Monday, January 07, 2008

Zero sum for the lower echelons

Martin Hutchinson (07 January) makes my case, with particular reference to Tata and Jaguar-cum-Land Rover :

... it seems likely that the most skilled Westerners will continue to give their countries a comparative advantage against emerging markets. However, there is no guarantee that these research-intensive sectors are likely to support the entire Western population, far from it. They are highly cyclical, benefiting hugely from an active stock market and venture capital market. Further there is no evidence that innovation itself, as distinct from the fruits of recent past innovations, is significantly expanding as a percentage of output -- indeed, research expenditure has if anything declined.

... Since the majority of location-dependent jobs in Western countries are low-skill it therefore follows that if governments wish to protect local living standards, they need to discourage low-skill immigration. Except in Japan, they have not been doing so; both in the EU and the United States low-skill immigration, frequently illegal immigration, has got completely out of control and is immiserating the working classes.

... the economic histories of a high proportion of the Western population under 30, except the very highly skilled, will involve repeated bouts of unemployment, with job changes involving not a move to higher living standards but an angry acceptance of lower ones. By 2030, it is possible that the median real income in the United States and Western Europe may be no more than 50-60% of its level today.

This will expose the democratic divide between those who vote and influence the system in their favour, and the rest. The class division could sharpen as "I'm all right Jack" is replaced by "One can't complain, Piers".

Sackerson awards a Prose Prize for Hutchinson's use of the term "immiserating".

P.S.

... and presumably this will have an obvious effect on residential property prices. Who's for selling up and buying a caravan?

5 comments:

James Higham said...

We'll all be gypsies yet.

Anonymous said...

It's certainly mad to allow mass low-skill immigration if you have no way of forcing your own low-skill people to emigrate!

Sackerson said...

Hutchinson's essay makes it clear that it's not just the low-skilled that are under pressure, but those in the middle tier also.

hatfield girl said...

Non-tradeables are not necessarily or even particularly low skill though nor, in many places, are they low status either. I don't know how much of the Italian economy is made up of non-tradeables but it must be a lot, and not done by immigrants.
Certainly tradeables abroad and non-tradeables by immigrants is not a friendly picture, but probably there will be social and political adjustments, following economic shifts, that will reward undertakings differently from at present. Also, economics is hardly rocket science and we all understand what is happening, but in the politics that is being transformed lies great complexity, and there lie too considerable and dangerous unknowns.

Sackerson said...

Yes, I think many of the white-collar workers may have a nastier shock coming than plumbers, plasterers and bricklayers.