Arthur:
Another factor is whether the carrying capacity of the globe
(energy, potable water, heat sink, pollution, resources, food) is sufficient to
meet the development goals.
Or the survival goals of particular
cultures. The last time I flew to Baffin Island, in winter some three
years ago, I noticed a huge open lead in the ice of Hudson Strait just as we
were approaching the island. I remember thinking that should not be
there. Since then, I've heard of several instances of the Inuit finding
the sea ice less stable and safe than it should be.
The following is from today's Globe
and Mail.
Ed
Climate an issue of rights, Inuit say
By CHRISTINE BOYD
UPDATED AT 11:10 AM EST Thursday, Dec. 11, 2003
The world's Inuit intend to launch a human-rights case against the United
States, condemning its role in the global warming that they say threatens them
with extinction.
Inuit Circumpolar Conference, which represents the 155,000 people who live
within the Arctic Circle, argues that Washington has violated their rights by
refusing to sign the Kyoto accord and resisting attempts to lower the country's
emissions of greenhouse gases, especially carbon dioxide.
It intends to invite the Inter-American Commission on Human Rights to observe
first-hand how the Inuit way of life is being destroyed as the Far North,
particularly the sea ice the Inuit use to hunt key parts of their diets, melts
away.
"What is at stake here is the cultural survival of the Inuit as a people,"
Sheila Watt-Cloutier, the group's chairwoman, warned a United Nations meeting on
climate change in Milan yesterday.
The conference was the first since Russia began flip-flopping over whether it
would sign the 1997 accord. Under the protocol's rules, it must be ratified by
industrialized countries accounting for at least 55 per cent of the world's
greenhouse-gas emissions, as of 1990, before it becomes binding.
So far, 120 countries accounting for 44 per cent of emissions have signed on,
while the United States -- which produces 36 per cent -- loudly backed out two
years ago, with President George W. Bush announcing he feared U.S. industry
would be hurt if it met the treaty's reduction goals. Kyoto will die if Russia,
which produces 17 per cent of global emissions, does not sign.
Ms. Watt-Cloutier said her organization was not invoking the threat of the
Washington-based commission, similar to the European court of human rights, in
an "adversarial spirit." The commission has no enforcement powers if it rules
against the U.S. government, but the Inuit hope the case will draw attention to
their plight.
----- Original Message -----
Sent: Thursday, December 11, 2003 8:23
AM
Subject: RE: [Futurework] What happens
when Asia has caught up?
Another factor is whether the carrying capacity of the globe
(energy, potable water, heat sink, pollution, resources, food) is sufficient
to meet the development goals.
We have Karen to thank for bringing the following to our attention.
In my view it is quite the most interesting and thoughtful economic
discussion I have read in a long while -- a conversation ably transcribed
into readable form by Erika Kinetz (a difficult job, as anybody who has done
this will know!).
The interlocutors had enough on their plates in
talking about the jobs that are now leaving America and Europe for Asia to
talk of other deeper factors. In a way, China, India and the other south
east Asian countries have an easy job because they're playing catch-up. All
they need to do essentially is to produce orthodox goods and services for
the West more cheaply than we can make them and then supply their own
consumer markets which, being much larger than ours, will produce a new
super-large brand of multinational. Initially, as pointed out below, most of
these will remain headquartered in American and European countries
(hopefully swelling the funds of investors and pensions institutions over
here) but increasingly they will become indigenous.
Quite apart from
the probability that all the developed and the neo-developed countries will
be draining the existing energy resources of the world, there are two more
big questions. The first is: Once the Asian countries have caught up, will
they have the innovative ability to start supplying a new generation of
consumer products? (We must remember that America's economic success in the
last century -- to a very considerable extent -- has been due to being able
to recruit the best brains of Europe and, in recent decades, Asia. The
former brain drain will undoubtedly continue, but the latter will probably
dry up in the coming years as their own countries supply sufficient
opportunities for research and development.) The second
question is: "Can we be sure that developed societies have the structural
capacity to absorb further goods?" A corollary to this is: "Will the
initiatory class (the middle-class consumer market with sufficient
disposable incomes not in hock to the credit card companies) have the time,
energy or inclination to absorb more consumer goods in their daily lives and
thus set off another wave of consumption?
Keith
Hudson
<<<< WHO WINS AND WHO LOSES
AS JOBS MOVE OVERSEAS?
Erika Kinetz
The outsourcing
of jobs to China and India is not new, but lately it has earned a chilling
new adjective -- professional. Advances in communications technology have
enabled white-collar jobs to be shipped from the United States and Europe as
never before, and the outcry from workers who once considered themselves
invulnerable is creating a potent political force.
