Annual SPP Summit Takes Place At A Bad Time

Posted on Saturday, April 19 at 15:33 by sthompson

Annual summit takes place at a bad time
The Chatham Daily News
Editorial

The timing of next week's meeting of the Security and Prosperity Partnership couldn't be worse.

On April 21 to 22, the leaders of Canada, the U.S. and Mexico will meet in New Orleans for their fourth annual summit on issues that concern North America.

Most foreign policy analysts believe these summits are worthwhile. The three countries, like it or not, are now part of a single economic space. On issues ranging from trade, environment and energy cooperation to security, a patchwork of counter-productive and often irrational government policies has largely given special interests a free hand to do whatever works for them.

While presumably activist groups would welcome any democratic effort to set new "rules of the road" for modern North America, it hasn't worked out that way.

The sheer tone-deafness of all three governments to how the SPP is perceived - or, just as problematic, the automatic dismissal of critics as mindless conspiracy theorists - has turned what should have been a 21st century exercise in smart governance into a public relations fiasco.

SPP summitry so far has produced a worthy, but befuddling, series of agreements. Recent summits, for example, have lumped together widely different initiatives - such as creating a network to protect North America against epidemics and establishing a common approach to the management of industrial chemicals.

Couldn't these be adequately handled in separate negotiations? Bureaucrats respond that the process helps to marshal common resources and skills on issues that cross borders, which is the key to good governance (at the top of this year's agenda is, officially, energy).

In any other year, we might be content to wait for the next incremental set of deals to be announced. But this year there's a gorilla in the room.

The U.S. is plummeting toward a painful economic restructuring that is sure to affect its neighbors, and the U.S. political campaign season has made talk about continental trade and security radioactive.

Could the SPP reduce the collective threat - or aggravate it? We don't know. Senior officials in the three capitals have been so concerned to play down anything that would suggest "continentalism" that they've concentrated on the trees while ignoring the forest...

Full article: Annual summit takes place at bad time

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  1. Sat Apr 19, 2008 7:03 pm
    What I would like to know what this writer means about "The US is plummeting toward a painful economic restructuring.........?"

    The destruction and exporting of of production facilities and replacing them with dead end "service sectors", to please the multinational carpetbagger mafia, obviously in control of this whole process ?

    When will so called "economists" finally come to the realization that the "service sector" is not an asset, but a liability?

    Ed Deak.

  2. by avatar Toro
    Sun Apr 20, 2008 8:45 pm
    The destruction and exporting of of production facilities and replacing them with dead end "service sectors", to please the multinational carpetbagger mafia, obviously in control of this whole process ?


    For a destroyed and dead sector, exports seem to be doing pretty well. In fact, it is the only thing doing well in the economy.

    Q4/07.

    Real exports of goods and services increased 6.5 percent in the fourth quarter, compared with an increase of 19.1 percent in the third. Real imports of goods and services decreased 1.4 percent, in contrast to an increase of 4.4 percent.


    http://www.bea.gov/newsreleases/nationa ... elease.htm

  3. Sun Apr 20, 2008 10:50 pm
    Exporting what? Resources? How many people have been thrown from their homes and jobs in the same time? As in Ft. Nelson? Not because the corporations hadn't made any profits, but because "it wasn't enough", so to hell with the people and towns.

    Here in Canada whole industries have been wiped out by the FTA and more by NAFTA and our "prestigious conservative economic think tanks" reported this destruction , e.g. Daniel Schwanen of CD Howe, and wrote it down as "predicted losses in the labour intensive industries", like furniture, clothing, shoes, machinery, etc.

    Since when, in what imaginary accounting system is the sale of resources, in other words, the sale of capital, an income? Especially when it is done by the carpetbagger mafia that now owns and controls Canada's economy, yet, it is reported as "Canadian exports" under the "national treatment" clause in the fraudulent "free trade" treaties?

    We had no homeless to speak of before the FTA, now BC alone has some 12,000 and the worst child poverty rate in Canada, while our braindead government and economists report a "booming economy" and our rural areas are being forcibly depopulated, as the carpetbaggers are buying up our resources, like logs and firing workers by the thousands.

    Ed Deak.

  4. by avatar Toro
    Sun Apr 20, 2008 11:38 pm
    Exports of American manufactured goods are soaring.

    There were homeless before free trade. Its silly to say otherwise.

