Bookraft

The New York Times has been almost dumb-founded by the huge impact of one of its articles on Italy. The article and the debate it has stirred in Italy is of course particularly Italian. But also it has broader European and North American tones. First, here is the first tremors of the increasing impact of globalization. In particular, China and India are taking away many jobs from not just North America but also many developed countries in Europe and even emerging countries like Argentina, Mexico, Cambodia and Vietnam. And given the huge backlog of 750 million and 800 million impoverished peasants in each country whose incomes are barely equivalent to a few dollars per day - there is a huge stock of workers more than willing to work at a pittance

relative to even the emerging countries already low wage scales(see article on Mexico losing jobs to China). In sum, it will take many years if not decades for wages in Asia to rise enough such that manufacturers in the rest of the world can compete on labor costs. In the meantime the skills, apprenticeships and manufacturing savvy will surely die off in the economically declining West while world manufacturing will be centered in Asia.

The villain of the piece is not the outsourcing and offshoring of every aspect of manufacturing but its precipitous and unregulated pace. The move to Asia has been done with nary a thought on the costs incurred domestically. It as if Adam Smith's invisible trading hand is allowed to suddenly flatten whole industries in developed and emerging countries throughout the world with little concern to the long term economic and social costs. Once those jobs are gone for 3-8 years the sustaining infrastructure of schools, supportings industries, and even inventive milieu will also quickly dissipate. This is the problem being experienced in Italy in the NYTimes report.

But the problem is worldwide, and there is no effort to regulate the pace of manufacturing with taxes or fees linked to good WTO behavior, clean ups of the Intellectual Property rights thefts rife in China and India, or the establishment of labor conditions and environmental practices on par with developed country standards. One could expect Western trade negotiators to at least leave the seeds of manufacturing competitive equality by having comparable labor practice and environmental conditions. But as in Italy, all of the developed countries and particularly the US are mired in petty political partisanship and political graft (the US will have a Presidential election in which the candidates will collectively spend well past $3billion and of course swear on the Bible that they will not be influenced one iota by those same campaign contributors when forming their policies).

Political Paralysis

This has lead to the second problem that befuddles Italy and that is entertwined with the first -> political paralysis. Even if Italy wanted to curb lost jobs to globalization they can't - the political mechanisms in Italy, with corruption and frequent changes in governments have precluded reform. As the NYTimes report points out, Italy's election practices have everything to do with party and therefore the need to accede to the Partyline (see the report for details). The result is that reforms are almost impossible to be done by the political parties that stand to lose so much. So Italy becomes politically paralysed. But that now also means socially and economically paralyzed as well.

Well the US is rapidly reaching the same state. Election campaigns for federal office are multi-million dollar affairs; yet 90% of Federal incumbents will get re-elected. But Elections have always been on the cusp of being bought in many democracies - the whole of the US democracy has seen a never-ending fight to preserve electoral integrity against the various forms of financial and political gerrymandering. Worse, policy making is subject to the purse - as PACmen (Political Action Committees) and lobbyists use funds to extend their one man's influence well beyond one vote. No better example than the antediluvian Electoral College which chooses the President be damned with the popular vote while attempts at reform have been sideswiped endlessly. Finally, the rancor of elections and political process has become much more partisan and subject to Swift-boat smear campaigns every bit as ruthless as Italy's Machiavelli and his sinister Princely preachings.

The inevitable question then arises - Can one see the onset of political sclerosis equal to or better than Italy's in the US? So this article about Italy, written by an American which has so much impact in Italy, has a lot of domestic echoes of equal if not greater import.