Showing all posts tagged: demographic arbitrage
Friedman wags his fingers at us, saying that we, Americans, are failing because we aren’t enthusiastic capitalists anymore. After creating a globalized world (that has destroyed the middle class and driven millions from ‘working class’ into poverty) we aren’t working like the Indians and Chinese are, we don’t seem to have their boundless optimism.
What is most striking to me being in India this week, though, is how many Indians, young and old, expressed their concerns that America also seems at times to be running away from the world it invented and that India is adopting.
With President Obama scheduled to come here next week, at a time when more than a few U.S. politicians are loudly denouncing immigration reforms, free trade expansion and outsourcing, more than a few Indian business leaders want to ask the president: “What’s up with that?” Didn’t America export to the world all the technologies and free market dogmas that created this increasingly flat, global economic playing field — and now you’re turning against them?
“It is the Silicon Valley revolution which enabled the massive rise in tradable services and the U.S.-built telecommunication networks that allowed creation of the virtual office,” Nayan Chanda, the editor of YaleGlobal Online, wrote in the Indian magazine Businessworld this week. “But the U.S. seems sadly unprepared to take advantage of the revolution it has spawned. The country’s worn-out infrastructure, failing education system and lack of political consensus have prevented it from riding a new wave to prosperity.” Ouch.
Saurabh Srivastava, co-founder of the National Association of Software and Service Companies in India, explained that for the first 40 years of Indian independence, entrepreneurs here were looked down upon. India had lost confidence in its ability to compete, so it opted for protectionism. But when the ’90s rolled around, and India’s government was almost bankrupt, India’s technology industry was able to get the government to open up the economy, in part by citing the example of America and Silicon Valley. India has flourished ever since.
“America,” said Srivastava, “was the one who said to us: ‘You have to go for meritocracy. You don’t have to produce everything yourselves. Go for free trade and open markets.’ This has been the American national anthem, and we pushed our government to tune in to it. And just when they’re beginning to learn how to hum it, you’re changing the anthem. … Our industry was the one pushing our government to open our markets for American imports, 100 percent foreign ownership of companies and tough copyright laws when it wasn’t fashionable.”
Mr Friedman, are those workers getting health benefits? What about the levels of pollution and exposure to poisonous chemicals those workers are exposed to? You never touch on the demographic arbitrage involved, when older US workers, who labored for decades under the presumption of ongoing employment, now are unemployed because corporations simply hire young cheap workers in India or China, with lax environmental and worker regulations, and pay them no benefits. This way both worlds are made poorer. Yes, the Indians are happy to take the work, but the ones benefiting the most are the owners of the companies.
No, Friedman continues as an apologist for a flat, globalized world. But he never mentions that its a policy choice for us to have such a world. We decide what to tax and to regulate. His attitude is that this world exists, inexorably, and now we have to accept its stark realities.
If this were the 19th century, Friedman would have been telling the smallholders of England that enclosing the commons was good for them, despite the fact that it made most destitute, and drove them to the factories of the Midlands, to work like slaves.