    Which whole industries have been wiped out by NAFTA?

  5. Mon Apr 21, 2008 2:22 am
    Practically all furniture, clothing, footwear etc. etc.

    Back in the 50-70s, when I was in custom manufacturing in Vancouver, the city was full of small manufacturing industries and when we had to have something made, all we had to do is order it locally. They're all gone , "as predicted", so everything is OK in the warped minds of our "economic think tanks".

    Now there still are some repair shops in larger cities, but nothing in smaller towns. When a TV, or electric tool breaks down, it goes into the garbage. My shops were full of Canadian made machinery and tools. Now there's nothing left, except Chinese.

    Things imported from China are not "cheaper", except in distorted monetary values, because the energy used for the export of resources and then for the re-import shipping, are causing huge resource depletion and environmental destruction, which could be avoided with locally made products. Not to mention the expropriation of skills every healthy economy and human society needs for survival and psychological well being. When somebody is born to be a tailor, or tinker, but is forced to become a computer programmer, everybody suffers.

    I was 28 when I went into an apprenticeship, because I couldn't stand the idea of working in a depressing office, and never looked back.

    But that wouldn't be profitable for the carpetbagger mafia, would it? It needs "specialization" to create incompetence and the separation of the makers from the users, controlling both ends, to steal from all.

    As far homelessness and foodbanks are concerned, the numbers are growing by large percentages every year.

    Check the real facts of life for a change, not the crap from the "right wing" "think tank" propagandists and miseducated economists.

    By the way, there are no "right" or "left" wings, only the predators, and their victims, who are the same people under every ideology.

    Wealth can not be created, only taken and certain people are born with the talents of "taking", and others to become their priesthood mouthpieces, selling their "divine orders" that empowers the "takers" with "scriptures" and "statistics". And I have seen them all..............

    Ed Deak.

  6. by avatar Toro
    Mon Apr 21, 2008 3:58 am
    I'm not sure about furniture and footwear, but it certainly isn't true about clothing being wiped out by NAFTA. High end mens suits made in Canada are doing very well here in America, or at least they were until the loonie hit parity, Jack's of Montreal for instance has seen a tremendous increase in exports to the US, or at least that's what the men's store where I shop tells me. Heck, I bought a suit from Canada down here.

    As for manufacturing being wiped out by NAFTA, well, that is simply incorrect.

    between April 1988 and April 2002, manufacturing employment rose by 9.1 percent in Canada, but fell by 12.9 percent in the United States and by 9.7 percent in Japan. This suggests, albeit not conclusively, that the transition costs were short run in the sense that within 10 years the lost employment was made up for by employment gains in other parts of manufacturing.


    http://www.chass.utoronto.ca/~trefler/fta.pdf



    http://worthwhile.typepad.com/worthwhil ... ing-o.html



    http://worthwhile.typepad.com/worthwhil ... .html#more

    Certainly, the manufacturing industry has been getting squeezed the past few years, but that has to do with currency movements, not trade agreements.

  7. Mon Apr 21, 2008 12:01 pm
    Here ya go Proactive!

    http://www.votestrike.com/

    If you always do what you've always done You'll alway get what you've always got

  8. Mon Apr 21, 2008 3:43 pm
    To the best of my recollection, some 3 million well paid manufacturing jobs have been lost in the US alone, since Bush was put into power, twice, by the " computerized voting machines".

    The 3 Amigos are now embracing each other in New Orleans, where thousands of homes are still stay destroyed and people displaced all over the country.

    The situation in Canada is no better. Some 10 or 12, or more thousand Canadian manufacturing firms have either gone broke, or moved out of the country since the FTA, while StatsCan reported their machinery being moved to the Maquiladores as "machinery exports". Including machinery that used to make copper plumbing pipes and plasterboard in the Vancouver area.

    The stores are full of products made in China, carrying the old North American brand names. When we find something made in the USA, let alone in Canada, we almost faint from the surprise. I have it on good, reliable, Chinese, eyewitness account that some BMW cars are now made in China, rolling off the production line, carrying the "Made in Germany" label. There was an Indian industrialist on TV some time ago, declaring that they, India, intend to pull 50 million jobs from North America and Europe.

    When we call a 1-800 number, the answer is very often in an Indian dialect, etc. etc. and not coming from an immigrant.

