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Tuesday, July 31, 2007
Asians a boon to American prosperity
By TOM PLATE
LOS ANGELES — For once, let's look at the other side of the coin regarding the constant drumbeat that Asia is causing American workers to lose jobs.
That happens to be true, but only in one sense. Because many economies in Asia have a competitive advantage in the cost of their labor — i.e., lots of people there tend to work longer and harder for a lot less money than workers elsewhere — some economic ventures can flourish much more cheaply over there.
So the bad side is that some people in the United States have to look for new work when the jobs they are doing are doable for less money in Asia.
One obvious remedy for this consequence is protectionism, but this, historically at least, has proven a cure worse than the disease. What's very sad right now is that most of the time in the U.S. you hear only about the bad side. This is irresponsible because if enough Americans understood how much Asia is contributing to our prosperity, we might want to give Asians a hug rather than the back of our hand.
But how exactly are Asians helping Americans? For starters, Asia's labor profit has not produced unrelenting evil and misery for America. In fact, Asia throws most of that fortune back into U.S. Treasury investments and American stocks for safekeeping and interest gains. It has done that not only because it regards America a very safe bet but also because Asia's own financial-investment options are limited by comparison.
Stashing all those many Asian billions here has helped take a lot of the sting out of the otherwise alarming U.S. budget mess. Not only has Washington reaped the benefit of Asia's huge stash of cash, but so, too, has the rest of the country. Consider the enormous economic and material benefits when we go to the discount stores and take home products from countries with much lower labor costs.
We wind up paying much lower sticker prices overall. This almost-miraculous effect has helped keep our consumer prices low despite all the periodic upsurges in oil and gas prices and the inflationary effect (until recently) of ridiculously ballooned property prices.
It's hard to recall a time when interest rates have hovered so consistently low. This has been a boon not only to those of us who rely on borrowing to underpin our lifestyle but also to American businesses of all shapes and sizes, which have found the cost of buying new equipment and expanding their operations much lower than it might have been.
And this business expansion has helped maintain a measure of job security for many U.S. workers and in some cases (though not as many as economists and indeed workers would like) has even created jobs.
Asia has thus been absolutely vital to our economic prosperity, despite the serious problems raised by our co-conspiracy in economic globalization.
In truth, Asians have as much trouble with the uprooting problems of globalization as do Americans. In fact, globalization was more or less force-fed to many Asians during the infamous Asian financial crisis 10 years ago.
As a condition of receiving bailout funds from Western financial agencies, they were required to open up their economic gates to the West. U.S. capital rushed in and realized a very pretty penny indeed.
This is not to say that the U.S. profited from their misery so much as to suggest that it was in America's immediate financial and national interest to help Asia out of the big hole.
In understanding the relationship between Asia and America, the theme of mutuality and overlapping national interest is more appropriate than conflict and war. We can say that Asia is stealing jobs from America only if in the same breath we accept that Asia is also helping create jobs. Then we can accept that erecting trade barriers or punishing China or India or South Korea for this or for that perceived infraction is to create enemies where none really exist.
America and Asia need to be working together to develop new solutions to the problems we both face. These include making sure that wealth is spread around to all — as much as possible without hobbling the engines of economic growth — and developing serious safety nets for people whose jobs evaporate in the furious typhoon of globalization.
America and Asia will fail to do this if they approach each other as enemies on a battlefield rather than as co-pilots of mutual destinies.
UCLA professor Tom Plate is a syndicated columnist.
Copyright 2007 Tom Plate