The Test of Globalization

There's been a lot of talk about Globalization in the last twelve years or so. One of the selling points of Globalization is that all boats will begin to rise. The argument is that as other economies around the world improve, those economies will begin to buy more of our goods. The argument was meant to include people at all economic levels, including laborers of all sorts who are the backbone of so many of the new factories in places like China. But officials in China have noticed, as have many others, that wages of workers are not climbing nearly as rapidly as profits.

Here's a story from earlier in the month by David Barboza of The New York Times about the efforts in China to correct the situation and the balking of big corporations:

China is planning to adopt a new law that seeks to crack down on sweatshops and protect workers’ rights by giving labor unions real power for the first time since it introduced market forces in the 1980’s.

The move, which underscores the government’s growing concern about the widening income gap and threats of social unrest, is setting off a battle with American and other foreign corporations that have lobbied against it by hinting that they may build fewer factories here.

(snip)

Whether the foreign corporations will follow through on their warnings is unclear because of the many advantages of being in China — even with restrictions and higher costs that may stem from the new law. It could go into effect as early as next May.

It would apply to all companies in China, but its emphasis is on foreign-owned companies and the suppliers to those companies.

Low wages in China has an impact on American jobs. Workers in America are also growing impatient with frozen wages while CEOs become the beneficiaries of record bonuses and stock options (even to the point of stock options being back-dated). I have no problem with capable people being paid more but I do have a problem with a system that is increasingly rigged to favor wealth. With one per cent of our population owning ninety per cent of America's wealth, something is very wrong.

Paul Krugman has a column in today New York Times that points out the disparity between the past when executives did quite well and the absurd scale of our current era:

In the 1960's and 1970's, C.E.O.'s of the largest firms were paid, on average, about 40 times as much as the average worker. But executives wanted more...

(snip)

In the 1990's, executive stock options proliferated— and executive pay soared, rising to 367 times the average worker's pay by the early years of this decade.

From 40 times more than the average worker to 367 times more than the average worker. Average, it should be noted. Just how many yachts, planes and vacation homes does the average CEO need while wages in America race to the bottom?

Globalization was supposed to raise everybody's boats, and instead wages have stagnated. Let's keep in mind that workers of all kinds built America, not just CEOs. The system has become rigged (no bid contracts, for example) and it seem the boats of low income workers and much of the middle class have been made to leak and too many people are spending time bailing out the water just to stay afloat.

I wish China well if they can manage to improve the conditions of workers. I don't expect, however, that our current president will start doing more for American workers. He's been too busy protecting the wealth of his friends instead of creating new opportunities and fostering new technologies such as alternative energy, efficient environmental systems, stem cell research and a host of other things languishing because they don't create an immediate profit for corporations which are top-heavy with people too busy with five-year personal enrichment programs no matter the cost to the country and future generations.

A democracy cannot remain healthy if the middle class is under threat and low income workers have little hope. We need hope for America to thrive. We need changes and given the greed of the current Republican Party which has spent far too much time at the feeding trough (think Hastert, Cunningham and Halliburton), we know we cannot turn to them.