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Your Highness, as Catholic Christians, and princes who love and promote the holy Christian faith, and are enemies of the doctrine of Mahomet, and of all idolatry and heresy, determined to send me, Christopher Columbus, to the above-mentioned countries of India, to see the said princes, people, and territories, and to learn their deposition and proper method of converting them to our holy faith; and furthermore directed that I should not proceed by land to the East, as is customary, but a Westerly route, in which direction we have hitherto no certain evidence that anyone has gone.

------ Entry from the journal of Christopher Columbus on his voyage of 1492





Of course, Columbus did not reach India and en route to China. He discovered North America and called the wrong people Indian. More than 500 years later, you can see Indian and Chinese engineers everywhere in the Silicon Valley; Mexican chefs cook food in ¬¥§üÁF¡B¹©®õÂ×. (Actually I have been there several times before, not bad) Japanese cars outsold American cars in America; Tycoons smoke Cuban cigars; Ladies put on Channel perfume and wear Cartier jewelries; Professors are talking about BRIC and emerging markets in business classes; Young investment bankers are going to China; Hedge funds are setting up in Cayman Island (³¢¥x»Êªº¬ü°ê¤½¥qÅ¥»¡¤]¦b¨ºµn°O) I bought a computer from Dell and forgot to pay my monthly payment --- I received a call from a call center in India; My friend founded a company which sells cheap notebook with open source Linux operating system. His computers were made in Taiwan. His programmers are working in Philippine and Bulgaria. He used to own a web design firm.

It is amazing, isn't it. The world is no longer the segregated world it used to be. It is more integrated and collaborated than ever before. Every country has its role in the supply chain of the world. Every country could boost its standard of living through globalization: exchange goods and services which it has strong relative advantages for goods and services that it lacks as such. I truly believe everyone will be better off as a whole in the long run through trades even though some of the industries and people might be sacrifice in the short run. I had an argument with my friends who major in sociology and who love to protect the rights of the local workers and protect infant industries. Here is my 2 cents:

Infant Industry Argument

Small start-up industries might be inefficient and unable to compete with larger foreign producers who are reaping the benefits of economies of scale. However, if these "infant" industries are protected from foreign competition, they can expand their markets to the point where their production facilities become larger enough to reap the same economies of scale enjoyed by foreign competitors.

This argument has some validity, but often is abused. Also, the empirical evidence shows that it is usually the old-line, large industries with political connections that obtain protections (steel, textile) rather than new "infant" industries such as biotech, software and technology.

Support Domestic Wages

In high wage countries, the public often fears that trading with countries where wages are low will increase labor market competition and push the wage rates lower. However, trade occurs because of comparative advantage. As was previously pointed out, when countries produce more of the products where they have a comparative advantage, the productivity of labor should increase. In a competitive market, wage rates are based on the productivity of labor. Therefore, the higher productivity of labor that results from international trade should result in higher, not lower wage rates.

Again, the public's unwillingness to accept this logic is due to timing and perception. The idea that international trade lowers wage rates might be fallacy for most of workers in the long run, but it persists because it is true for some workers in the short run. Even though international trade may actually raise wage rates in the long run, many people may be unwilling to sacrifice income and undergo the retraining necessary in the short run to attain the longer-tern benefits.




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Empty Traveler
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individual v.s. group's advantage
2008/07/16 13:05

I agree with all the "theories" in the article from my head (actually I know the wages

at ShangHai is pretty much the same as in Silicon Valley nowadays...) ,

but from my heart, I couldn't help to think how cruel life is ;

"Retraining" is such a fancy word for mid-age professionals/engineers

b/w 40 and 50 years old.

Usually these middle class engineers/professionals are having kids attending

college at this very moment of bad economy (or "globalization").

The college tuition ranging from 25k/year (e.g., UC Berkeley) to 45k/year (e.g., Harvard U)

One of my friends got laid off 3 times durnig the past 6 years and he got a son who

is studying in Harvar U. He is lucky to have (Bay Area) house appreciation to refinance

cashing out. 

Others, if not lucky enough with a house appreciation, will have to borrow more

loans to get thru...

I guess that is that, life is always strugguling for certain group of people.

Personally, I think its a nice thing for mid-aged engineer to retire early.

Excellent excuse not to work any more :)

Hey...living simple is also doable ... low wages can still go with high quality life spiritually.

­·¶Õ±Û±Û(indait) ©ó 2008-07-16 20:17 ¦^ÂСG

Dear  Empty Traveler

I have a good friend who recently went through that "Retraining" process. He majored in Engineering and IT in college and graduate schools. After years of working, he decided to switch to investment industry. He planned to do so through studying for CFA exams, obtaining relevant job experiences and returning back to business school in the future. Granted, this is a time consuming and difficult process. However, he told me that he wants to go through that because he finally realize that's what he really has passion for.


I agree with you that "Retaining" is very difficult for mid-aged working professional with families. That friend of mine is in his late 20s. I also agree that although good economic policies should aim for the long-term benefits rather than the short-term, we need to help and subsidize those who are sacrificed in the short term during the globalization process. After all, we live in a society, not a giant enterprise only looking to make profit without considering any social responsibility.  :)



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2008/07/16 09:34

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­·¶Õ±Û±Û(indait) ©ó 2008-07-16 22:28 ¦^ÂСG

Dear ©]¹C¯«

thanks!

·PÁ§Aªº¼ö¤ß«ØÄ³! 

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