    On Oct. 18. 1991 the then Executive VP of the Royal Bank, Edward Neufeld said in a speech in Singapore, taken verbatim from a tape: "It is in the national interest and makes sense for Canadian manufacturers to move to Mexico and cheap labour to remain competitive, or perish, and bring back the profits to repay investors."

    Showing the original intent of this crime wave to begin with.

    One of the main purposes for the planned NAFTA superhighway is to carry Chinese and Indian goods through a Mexican port, avoiding unionized US ports, right up to Winnipeg.

    But then, what do we call manufacturing jobs and who owns the companies? A couple of the good old, famous British car factories have just been bought up by Pakistanis. How long will they stay in England?

    Anybody who can not see the criminal intent to defraud, behind these moves, is either blind, which could happen through miseducation or pseudo religious ideological beliefs, or is paid off to lie, forgetting that some of us have heard all these lies, many times before and became immune to the new ones.

    Ed Deak.

  9. Mon Apr 21, 2008 3:51 pm
    "CCPA" said
    CANADA
    The era of Canada-U.S. free trade began with the signing of the Canada-US Free Trade
    Agreement (CUFTA) in 1988, and it triggered a phenomenal growth in commerce between
    the two countries--from a value of US$116 billion in 1985 to more than US$240 billion by
    2002. Between 1989 and 2002, Canadian exports to the U.S. rose by 221%, while imports
    from the U.S. went up by 162%.

    Politicians and media pundits point to these figures as "proof" of NAFTA's "success," but such
    crude mercantilist measures fail to conform to the actual economic rationale for free trade.
    One of the arguments, for example, was that free trade would increase Canada's
    disappointing rate of economic growth, which in the eight years prior to CUFTA had
    averaged only 1.9% per capita per year. Instead, in the first five years of free trade, real GDP
    growth per capita was actually negative, averaging -0.4% a year. The GDP rate rose after
    NAFTA came into effect, but for the entire free trade era has averaged 1.6% annually, which
    is still below the pre-CUFTA rate.

    Productivity: The main economic rationale for free trade, however, was that increases in
    two-way trade would boost Canadian productivity, and thus lead to higher wages and rising
    living standards. What actually happened was that, between 1989 and 1993, average labour
    productivity in the business sector grew at an annual rate of 0.6%, which was less than half
    of its rate of growth over the previous eight years (1981-88), when productivity rose by 1.6%
    per year. Over the same CUFTA period (1989-93), real (inflation-adjusted) hourly wages in
    Canada rose by only 0.2% per year--less than half the 0.5% average increase over the
    previous pre-free-trade years.

    Productivity growth regained and even exceeded its pre-CUFTA rate in the NAFTA years
    from 1994 to 2002, averaging 2.1%, but real wage gains continued to lag behind increases in
    productivity as employers, not workers, reaped the benefits of higher hourly output.
    A comparison of productivity increases and labour costs in the key manufacturing sector in
    the U.S., Canada and Mexico from 1993 to June 2002 shows that, over this period, the
    cumulative increase in Canadian output per hour was only 14.52%, while the increase in
    the U.S. amounted to 51.98%, and in Mexico 53%. Labour costs, measured in U.S. dollars,
    actually fell in all three countries, further evidence that productivity gains were not passed
    on to workers in any of the three NAFTA countries.

    In the years prior to CUFTA, manufacturing productivity in Canada stood at 83% of the U.S.
    level. By 2000, it had dropped to only 65%. So the productivity gap widened rather than
    narrowed, as promised by the proponents of free trade.

    One of the reasons for the widening productivity gap is the dominance of foreign
    transnational corporations in Canadian manufacturing, since foreign corporations typically
    invest much less than domestic firms in industrial research and development.
    Investment: The promoters of free trade predicted that it would lead to new foreign direct
    investment (FDI) in Canada and to the expansion of U.S.-owned branch plants. Such U.S.
    investment did grow by a modest C$36.8 billion in the CUFTA years, and by a further
    C$102 billion under NAFTA up to 2002. But most of this "investment" took the form of
    takeovers of Canadian firms, not new "greenfield" investments. From 1985 to 2002, there
    were 10,052 foreign takeovers of Canadian companies, 6,437 of them by U.S. corporations.
    Of all the new direct foreign investment in Canada over this period, an extraordinary 96.6%
    was for takeovers and only a meagre 3.4% for new business. And to make matters even
    worse, many of these takeovers were financed through borrowing within Canada.
    At the same time, there was a marked increase in Canadian FDI in the U.S., showing a
    pattern of disinvestment from Canada. By 2002, Canadians held about US$133 billion
    worth of FDI in the U.S., three times more than they did in 1990. But this doesn't mean that
    Canadian investors are taking control of key U.S. industries. As Mel Hurtig points out,
    research • analysis • solutions


