On Mon, 13 Oct 2003 11:06:29 +0800, Old Nick wrote:
Union workers are "pricing themselves out of the market" at least in
part because they need the wages to buy the products they make

But at least in part those products are priced so high because of the
excessive wage demands of the union workers. It is a vicious circle.

Just last week, a large factory announced that it was closing- idling
1200 workers. The jobs are going not to China, but to Singapore.
It's hard to feel sorry for these workers- they were getting big bucks
and bennies for assembly line work and they wouldn't consider even a
small pay cut to stay employed.

But the lower paid workers in Singapore will not be able to buy the
very products they make. Singapore will probably export huge portions
of whatever it makes.

GM is setting up car factories in China. GM says they are building for
the Chinese market only, but I wonder...

*Someone* has to be making enough money to buy those products.
If you follow Jim Rozen's theory that all US citizens will be working at
Walmart, they won't be making enough to buy those products.

There has to be a mass market large enough to absorb Chinese
production. And that market has to be rich enough to pay for that
production. If all the jobs are going to China, who is going to buy
what they build if it isn't the Chinese? And how will the Chinese
buy them if their wages don't rise? And what does that do to the
comparative advantage of Chinese factories over US ones?

There was a time, I think, when the memories of world war, less
communication and transport ability, and national pride prevented
this, because an American company was an American company and proud of
being able to support the country's economy. But this is no longer so.
"American" (and the others as well) companies are now simply
international, with proft, or even worse "return to the shareholder"
(most of whom have absolutely no knowledge of or interest in what the
company actually _does_), being the _only_ motive.

Indeed, there was a time when jingoism overrode good sense. But
the purpose of a corporation is to earn value for its shareholders.
Eventually it has to do that, or it will cease to exist, its shareholders
will have lost their investments, its workers will be unemployed, and
who benefits from that?

Gary