surplus to political requirements
1 year ago
While there has been some media coverage of NAFTA's ruinous impact on US industrial communities, there has been even less media attention paid to its catastrophic effects in Mexico:
NAFTA, by permitting heavily-subsidized US corn and other agri-business products to compete with small Mexican farmers, has driven Mexican farmers off the land due to low-priced imports of US corn and other agricultural products. Some 2 million Mexicans have been forced out of agriculture, and many of those that remain are living in desperate poverty. These people are among those that cross the border to feed their families. (Meanwhile, corn-based tortilla prices climbed by 50%. No wonder so many Mexican peasants have called NAFTA their "death warrant.")
NAFTA's service-sector rules allowed big firms like Wal-Mart to enter the Mexican market and, selling low-priced goods made by ultra-cheap labor in China, to displace locally-based shoe, toy, and candy firms. An estimated 28,000 small and medium-sized Mexican businesses have been eliminated.
Wages along the Mexican border have actually been driven down by about 25% since NAFTA, reported a Carnegie Endowment study. An over-supply of workers, combined with the government-sponsored crushing of union organization, has resulted in sweatshop pay along the border where wages now typically run 60 cents to $1 an hour.
NAFTA essentially annexed Mexico as a low-wage industrial suburb of the US and opened Mexican markets to heavily-subsidized US agribusiness products, blowing away local producers. Capital could flow freely across the border freely to low-wage factories and Wal-mart-type retailers, but the same standard of free access would be denied to Mexican workers.
In the fifth year of this business cycle, the fortunes of CEOs and middle-class families pulled further apart. In 2005, the typical CEO received $11.6 million in total direct compensation—salaries, bonuses, restricted stock grants, gains from stock option exercises and other long-term incentive payouts. This constituted a 24 percent increase over the 2004 average of $9.3 million. This means that in 2005, the average CEO made 279 times the average pay of a production non-supervisory worker, the vast majority of America’s private sector work force. This is up from 185 times in 2003 and 229 times in 2004.
WASHINGTON -- When world finance ministers gather here tomorrow for the International Monetary Fund's spring meeting, the agency that has confidently dispensed advice to countless governments in distress will be searching hard for answers to its own identity crisis.
For much of its 61 years, the 184-member-nations IMF has acted as the fire brigade for the global financial system. When economic crises flared up in countries ranging from Mexico to Turkey, the IMF would try to snuff them with emergency loans. In return for cash, economically troubled countries were compelled to undertake harsh new policies -- often cuts in government spending or interest-rate increases -- to try to fireproof their economies.
Now the IMF faces a novel predicament: A robust global economy, growing at a 4% clip since 2003, has left the IMF with a dearth of financial firestorms to manage, and fewer countries willing to borrow from it and heed its dire lending conditions. Flush with cash and eager to regain control over their economic policies, 10 countries, from Russia to Brazil to Argentina, have repaid loans to the IMF ahead of schedule in recent years. The IMF's current loan portfolio of $35 billion is its smallest since the 1980s.
The effect is twofold: A shrinking loan portfolio greatly diminishes the IMF's influence over global economic policy. IMF loan disbursements are conditioned on the enactment, within defined time frames, of measures including privatization of state-owned companies, budget cuts, interest-rate increases and stiffer financial regulation. Once IMF loans are ended, the momentum for economic reform in one-time borrowers may fizzle. That's a worry in Latin America, especially where populist politicians are winning power across the continent.
Fewer loans also means less interest income, and thus fewer dollars in the IMF coffers. In an irony that has provoked tittering among many emerging-market finance ministers, the agency that has long preached belt-tightening now must practice it itself. Over the next three years, the IMF figures it may sustain operating losses of nearly $600 million, and have to dip into its nearly $9 billion in cash reserves to cover the shortfall. To reduce the red ink, the Fund has already capped personnel levels at 2,800 and is planning budgets that would lag behind the rate of inflation. It may start charging nations for technical advice that the IMF now provides free. If that doesn't work, it may have to tap its vast gold hoard of 103 million ounces, valued at $63.5 billion at today's prices and held in the vaults of IMF member nations.
To be sure, the global good times have been powered by low interest-rates, U.S. consumer spending and Asian demand for commodities -- a combination that could come to a halt, and plunge developing countries into crises and knocking on the IMF's door again.
But for now, thanks to the vast sums of capital sloshing around the world's economy, developing nations are enjoying more freedom than ever before to chart more individualistic courses. From 2001 to 2005, the key emerging economies in Asia, led by China, have seen their reserves grow about 2.5 times to $1.7 trillion. In Latin America, reserves of the largest economies nearly doubled over the same time period to $223 billion, according to ABN-Amro.