    <i>"There is not one single industry in the U.S. that is majority-foreign-owned and/or foreigncontrolled."</i>

    As of 1999, Canadians owned less than 0.6% of U.S. industrial investment.
    Job losses and labour "flexibility": In describing its "success," NAFTA boosters credit the
    agreement with increasing employment and prosperity in all three countries. Admittedly,
    during NAFTA's first nine years, employment in Canada grew by 19%, representing a gain of
    2.7 million new jobs. But fewer than half these new jobs were full-time. And this apparently
    rosy period of Canadian job gains under NAFTA should be set against the prior six-year
    period of heavy job losses under CUFTA. Between 1988 and 1994, Canada lost 334,000
    manufacturing jobs, equivalent to 17% of total manufacturing employment in the year
    before CUFTA came into effect. Canada's official unemployment rate rose from an average
    of 7.8% in 1988-90 to 11% during 1991-93.

    During the first 13 years under CUFTA and NAFTA, Canada created less than half as many
    full-time jobs as during the previous 13 years. Moreover, many of the jobs created during
    the NAFTA period have been part-time, insecure jobs with fewer benefits, particularly for
    women. A study on labour market conditions in Canada under NAFTA found that "part-time
    workers--overwhelmingly women--earn just two-thirds the wages of equivalent full-time
    workers, and less than 20% receive benefits from their employers."
    The year 2002 was marked by a superficially impressive increase of 560,000 jobs in Canada,
    but 40% of them were part-time and another 17% were self-employed. Thus, while the
    overall employment statistics look positive, the process of creating a more "flexible"
    workforce continues.

    Social programs: Canada's business élite has consistently argued that, for Canada to be
    competitive in NAFTA, its social programs would have to be cut to match the generally
    inferior U.S. levels. This process started just four months after the implementation of CUFTA
    when the Mulroney government brought down its 1989 budget. It imposed cuts to
    Unemployment Insurance, old Age Security, and federal transfers to the provinces for health
    care and education. This pattern of social spending cuts continued throughout the mandate
    of the Tory government, and was accelerated by the Liberals after they took office in 1993--
    especially in their 1995 budget which included $29 billion in spending cuts over the next
    three years.

    The most stark example of this downward harmonization of Canadian social policy is what
    happened to unemployment insurance. The UI system has been slashed repeatedly by both
    Tory and Liberal governments to conform to the lower standards prevailing in the U.S.
    Whereas in 1989, 87% of the unemployed in Canada qualified for UI benefits (as compared
    to 52% in the U.S.), by 2001 only 39% of jobless Canadians could qualify for coverage.
    These deep cuts hurt more women than men because women more frequently work part
    time and enter and leave the workforce more often due to child-care responsibilities.
    Trade disputes: The Mulroney government and other free trade pushers claimed that a free
    trade agreement with the U.S. would exempt Canada from American anti-dumping and
    countervailing duty measures. This promise, too, proved false. Canada remains subject to
    U.S. arbitrary actions such as the punitive U.S. duty on Canadian softwood lumber exports.
    All that Canada got was a provision that special panels would decide whether U.S. trade laws
    were being correctly applied. But even if a panel were to rule against the U.S., the U.S. would
    be free to change its laws unilaterally to negate such a ruling.

    Before the free trade era, Canada was able to oppose U.S. charges that its agricultural
    supports and its regional development and transportation programs were "trade-distorting,"
    but under the free trade deals disputes in each of these cases were settled in favour of the
    U.S.

    Agriculture: The experience of Canadian farmers clearly demonstrates that more trade does
    not necessarily translate into more prosperity. The National Farmers Union points out that,
    since 1988, agricultural exports have almost tripled, but net farm income (adjusted for
    inflation) has fallen by 24%. Over the same period, farm debt has doubled, 16% of
    Canadian farmers have been forced off the land, the number of independent hog farmers
    has dropped by 66%, and there are 2,400 fewer jobs in the agri-food processing industry.
    The NFU concludes that free trade agreements "may increase trade, but they dramatically
    alter the relative size and market power of the players in the agri-food production chain.
    Free trade helps Cargill and Monsanto, not farmers."

