FDI - foreign direct investment in plant and equipment is what is going on in china and india. labor substitution is where the job hiring is going. millions of jobs have been and are being being substituted and created by us, canadian, japanese, european, taiwanese, etc., companies in china and india. indigenous chinese and and indian companies are NOT providing the competition for the usa, canadian, japanese, european, taiwanese, etc., companies. so fair trade is NOT the issue. all these companies are attempting to reduce product costs by substituting lower labor and benefits costs whether it is for manufacturing or whether it is for legal, engineering, design, etc., employees. this is why i reject the standard politicians' tripe, techno-type, white collar worker, and man-on-the-street's idea that more money for education is the answer. more education in an area were labor substitution can be had is similar to the particle physicists when i got out of university, i.e., there weren't enough jobs for all those guys who wanted to study the little buggers in those particle accelerators. so we had highly educated particle physicists bagging groceries. if one wants to train for a job that can't be so easily substituted, one needs a job with some degree of face-time with the end customer or one needs a job working with raw materials that china/india does not have.
if one wants to complain that jobs are not being created in the usa, one needs to beat the hell out of top managements of corporations. if you vote to stop the usa companies' job substitution in countries where the labor rate is much cheaper and the education level is adequate, then those usa companies will go out of business or have to move their corporate tax situation to asia or elsewhere, because the european, taiwanese, japanese, and canadian, etc., companies won't have that burden. thus their products will be much cheaper.
if you want to stem the tide a bit, the government could do some things about capital depreciation for usa (i am just talking about the usa.) companies that invest capital in china/india, etc., like no tax break/no depreciation for capital spent there, etc. there are many other ideas (i have 10s of them), but the fact is (in my mind anyway) that this is not a fair trade issue at this time. this is a global people competition to create, design, and manufacture stuff at the lowest cost. |
