Some Workers Will Sink, Rather than Swim, in Global Economy

Ann All

While conventional wisdom says that globalization should act as a tide that raises all boats, economists are beginning to worry about the number of workers whose careers may be jettisoned.


A recent study by French think tank the Organization for Economic Cooperation and Development, while largely positive about globalization, notes that broadly expanded trade is "a potentially important source of vulnerability for workers."


According to a Wall Street Journal article about the study, published on CorpWatch, the OECD research links globalization to stagnant wage growth in the U.S. and Europe and to a growing gap between the highest-paid and lowest-paid workers around the globe.


The study comes on the heels of a BusinessWeek article that describes how flawed productivity statistics that do not fully account for globalization's impact are leading to a problem it calls "phantom GDP" in the U.S.


According to the article, phantom GDP also contributes to a culture of haves and have-nots, largely by ensuring that the executives who cut costs through offshoring are the primary beneficiaries of globalization.


Perhaps the answer is, as ZDNet blogger John Carroll suggests, to make globalization-driven change less scary. Carroll passes along some words of wisdom from Newsweek International Editor Fareed Zakaria:

What America needs is a new way to tackle trade. It is a C-and-T agenda: cushion and train. The government should help people to weather the shocks of this roller-coaster ride, and it should help train them to be better equipped for the next round of global competition. We do very little of this today. When someone loses his job in America, he loses his health care and pension. Imagine if that didn't happen--and it doesn't in other rich countries--would that worker be as terrified of change?

Zakaria opines that a kinder, gentler approach to those whose jobs are displaced by offshoring -- one involving education and training opportunities -- would go a long way toward reducing political resistance to further globalization.


Another interesting point from the OECD study: Technology may be a bigger factor than globalization in broadening the divide between high- and low-skilled workers. This explains, says the study, why low-wage workers in places like China do not benefit as much as might be expected from globalization.


If true, this highlights the importance of initiatives like the One Laptop Per Child project, which is designed to "democratize" technology by bringing it to people who couldn't otherwise afford it.

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