Quotations from “The New Global Labor Market” by Professor Freeman in 2008.
“The world labor pool doubled in the ‘90s from 1.46 billion to 2.93 billion workers as China, India and the former Soviet bloc joined the global economy and the entire world came together into a single economic world based on capitalism and markets.” A lot of third world countries were trying to get ahead by selling low-wage products to the richer countries. They were hit hard by the new competition. The newcomers brought relatively little capital with them, making the capital already in the system more valuable. (paraphrased). “In the long run, China, India, and the former Soviet bloc will save and invest and contribute to the growth of the world capital stock.” Because capital has gained power to pick what labor it uses, many manufacturing jobs are going to move out of America and Europe. There will also be downward pressure on wages inside rich countries for some time while wages continue to rise for the newcomers. That process is still underway and policy foolishness in the US has moved some of the job losses and income reductions forward to this recession. "If the United States adjusts well, the benefits of having virtually all of humanity on the same economic page will improve living standards for all Americans".
|Richard B Freeman|