Is globalization helping the world gain a better standard of living at the expense of U.S. standards of living

Question

Globalization's goal is to give the developing "third world" a chance to eventually become synchronized with the technology and workplace of the modern era, developed society. Outsourcing creates more high-skill jobs in those countries, increasing their GDP per capita income right? Essentially it will become an equilibrium and will pull impoverished people to higher living. Essentially we are sacrificing ourselves for those people right? Is this a good thing or bad thing do you think? Will it even work?

Answer 1

if their GDP per capita increases, their demand will increase.  that demand will be filled from inside their own country, and from abroad.  therefore, americans will continue to be employed.  the only thing is that industries where we are not efficient -- low-skilled manufacturing, for instance -- tend to move overseas.  however, areas where we are efficient, and due to our high level of human capital, they tend to be high paying jobs, will grow.  so we are not sacrificing ourselves, we're just shifting to what we do best.

also, globalization makes prices lower.  lower prices = higher real income = higher standard of living.

Answer 2

one aspect to your question is related to the notion of a zero sum game.  the idea is that if the total wealth of the world is fixed, then the economies just battle it out to decide who gets the biggest piece of the pie.  in that scenario, it might be true that globalization is giving more people the tools to compete more effectively and your share could go down.

But it is not a zero sum game.  We continuously produce more and more products and services with less and less human effort.  This is what can raise the standard of living for everyone, world wide.   An example is clothing.

At one time, textile mills were located in the US and they made clothing for people who lived in the US.  conditions in the mills varied, some were good places to work, others were sweatshops etc.  but we as a nation made our own clothing, other than some fashion items.

With the exporting of the textile jobs to other countries, you saw increased employment opportunities in less fortunate countries, and reduced costs for clothing here in the us, by importing the clothes from countries that could pay much lower wages there.

Our discount retailers were able to buy clothing much less expensively, and pass the savings on to the us consumer.   the us consumer bought a lot more clothing, and discarded perfectly good, lightly used clothing just because a style had changed from one year to the next.   Wholesalers buy the used clothing here and ship it back to the poorer countries where it is sold at affordable prices there.   Productivity is up, and all parties have benefited.

Look at all the things that are made in china today.   practically anything small enough to ship here in a cost effective manner.   putting aside the pollution problem, which is huge, we can pay chinese factories a tiny fraction of what it would cost to make an electric drill here in the US, because they have billions of people who are looking for work that pays better than subsistance farming.   We import cheap drills, the chinese grow their economy, and their own people can begin to afford to buy the products made there.  this creates higher demand for their products, which allows them to charge more for them.  eventually china will become an equal trading partner with the US, but we will have brought billions of people into higher productivity jobs, where they once toiled with primative tools and methods to farm enough to survive, they will eventually produce enough output to live comfortably and return a competative profit to the investors in the businesses that employ them.

The trick to all this is pollution and the supply of natural resources.  at some point we do not need more or better toasters, electric drills, or fashionable clothes.   we will need education, leisure time, travel, art, etc.

by bringing more and more people accross the globe into the range of productivity that allows us all to work fewer hours for food clothing and shelter, we will free ourselves from the drudgery of today's 40 hour work week if we choose.

it is easily within our grasp to have a 20 hour work week and a perfectly delightful standard of living.  we just haven't chosen to do so yet.  eventually we will tire of grinding away to make more and more things we don't need

but productivity is the key.  it provides us the power to do what we want to do with our lives

Answer 3

Good point.  If somebody tries to lower my American standard of living--eating at restaraunts, wearing $200 boots, deep sea fishing in the springtime, HDTV, and pedicures, it better not be to feed, clothe, and give rudimentary health care to some worthless third world brat who should be nuetered.

Answer 4

One obvious effect of the rise of the economies of poor nations is an increase in the competition for natural resources, especially oil, which will lower the standard of living for everybody. However increase in trade should benefit all countries but will create winners and losers within a country. In a highly industrialized country like the US wages will be depressed for most people but owners of capital  will make more profits and in a third world county  the reverse  will be true. In the new economy the owners of capital also include the well educated "owners" of intellectual capital.

Right now it is our unskilled labor that is feeling the negative effect of Globalization but as the third word develops and educates more of their population and become capital intensive the previous balance will be restored and the current high returns to education will diminish and the relative wages of the unskilled will rise. In the long run it is a good thing for everybody because of better use of resources, but in the long run we are all dead.