U.S.-China trade is almost a one-way street

Vous savez, j’ai toujours été contre la mondialisation sauvage, et ça ne prend pas un doctorat pour comprendre l’issue fatale.

Comment, voulez-vous compétitionner contre un Chinois ou un Indien qui est aussi brillant et entreprenant que toi, mais ton salaire est cinq fois supérieur.

La seule solution viable pour une multinationale : réduis ton salaire.

Entre temps, puisque certains employés étaient réticents à jouer le jeu, les multinationales, depuis au moins une décennie, se sont données à cœur de joie de délocaliser, de transférer le savoir-faire et tous les écosystèmes s’y rattachant.

Il ne faut jamais oublier de faire rappeler à nos chers mondialistes, que vous n‘êtres pas seulement des consommateurs, mais aussi des producteurs.

Si votre salaire se résume à 12 ou 14 heures de l’heure, la seule place que vous allez magasiner, ça va être chez Wal-Mart en achetant leurs produits chinois.

Évidemment, nos économistes à la gomme de nos universités subissant tous le même lavage de cerveau, surtout si tu veux devenir directeur du département, vous ont chanté la bonne parole depuis au moins une bonne décennie.

Ajoutés, une propagande constante de nos médias traditionnels appartenant dans l’ensemble aux oligarques (1%), ils vous ont régulièrement rappelés des bienfaits de la mondialisation.

Puisque l’économie craque de partout, cette belle théorie commence sérieusement à prendre l’eau.

Pour pousser une petite pointe d’ironie, la revue ‘The Economist’ particulièrement très à droite a fait un sondage auprès de ces lecteurs, voici la question :

Do multinational corporations have a duty to maintain
a strong presence in their home countries?

Pensant savoir d’avance la bonne réponse, il se sentait sécurisé. Jolie surprise, leurs propres lecteurs se sont opposé à une mondialisation sauvage, ceux-ci ayant plus de bons sens, que le chef éditorialiste de ‘The Economist’.

Il semble que la bonne parole perd quelque plume depuis quelque temps, voici certains articles ou document sur ce sujet.

Extrait de : Trade and technology as middle class job killers, Chrystia Freeland, NEW YORK — Special to The Globe and Mail, Feb. 14 2013, 7:00 PM EST

President Barack Obama’s State of the Union speech this week confirmed it: The pre-eminent political and economic challenge in industrialized democracies is how to make capitalism work for the middle class.

There is nothing mysterious about that. The most important fact about the United States in this century is that middle-class incomes are stagnating. The financial crisis has revealed an equally stark structural problem in much of Europe. Even in a relatively prosperous age, this decline of the middle class is more than an economic issue. It is also a political one. The main point of democracy is to deliver positive results for the majority.

All of which is why understanding what is happening to the middle class is urgently important. There is no better place to start than by talking to David Autor, an economics professor at the Massachusetts Institute of Technology. Prof. Autor is one of the leading students of the most striking trend bedevilling the middle class: the polarization of the job market.

That is a nice way of saying the economy is being cleaved into high-paying jobs at the top and low-paying jobs at the bottom, while the middle-skill and middle-wage jobs that used to form society’s backbone are being hollowed out.

But when I asked him what has gone wrong for the U.S. middle class, he gave a different answer: “The main problem is we’ve just had a decade of incredibly anemic employment growth. All of a sudden, around 2000 and 2001, things just slowed down ... No one really understands why that is the case.”

Research by Prof. Autor and two colleagues – David Dorn, a visiting professor at Harvard, and Gordon Hanson of the University of California, San Diego – is starting to untangle the two forces that are probably responsible for a lot of what is happening to the middle class.

Those forces are technological change and trade.

The easy assumption is that the two go together. After all, trade needs technology; it is hard to imagine outsourcing without the Internet, sophisticated logistics systems and jet travel. Technology is dependent on trade, too: The opportunity for global scale is one reason technological innovation has yielded such outsize rewards.

But in a careful study of U.S. local labour markets, the three academics have found that trade and technology had very different consequences for jobs. “We were surprised at how distinct the two were,” Prof. Autor said.

1.      “We found that the trade shock had a very measurable impact on the employment rate.