    Social inequality: Canada has become a noticeably more unequal society in the free trade
    era. Real incomes declined for most Canadians in the 1990s, with median income in 1999
    having dropped by $1,100, or 2%, from the 1990 level. While this decline can't entirely be
    blamed on free trade, it is undeniable that the downward pressure on wages, the loss of so
    many secure full-time jobs, and the sharp cutbacks to social transfer payments have
    contributed significantly to rising inequality.

    Free trade and other neoliberal economic policies have also led to a markedly more unequal
    distribution of wealth. From 1984 to 1999, the poorest 40% of Canadians had their share of
    the nation's total wealth reduced from 1.8% of all personal assets to just 1.1%. Over the
    same period, the richest 10% of the population enjoyed a rise in net worth from 51.8% of all
    wealth to 55.7%.


    from CCPA - Lessons from NAFTA, November 18, 2003
    http://www.policyalternatives.ca/Report ... tudies550/

  10. by avatar Toro
    Mon Apr 21, 2008 4:39 pm
    "Ed Deak" said
    To the best of my recollection, some 3 million well paid manufacturing jobs have been lost in the US alone, since Bush was put into power, twice, by the " computerized voting machines".


    This is true



    But manufacturing only consists of 10% of all non-farm jobs.

    http://www.bls.gov/news.release/empsit.nr0.htm

    While manufacturing output is rising.


  11. by avatar Toro
    Mon Apr 21, 2008 5:05 pm
    "C.M. Burns" said
    from CCPA - Lessons from NAFTA, November 18, 2003
    http://www.policyalternatives.ca/Report ... tudies550/


    I will read the pdf file for this later, though I did skim it.

    Of course, as an econometrician or a statistician will tell you, one must isolate the variables to draw a conclusion about cause and effect. To compare, say GDP growth over the previous five years relative to the following five years, is a specious comparison since there are many, many factors which effect the economy. This is true when you consider the volume of trade or productivity or inequality or any other factor.

    The CCPA is a union-funded institution. That does not mean it is incorrect, of course, but it certainly sounds like there is a political spin occurring, evidenced by the comparisons of productivity over different time periods. As Daniel Teffler noted, when isolating the various factors, there have been substantial gains due to NAFTA. What can be implied from Teffler's analysis is that productivity growth would have declined further had it not been for NAFTA.

    Teffler's is the most recent comprehensive econometric study of the effect of NAFTA on Canada

    http://www.canadaka.net/modules.php?nam ... highlight=

    As for widening inequality, there is substantial evidence that this is due primarily to the distribution of income arising from the application of technology.

  12. Mon Apr 21, 2008 5:50 pm
    "Toro" said
    What can be implied from Teffler's analysis is that productivity growth would have declined further had it not been for NAFTA.

    One can imply all kinds of things but that doesn't make it real or even probable.

    "Toro" said
    As for widening inequality, there is substantial evidence that this is due primarily to the distribution of income arising from the application of technology.

    Yes, technology like reduced taxes for coporations and personal capital gains.
    Read TFA. Better yet, let's see this 'evidence'.

  13. Mon Apr 21, 2008 5:55 pm
    The CCCPA may be a union funded institution, but what are the Fraser and CD Howe Inst. plus a hundred more across North America, not to mention the total corporate control of university economics departments and of the whole educational system, not to mention the NAFTA, and the presently, secretly negotiated SPP and NAU rackets, the North American Competiveness Council, if not funded by the corporate mafia? Why is only the corporate mafia invited to the "summit"? Is this democracy, or preparation for dictatorship?

    Who has more tax deductible funds? The membership in the "charitable organization" Fraser Inst. is $25,000/yr. Why is one of the main points of all free trade rackets the "national treatment", or instant citizenship to corporations, like Wal Mart, etc. with mile long records of fines and convictions across the globe, if not the free licence to buy governments?

    Who is financing the Reform Party, under various disguised, now governing across Canada? And who benefits most?

    Ed Deak.
    =================================================================

    2007 Political Donations
    April 4, 2007


    This morning Elections BC posted the annual financial reports for political parties in BC.

    Main Points

    Last year the NDP received a total of $3.1 million in donations.

    92% of this total was contributed by individuals

    7% was contributed by labour groups

    The Liberals raised $5.89 million

    Only 23% of this came from individuals

    Almost 77% came from corporations, unincorporated businesses and business interests.

    The financial disclosure for the Green Party has not yet been released


    Some specifics

    NDP donations are up 18% over the previous year - an additional $482,700

    Donations are also up 10% over 2003 - the corresponding year in the four-year election cycle.

    Donations from labour organizations are up 144% over the previous year.

    A number of very generous donations were made by individuals who contributed part of their estate through our Legacy Program.

    But a large share of donations comes from individuals giving $250 or less.

    12,822 individuals made small donations of $250 or less to the NDP, while the Liberals received small donations from just 3597 people.

  14. by avatar Toro
    Tue Apr 22, 2008 12:37 am
    "C.M. Burns" said
    One can imply all kinds of things but that doesn't make it real or even probable.


    No, actually it does.

    As I'm sure you know from regression analysis, you test specific variables to isolate cause and effect. This is what economists do all day. Woo-hoo!

    Which reminds me of a joke - What's the definition of an economist? An accountant without the personality.

    "C.M. Burns" said
    Yes, technology like reduced taxes for coporations and personal capital gains.
    Read TFA. Better yet, let's see this 'evidence'.


    I posted this somewhere on CKA, but I can't find it, so here it is again

    A general overview

    Many people argue that the pattern of world growth over the past 20 years has not been beneficial. They point out that globalisation-driven growth has gone hand in hand with a growth in inequality. This inequality is a worry in its own right (communities get broken up; the poor get left behind) and also a missed opportunity (emerging markets might have done better still if only their extra wealth had been distributed more fairly). Is this charge against globalisation true? And, if it is, does it follow that globalisation has been a failure because its benefits have been pinched by the rich?

    The evidence that the rich have done best is certainly compelling. Inequality has risen in both rich and poor countries. It is thus a sharp break from the pattern established between 1950 and 1990, when there was a general decline in inequality, notably in East Asia, where the tigers managed to combine fast growth with relatively equal incomes.

    But it is not so clear that globalisation—in the sense of opening up to trade and foreign investment—is to blame. Ukraine and Poland both opened themselves in the 1990s. Yet inequality rose in Poland and fell in Ukraine. Globalisation, it seems, sometimes increases inequality, sometimes reduces it.

    A more plausible culprit for rising inequality seems to be technological progress (see chart below). This is associated with inequality in poor countries because in emerging markets the people best able to take advantage of new technology are those who already have an education and who are usually among the richest in society. The more technological progress, therefore, the better the well-off do.



    But to limit technology to reduce inequality would be a cure worse than the disease. Technology in its broadest sense—the flow of new ideas—is the only way of getting growth rates up to 5-10% a year, the rate which enables poor countries to catch up with the West. Without it, growth would be dependent on labour and capital inputs, and growth would be just a few percent. To reduce technological progress—even supposing one could do it—would be to condemn poor countries to stay poor.

    In fact, since the mid-1990s, the incomes of the poorest fifth have risen everywhere except, marginally, in Latin America, where they have been affected by the after-shocks of debt crises. In Asia, the real incomes of the poorest fifth rose 4% a year; in Africa, by 2% a year, faster than the rise for other income groups.

    The result is that the number of very poor people in the world is falling fast—even though many critics continue to believe that the poor have not really benefited from growth. In 1990 those on $1 a day accounted for more than a quarter of the population of developing countries. By 2015, on current rates, the proportion of very poor people should have shrunk to 10%. Moreover, these monetary measures probably understate the real gains from things such as lower child mortality, safer water, literacy and other social achievements. A rich man appreciates his extra cash but this does not compare with what a poor family gains from seeing an infant survive childhood or learn to write.


