Asian side of the labour coin

PUBLISHED : Friday, 27 July, 2007, 12:00am
UPDATED : Friday, 27 July, 2007, 12:00am

Cliches can aid in understanding complexity. Consider the always-helpful cliche that every coin has two sides. So, in this spirit of the obvious, let us - for once - look at the other side of the coin regarding the constant drumbeat that Asia is causing American workers to lose jobs.

Well, that happens to be true, but only in one sense - many economies in Asia have a competitive advantage in the cost of their labour. So this coin's bad side is that some people in America have to look for new work when the jobs they are doing can be done for less money in Asia.

Of course, one obvious remedy for this consequence is protectionism, but this, historically at least, has proved to be a cure worse than the disease.

What's very sad right now is that most of the time in the US you hear only about that one side of the coin.

But how exactly are Asians helping Americans? For starters, Asia's labour profit has not produced unrelenting evil and misery for America. In fact, Asia throws most of that fortune back into United States Treasury investments and American stocks for safekeeping and interest-gaining.

Stashing all those Asian billions in America has helped take a lot of the sting out of the otherwise alarming US budget mess. Not only has Washington reaped the benefit of Asia's huge stash of cash, but so, too, has the rest of the country.

Americans wind up paying much lower prices overall. This has helped keep US consumer prices low despite all the periodic upsurges in oil and gas prices and the inflationary effect (until recently) of ridiculously high property prices.

It's hard to recall a time when interest rates have hovered so consistently low. This has been a boon not only to those of us who rely on borrowing to underpin our lifestyle, but to American businesses, which have found the cost of buying new equipment and expanding their operations much lower than it might have been.

And this business expansion has helped maintain a measure of job security for many US workers, and in some cases has even created jobs.

Asia has thus been absolutely vital to US economic prosperity, despite the serious problems raised by our co-conspiracy in economic globalisation. In truth, Asians have as much trouble with the uprooting problems of globalisation as do we in the US. In fact, globalisation was more or less force-fed to many Asians during their financial crisis 10 years ago.

As a condition of receiving bailout funds from western financial agencies, they were required to open up their economic gates to the west.

We are allowed to say that Asia is stealing jobs from America only if, in the same breath, the US accepts that Asia is also helping to create jobs. Then we can accept that erecting trade barriers, or punishing China, India or South Korea for this or for that perceived infraction, is to create enemies where none really exist.

America and Asia need to be working together to develop new solutions to the problems we both face. These include making sure that wealth is spread around to all, and developing serious safety nets for people whose jobs evaporate in the furious typhoon of globalisation.

Tom Plate is a member of the Pacific Council on International Policy. Distributed by the UCLA Media Centre