From: randy (cryofan@mylinuxisp.com)
Date: Sat Aug 30 2003 - 14:55:46 MDT
I know all the freemarketeers here will love this essay from:
http://www.tradealert.org/view_art.asp?Prod_ID=879
Here is an excerpt:
Lower Import Prices Haven't Lifted Living Standards After All
Alan Tonelson
Tuesday, August 26, 2003
With even normally free-trading Republican Congressmen up in arms
about globalization-related job loss, America's globalization-happy
economic establishment is preparing its counter-attack. Among the
trade-extremist bromides we're likely to hear most often is that
today's monumental import levels are blessings for all Americans
because they reduce consumer goods prices and thus raise real incomes.
America's working families, we're told, benefit most because, as U.S.
Trade Representative Robert Zoellick argues, "When trade is
restricted, hard-working fathers and mothers pay the biggest portions
of their paychecks for the higher costs food, clothing, and appliances
imposed through taxes on trade."
Unfortunately, there's no serious evidence to support these claims. In
fact, when you look at the effects of trade not only on consumer
prices but on wages and employment levels, it's clear that current
trade policies and their impact have been undermining American living
standards for decades.
Take the biggest picture macroeconomic data. American economic history
has long been a story of strongly rising real wages – that is, wages
adjusted for the effects of inflation. These wages – the best measure
of an American worker's value in the global labor market – were
critical engines of an equally strong rise in American living
standards. But during the 1970s, these engines stalled out.
Real wages for all private sector workers peaked in 1973 at $9.08 per
hour. Today, they've fallen to $8.33 per hour – more than 8 percent
lower. Two points stand out from this development. First, as Zoellick
has noted in speeches, this thirty-year period witnessed a more than
doubling of trade volumes and returns on international investment as a
share of the U.S. economy. Second, inflation-adjusted wages by
definition take into account the widely documented and dramatic fall
in the prices of most imported goods during this period.
The only reasonable conclusion possible: Even though trade has helped
bring lower consumer prices (along with more efficient production
methods and a continuing fall in the prices of most raw materials,
whether domestic or imported), wages have fallen even faster for the
typical American. And the onset of wage stagnation coincides almost
perfectly with the onset of the American economy's dramatic
internationalization.
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-Randy
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