The Other I

October 9, 2016

International Trade: The devil’s own?

Filed under: Environmental Issues,Food chains,Just Stuff — theotheri @ 8:41 pm
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In my last post, I reviewed what I found to be the astonishing feat we humans have accomplished in providing nourishment for literally billions more people than populated our globe a mere 75 years ago.  This is an incredible feat for which we as species can be proud.

Most of us have no idea of the size of this gigantic accomplishment nor that it could not have been achieved without international trade.

The great risk of this ignorance is that many of us, especially in the developed world, are undergoing a mega-temptation to close off the very processes of this source of enrichment.

This might just sound ignorant, selfish, or racist on the part of people who are just too lazy to work.  But it would be a huge mistake to reduce the problem to bigotry or a preference to depend on hand-outs.. Vast swathes of joblessness resulting from international trade has created real problems for hard-working people who have been driven from a middle class life style to the edges of serious poverty.  This has happened before, but perhaps never so rapidly and without the accompanying awareness made possible by our modern communications system.

Worldwide international communication conceptHere’s an example.  China was accepted into the World Trading Organization in 1993, it looked like an unalloyed win-win situation for the world.  It indeed has been a win for Chinese workers who now supply 20% of world-wide manufacturing exports.  China has been transformed from a poor to a middle-income country, taking hundreds of millions out of poverty.   And in the developed world, the less well-off benefited hugely from cheaper imports of everything from computers to solar panels.

But the developed world did not foresee the millions of  factory job losses in countries benefiting from cheaper products being imported from China.  Today, economists estimate that up to 2.4 million jobs in America alone may have been lost as a  result of Chinese imports.

And these jobs were not replaced.  Workers could not simply move to another part of the country.  The kind of jobs for which these unemployed workers were trained no longer exist in sufficient numbers in the developed world.

It is easy to understand why people on the ground resent international trade.  It’s a resentment swelling up in Europe, Australia, North and Latin America, the Middle and Far East.  But the solution, unfortunately, is not to build walls, to slam the door shut, to go back to the mythical days when we were supposedly all able to take care of ourselves.

The problem is extraordinarily complex, and solutions are not simple.  But there are things we can do which will not destroy the huge benefits which so many have received as a result of international trade.

Culturally, the human species has always had to walk that narrow road between benefiting from our great diversity of gifts and being quite realistically threatened by them.  But we are all in this together, and with increased globalization, it is increasingly important that we learn to appreciate the huge value of our differences.

Politically, we also need to make changes.  The America government has been particularly – but not uniquely – slow to appreciate the scope of job-losses resulting from China’s rapid industrialization.  Some countries – Denmark, for instance – have done a better job of providing job retraining and meaningful unemployment benefits for those actively seeking for work.  Governments can also create jobs.  In the U.S. the needs for upgrading our transportation, electricity, and other superstructures is significant.  Few countries are without similar needs.

There are also world-wide problems of reduced competition and tax avoidance by international companies which is increasing joblessness among former factory workers.  Internet giants by and large pay above-average pay to all their workers.  But they crowd out small businesses or buy them up, reducing competition.  These are not easy problems to solve, but we must grapple with them if we don’t want to lose the benefits of international trade which enriches us all.

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4 Comments »

  1. Beautifully written.

    Like

    Comment by Kathleen — October 9, 2016 @ 9:25 pm | Reply

    • Thank you, Kathleen. I appreciate your feedback (especially when it’s positive!).

      Like

      Comment by theotheri — October 10, 2016 @ 3:29 pm | Reply

  2. There’s one more dimension – we’re going to be served in restaurants by robots.

    In our place, inefficient distribution generates a lot of hidden employment and pushes up costs. Example: At my pharmacist, entire family attends to the small store and derives income. No wonder we resist big malls, super-markets, etc. Some years ago, trade unions at our nationalized banks fought tooth and nail against introduction of those 8-bit CP/M based machines for ledger posting!!! They did not want the army of clerks to be disbanded.

    US is lucky that it has highly granular data available on employment, etc. that should allow them to experiment and see v soon if their ideas work. For us it’s a shot in the dark.

    I think economics and whatever part of it deals with employment, trade, etc. sorely needs engineers to solve problems on the ground:-) In the meanwhile others can earn their phd’s, business schools can mushroom and whatever. It’ll be no wonder if an engineer comes up with an idea of employment for generating power on industrial scale!!

    Like

    Comment by tskraghu — October 10, 2016 @ 5:40 am | Reply

  3. Well, as someone who has three brothers, a niece and a nephew who are engineers, I agree with you and I deeply appreciate the immense value of the already-achieved and potential contributions made by engineers. And there is a great need for many more of them. I suspect it is often an under-appreciated profession.

    But you must admit that there are researchers in other areas whose contributions are essential! As you point out, there’s all that data and it needs analyzing to point out the achievements, and problems still to be solved. Some of the problems, even, as we see with international trade, are a result of the very success of those achievements.

    Like

    Comment by theotheri — October 10, 2016 @ 3:37 pm | Reply


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