JPF Home Page Forums General Messages General Message Forum so who really controls the world??

Actually, the reason that the rich are getting richer and the poor are not is free trade.

The scenario was that a company in the USA or Europe (probably down under too) made a product in their respective country and employed local people to perform the work. The cost of employing the locals continually increased due to unions, productivity, health and welfare, etc. etc., but all the competition was in the same boat so it did not really matter. Everyone did OK.

And then free trade became acceptable and the owners of the companies discovered that they could operate their business in the same way but send the work offshore to where the labor costs including all the benefits were lower and the products were as good or better in most cases. So the companies became more profitable, the consumers could buy the products for less, and everyone was happy until jobs began disappearing.

So the middle and working classes in the USA and Europe are now scrambling for the remaining crummy jobs, but the companies and their owners are doing fine.

Free trade ultimately would bring about a world where people in the USA and Europe would have wages and benefits equal to people in China, Indonesia, and the communist countries. As costs increase in Japan for instance, the work simply moves to the next low cost country. The bad news is that as the Chinese become more wealthy, the US and European people become less wealthy until they meet in the middle. There are a lot of low cost countries that have not been tapped yet so it will be a long time before this system reaches equilibrium. Meanwhile, the working class in the West become relatively poorer and fight for jobs at McDonalds paying minimum wage instead of making good wages at a steel mill.

The only way to stop this decline is to increase the cost of imports by adding duty to products and services entering the USA and Europe from low cost countries. Otherwise the company owners and management will continue to do fine while their former working class employees will do worse and worse.

There is one other theory that states that the Western workers will innovate and create new jobs and products to fill the void. This does happen to some degree but uneducated people do not have much of a chance in that environment. Unfortunately, we are being outgunned by the poorer countries in education which means that they will be the ones innovating too.

Note that our governments are the only entities that can do anything about this. If an individual company attempted to employ only locals at high labor costs, they would soon be put out of business by their competitors.