Friday, March 24, 2006

I like Harold Meyerson

He notes that Alan Blinder says that many US jobs may be outsourced so long as US wages are higher than Indian wages. Meyerson then proposes

So, here are three immodest suggestions:

· We need to entice industry to invest at home by having the government and our public- and union-controlled pension funds upgrade the infrastructure and invest in energy efficiency and worker training.

· We need to unionize and upgrade the skills of the nearly 50 million private-sector workers in health care, transportation, construction, retail, restaurants and the like whose jobs can't be shipped abroad.

· And, if America is to survive American capitalism in the age of globalization, we need to alter the composition of our corporate boards so that employee and public representatives can limit the offshoring of our econom
y.



I do not like his points 1 and 3 at all. He says that globalization is a great force for equality as jobs and capital will flow towards countries with low wages. He says this is bad and must be stopped. It seems Meyerson's egalitarianism stops at the water's edge.

It may be true that globalization implies increased inequality in the USA (although you know empirical work on increased inequality tends to come to the conclusion that 90 to 95% of the increase would have occured anyway in a closed economy).

To an mid 2oth century style pre new political economy post old political economy public economist, the solution is easy. We can have equality in the USA and word equality and growth in India if we embrace globalization (which means huge profits for US firms and huge compensation for US CEOs) then tax them and make the earned income tax credit larger than income plus payroll taxes for the majority of Americans.

Now we see that can not be, because the US might find a way to defeat both globalization and Euroschlerosis but no way can we take on K street too. More seriously , the effort to soak the rich while leaving them in charge of the private sector has been strongly correlated with unfortunate events In the policy dream world, K street can be defeated. That strange possible America might learn the meaning of one of the key American word Golpo.

Maybe to stop the increase in inequality in the USA we have to fight the programmers of Bangalore, since they can't fight back. I for one say no. Even Meyerson should consider it the least bad option, not his pet plan.

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