Rich workers, poor workers

Can workers in the West compete with hard-working, anything-for-a-buck Third Worlders? Check out the Economist debate on Workforce Talent 2020.

It’s the jobs, stupid! For years, a growing popular dislike of globalisation in rich countries has been driven by fear that their workers — initially, the low-skilled sort, but lately also the white-collar sort — will not be able to compete with all those billions of hungry, cheap Chinese, Indians, Mexicans and so forth. As first manufacturing, then back-office processing, and more recently innovation, have increasingly been done in emerging economies, politicians and the media have screamed about the loss of “our” jobs, and proposed solutions ranging from better education to protectionism.

But how valid are these fears? Are workers in rich countries doomed to become ever less competitive, as our proposition suggests? Or can something be done to improve their competitiveness? More fundamentally, is the fear wholly misplaced, whipped up by populist politicians with a weak grasp of economics who play on the rich-world public’s worries rather than try to calm them?

“Educational stagnation” will hold back most rich countries, argues Jacob Funk Kirkegaard. “Baby-boomers in the United States and Germany will soon retire, but have neglected to ensure that their children replacing them are on average better educated than themselves.” But educated workers are a much smaller percentage of the population in developing countries than in wealthy countries, counters Lynda Gratton.

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  1. To the extent that oil costs stay high or get higher, there are major implications for the geographical configuration of production decisions. The cost of sending a sea container from China to the U.S. has already gotten much higher, prompting some companies to reassess their offshoring decisions.

    Also, the time delay involved in shipment of physical goods between continents makes inventory control–particularly in fashion businesses and in technology businesses with short product life cycles–much harder.

    The world may turn out to be somewhat less flat that Tom Friedman thought…

  2. Walter E. Wallis says:

    Years ago, prior to starting a remodel of Sunset Magazine, I sent the as-built drawings to the Philippines to be traced into a CAD program. The turnaround was weeks. They now have scanners, albeit expensive, that perform the same function in hours. Outsourcing of customer support has been replaced in many cases with homesourcing. My last bout with my HP plotter was resolved by a stay at home mommy in Washington state.I could understand almost every word she said. I am confident there are engineers around the world who could undercut my fee, but I am here and they ain’t.