After falling by
2.8 million jobs since early 2001, employment has risen by 240,000 jobs
since August. That gain, less than some expected, has not resolved whether
the nation is suffering cyclical losses or permanent job destruction.
Last month, The International Herald Tribune convened a
roundtable at the Algonquin Hotel in Manhattan to discuss how job migration
is changing the landscape.
The participants were Josh Bivens, an
economist with the Economic Policy Institute, a nonprofit research group in
Washington that receives a third of its financing from labor unions; Diana
Farrell, the director of the McKinsey Global Institute, which is McKinsey
& Company's internal economics research group; Edmund Harriss, the
portfolio manager of the Guinness Atkinson China and Hong Kong fund and the
Guinness Atkinson Asia Focus fund; M. Eric Johnson, director of Tuck's
Glassmeyer/McNamee Center for Digital Strategies at the Tuck School of
Business, Dartmouth College; and, via conference call from Singapore,
Stephen S. Roach, managing director and chief economist of Morgan Stanley .
Following are excerpts from their conversation.
Q. How
big an issue is job migration?
MR. ROACH: Offshore outsourcing is
a huge deal. We do not have a data series called jobs lost to offshore
outsourcing, but 23 months into the recovery, private sector jobs are
running nearly seven million workers below the norm of the typical hiring
cycle. Something new is going on. America is short of jobs as never before,
and the major candidates for our offshore outsourcing are ramping up
employment as never before. So yes, I think two and two is
four.
MS. FARRELL: This is a big deal in the sense that we see
something structural happening. But I would react to the notion that it is a
big deal that we should try to stop or recognize as anything other than the
economic process of change. I think the bigger deal is the fact that we are
going to have very serious curtailment of the working age
population.
MR. BIVENS: I'm curious about Steve's assertion
that outsourcing can explain the sluggish employment situation. If you just
look at slow growth plus fast productivity, you've got the sluggish labor
market right there.
MR. ROACH: A pick-up in productivity does
not have to be accompanied by sluggish employment. There are countless
examples, like the 1960s and again the 1990s, of rapid productivity growth
accompanied by rapid employment.
The point is that the relationship
between aggregate demand and employment growth looks to me as if it has
broken down. That breakdown reflects not just the rapid growth and
maturation of outsourcing platforms in places like China and India, but also
the accelerated pace by which these platforms can now be connected to the
developed world through the Internet. These are brand-new developments. This
is a huge challenge for service-based economies, like the United
States.
MR. BIVENS: How much of the insecurity that people
think is caused by service sector outsourcing is in fact just the business
cycle as usual? Every time there's a recession people want to blame it on
some underlying structural factor, when sometimes recessions are just
recessions, shortfalls in demand that work themselves out.
MR.
ROACH: Over the September to November period, employment has turned up,
but many of those jobs came from the temporary hiring industry. These are
service jobs, contingent workers without benefits and significantly lower
pay scales. We're getting the GDP growth, and by now any recovery in the
past would be flashing green on the hiring front. This one isn't. With all
due respect, I don't know what you guys are talking about. This is a
profoundly different relationship between hiring and the business cycle. And
I think these jobs are, by in large, lost forever.
Q. Who wins in
offshoring and who loses?
MS. FARRELL: There is an assumption by
protectionists that these jobs are going somewhere else, and all this money
has been pocketed by CEOs who take it home. A little more sophisticated
version is: It's being pocketed by companies in the form of profits. One
step further and you say those profits are either going to go as returns to
the investors in those companies, or they're going to go into new investment
by those companies. Those savings enable me, if I am an investor, to consume
more and therefore contribute to job recreation, and if I am a company, to
re-invest and create jobs. That's important because I agree that we are
migrating jobs away, some of which will never return, nor should
they.
MR. BIVENS: Within nations, trade tends to redistribute
a lot of income. The gains get pretty concentrated in the pockets of capital
owners. The people who lose out are the blue-collar workers. Now you've got
this class of white-collar workers who are much more insecure about their
job prospects, and their labor market bargaining power is being undermined.
It doesn't mean we need walls all around the economy, but it does mean we
need to get really serious about making sure all these gains are
distributed.
MR. HARRISS: Look at what's gone on in China over
the last 10 years There are 300 million people in those eastern coastal
provinces who have seen an extraordinary pickup in their standard of living.
And you're seeing an economy that is just about to take wing because you now
have consumers who were never able to participate in the economy before. Now
it is people in the developed world who are being left behind. That is very
difficult to resolve.
Q. One key piece of the win-win theory seems
to be that displaced workers do find new jobs. What does history teach us
about how well displaced manufacturing workers have been reintegrated into
the work force?