The IMF is trying gamely to change the way it does business, from lender to "confidential adviser," as Rodrigo de Rato, the IMF's managing director, puts it. That entails a mixture of sound economic advice, outreach to one-time opponents -- and a splash of public relations. Arm-twisting is out; persuasion is in. When Mr. de Rato visited Tegucigalpa, Honduras, in February, he not only went to see the president and finance minister, but also trekked to the rough-and-tumble Campo Cielo barrio. He toured a project where social workers were removing gang-insignia tattoos from youths and the IMF even sent some money later.
Many important decisions by the Fund require 85% approval by shareholder nations, with votes apportioned to each country based on its general position in the world economy. The largest single shareholder, the U.S., accounts for about 17% of the total vote, giving it effective veto power on issues such as expanding the Fund's financial base or changing voting shares.
Over the decades, the Fund's focus shifted to developing nations. When oil prices fell and Mexico ran out of money to pay its lenders in 1982, the IMF had to step in and lead a bailout of Mexico and several emerging countries to avert a global-banking meltdown. The IMF led rescue packages to Asia in the late 1990s and supported the former Soviet Union and its Eastern Europe client states in making the transition from communism.
But the IMF's harsh austerity policies, and perception that it was insensitive to their impact on working people, have caused deeply ingrained ill-will. In South Korea, which went through a financial crisis in 1997-1998, critics bitterly remarked that the Fund's initials stood for "I'M Fired."
Indonesia's 1997 IMF program was perhaps the most intrusive and listed 140 conditions the country needed to meet, including boosting reforestation and disbanding its clove monopoly, to dismantle what economists called "crony capitalism." An IMF requirement that the Indonesia government cut fuel subsidies, which the government slashed faster than the IMF called for, led to the rioting that prompted the resignation of President Suharto in 1998.
The memory of that harsh medicine is hindering the IMF today as it tries to nudge Indonesia to clean up its state-owned banks, which account for about 40% of all lending, and privatize them. The idea is facing resistance both inside and outside the government. Indonesia's Minister for State Enterprises Sugiharto, who oversees privatization plans, is an economic nationalist who has declared publicly that Jakarta can manage its own affairs and need not heed IMF advice.
The IMF has been careful not to push too hard. "One of the lessons learned from the Asian crisis is that if a government is not itself committed to policies, the likelihood of its following through with implementing them is very limited," says Stephen Schwartz, the Fund's senior representative in Jakarta. The Fund also can't afford to lose many more clients: Indonesia is the IMF's No. 2 borrower after Turkey and accounts for about 22% of the IMF's loans outstanding -- and some Indonesians have talked about paying off the IMF early to get it off the country's back.Many developing countries are inspired to distance themselves from the IMF by the example of Argentina, which announced the payback of its $9.8 billion debt to the Fund in December, closing the books on a long tortured chapter in its history. Beginning in the early 1990s, the IMF had provided financing supporting Argentina's risky strategy to keep its peso pegged one-to-one to the dollar. The IMF overlooked warning signals that the government deficit and debt levels were expanding too much to support the currency, a 2004 IMF audit concluded.
After the economy collapsed in 2001, Argentina flouted many of the IMF's recommendations to get the country on its feet -- and has grown rapidly nonetheless. When Argentina finally attained the wherewithal to pay off the Fund last December, jubilant Argentine demonstrators released balloons saying "Ciao IMF." Contempt for the Fund runs so high in Argentina that it inspired a popular Monopoly-like board game, "Eternal Debt," in which the object is "to defeat the IMF."
Without a lending program, there is little the IMF can do to convince Argentina to change course. Argentina still receives a couple of visits a year from IMF delegations and is subject to critiques in an annual review. But Claudio Loser, a former IMF chief for Latin America, thinks the Fund's advice will fall on deaf ears. "With this government, hearing the word IMF is like hearing a curse," he says.
Bolivia is another example of the IMF's fading influence in the region. One of Latin America's poorest nations, Bolivia has borrowed repeatedly from the Fund, which has pressed the government to fight inflation through budget cuts and to encourage foreign investment through modest taxation.
In mid-February, Anoop Singh, the Latin America chief, and his top lieutenants flew to Bolivia to meet with the new regime of President Evo Morales, a leftist indigenous leader who has been critical of the IMF and has threatened to re-nationalize the energy industry. The IMF team held a town meeting with labor and indigenous leaders decked out in traditional Bolivian bowler hats. Mr. Singh, a 55-year-old Indian native, joked with the crowd that he was sorry he didn't know how speak Spanish despite "being 'Indian' himself." He parried concerns about IMF influence by informing the crowd that the Fund had written off nearly all the country's loans.
But not all of the Bolivians who attended were convinced of the IMF's good intentions. Donato Duran, a union leader, says he still believes that "the IMF only cares about rich nations and rich Bolivians." Bolivia's IMF program expired at the end of March, and Mr. Morales's critics worry that the IMF will now have little influence over the government.
