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Curzon
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Curzon

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January 19th, 2007

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Ask Yourself

The Economist has a great cover article on the current state of globalization, and the report is not good.

Since 2001 the pay of the typical worker in the United States has been stuck, with real wages growing less than half as fast as productivity. If you look back 20 years, the total pay of the typical top American manager has increased from roughly 40 times the average””?the level for four decades””?to 110 times the average now.

What is to be done about this poisonous mix? If globalisation depends upon voters who, as workers, no longer think they gain from it, how long before democracies start to put up barriers to trade? If all the riches go to the summit of society and that summit seems beyond everybody else’s reach, are the wealth-creators under threat?

If the winners are difficult to curb without doing damage to your economy, the losers are tough to help.

All you readers out there in your 10s, 20s, and 30s, whether you are preparing for a career or just starting one, you need to ask yourself: is it possible that someone, somewhere, in the near future could do my job cheaper than I’m doing it now? Am I doing something that can be automated?

As the global economy becomes more integrated, companies facing more international competition will look to cut costs. If you’re not in a secure job, think about how to get one.

Comments to this entry

J.Kende
January 19, 2007
5:59 am
In other words, don't go into management. International development, while high risk, might have just a wee bit more promise.
Joe
January 19, 2007
6:07 am
True expertise is still impossible to automate, so I reckon that's what will carry people through the new century. Stay in school! (Or max out your library card.)
communard
January 19, 2007
7:04 am
Or perhaps we should stop living our lives as waged commodities and demand control of our lives back from 'the market'.

The market see's human life as valuable only as far as a human life can sell a marketable commidty. That marketable commodity is your life; it is the skills, talents and labour you can sell.

For the majority of the humans on this planet, they don't have anything marketable, and therefore are ignored to rot in this planets sprawling slums.

Demand free lives. Don't just haggle over the price of your own exploitation.
Curzon
January 19, 2007
7:43 am
Communard: do you have any specific definitions of what you mean by "free lives" and ending our position as "marketable commodities"? Plenty of rights are guaranteed under law in most developed nations; standards of living continue to climb in medical care, nutrition, education, etc; luxuries and entertainment are widely available. It would seem that with all the good globalization has brought, the best thing would be, as the Economist says, more economic benefit for the middle class than some revolution in regards to how the system works.
IJ
January 19, 2007
10:30 am
The article in the Economist has a lot of conventional wisdom.

However this logic was rejected in popular referendums on the EU constitution and the US mid-term elections. This week the chief of the US Federal Reserve persisted with the line in the Economist: Mr Bernanke advised Congress that entitlement programmes should be reduced in the interests of the national economy.

Moreover the Doha WTO trade talks have been effectively stalled for some years. Global economics is being stopped by national politics. These are not conventional times.
slim
January 19, 2007
4:42 pm
Wouldn't demanding "free lives" firstly mean an end to communism?
TDL
January 19, 2007
5:06 pm
Several points to make here.

First, The Economist has been bleating about how wealth is distributed for at least 20 years and The Economist is still wrong. Wage growth has trends like anything else in the economy. It does not really matter what the distribution of wealth is as long as "total wealth" is increasing (unless of course if we go to extremes, like 100% of all wealth is owned by a few people.)

Second, Communards comment about the markets view that people are commodities is pretty much classic Marxsim. The comment is also silly. "The market" is made of people, individual actors who seek to further their own interests. "The market" is not some amorphous entity that exists to exploit. If an individual *chooses* to sell their labor that is their business and no one has a right to say at what price or under what conditions that individual can sell their labor.

Thrid, I want to echo Joe's comments. True skill can not be automated. Certain aspects can, but the whole package can not. Automation and competition simply allows for the division of labor to occur and specialization to proceed. As the markets continue to allow for the division of labor and specialization to occur, new technologies and markets will develop which allow for new highly, productive, highly paid jobs to be created. Also, depending on what we mean by "school" (vocational schools would be a very good choice for a large percentage of the population,) I would agree; continue refining your skills (as well as learn other skills that may become necessary in case your chosen profession is no longer relevant.)