MR. BIVENS: The best research on what happens to
people displaced from manufacturing is that they eventually find a new job,
but they take an average wage cut of 13 to 14 percent. The people who are
hit hardest are older workers. Also, it's not just the worker who is
directly displaced from a sector that is hurt by international trade, it is
also every other worker in the economy who has a similar skills
profile.
Q. For labor, is outsourcing a race to the
bottom?
MR. ROACH: It's a race to the bottom if we spend all our
energy trying to protect existing sources of job creation, as the
politicians in the U.S. Congress are inclined to do. The problem is that
globalization is growing asymmetrically, so initially it creates more supply
than demand. We're living through that asymmetry right now, and that has
caused a potentially dangerous political backlash. The Chinese, for example,
are reluctant to transform their habits from savers to consumers because
they're losing jobs through the reform of their own economy, and they don't
have social security or retirement. Over time there is a rising tide. But
the political process is not that patient.
Q. If protectionism is
the wrong answer, explain how the market will solve this. Does government
need to intervene at all?
MR. ROACH: This is classic
election-year posturing by a Congress that is basically responsible for the
problem itself and doesn't want to admit it. We have trade deficits with
China and Japan because Washington is running the most reckless fiscal
policy we've seen in the United States since the late 1960s. They are the
problem. It's not the Chinas and Japans and Indias of the world. Moreover,
there are a lot of assumptions being made, especially by political leaders,
that the rapid growth of Chinese exports and production is the smoking gun
of the threat to traditional sources of job creation. About two-thirds of
the export growth China has realized over the last 10 years has come from
Chinese subsidiaries of multinational corporations headquartered in Japan,
the U.S. and Europe and their joint venture partners. These are our
companies. It's us; it's not necessarily them.
MR. JOHNSON:
It's all about innovation and productivity. As long as we maintain those two
engines, we'll continue to have a very high standard of living. Out in the
Bay Area there are plenty of folks who would love to create a little bit of
protectionism around their IT jobs, but we are far better off letting a lot
of those jobs go. Low-skill jobs like coding are moving offshore and what's
left in their place are more advanced project management jobs.
MS.
FARRELL: We will require different services, medical devices, all kinds
of things to support an aging population. Fifteen years ago, you would not
have been able to fathom many of the jobs that exist today.
MR.
HARRISS: There is not much new radical innovation in Asia of the kind
we're looking at to create jobs in the U.S. Apart from a very few
exceptions, what Asia does well is take the latest innovations and
production techniques, invest in the most recent equipment and then bring in
their powerful advantages in low-cost labor, and start to produce. For the
most part, the benefits to Asia are just going to come with more people
coming off the poverty line and into the global economy.
Q. What
happens when China ceases to be an endless pit of poverty?
MR. ROACH:
China for all practical purposes has an infinite supply of labor 400
million in its urban population and another 900 million in the rural area.
The average wage of a Chinese worker is still 2.5 to 3 percent of the
counterpart in the developed world. Those are disparities that will be
around for a long time.
Q. Can China keep labor costs so low and
still grow a critical mass of domestic consumers?
MS. FARRELL:
You are still talking about a pretty significant critical mass of people
who are now entering consumption level incomes $7,000 to $10,000 GDP per
capita. Car sales in China are growing at 26 to 30 percent compound annual
growth rates. Televisions, refrigerators, mobile handsets all have the same
kind of J-curve. You only need 10 percent of the population to have a
critical mass of income.
Q. What do you see in the
future?
MR. BIVENS: Globalization is good at increasing the
productive capacity of the world, but to make sure there are enough jobs for
everybody, you need demand to keep pace with that increase in supply. That's
where globalization presents a real challenge. Government's big roles in the
future are to make sure global demand matches supply, and to provide social
insurance schemes to make sure the living standards of the workers being
left behind aren't sacrificed on the altar of global progress.
MR.
ROACH: In the future there are two roads. One is to look backward and
hang on to what we think we're entitled to. The other is to recognize what
has made America. Our virtues lie in a flexible and open, technology
friendly, risk-taking, entrepreneurial, market-driven system. This is
exactly the same type of challenge farmers went through in the late 1800s,
sweatshop workers went through in the early 1900s, and manufacturing workers
did in the first half of the 80s. We've got to focus on setting in motion a
debate that pushes us into new sources of job creation rather than bemoaning
the loss. There are Republicans and Democrats alike who are involved in this
protectionist backlash. They're very vocal right now, and they need to be
challenged. New York Times -- 7 December
2003 >>>>
Keith Hudson, Bath, England,
<www.evolutionary-economics.org>
|