Monday, February 06, 2006

Countries can't downsize

The Big Picture: BusinessWeek Cover Story: Disingenuous or Denial had this rather interesting comment:

... In a nutshell, countries can't downsize. Bizweek (and others) are trying to suggest that America as a whole is benefiting from this enlightened leverage of IP and low cost manufacturing availability. Not true, not by a longshot.

The reality is that there is a small contingent of folks in the US reaping the benefits of the iPod economy, and a much larger group of folks feeling the brunt of wage stagnation even as downward pressure on manufactured goods gets offset by upward pressure elsewhere (the natural result of a static inflation policy). America is not like a jack-be-nimble startup, or even like a General Electric where Neutron Jack can lay off 100,000 workers.

As borders dissolve, opportunity spreads more evenly. This is very good for rich world players with leverage (knowledge, know-how etc) and developing world players looking for a leg up (88 cents an hour better than 0 cents an hour). It is very bad for rich world wage workers who were previously insulated from developing world competition.

A great short essay. The pithy phrase is worth bearing in mind.

No comments: