In the middle of a lengthy article about globalization and business super-elites, this — a “look at the bright side” statement that fails miserably, & leaves out a ton — seemed to a hedge fund CEO to be a useful comment:
The U.S.-based CEO of one of the world’s largest hedge funds told me that his firm’s investment committee often discusses the question of who wins and who loses in today’s economy. In a recent internal debate, he said, one of his senior colleagues had argued that the hollowing-out of the American middle class didn’t really matter. “His point was that if the transformation of the world economy lifts four people in China and India out of poverty and into the middle class, and meanwhile means one American drops out of the middle class, that’s not such a bad trade,” the CEO recalled.
When I say that the economy has been rendered artificially zero-sum, this is what I’m talking about. Within a natural market order, trade occurs when there is benefit seen for both sides. No one would willingly submit to a deal that they know harms them, so if we’re talking about trade helping some at a clear cost to others, that signals that outside influence is involved, whether in the form of subsidies, loopholes, or outright force. That so much of what we know as “globalization” actually takes place in the form of outsourcing & the movement of capital, with movement of labor strictly regulated & actual, mutually beneficial TRADE seen as an anachronism, is not (as some call it) a bug in a free market, it’s a feature of a politically designed & centrally managed one. Whether you call the ones in charge members of a Politburo or CEOs is irrelevant.
Yes, the average U.S. resident is well off compared to the average person in China or India, that much is obvious. Their standard of living that they would label “middle-class” is much different from what gets that description here. However, the assertion of equivalent value brings labor power (or, more accurately, the lack of it) to the table. Observing that there are products or services that in the U.S. a worker could get $10 an hour for, while in a poorer country someone of equal skill would get a rate of $3, isn’t an answer, it’s the lead up to more questions:
-How much are they selling it for now?
-If the price hasn’t decreased much, if at all, despite the lower amount to labor, why? Where is the extra money going?
-If it still holds the same quality, then aren’t the workers making $3 technically providing $10 worth of value?
-Who paid for the infrastructure the company is using in the poorer country?
The right-wing looks at this & says “what problem? Real Merkins should take $3 and shut up”. Conventional wisdom otherwise is to blame “free trade”, and even for some to throw in bits of xenophobia. What this all masks is that most people on both sides of the ocean are getting screwed, and the market really has squat to do with it.