2.      Technology led to job polarization, but its employment effect was minimal.”

Trade, at least in the short term, really did ship jobs overseas. Technology did not kill jobs per se, but it did hollow out those essential jobs in the middle.

The big surprise, at least for believers in the classic liberal economic view that trade benefits both parties, is the strong and negative impact of globalization on U.S. workers. Prof. Autor estimates it accounts for 15 to 20 per cent of jobs lost.

“The rise of China was such a huge change. It really did matter,” he said. “First, China is such a huge country. [Second], China was 40 or 50 years behind in technology, so it had a lot of catching up to do. Third, it happened so fast.”

What is striking, and frightening, is the extent to which knee-jerk, populist fears that intellectuals tend to deride actually turned out to be true.

U.S.-China trade is almost a one-way street. This trade relationship doesn’t clearly give you the benefit that you can sell a lot of stuff to your trade partner,”

Prof. Dorn said. “If you talk to someone who is somehow involved in the promotion of free trade, they may say that maybe the headquarters of Apple benefits. That may be true. But the first-order effect is of job loss.”

The impact of technology is more familiar. The three researchers found that it did not create fewer jobs over all, but it did hollow out the jobs in the middle. “There is an abundance of work to do in food service and there is an abundance of work in finance, but there are fewer middle-wage, middle-income jobs,” Prof. Autor noted.

What is challenging about both of these trends is how different they look depending on whether you own a company or work for one.

Shipping middle-class jobs to China, or hollowing them out with machines, is a win for smart managers and their shareholders. We call the result higher productivity.

But looked at through the lens of middle-class jobs, it is a loss.

That profound difference is why politics in the rich democracies are so polarized right now. Capitalism and democracy are at cross-purposes, and no one yet has a clear plan for reconciling them.

Deconstructing the Theory of Comparative Advantage

This article critically examines the theory of comparative advantage, which underlies the wide-spread support of worldwide trade liberalisations. Both the classical and neoclassical formulations of it are shortly discussed and its essential assumptions are scrutinised.

Deconstructing the Theory of Comparative AdvantageThese include the international immobility of capital and labour, balanced trade, the existence of an adjustment mechanism which is responsible for the transformation of comparative production advantages into absolute price advantages, full employment and the perception of international trade as a static and harmonious phenomenon.

It is shown that all these assumptions are neither theoretical valid nor do they coincide with empirical research.

The whole rationale why international trade exists according this theory is deficient.

The New Trade Theory, which claims to enhance the theory of comparative advantage, is unconvincing as a complement.

It is concluded that the theory of comparative advantage should be dismissed.

International trade theory, by relying on this theory, risks ignoring the most relevant and important elements with regard to international trade.

The deficiencies of the theory of comparative advantage are especially crucial for trade policies that are derived from this theory, which is discussed with reference to the WTO and its ongoing Doha Round.

This article does not give judgement in favour or against free international trade – and it has no such intentions. Free trade as a phenomenon is not the object of study. Rather, the dominating theory that tries to explain this phenomenon, and on which present implementation of trade liberalising theories is based, is the object of critique. After deconstructing the theory of comparative advantage and its assumptions, it cannot be endorsed any longer. Not only were the assumptions dismissed in this article, but it was also shown that the theory of comparative advantage is wrong on its own terms.

The obvious suggestion is to dismiss the theory of comparative advantage after nearly 200 years in order to get a better and sounder understanding of international trade.

Offshoring & outsourcing

Do multinational corporations have a duty to maintain a strong presence in their home countries?

Once upon a time companies based themselves at home to serve nearby countries. Now there are hardly any big firms which have not sent important parts of their operations overseas.

Some industries, such as consumer electronics, are almost entirely "outsourced" to Asia. But after the Great Recession, amid high levels of unemployment, politicians in the developed world are putting pressure on firms to bring work back home.

Apple, a technology firm, recently responded to the political mood by saying it would bring some production of Mac computers from Asia back to America starting this year. Tim Cook, the firm's chief executive, said Apple had a responsibility to create American jobs. Do you think that companies owe anything to the place they came from?

Or is the notion of "home" now largely irrelevant for the corporate world?

Offshoring & outsourcing

Extrait de: Offshoring & outsourcing, The Economist, February 18th 2013