Regards,
TDL
a517dogg
January 19, 2007
10:54 pm
Security clearance --> job security. Time to lay off the chronic. ;)
adamu
January 20, 2007
2:23 am
You fool! Don't you realize that encouraging people to have actual, marketable skills will just make it harder for the rest of us?! We at the top need to keep the masses dumb and distracted, thank you very much.
moorethanthis
January 20, 2007
3:31 pm
IJ: I've been reading John Ralston Saul's "The Collapse of Globalism". It tracks the rise and fall of globalisation as an ideology rather than a structure, and how it has become once more subordinated to national interests. A good read, I recommend it.
IJ
January 20, 2007
6:36 pm
moorethanthis,

Many thanks for the book recommendation. One of the Amazon reviews was especially helpful:

_[Saul] shows [.] that in spite of China doing everything "wrong" according the models of modern economics, they are wildly successful. China prospers with exchange rates pegged to favor exports, a lack of political freedom, pays no attention to intellectual property rights and has heavyweight state planning and regulation._

China's model of economics will no doubt become everyones model. Some of these ploys the West is doing already; and the possibility of a wholesale return to fixed exchange rates is mentioned in a recent paper from the US Council on Foreign Relations. But the key difference is the low costs in developing countries - they will be ascendant until wages level off in 30 to 40 years. Perhaps Davos will discuss this next week.
Joe
January 20, 2007
9:25 pm
New technologies and markets will develop which allow for new highly, productive, highly paid jobs to be created.

I think we should also keep in mind that many of these won't be "jobs" in the traditional sense. Technology is increasing the amount of work that a single person can accomplish. Already, a person can do their own advertising, correspondence and bookkeeping using relatively cheap software packages on their laptop. That really diminishes the fabled "economy of scale" that made many big businesses successful. eBay is one of the most visceral examples of this--you can sell anything to anyone in the world without leaving your chair!

So there's increasing potential for people to work as independent consultants, or as one-person companies. Of course, as an independent businessperson, you're still working for The Man--he's just your client rather than your employer. But your financial performance becomes much more merit-based, since you're part of a more fluid market.

(Note to people in college: Take some business courses while you can fit them into your degree! Preferably those that involve a lot of math. And don't complain about not liking math; you'll be forced to like it sooner or later, usually when your student loans come due.)
Tangurena
January 21, 2007
5:09 pm
Nationalism is going to be the result of the concentration of wealth trend that the Economist is just noticing. I think that is going to be inevitable, although there will be many people who think they benefit from globalization, and they might. The majority of workers in the "industrialized world" have lost significant ground to globalization. On the whole globalization is a very fragile thing that depends on cheap shipping. Shocks to our financial system and to the supply of cheap oil will cripple it more than rioting hippies can ever accomplish.

I've been trying to support my country's economy by buying stuff made in America. It is very hard to do. One can't shop at the big box store and find domestically produced goods. Almost all of it is imported. My plan is to be able to grow my own food and make (some of) my own clothes. I have found a place that sells clothing made in North America (justiceclothing.com).

I believe that our "immigration crisis" is a form of virtual offshoring, or virtual globalization. Instead of moving the plants and jobs overseas, workers are brought here, many times illegally. I live in Denver, and when a nearby Swift meat packing plant was raided, one of the "tales of woe" that appeared in the papers was that the median wages for meat cutters and meat packers in the 1980s was $19-20/hour. In 2005, the median wages were $9-11 for the same jobs. This isn't "adjusted for inflation" or any such econononsense, this is the number on the paycheck. Our administration and our companies benefit from illegal workers in the US, and therefore will do nothing about it, with the exception of a few potemkin actions. When Russia and Georgia were engaged in their dispute a couple months ago, Russia rounded up and deported all the Georgians (legally there or not) and shut down all the Georgian businesses (mostly illegal). They did this in less than 2 weeks, so that shows it _can_ be done.

It takes about 10 years for someone to become an expert at their job, and in the US, most people lose their jobs long before that. Young people see that instablity and risk, and as a result, they're staying out of many professions that have excessive cyclical risks. Especially when the odds are greater than 50-50 that they'll have to learn a whole new career before their student loans are paid off. Businesses refuse to do anything about it, except whine to the government. When you hear folks like Bill Gates complain that he can't get enough programmers, you're really hearing him state that he _can't get enough programmers at a price he is willing to pay_. He, and others, want the government to protect them from the free market.

I'm a software developer, and I see this sort of thing go on all the time: companies wanting instant experts while refusing to train the people that they do have; and falling for mismanagement fads like TQM or offshoring. You haven't seen messed up until you see "contracts" for 2-3 weeks of work. It used to be that contracting in software development was used as a surrogate probationary period, or to fill in seasonal gaps in workload, but now it has mutated into extremely short duration work.

One of the most important things you can learn in college isn't even taught there: _how to learn_. And many folks manage to escape without learning it.
snow
January 22, 2007
3:38 am
All the fear and loathing about globalization is very much misplaced, I believe. Globalization is fundamentally about freer trade and trade is what has caused the world economy to grow exponentially over the last 30-40 years. This has benefited far more people than it has hurt in the long run.

For example, life expectancies the world over (despite some decreases in recent years due to AIDS epidemics in some countries) meaning better health conditions, have improved over time, though this may not be reflected in increases in real wages. In Canada, can it really be called poverty when supposed 'poor' people can afford discretionary purchases such as wide screen tvs, stereo systems, computers and cars?