Sunday, January 28, 2007


The Pendulum Swings...

The British article at the link below summarizes the rapid gains of globalization at the expense of both blue and white collar workers - especially in the United States. Real income has increased at an average rate of only 1.4 percent over the past five years, less than half the average rate at which productivity has expanded - 3.1 percent per year. According to the article, "academic research indicates that only about 10 per cent of the American workforce realised gains in labour income that were in excess of underlying productivity growth - meaning that 90 per cent of the workforce has been on the outside looking in." Well-put, we say, with our noses pressed against the glass like Dickensian urchins.

"A backlash is at hand," the article warns. "The pendulum of economic power, which has swung to excess in favor of capital, is about to swing back in a pro-labour direction." Powerless to bargain with the corporations on their own behalf, workers have elected representatives to fight for their interests. "Led by Democrats for the first time since 1993, the new US Congress has already put down a pro-labout marker - a 41 per cent increase in the minimum wage. Look for further actions emanating from Washington along this same general theme - namely, increased taxes on the energy industry, scrutiny of executive compensation and intensified China-bashing." Other countries will no doubt follow suit in the years to come. Hallelujah!

The article continues to warn that financial markets are unprepared for this shift of the pendulum. Corporate profits and stock equity will suffer, the dollar will fall, and inflation could result. In short, "it is as if the film of the past 15 years is about to run in reverse." Too bad all the damage inflicted during that time on human lives and the public trust could be reversed as well, a la Martin Amis' Time's Arrow. But, oh well. At least the times, they are a-changin'...

"Pendulum swings towards new era of localisation" from TimesOnline (UK)

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