09 June 2008

Moving forward on fair trade in a free trade world.

I had a discussion with a friend a couple weeks ago about globalization and how the world and the United States moves forward to a state where labor is equally valued around the world in order to create more fair trade.

I've thought about it quite a bit and I think that the recent catastrophic earthquake in China is a good example of how the system moves forward. To be clear I think that the disaster and all of its immediate results are terrible. However, I think that in the long term there may be beneficial side effects for China and for the world in general.

One of the tragedies that received the most press coverage during the disaster was the collapse of several schools. The schools were aparently not designed or constructed strong enough to resist the earth quake. As a result many young lives were lost and there was much public anger. The Chinese government has attempted to control and quiet this anger as much as possible. However in the long run they are going to have to be sure that the same problem does not occur again.

In order to do this they must train and employ more skilled and honest architects, contractors, building inspectors, seismologists and number of other professions. Because we do live in a global market place, especially in the skilled labor market, the Chinese government will have to increase what they pay these craftsman.

Ultimately this will increase the level of skill and level of pay across the Chinese market place because if you don't want you children to attend an unstable school would you want to work in an unstable factory? I think not.

In the long run the change will be good for China, who will have more skilled craftsman and professionals. It will also benefit the United States and the World because the cost of doing business will begin to level out between China and the United States, creating a more fair labor market place.

In that arena countries must compete on the merits of their skills and comparative advantages. Innovation again becomes an important element to being the best producer. I'll put my money on the United States just about any day in that competition.

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