Global Economy Often Leaves Workers Behind
By many indicators our economy is doing well. The Dow Jones Industrial Average sets near its all-time high, interest rates are still relatively low and most people’s properties are worth more than they were five years ago.
Even our boy Ben Bernanke, the chairman of the Federal Reserve whom we endorsed in November 2005 after his nomination by President Bush, sees great tidings that will result from the current US position in the global marketplace.
Or so it seemed from his remarks last week at a Federal Reserve symposium in Jackson Hole, Wyo., a speech that identified historical patterns in the world’s emerging global economic integration.
“The pace of global economic change in recent decades has been breathtaking indeed,” he said, “and the full implications of these developments for all aspects of our lives will not be known for many years.”
But, he said, like in ancient Rome, the golden age of exploration and the period after the Napoleonic Wars until WWI, governments have generally been behind the forces of globalization, lowering tariff barriers and creating treaties with trade and labor partners among other things to grease the wheels of progress.
And like in the past, he said, there will be opposition to this change.
“The resulting shifts in the structure of production impose costs on workers and business owners in some industries and thus create a constituency that opposes the process of economic integration. More broadly, increased economic interdependence may also engender opposition by stimulating social or cultural change, or by being perceived as benefiting some groups much more than others,” he said.
Which means that everything is going according to plan: Seismic shifts in the way we do business trigger casualties, generally among people who work for a living.
It happened in the furniture industry. It’s happening with agriculture and telecommunications.
And sure, the economy has shown growth over the past five years, but not everybody’s getting her piece of the pie.
A New York Times story on Aug. 28 detailed current trends for wage earners, who earn 2 percent less in real wages than they did in 2003, and their productivity, which according to the article has risen steadily since then.
Which means that people are doing more work for less money. Sound familiar?
But Bernanke, a former waiter at South of the Border in Dillon, SC, has some sound advice for nations competing in the global marketplace.
“The challenge for policymakers is to ensure that the benefits of global economic integration are sufficiently widely shared,” he said, “[so] that a consensus for welfare-enhancing change can be obtained.”
As to whether our leaders were sufficiently up to the challenge, Bernanke did not comment.