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How to prepare for next 100 years as globalization spreads economic competition

By David Blair | | Updated: 2019-06-28 16:30
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A US container ship is docked at a port in Qingdao, East China's Shandong province, on April 1, 2019. [Photo/IC]

The lack of wage growth is not all due to globalization. The access of women and minorities to jobs, which was absolutely a needed and just change in policy, increased the domestic supply of labor. A boom in building infrastructure and houses in both the US and Western Europe had largely played itself out by the 1970s.

Some technological changes reduced the need for even highly skilled labor. For example, radiologists — doctors who read X-rays — are among the highest-paid professionals in the US. But, recent studies have shown that AI is able to make correct diagnosis much more often than human radiologists.

Nevertheless, the radiologists are lobbying the government to pass laws preventing competition from AI. If they succeed, the radiologists will keep their very high incomes, but Americans will face higher healthcare costs and worse outcome than people in countries that allow the competition.

Many of the things that have people upset in the West have nothing to do with trade — though they are lumped into a general feeling that things aren't fair. Many of the current high-income jobs in the US are in fields that have found ways to protect themselves against either foreign or technological competition.

Government workers and contractors make significantly more than an equivalent worker in the private sector. Lawyers and financiers in New York are protected from competition. High-tech sector salaries are protected by the monopolization of the software industry, in much the same way that the big three carmakers once made oligopolistic profits that allowed them to pay their workers more than the market wage.

So, according to 2016 income data, the top three highest per-household counties in the US, and four of the top six, are suburbs of Washington — an almost purely government center that produces little of commercial value.

Other high-income counties are based on monopolistic income from tech companies in the San Francisco region and on big banks in the New York area. The manufacturing centers of the Midwest are now nowhere near the top 10.

Many of today's young adults will live to see the start of the 22nd century, which seems to me to be a science-fiction date. Of course, no one can predict what the next 100 years will bring, but it does seem clear that we'll see further globalization — the spread of economic competition around the world.

Some currently high-paying jobs will go away. The only way a young person today can prepare for this competitive world is to learn new skills and be adaptive.

For good reasons, people also need some stability. Governments will try to provide this stability, but must be careful to provide industrial protection only for a transition period. Competition is tough, but the only long-term alternative is declining incomes and stifled innovation.

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