Quote:
Originally Posted by Beemer B773ER  Eni.. you make it sound like there won't be any jobs for the middle class. This certainly is not and will not be the case. Only the most basic jobs are being moved to cheaper labour nations such as China, India or African nations (eg: Nike). Sure we hear about call-centres and factories being moved to these nations, but I can bet that more people are being made redundent due to company restructuring rather than corporations moving part of their operations to cheap-labour countries. By restructing I'm referring to instances where company's have become too large for their own good (eg: current situation at Ford America).
Possible counter arguments:
1. Cheaper products due to globalisation -> Greater level of disposable income since good are cheaper than before -> more spending -> greater demand
or..
2. Using your argument of increasing unemployment of middle class: Increase in unemployment -> Decrease in inflation (due to lower levels of spending) while wages remain fairly constant -> More affordable goods -> Increase in demand
3. You say that lower demand -> lower prices which may well occur, but lower prices will very quickly bring demand back up as consumers act positively (and quickly) to lower prices. Ofcourse I undertand your point that demand cannot pick up since the middle class is unemployed, but like I explained earlier, the entire middle-class will not become unemployed in a flash, otherwise the economy itself will implode.
The economy runs in cycles, so either way it will pick up. If one business feels the pinch of decreasing profits due to the economy, you can be sure that their competitor's are feeling it too (assuming that particular company isn't losing money for some reason other than an econominc downturn, that is: implying some form of mis-management). With peoples' level of disposable income for general expenditure decreasing, we tend to save rather than spend. Soon enough this trend to saving will increase consumer's level of disposable income, and then again push up demand and spending activity. |
Not all the goods follow such pattern. You are forgetting about price elasticity ... Some goods / prices are elastic some are not.
And like I said earlier: some materials (like raw metal eg. iron, aluminum, copper etc, and eg. oil & gas, coal etc) are in limited quantity. So, prices will be high because demand will be high.
Also: not all countries are like USA. Some (eg. all European countries) even have nationwide social & health security available! So, bigger social & health expanses -> higher taxes -> higher prices.
I'm not saying entire middle class will suffer from globalization, but some segments definitely will. I can see middle class slowly shrinking in the Western countries -> some migrating in lower classes, some in higher (depending on situation), while in developing countries yet non-existent middle class will arise.
So, some sort of redistribution. Lower standard for some in the West, higher fore some in the East.
But like I said: imagine Indian & Chinese (combined population: 2.5 billion), - and add some other East Asian countries here - middle class explosion. All buying cars, other consumer goods , using services etc.
The demand for raw materials & energy will explode! And so will prices since the supply is very limited. And consequently all the other products & services will be more expensive, and life in general will become more expensive. Worldwide.
I'm not talking luxury goods & services here, yet the essential ones!
Yes, there will be cycles - they always are in economic systems, yet the trend will move towards more expensive life -> lower living standard.
Also do not forget about bigger pollution due more developed industry -> impact on environment -> health problems, climate change, imbalances in ecosystems etc. -> more expenses to repair the damages etc
You know, I can live with higher prices of cameras, TV sets, MP3 players, Adidas snickers, Armani suits, BMWs etc but higher prices of health care, food, water, heating / air conditioning, electricity, gas / oil / petrol will definitely affect my standard.
So, I'm quite concerned about globalization ... in the long run. Maybe ... with a bit of luck I'll be dead already when the most unpleasant things happen in the future.