Playing In The Global Economy

It seems to me….

To ensure continuing prosperity in the global economy, nothing is more important than the development and application of knowledge and skills.” ~ Martin Rees[1].

Most people favor the concept of free markets. Many conservatives, while professing a basic belief in free markets, apparently only believe in a free lunch. Free-market prices seldom reflect true product costs – especially when additional factors such as environmental impact are considered.

If countries are to be multi-national (global), then it’s their prerogative to put a factory in locations where their products can be produced least expensively[2]. When they do, no one should claim those companies are not being fair and demand tariffs be placed on their products to “level the playing field”.

Today, there may be as many as 20 million Americans who would like a full-time job but can’t get one. Many more have stopped looking. The labor force participation rate reached its lowest point in 38 years with 62.4 percent of the U.S. population either holding a job or actively seeking one[3]. There is a real risk that individuals moved from low productivity-employment in a protected sector will end up zero-productivity members of the vast ranks of the unemployed. This hurts even those who keep their jobs as higher unemployment puts downward pressure on wages.

Economists argue over why our economy isn’t performing the way it’s supposed to — whether it’s because of a lack of aggregate demand, or because our banks, more interested in speculation and market manipulation than lending, are not providing adequate funds to small and medium-size enterprises.

Our economic policies encourage the outsourcing of jobs: Goods produced abroad with cheap labor can be cheaply brought back into the United States. So American workers understand that they have to compete with those abroad, and their bargaining power is weakened. This is one of the reasons that the real median income of full-time male workers is lower than it was 40 years ago.

Advocates of trade agreements erroneously often say that for the U.S. to be competitive, not only will wages have to be cut, but so will taxes and expenditures, especially on programs that are of benefit to ordinary citizens.

If it had been successful, Democratic opposition to a fast-track for the trade deal with Asia, the Trans-Pacific Partnership (TPP), would have shaped trends in a direction not compatible with American ideals and interests and was blind to the fundamental reality of this era: the two most powerful forces that have transformed the world in recent decades have been the expansion of globalization and the information revolution[4].

The technology revolution has accelerated globalization enabling digitized products, and almost everything is getting digitized in some sense, to be sent across borders at minimal cost. The reality is that the world consists of rising new powers and declining old norms rewriting the rules for trade, cybersecurity, intellectual property and much more.

It’s too late to worry that the TPP will require the U.S. to compete against low-wage countries as we are already living in a free-trade world; the average tariff in the developed world is about 3 percent and in the past three decades developing countries have also cut their tariffs substantially. The U.S. already has one of the world’s most open economies so the TPP is consistent with our ideals and interests and increase access to other economies less open ours.

A culture of innovation spawns entirely new economies and is necessary to remain competitive in this century. We must constantly innovate economic and technological advances or we otherwise have our jobs migrate to other countries as they develop the ability to do them better and at lower cost.

That’s what I think, what about you?

[1] Martin John Rees, Baron Rees of Ludlow, Kt, OM, FRS, HonFREng FMedSci is a British cosmologist and astrophysicist.

[2] Miller, Todd. Space exploration and the culture of innovation: an interview with Neil deGrasse Tyson, SFGate, http://blog.sfgate.com/tmiller/2012/03/28/space-exploration-and-the-culture-of-innovation-an-interview-with-neil-degrasse-tyson/, 28 March 2012.

[3] Jones, Susan. Record 94,610,000 Americans Not in Labor Force; Participation Rate Lowest in 38 Years, cnsnews,com, http://www.cnsnews.com/news/article/susan-jones/record-94610000-americans-not-labor-force-participation-rate-lowest-38#main-content, 2 October 2015.

[4] Zakaria, Fareed. You Can’t Stop The Trade Machine, Washington Post, http://fareedzakaria.com/2015/05/14/you-cant-stop-the-trade-machine/, 14 May 2015.

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About lewbornmann

Lewis J. Bornmann has his doctorate in Computer Science. He became a volunteer for the American Red Cross following his retirement from teaching Computer Science, Mathematics, and Information Systems, at Mesa State College in Grand Junction, CO. He previously was on the staff at the University of Wisconsin-Madison campus, Stanford University, and several other universities. Dr. Bornmann has provided emergency assistance in areas devastated by hurricanes, floods, and wildfires. He has responded to emergencies on local Disaster Action Teams (DAT), assisted with Services to Armed Forces (SAF), and taught Disaster Services classes and Health & Safety classes. He and his wife, Barb, are certified operators of the American Red Cross Emergency Communications Response Vehicle (ECRV), a self-contained unit capable of providing satellite-based communications and technology-related assistance at disaster sites. He served on the governing board of a large international professional organization (ACM), was chair of a committee overseeing several hundred worldwide volunteer chapters, helped organize large international conferences, served on numerous technical committees, and presented technical papers at numerous symposiums and conferences. He has numerous Who’s Who citations for his technical and professional contributions and many years of management experience with major corporations including General Electric, Boeing, and as an independent contractor. He was a principal contributor on numerous large technology-related development projects, including having written the Systems Concepts for NASA’s largest supercomputing system at the Ames Research Center in Silicon Valley. With over 40 years of experience in scientific and commercial computer systems management and development, he worked on a wide variety of computer-related systems from small single embedded microprocessor based applications to some of the largest distributed heterogeneous supercomputing systems ever planned.
This entry was posted in Economics, Economy, Employment, Employment, Feee Markets, Globalization, Globalization, Interdependence, Jobs, Jobs, Labor, Low-Skill, Markets, Multi-National, Outsourcing, Skilled, Tariffs, TPP, Trade, Trans-Pacific Partnership, Wages, Workers, World and tagged , , , , , , , , , , , , , , , . Bookmark the permalink.

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