Welcome to globalisation
17 July 2004
A study of inflation in Scotland since 1989 has shown that prices in the service industry have risen dramatically, while those in manufactured goods have fallen.
I imagine a similar situation must exist in other countries like the US, for example. A lot of people in the US aren’t happy that lower labour costs in other countries have sent jobs away (my favourite example is Neil’s story of a US immigration official asking his colleague if they were one of those people stealing jobs from America). On the whole, though, the jobs ‘stolen’ by China are low-skilled, manufacturing positions. Computers and televisions are becoming more and more commoditised by the minute.
Everyone wants lower prices. Unless the people who are unhappy with the situation are more than willing to accept a wage that averages US$100 a month (a Xiamen estimate), I don’t see them being at all competitive with their Chinese (or Indian) counterparts. If people want to enjoy the benefits of free trade, they need to accept the costs, too.
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