China has reached the 1st step in ending up like the USA

Post Reply New Topic

I'm sure a lot of people predicted this, but now workers in China are demanding better wages:
http://www.aolnews.com/world/article/ch ... s/19593310

It makes sense though, even by basic supply and demand. More production is being moved to China, which means an increase in Labor Demand... So that creates an upward pressure on wages. You know what that means, right? It's only a matter of time before wages in China become "too high", and production is moved to the next unwitting country in line: India.

So what will happen to China as a result of their production being outsourced? The same things that have happened here in the US: falling wages, high unemployment, extremely low job security... Their once great economy will bust, while India's economy will boom... until their wages become "too high", and their production is shifted to somewhere else, most likely Africa..

When/where will this cycle end? How is this "free trade" business good for anyone (besides the megacorporations, anyway)?

Oh my god. It is pretty much unanimous among economists all over the political spectrum that free trade is beneficial to all involved. Protectionist tariffs and import quotas benefit a select few (the corporations that lobby for them) at the detriment of the rest of society. Look up comparative advantage.

Also, wages have not been falling in the US. Average real compensation per hour, median yearly income, and pretty much every other measurement of income have been steadily increasing in the US.

And here I was hoping from the title that they'd decided to respect human rights once in awhile, or let people disagree with the state occasionally, or that they were thinking of taking down the great firewall.

There's a fundamental flaw in your argument, though -- if China starts outsourcing, what's to stop a partial backflow to the US? Or their realizing that it's happening and stopping it? Production doesn't simply shift to the one single poorest country available.

Soon, it will be America making the disproportionate foam hand.

That really depends on the state of your economy. Institutionalists like Ha-Joon Chang have noted that almost all successful economic powerhouses today practiced "infant industry protectionism" to ensure larger, more well-established industrialists overseas didn't out-compete native industry before it had a chance at succeding. The "homes of Free Trade" - UK & US - practiced protectionism well before they were ready to practice free trade and the Japanese auto-industry developed through protectionist measures. GM doesn't own Toyota - without protectionism, it may have.



Real wages haven't increased alongside worker productivity.