Website review: For Many, a Boom That Wasn't -...
laodan discovered this in Economics
•1 reviews since Apr 9, 2008
finance
•nytimes.com/2008/04/09/business/09leonhardt.h...
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laodan discovered 5 weeks ago- For Many, a Boom That Wasn't in the NYT Business by DAVID LEONHARDT
...The ... now-finished boom was, for most Americans, nothing of the sort. In 2000, at the end of the previous economic expansion, the median American family made about $61,000, according to ... inflation-adjusted numbers. In 2007, in what looks to have been the final year of the most recent expansion, the median family, amazingly, seems to have made less - about $60,500. This has never happened before, at least not for as long as the government has been keeping records. In every other expansion since World War II, the buying power of most American families grew... You can think of this as the most basic test of an economy's health: does it produce ever-rising living standards for its citizens? ... For Many, a Boom That Wasn't It will be tempting for some to lay the blame on George Bush. But the decline in living standards, that those figures are illustrating, is not related to US internal politics. It is related to the great re-alignment of economic forces around the world. The present round of globalization that started in the seventies has flattened the economic and financial level playing field. After 3 decades of free capital flows around the world the production of goods has largely been de-localized from the West to the South. Western factories that once procured good paying jobs closed and the jobs that were thus lost have been replaced by low paying service jobs. To keep their living standards from falling many have been obliged to take on a 2nd and in some cases a 3rd job. But longer working hours have not succeeded in maintaining the past standard of living. What is going on is a global re-balancing of the standards of living among nations that is taking place as a result of the free flow of capital: - Western incomes are coming down. (in most Western nations) - Southern incomes are going up. (in some Southern countries) Globalization has essentially been the bestowing of free movement on big capital. This allowed big capital to crunch once and for all the labor movement with whom it had been politically obligated to sit with a bargaining table. Once free to move over borders big capital went where no social bargaining tables had yet been politically imposed which helped in reducing its work costs which in turn helped it supplying cheaper goods to its traditional consumer bases. Economists and politicians of all stripes have defended globalization thinking that it gave their nations the advantage of scale economies. Those advantages were real but they did not benefit their nations. They benefited the multinational companies invested by big capital holders. So now what? - Capital has gone global and, in so doing, has gained a bargaining power with nations that weakened the application on itself of their regulatory framework while simultaneously imposing the weakening of organized labor and workers' historically gained benefits. - Work remains a national affair. Put in a position to compete for the localization of big capital the political elites have accepted to weaken organized labor in all nations. - Conclusion: Big capital is not going to abandon the bargaining chip it gained over labor through this last round of globalization but a reaction is nevertheless in the making at the level of nations in the form of protectionist barriers. Let's just remember that this has historically been the ferment of nationalism and wars...
- For Many, a Boom That Wasn't in the NYT Business by DAVID LEONHARDT
