Spare Tyre said:
Frankly I still don't understand how globalism and supposedly free markets are supposed to keep on working for the benefit of all into the future (even for the benefit of all Asians). Could you please explain it to me? (This is a serious question; no one has ever been able to explain to me how it is a sustainable situation.)
BTW, I disagree with your perception of Australia's economic policy in recent times. It sounds like you have been reading neo-liberalist promotional literature and have been very taken by the phrase "rise in productivity".
I will start with pointing out that Rhubroma and I come form this argument form fundamentally different viewpoints - obviously. He subscribes to the Marxist doctrine, and more specifically, views himself as the proletariat to his external oppressors the bourgeoisie. My point has been that he, as a result of the life that he enjoys - regardless of how hard he sees his life, is, on a global scale, part of the European bourgeoisie to the global proletariat, the workers of the emerging markets who build the things that all of us in the western world use to make out life more comfortable, from cheap electrical goods and clothing, to housing products. While the true proletariat live in conditions so foreign to us that, as far as Im concerned, to have anyone from western society complain about their share of contribution to their education is offensive.
I on the other hand come from the starting point diametrically opposed to Rhubroma in that I believe in free market economics - so he and I will never agree on much to do about economics, the markets, or how the world can improve. I'm fine with that, the world would be a boring place if everyone had the same view, however, as my views (ie free market economics, not my personal views) are prevalent in the world today, it opens me up to easily be placed in the role of the bourgeois ruling class. And Im comfortable playing that role - I simply feel obliged to point out the true proletariat are not some middle class student rioting in London but the true oppressed workers of the world, those in the emerging markets, Asia, India, Sth America etc. This has been the fundamental point of my arguments for the last few pages of this forum.
In answering your question, and again, Rhubroma would come from a fundamentally differing view; rhubroma would come from the views espoused by Marx in his text The Communist Manifesto (given, he's obviously widely read so his views are drawn from more sources than just this title, but for simplicity...); where I would come armed with (again for simplicity) Adam Smith's The Wealth of Nations.
So, how do free markets improve the life of an Asian family living off subsistence farming? I will use a couple of very oversimplified examples to provide a basic understanding of how it works in general before showing how it sustains itself. If you go back to the 1950's the US largely manufactured all of its own goods; vehicles, tv's, whitegoods etc. The working classes in the cities of the likes of Detroit 'sold' their skills, or lack thereof to the highest bidder, so unskilled labour got paid the least, moving up to skilled labour (trades) who got paid more, to highly skilled labour (professionals) got more again. Things were fine for America, everyone had a job, and the American dream was that while I may be unskilled labour at the car plant, if I educate my children, maybe they will get a trade and be paid more, or maybe even become a professional - or worse, an economist. Globalization, for many reasons, but lets just say lack of shipping, is non existent, and the Asian family, with the children working the farm along side their parents so that they may grow enough to trade to survive is completely unaware that on the other side of the world there are things called fridges, let alone working class people who own them.
Eventually, being an unskilled worker no longer looks appealing to Americans so in the 60's, 70's and 80's they sought higher skilled jobs and with their improving wages looked to enjoy the fruits of their labours. But they didn't want to pay the wages demanded by the newly skilled masses to build their fridge, so they found someone who would work for less. So Company A goes to the 3rd world. And while we may view their work standards as exploitative, the father back on our subsistence farm sees a regular wage which can ensure his family can eat every night rather than being dependent on the harvest of his small farm, as he doesn't get government grants if he has a bad season, as a big plus. All of Company A's competitors now see they are able to sell their goods at much lower prices and to compete, they move their workforce to the 3rd world, and now the farmer's neighbour also has a job. They both send money back to their families and decide to buy a fridge. Now they can store food, lowering the levels of dysentery, and lowering the infant mortality rates of the nation. (I did say I would oversimplify)
But what about those Americans who no longer have their unskilled labour jobs? Well, those who previously bought a fridge for $1000 using expensive labour, can now buy it for $500 using cheap labour, and they use the spare $500 to improve their life by paying people to mow their lawns and walk their dogs and train them so their belly shrinks.
So our Asian friend, while we see him as exploited, is happy that now his family is able to eat every day, and he can buy his own fridge and store food rather than his wife walk 10k every day to market. It may not sound like much of a life to us, but his kid no longer cries because he's hungry, so he's a little happier.
How does this sustain itself? Eventually, the farmer has the same dream as the American. So rather than have his son work in the field, he sends him to school, something no one in his family has ever done before. Then he saves his money and sends him to univeristy so that he gets a good education (ok, I skipped a genration or two in this, but its getting long). Eventually their nations labour 'skills up' and starts to earn more money and after seeing how we live in the western world, decide they too should have the right to own a house, and a car, and a flat screen television. So they drive more employment at the factories and subsistence farms become consolidated to make food production more efficient. A rising tide lifts all boats and all. Soon these workers want better conditions and demand higher wages to the point that the companies seek cheaper labour again. This is already happening with production facility expansions from Chinese based manufacturing plants being built in Vietnam.
So we have benefited through cheaper white goods, our original farmer has benefited as his standard of living has improved (and may one day reach ours), and the farmer in the next cheap labour country is about to have his life improved when the manufacturer moves there. I think Rhumborma noted no system is perfect, and this one isn't but it allows wealth flows to reach the poorest nations.
Eventually, the nation goes from a low skilled nation selling its product (low wages) to a high skilled nation exporting technical, high value add products. Perfect example being Taiwan as this is exactly how Taiwan has developed itself over recent decades. 30 years ago, made in Taiwan was the sign of exploiting cheap labour, now Taiwan is a technological powerhouse selling high end products to the world - including your carbon bike frame. This in 30 years! Given its a 'captured' environment, being an Island, it is a perfect example of how a nation can grow from low skilled to high skilled (and high wealth) and all in a very short time frame. Rhumboma would probably argue that the pursuit of wealth is a bad thing, but again, we're diametrically opposed on these things.
In answer to you other question, yes, I do believe the size of the 'internal' middle classes of these nations are such that they can sustain the growth, and improved lives of the masses. It will be a bumpy road, but which isn't.
I will leave it to rhumbroma to explain how I'm 100% wrong and how Marxism is a much better way to improve the lives the Asian masses. I will however grant him that I agree that I look on some of these countries which I see as having ideal lifestyles (example pacific islands) wanting to become manufacturing centres and think, wouldn't it be nicer to just be fisherman? I guess upward mobility is hard wired into humanity.
And no, I don't read 'neo-liberalist' propaganda, the rise in productivity is factual and backed up by economic statistics, though it has stalled over the last 10 years as governments of both sides of politics have preferred to take the easy populist route rather than doing the hard yards of economic reform. And I believe 'neo-liberalist' is possibly the wrong term for what you mean, there's a big difference between "small l" liberal and "big L" Liberal (the political party), I assume you mean neo-conservative.