Harold's Point

Make-you-think column by Harold Meyerson in the Post on how unions might have mitigated today's woes in context of the US-China imbalances. Highlights:

At the center of the global meltdown, then, is the misshapen economic codependency of the United States and China. Each has followed a fundamentally unstable economic model, with one nation suppressing wages so that it could export more and the other living on borrowed funds so that it could purchase more. Despite the sharply different roles that each nation carved for itself, though, a shared characteristic allowed them to chart their ultimately disastrous course...What do the United States and China have in common? They are the only two major economic powers that are resolutely hostile to unions....

But suppose that China and the United States did have powerful unions. In China, such unions might have pushed for higher wages, social insurance and more domestic consumption. Here, such unions would have preserved more of a manufacturing sector and boosted wages in the service and retail sectors, so that American consumers could have relied more on income than on credit to make their purchases. The two nations would have had more sustainable economic strategies.
I'm not sure he's right, but I'm also not sure he doesn't have an important point. Worth mulling, especially for those who reflexively oppose unions.


Blogger LAToxDoc said...

Yes, exactly. A curiously sick symbiosis.

The terrific economist Jamie Galbraith argues this same point in detail in his book The Predator State. China needs US debt denominated in dollars as a source of international capital stability. The US needs China as a source of cheap consumer goods on credit. As a further bonus, because China exports only a small fraction of what its industrious workers produce, it actually has a abundance of relatively cheap consumer goods of for its own domestic consumption, even if the workers never get hold of dollars.

A system ripe for exploitation by financial predators.

February 18, 2009 at 10:55 PM  

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