Globalization - the irrational fear that someone in China will take your job

Bruce Greenwald and Judd Kahn, Wiley, Multco 337 G816g 2009

As I write this, fear of job loss to China has been replaced by fears of job loss to robots, but the same paranoia is engaged. Don't be a robot (or worse), and a robot will not take your job. Nor will an unskilled Chinese peasant take your job, unless you do work that any unskilled non-English-speaking peasant can do. The cure? Learn something useful, and keep learning





















The book aims to dispel popular myths about globalization and jobs and trade, while introducing a neglected aspect of the global money supply in chapter 6, "A Genuine Global Economic Problem -Replacing the Consumer of Last Resort". At the 1944 Bretton Woods conference, the International Monetary Fund was established, and the US dollar replaced the British pound as the world's currency.

The prior gold standard was deflationary - the gold supply did not grow as fast as the volume of transactions, so prices declined relative to a dwindling supply of money. As wages were paid in advance of goods sold, that made simply holding gold (or its surrogate, cash) more attractive than running a business. The authors suggest this caused economic crises, which were ameliorated by foreign exchange, establishing currency trading. The perceived self-restraint of the Bank of England made the British pound the favorite exchange currency. To get pounds for reserves, other countries would have to sell assets to the British, borrow pounds and (requiring more pounds to pay interest), or import less real goods from Britain and sell more to the country. This lowered prices in Britain, but that disadvantaged domestic British production and employment.

I wonder if some tool vaguely like bitcoin could stabilize the creation of SDRs. Perhaps they could be tied to pollution mitigation, or preservation of natural genetic diversity. However it is done, if it is not set by some objective physical standard, it can be gamed, and if there is a physical standard, it can be mismeasured.

Money is a surrogate for goods flowing the other way, an abstracted version of barter. We have computers and 24x7 global global communication to communication - perhaps we can return to gold and superhigh velocity trading, or develop a stable average measure of global wealth out of a hodgepodge of volatile real goods and purchased services. Whatever standard is chosen, them that has, gets.

Globalization (last edited 2016-04-17 16:23:33 by KeithLofstrom)