Sunday, March 09, 2008

What The World Hears

Normally I post Fareed Zakaria without too much qualification, such is the credibility I think he has. Ordinarily there is not a significant point he makes which I question more than a few minutes. But this week his criticism of free trade talk in the Democratic primary has given me a more serious pause. In general, I agree that even Obama needs to temper the protectionist vein in his remarks, because after all he is a free trader. The message to the world, even beyond the sensitivities of Canadians, is worth careful examination.

The one place where I seriously cannot agree with Mr. Zakaria, and perhaps this will merit a lot more reading on the subject, is his point about the unfair scapegoating of global labor markets for the decline of American manufacturing.

There are no serious economists or experts who believe that low wages in Mexico or China or India is the fundamental reason that American factories close down. And labor and environmental standards would do very little to change the reality of huge wage differentials between poor and rich countries' workers.

Well if this is the case, what is causing them to close? American and the rest of the world are still buying steel, tires, vacuum cleaners, and the like, so I cannot be convinced the lack of demand has doomed those industries. If not the fact that others make them cheaper, by paying workers less, then why?


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