Thus it will not be self-evident to future generations of Americans why the imperial might and international reputation of the United States are so closely aligned with one small, controversial Mediterranean client state. It is already not at all self-evident to Europeans, Latin Americans, Africans or Asians. Why, they ask, has America chosen to lose touch with the rest of the international community on this issue? Americans may not like the implications of this question. But it is pressing. It bears directly on our international standing and influence; and it has nothing to do with anti-Semitism. We cannot ignore it.
Now, I would not for a moment suggest that federal prosecutors should not be pursuing the Enron case with all the force in the world. Enron remains one of the most spectacular corporate frauds ever, and to let the folks who cooked it up off the hook would be a travesty of justice.
But at the same time, I also think it’s important to take a step back and remember what it is that Lay and Skilling are being prosecuted for. They are being prosecuted for bluffing about the financial health of their company—which allowed them to make off with millions by selling their stock high while unwitting investors were left holding the bag.
This is a serious crime, and it is true that many Enron employees had their whole pensions in Enron stock and subsequently lost everything. But it is also true that the roughly half of the stock out there is owned by the wealthiest 1 percent of Americans. As far as classes of victims go, investors tend to be a pretty privileged class.
Perhaps, then, it is not surprising that the face of “corporate crime” has come to be defined largely by Enron, WorldCom and other cases of accounting fraud where the victims are primarily wealthy investors. Nor should it seem surprising that corporate reform and corporate accountability is still largely discussed in reference to the Sarbanes-Oxley Act, which dealt almost exclusively with curbing accounting fraud. After all, investors are a pretty powerful political class.
Yes, financial fraud is a serious crime; and yes, reforms are needed and violators ought to be pursued with the full force of the law. But all this must not distract us from the fact that when the victims are not wealthy investors, the same force of response is often lacking.
One of the great absurdities in the debate over immigration policy is the frequently repeated claim that the U.S. economy is generating more “low wage” jobs than can be filled by the domestic workforce. This line has been endlessly repeated in news stories on the issue.
Quick trip back to econ 101: recall the concepts “supply” and “demand.” What makes a job a “low wage” job? In econ 101 world, a job will be a “low wage” job if the supply is high relative to the demand. When there is insufficient supply, then the wage rises. My students didn’t pass the course if they couldn’t get this one right. Econ 101 tells us that there is not a shortage of workers for low wage jobs; it tells us that there are employers who want to keep the wages for these jobs from rising.
Immigration has been one of the tools that have been used to depress wages for less-skilled workers over the last quarter century. Many of the “low-wage” jobs that cannot be filled today, such as jobs in construction and meat-packing, were not “low-wage” jobs thirty years ago. Thirty years ago, these were often high-paying union jobs that plenty of native born workers would have been happy to fill. These jobs have become hard to fill because the wages in these jobs have drifted down towards a minimum wage that is 30 percent lower than its 1970s level.
In response to this logic, the “low wage” job crew claims that if the wages in these jobs rose, then businesses couldn’t afford to hire the workers. It’s time for more econ 101. Businesses that can’t make money paying the prevailing prices go out of business – that is how a market economy works. Labor goes from less productive to more productive uses. This is why we don’t still have 20 percent of our workforce in agriculture.
So the economic side of the debate over immigration is a question about employers wanting access to cheap labor. That part is pretty simple. There are other questions in this debate about human rights and basic decency. It’s outrageous to threaten people with deportation and imprisonment who have worked in this country as part of a conscious government policy. (No one enforced employer sanctions. That was a deliberate decision by the government.)
U.S. trade negotiators have not pursued such policies, because trade and immigration policy has been deliberately intended to redistribute income upward. We can debate whether this is a desirable goal for trade policy, but only if the media stops making silly claims about “low wage” jobs.
The efficacy of labor supply limitations is one question. Another is the practicality of that approach applied to immigration. A third is the political consequence. I think the answers to all of these are contestable.
What seems less open to doubt is a more birds-eye view of U.S. historical experience. Waves of immigration in the past gave rise to struggles among workers -- stoked by employers -- for what was perceived as a limited number of jobs. Perverse mythologies regarding race, ethnicity and religion blossomed in this setting leaving malign, long-lasting effects.
Ultimately the number of jobs -- the 'lump of labor' (sic) -- was not limited. Immigrants fought their way into politics and fueled the rise of the labor movement, which in turn made the country a better place in all kinds of ways. The old exclusionist-collaborationist AFL sort of "business unionism" was swept aside. Labor went from cheap to dear. In 1969 the "Woodstock minimum wage" of $1.30 was $7.03 in today's dollars. It did not go downhill later because of immigration.
