Tuesday, June 17, 2008

Globalization and automation harm workers

That's according to Sen. Barak Obama. [From this interview with the Senator in the Wall Street Journal where he outlines some of his economic platform. The full quote: ""Globalization and technology and automation all weaken the position of workers," he said, and a strong government hand is needed to assure that wealth is distributed more equitably."]

Cafe Hayek responds
, in the succinct style that one is used to over there:
If this presidential wannabe is correct, then some of the world's most prosperous workers must be the people in that newly discovered tribe in Brazil -- persons with absolutely no contact with the global economy or with modern technology.

Less extreme cases, of course, include persons not so cut off from the world as these Brazilian tribes. Sub-Saharan Africans should be more prosperous than eastern Europeans, who, in turn, should be more prosperous than Americans and western Europeans.

Of course, if the facts don't follow this pattern, then I guess that Sen. Obama will soon publicly apologize for either misspeaking or admit that his thesis is flawed.


coray said...

The groupthinkers at Cafe Heck are good at beating up straw men but not considering the meaning of the statement under question. Hence they roll out this old saw, that any recognition of the costs of technological change is tantamount to its total rejection. It is as if they heard a drowning man say, "Less water, please!" and advised him to go live in the desert if he hates water so much.

Obama did not say globalization and technology are unmitigated evils and are best done without, which is apparently how Cafe Hayek understood him. Globalization does in fact weaken the position of workers because a global corporation can hire and fire from a global labor market. In the short term this benefits countries that are factor-intensive in labor and hurts countries that have other productive assets, such as land or capital. This is an old result from 1933, called Heckscher-Ohlin, and it provides justification for a temporary increase in (say) worker training benefits during a period of rapid change.

For Cafe Hayek a better argument would weigh the long-term benefits of competitive labor markets against the short-term costs of depressed wages, but such an argument wouldn't be so "succinct."

Gashwin said...

Did you intentionally say Cafe Heck? :) And you're the one who turned me on to Hayek (though not Cafe Hayek), remember? I shall pray for your lost libertarian soul ... :)

But thanks for your economic insight. Mine is in its infancy and won't grow much more. I am, however, still enjoying TWON.

And I still don't like Obama. :-|

coray said...

i'm not ogaga about him either, due to his obortion policy