, let us for once look at the other side of the coin regarding the constant drumbeat that Asia is causing American workers to lose jobs.
Well, that happens to be true, but only in one sense. Because many economies in Asia have a competitive advantage in the cost of their labor - i.e., lots of people there tend to work longer and harder for a lot less money than workers elsewhere - some economic ventures can flourish much more cheaply over there. So this coin's bad side is that some people over here have to look for new work when the jobs they are doing are doable for less money over there.
Of course, one obvious remedy for this consequence is protectionism, but this, historically at least, has proved a cure worse than the disease.
What's very sad right now is that most of the time in the U.S. you hear only about that one side of the coin. This is irresponsible because if enough Americans understood how much Asia is contributing to our prosperity, we might want to give Asians a hug rather than the back of our hand.
But how exactly are Asians helping Americans?
For starters, Asia's labor profit has not produced unrelenting evil and misery for America. In fact, Asia throws most of that fortune back into United States Treasury investments and American stocks for safekeeping and interest-gaining. It has done that not only because it regards America as a very safe bet, but also because Asia's financial-investment options are limited and so, in a sense, their money had few other places to go.
Stashing all those many Asian billions here has helped take a lot of the sting out of the otherwise alarming U.S. budget mess. Not only has Washington reaped the benefit of Asia's huge stash of cash, but so, too, has the rest of the country. Consider the enormous economic and material benefits when we go to the discount stores and take home products from countries with much lower labor costs.
We wind up paying much lower sticker prices overall. This almost-miraculous effect has helped keep our consumer prices low despite all the periodic upsurges in oil and gas prices and the inflationary effect (until recently) of ridiculously ballooned property prices.
It's hard to recall a time when interest rates have hovered so consistently low. This has been a boon not only to those of us who rely on borrowing to underpin our lifestyle but to American businesses that have found the cost of buying new equipment and expanding their operations much lower than it might have been. This business expansion has helped maintain a measure of job security for many U.S. workers and in some cases has even created jobs. Asia has thus been absolutely vital to our economic prosperity, despite the serious problems raised by our co-conspiracy in economic globalization.
In truth, Asians have as much trouble with the uprooting problems of globalization as do we in the States. In fact, globalization was more or less force-fed to many Asians during the infamous Asian financial crisis about 10 years ago to this month. As a condition of receiving bailout funds from Western financial agencies, they were required to open up their economic gates to the West. U.S. capital rushed in and realized a very pretty penny indeed.
This is not to say that the U.S. profited from their misery so much as to suggest that it was in America's immediate financial and national interest to help Asia out of the big hole.
In understanding the relationship between Asia and America, the themes of mutuality and overlapping national interest are more appropriate than conflict and war. We are allowed to say that Asia is stealing jobs from America only if in the same breath we accept that Asia is also helping create jobs. Then we can accept that erecting trade barriers or punishing China or India or South Korea for this or for that perceived infraction is to create enemies where none really exist.
America and Asia need to be working together to develop new solutions to the problems we both face. These include making sure that wealth is spread around to all as much as possible without hobbling the engines of economic growth - and developing serious safety nets for people whose jobs evaporate in the furious typhoon of globalization. America and Asia will fail to do this if they approach each other as enemies on a battlefield rather than as co-pilots of mutual destinies.
(UCLA professor Tom Plate is a veteran U.S. journalist)
Clichés can aid in understanding complexity. Consider the always-helpful cliché that every coin has two sides. So, in this spirit of the obvious, let us for once look at the other side of the coin regarding the constant drumbeat that Asia is causing American workers to lose jobs.
Well, that happens to be true, but only in one sense. Because many economies in Asia have a competitive advantage in the cost of their labor - i.e., lots of people there tend to work longer and harder for a lot less money than workers elsewhere - some economic ventures can flourish much more cheaply over there. So this coin's bad side is that some people over here have to look for new work when the jobs they are doing are doable for less money over there.
Of course, one obvious remedy for this consequence is protectionism, but this, historically at least, has proved a cure worse than the disease.
What's very sad right now is that most of the time in the U.S. you hear only about that one side of the coin. This is irresponsible because if enough Americans understood how much Asia is contributing to our prosperity, we might want to give Asians a hug rather than the back of our hand.
But how exactly are Asians helping Americans?
For starters, Asia's labor profit has not produced unrelenting evil and misery for America. In fact, Asia throws most of that fortune back into United States Treasury investments and American stocks for safekeeping and interest-gaining. It has done that not only because it regards America as a very safe bet, but also because Asia's financial-investment options are limited and so, in a sense, their money had few other places to go.
Stashing all those many Asian billions here has helped take a lot of the sting out of the otherwise alarming U.S. budget mess. Not only has Washington reaped the benefit of Asia's huge stash of cash, but so, too, has the rest of the country. Consider the enormous economic and material benefits when we go to the discount stores and take home products from countries with much lower labor costs.
We wind up paying much lower sticker prices overall. This almost-miraculous effect has helped keep our consumer prices low despite all the periodic upsurges in oil and gas prices and the inflationary effect (until recently) of ridiculously ballooned property prices.
It's hard to recall a time when interest rates have hovered so consistently low. This has been a boon not only to those of us who rely on borrowing to underpin our lifestyle but to American businesses that have found the cost of buying new equipment and expanding their operations much lower than it might have been. This business expansion has helped maintain a measure of job security for many U.S. workers and in some cases has even created jobs. Asia has thus been absolutely vital to our economic prosperity, despite the serious problems raised by our co-conspiracy in economic globalization.
In truth, Asians have as much trouble with the uprooting problems of globalization as do we in the States. In fact, globalization was more or less force-fed to many Asians during the infamous Asian financial crisis about 10 years ago to this month. As a condition of receiving bailout funds from Western financial agencies, they were required to open up their economic gates to the West. U.S. capital rushed in and realized a very pretty penny indeed.
This is not to say that the U.S. profited from their misery so much as to suggest that it was in America's immediate financial and national interest to help Asia out of the big hole.
In understanding the relationship between Asia and America, the themes of mutuality and overlapping national interest are more appropriate than conflict and war. We are allowed to say that Asia is stealing jobs from America only if in the same breath we accept that Asia is also helping create jobs. Then we can accept that erecting trade barriers or punishing China or India or South Korea for this or for that perceived infraction is to create enemies where none really exist.
America and Asia need to be working together to develop new solutions to the problems we both face. These include making sure that wealth is spread around to all as much as possible without hobbling the engines of economic growth - and developing serious safety nets for people whose jobs evaporate in the furious typhoon of globalization. America and Asia will fail to do this if they approach each other as enemies on a battlefield rather than as co-pilots of mutual destinies.
(UCLA professor Tom Plate is a veteran U.S. journalist)