Off-shoring is a wonderful example of private equity types reducing global inequality, helping the poor, and helping consumers. It's true that the wealthy Americans who formerly collected rents due to an accident of their birth might not be happy about it, but so what?
Real income is rising, BTW. It's only real wages (i.e. income excluding benefits) in the US which have not due to a shift of comp from wages to non-wage benefits (the total is also rising).
>Off-shoring is a wonderful example of private equity types reducing global inequality
Pitting third world workers against first world workers isn't good for either of them in the long run.
The same threat that hangs over US workers (we will offshore your job if you unionize and demand higher wages) actually hangs over 3rd world workers too (we will reshore your job if you unionize and demand higher wage).
It's a win/win situation for private equity though.
> It's true that the wealthy Americans who formerly collected rents
Wages are rents now are they? That's doubleplus good doublethink.
>Real income is rising
Median incomes are in decline.
>shift of comp from wages to non-wage benefits
...if you do some creative accounting on healthcare costs. Theoretically you might be getting $150,000 worth of benefits if your company insurance pays for your appendectomy. You and I both know that those absurd prices only really apply to the uninsured.
>Wages are rents now are they? That's doubleplus good doublethink.
I'm born to the middle class in Norway. I have done little productive with my life and yet I enjoy better personal financials than 95% of the world's working population. After I'm done with my education I could go into unemployment and be even better off. All because of where I was born. I'm just collecting on the rest of the world's wealth because... Norwegian passport. I am clearly collecting rent.
>Pitting third world workers against first world workers isn't good for either of them in the long run.
>The same threat that hangs over US workers (we will offshore your job if you unionize and demand higher wages) actually hangs over 3rd world workers too (we will reshore your job if you unionize and demand higher wage).
Unionisation's purpose is to increase workers' bargaining power and thus change the wealth distribution in favour of workers. 3rd world workers' problem is that there isn't all that much wealth to be redistributed. 3rd world workers have more to gain from the industrialization of their countries than from unionisation. Your emphasis on the different factors is way off. Eventually we will need international unions to deal with mobile multinationals, though, but it doesn't make sense as long as the income inequalities across borders are as high as they are.
The rent captured by us workers is the price delta between a competitive market and one with barriers to trade. Only part of their wage is rent - if deepika earns 10k rs/month and Danielle earns 100k rs, the rent is 90k.
As for income (not wages, which is a subse of income), data is easily googleable.
Your equation leaves out the technological contribution to making the jobs possible in the first place; the innovation, the science / R&D, etc.
The rent is not 90k in that case. The rent is negative, in favor of the US; the US economy has benefited most other countries far more than those countries have benefited it. Most of the world gets a vast free rider benefit from what the US economy accomplished in the last ~140 years.
It's far from clear that the rent would be negative. It's not as if Danielle costs 10x what Deepika costs simply due to the fact that Danielle pays a few hundred rs/month to fund the NSF/NIH/DOD science orgs. Could you justify this claim?
The fact that the US benefits most other countries a lot (primarily due to trade) doesn't mean that anyone collects a rent.
You are correct that all models are imperfect, and you can compute second order corrections to my sketch of rents (e.g. subtract overhead for offshore operation).
None of this changes the conclusion that Deepika (a real person and a friend of mine, albeit not named deepika) has escaped poverty thanks to her job at a call center. Based on our previous conversations I know you dont consider her as valuable as a hypothetical american (ugh, dirty foreigners with animal gods and spicy foods), but that's simply a normative difference.
Not all off-shoring is the same. Some of it moves labor from sustainable economies to corrupt ones, and some of it uses slave labor. Neither of those is a net positive for global equality.
I'd have to believe that a very small percentage of off-shoring from first world nations (economically speaking) ends up in classically corrupt countries.
Most labor off-shoring from the US has not gone to corrupt countries (if we're talking about corrupt being Sudan, Venezuela, Zimbabwe, Somalia, etc).
Most of it has gone to India, Mexico, China, Philippines, Vietnam, etc. Rising, former third world nations. US companies obviously don't like to off-shore to countries like Sudan because those countries are neither safe nor stable for investment or operations. It does a company no good to build a factory in Somalia if it's just going to be arbitrarily nationalized or destroyed.
I wasn't even thinking of Somalia and Sudan, which aren't quite even states in all aspects, let alone corrupt ones.
The ones you mention have all problems with corruption, to the point that as a Westerner doing business there you have to be aware of it.
Certain parts and certain businesses are worse off than others, of course, and for example the textile industry which is probably the most discussed and studied, have had huge problems with everything from organized crime to outright slave labor.
A general statement that off-shoring helps poor people is simply too easy to find counter examples to.
Real income is rising, BTW. It's only real wages (i.e. income excluding benefits) in the US which have not due to a shift of comp from wages to non-wage benefits (the total is also rising).