A Blog About Economics That Makes Sense

If you click on the link in this entry's title, you can read an article about economics that is very interesting. The author postulates the theory that over the last 25 years politicians of both parties in the U.S. have pushed policies that allowed both capital and goods to flow freely around the globe. During that time over two billion workers in China, India, the former USSR, and Eastern Europe have entered the global workforce because of the fall of communism in Russia, China, and Eastern Europe and the modernization of the Indian economy. Because of the entry of these workers into a global economy that allows for more free movement of capital and goods, America has become the financier of the global market while China and other areas have become the labor force. Result? Millions of high-paying jobs lost to foreign countries.

He points out that there is an economic theorem that says if a country with capital trades with a country that has cheaper labor, the result will be increased profits and a lowering of wages in the country with capital. We are seeing this in America as the divide between the rich and the rest of us increases. It is a very fascinating article and one that is worth the time it takes to read it.