Re: Does International Trade Lower Wages in the 1st World?

[Doug Henwood <dhenwood@xxxxxxxxx>]

On Thu, 20 Jan 1994, Nathan Newman wrote:

>
> The January 15th ECONOMIST had an interesting article that argued that
> international trade with the third world has had little or no role in
> lowering wages in the US for unskilled workers.
>
> The prima facie evidence for this fact is the argument that if unskilled
> work had been migrating to third world countries because of lower wages,
> the relative prices of low-skill goods should have fallen.  THE ECONOMIST
> cites studies that asset that this has not occurred.
>
But what if lower wages have resulted in higher profits rather than lower
prices? I've been trying to puzzle out a contradiction: evidence from
one's eyes is that monopoly power has decreased and competition increased
nearly universally, which hsould depress markups and profits, but in fact
profits have held up quite well in the recent slumpish years. Does markup
theory focus too much competition among capitalist and not enough on the
relation between K and labor?

Doug

Doug Henwood [dhenwood@xxxxxxxxx]
Left Business Observer
212-874-4020