The 3-pronged attack on wages (guess who wants to redistribute wealth now?)

Monday, September 18, 2006 at 02:21 PM

Kudos to The Economist magazine for at least telling the truth about the current state of things in the course of its cheerleading for globalization and free markets.

As part of its "Survey of the World Economy" in the Sept. 16 issue, the magazine offers up a lengthy analysis of why so many workers in the world's wealthy countries are so far experiencing "More pain than gain."

...workers' share of the cake is now the smallest it has been for at least three decades...In many countries, real wages are flat or even falling.

Meanwhile, capitalists have rarely had it so good.  In America, Japan, and the euro area, profits as a share of GDP are at or near all-time highs...Corporate America has increased its share of national income from 7% in mid-2001 to 13% this year.

And some people wonder why more than a third of Americans still approve of Bush.  The national slice that is basking in this doubling of profits just loves him.  Add in the people who get sucked into believing that he's a righteous religious man....

And the three fronts on which wages are under attack?  You've seen them before, here at WTW--see here for example.  Th Economist sums them up succinctly:

First, offshoring to low-wage countries has reduced firms' costs.  Second, employers' ability to shift production, whether or not they take advantage of it, has curbed the bargaining power of workers in rich countries....And third, increased immigration has depressed wages in sectors such as catering, farming and construction.

In other words, if the job is really easy to ship elsewhere, off it goes.  If it's possible but not easy, use the threat of offshoring to extract wage concessions and avoid wage increases.  If the jobs have to be physically performed here, then import the cheap labor to do it here.

Which leaves who with all the money?  Owners and executives.  Which leaves who holding the empty bag?  You know damn well who.

David Ricardo theorized in the 19th century that trade enriches all nations by allowing/forcing each one to specialize in the activity in which it has a comparative advantage.  The magazine also points out why  this seems not to be working too well today (that's assuming it ever did): too much labor worldwide, and too few jobs, and an unexpectedly large number of educated and skilled workers in "emerging" countries.

The magazine is not, of course, particularly interested in the plight of workers per se; that would be contrary to the root belief that markets are the best and most useful means of ordering life.  What concerns The Economist is that wealthier countries remain democracies, and unhappy workers may actually wake up one day and insist that their country protect them.  This "protectionism" would, of course, be very bad in the magazine's view, so they go so far as to contemplate that governments may need to--hold onto your globalizing hat--"redistribute the benefits of globalisation more fairly through the tax and benefits system."

The Economist is advocating a fairer distribution of wealth through taxes and social programs!  Eat that Grover Norquist.  Try to get your tiny, extremist perception around that, Mr. President.

So in parting, one question:  If it is so damn clear that the inequality is growing, that ordinary workers are losing hand over fist while privileged workers and owners are getting fatter and fatter, how can conservatives (think David Brooks, Norquist, and on and on) get away with portraying this as questionable?  Specifically, how come the conservatives can sit there day after day on television claiming that wages aren't stagnant, that the economy's great for all of us, without the interviewers and hosts immediately taking them to task with the info from The Economist and several other honest sources?

As the magazine says: "It is time for a more honest debate about trade."