For 30 years, the wages of American workers rose as they became more productive. That era is over. Blue collar wages have stagnated since 2001, partly because jobs have been moved offshore. The rich have got richer but the middle class is working harder to stand still: in Europe, average real disposable incomes hardly rose between 1997 and 2007.
I´m always very wary indeed of people who mix and match their statistics. Why use wages once and disposable incomes the other?
Fact is that blue collar compensation has been rising in the US. For US workers get part of their total compensation in benefits…health care insurance for example. And disposable incomes are of course calcualted after tax. And I think we´d agree that taxes have been rising…in the UK, at least?
And so it´s possible (I don´t insist it is mind, just that it´s possible) that neither of these figures show anything at all about the impact of globalisation.
The theory of comparative advantage, which has underpinned trade for 200 years, is fraying. The argument was that everyone would gain because emerging economies would take over low-wage jobs and rich countries would gain new markets for high-end services. But India is already better at high-end technology than the West, and is filing an increasing number of patent applications. Western politicians make glib statements about the need to improve education. But the globalisation of innovation should shake them to the core. That\’s why many G20 countries talk up trade while implementing protectionism.
Do stop being silly. The theory of comparative advantage is not fraying. It´s a simple fact. Precisely what might be the comparative advantage might be changing, but the existence of them and the reality that the exploitation of them is what makes us richer is simply not in doubt.
A third slogan is that “growth is good”, and that more growth will help nations to bear the costs of eliminating pollution. But many ordinary people who read about the mass extinction of species, the unprecedented loss of forests and climate change, are starting to ask whether GDP growth always equals improvement.
This is just silly. No one at all says that growth necessarily improves the environment. What is indeed said, for it is true, is that growth increases our ability to improve the environment for that is what growth means: a rise in our ability to do things.