On Thu, 20 Jan 1994, Jim Devine wrote:
> I think that the distiction between movement to low-wage countries
> by capital (and the concomitant increase of imports of goods produced
> there by the advanced countries) and technological change that
> lowers the demand for lower-skilled labor in the advanced countries
> is largely false. The technological bias toward simplifying and
> routinizing (deskilling) traditional jobs in the advanced countries
> (which often have high skill relative to poor countries) *allows*
> the movement of capital to the poor countries.
Why does routinization help move jobs to the third world? Let's not act
as though many of the jobs weren't already routinized, while many of the
jobs being moved to Mexico are often quite high-productivity jobs
(although the relation of productivity to skill is often a bit mixed).
But you didn't address the issue raised in THE ECONOMIST which is that
low-skill goods have not been dropping in relative price. This was taken
to indicate that it is not low wage competition that is lowering the
wages in such jobs. Now there may be a problem in that logic (promoted
by Jagdish Bhagwati and by a paper by Robert Lawrence and Matt
Slaughter), but it is a good question. Many of those who promote NAFTA
argue it will lead to cheaper goods; if relative prices are not dropping,
it might be argued that we are getting neither the bad nor the supposed
good effects of trade with the third world.
Or it could mean that the multinationals are snookering both the workers
and the consumers and are pocketing the difference. SO what these
researchers are picking up would then be not the lack of low wage
competition effects but its masking by multinational increases in profits.
Does anyone else on PEN-L have research to add to these reports?
--Nathan Newman