    http://www.economist.com/world/internat ... d=10564141

    And the empirical evidence

    International trade accounts for only a small share of growing income inequality and labor-market displacement in the United States. Lawrence deconstructs the gap in real blue-collar wages and labor productivity growth between 1981 and 2006 and estimates how much higher these wages might have been had income growth been distributed proportionately and how much of the gap is due to measurement and technical factors about which little can be done. While increased trade with developing countries may have played some part in causing greater inequality in the 1980s, surprisingly, over the past decade the impact of such trade on inequality has been relatively small. Many imports are no longer produced in the United States, and US goods and services that do compete with imports are not particularly intensive in unskilled labor. Rising income inequality and slow real wage growth since 2000 reflect strong profit growth, much of which may be cyclical, and dramatic income gains for the top 1 percent of wage earners, a development that is more closely related to asset-market performance and technological and institutional innovations rather than conventional trade in goods and services. The minor role of trade, therefore, suggests that any policy that focuses narrowly on trade to deal with wage inequality and job loss is likely to be ineffective. Instead, policymakers should (a) use the tax system to improve income distribution and (b) implement adjustment policies to deal more generally with worker and community dislocation.


    http://benmuse.typepad.com/custom_house ... r-blu.html

    Much of the growing wage inequality stems from increased inequality between firms rather than within firms, suggesting inequality is driven by changes in firm-level productivity related to new technology rather than to international trade or institutions. Trade protectionism or re-energising unions may do relatively little to reverse the increase in inequality. ...

    It is well-known and entirely understandable that different firms have different productivity levels. A key finding in our work is that the productivity gap between firms has been widening. We look at two groups of firms: one at the top (90th level) and one at the bottom (10th level) of the productivity distribution. Between 1984 and 2001, the rate of growth in productivity has been 17% for firms at the top and only 8% for firms at the bottom. Productivity for firms in the middle has grown by 14%. Measuring productivity dispersion as the difference between the top (90th level) and the bottom (10th level) deciles, this 90-10 differential
    increased by 33% between 1984 and 2001. ...

    We also document that much of the increase in individual wage inequality in the UK occurred between firms within the same industry (between-firm component) instead of within firms (within-firm component). This is an important finding when looking for ‘culprits’ of wage inequality. It says that little of extra inequality has come from a change in the way firms treat their own workers. The main source is the change in firm-level productivity. This implies that understanding the evolution of productivity distribution between firms may be critical in understanding the evolution of wage distribution (we also show that the correlation between wages and productivity has become more important over time). ...

    In terms of policy, this suggests that the causes of rising inequality are primarily structural and related to new technology rather than to trade or institutions. Thus greater trade protectionism or the re-energising of unions may do relatively little to reverse the increase in inequality. A better strategy would be to concentrate on raising the skill and education levels of the workforce, particularly the skills of those at the bottom of the ability distribution.


    http://www.voxeu.org/index.php?q=node/742

    The U.S. wage structure evolved across the last century: narrowing from 1910 to 1950, fairly stable in the 1950s and 1960s, widening rapidly during the 1980s, and “polarizing” since the late 1980s. We document the spectacular rise of U.S. wage inequality after 1980 and place recent changes into a century-long historical perspective to understand the sources of change. The majority of the increase in wage inequality since 1980 can be accounted for by rising educational wage differentials, just as a substantial part of the decrease in wage inequality in the earlier era can be accounted for by decreasing educational wage differentials.

    Although skill-biased technological change has generated rapid growth in the relative demand for more-educated workers for at least the past century, increases in the supply of skills, from rising educational attainment of the U.S. work force, more than kept pace for most of the twentieth century. Since 1980, however, a sharp decline in skill supply growth driven by a slowdown in the rise of educational attainment of successive U.S. born cohorts has been a major factor in the surge in educational wage differentials. Polarization set in during the late 1980s with employment shifts into high- and low-wage jobs at the expense of the middle leading to rapidly rising upper tail wage inequality but modestly falling lower tail wage inequality.


    http://papers.nber.org/papers/w13568

    Subir Lall, the IMF's deputy chief for research ... said it found that, overall, wealth increased through globalization. In the great majority of countries, the income of lower-income workers has risen in the past two decades, but at a slower pace than for higher-skilled workers. As a result, the gap between haves and have-nots has widened.

    The policy lesson, Mr. Lall said, is the need for greater investment in education. "This would allow less-skilled and low-income groups to capitalize on the opportunities from" technology and globalization, the IMF report said. ...

    The IMF researchers separated "globalization" into three components -- technology, foreign investment and trade -- and looked at how changes in each of the three corresponded with changes in income inequality globally. According to the results, technology and foreign investment deepened income inequality, while trade diminished it. Overall, globalization has contributed "moderately to net changes in income shares," the IMF found.


    http://online.wsj.com/article/SB1191933 ... s_page_one

    There's more, but that's all I feel like posting for now.



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