I did not say it would be fun for everyone. But it's where we are.
A recent study by the Fiscal Policy Institute in New York confirms this view. It found that small businesses actually grew faster in states that kept their minimum wages above the federal level. From 1998 to 2003, job growth for small businesses in states with higher minimum wages was 6.7 percent, versus 5.3 percent in states stuck at $5.15 an hour.
Surprisingly, job growth was even more robust in the retail sector, where the wages tend to be low. And the total number of small retail businesses grew 0.6 percent in high-minimum-wage states, while they actually fell 0.3 percent in states that relied on the federal standards.
What is the explanation? Part of it is that higher wages lead to higher productivity. That is, the workers get more done in the same amount of time. The better pay encourages them to stay at the job and gain experience. And employers don't have to waste resources finding and training new people.
The report also notes what economists call the "Henry Ford effect": If you pay workers more, they can buy more. That boosts the overall local economy. And the biggest winners are the small retail businesses, who, according to the propagandists, are supposed to be hurt most.
While AIPAC undeniably has influenced Congressional votes regarding Israeli-Palestinian concerns and related issues, they did not play a major role lobbying members of Congress to vote in favor of the resolution authorizing a U.S. invasion of Iraq, in large part because they knew there was such overwhelming bipartisan support for invading that oil-rich country they did not need to. More fundamentally, there are far more powerful interests that have a stake in what happens in the Persian Gulf region than does AIPAC, such as the oil companies, the arms industry, and other special interests whose lobbying influence and campaign contributions far surpass that of the much-vaunted “Zionist lobby” and its allied donors to Congressional races.
The American Jewish community, like most Americans, is turning against the war. Rabbi Eric Yoffie, president of the Union of American Hebrew Congregations, along with its chairman of the board, Robert Heller, recently sent a letter to President Bush stating that “We call not only for a clear exit strategy but also for specific goals for troop withdrawal to commence after the completion of parliamentary elections.”
The Census Bureau says its new report is meant to provide “a more complete measure of economic well-being,” but the report ignores issues such as child care and medical expenses that Census staff, with help from outside experts, included in many past estimates of poverty under a comprehensive, revised poverty standard.
In addition, by not following some of the key recommendations made by the National Academy of Sciences regarding improved poverty measurement — most notably, to use poverty thresholds that are consistent with the measure of income being used — and by not including or discussing the NAS-guided measures of poverty, the new report presents an
overly positive view of the extent of poverty in America.
It would be of particular concern if the Census Bureau plans to continue publicizing only those poverty rates that are much lower than the current rate, and providing no indication that the lower rates are derived from poverty measures that are controversial in the research community and that many researchers regard as flawed.
Vice President Dick Cheney's former top aide told prosecutors President Bush authorized the leak of sensitive intelligence information about Iraq, according to court papers filed by prosecutors in the CIA leak case.
Before his indictment, I. Lewis Libby testified to the grand jury investigating the CIA leak that Cheney told him to pass on information and that it was Bush who authorized the disclosure, the court papers say. According to the documents, the authorization led to the July 8, 2003, conversation between Libby and New York Times reporter Judith Miller.
There was no indication in the filing that either Bush or Cheney authorized Libby to disclose Valerie Plame's CIA identity.
But the disclosure in documents filed Wednesday means that the president and the vice president put Libby in play as a secret provider of information to reporters about prewar intelligence on Iraq.
"The fact that the president was willing to reveal classified information for political gain and put interests of his political party ahead of Americas security shows that he can no longer be trusted to keep America safe," Democratic National Committee Chairman Howard Dean said.
Libby's testimony also puts the president and the vice president in the awkward position of authorizing leaks — a practice both men have long said they abhor, so much so that the administration has put in motion criminal investigations to hunt down leakers.
Libby also testified that an administration lawyer told him that Bush, by authorizing the disclosure of classified information, had in effect declassified the information. Legal experts disagree on whether the president has the authority to declassify information on his own.
The next country to fall to a strongly anti-American populist politician could be Peru.
Voters there go to the polls on 9 April to elect a president and Congress.
The presidential frontrunner is Ollanta Humala, a retired army commander who led a failed military uprising in October 2000 and who is now ahead in the opinion polls.
Now, opinion polls in Peru are not especially reliable. They under-represent poor voters in the countryside.
But that is the point. The rural poor form the backbone of Mr Humala's support. If he is ahead even in the flawed opinion polls which tend to under-count his key constituency, Mr Humala is confident he can take the presidency.
And if he does, there will be more ulcers in George Bush's White House.
Like President Hugo Chavez in Venezuela and President Evo Morales in Bolivia, Mr Humala talks of the evils of what he calls "the neo-liberal economic model that has failed to benefit our nation".
He dismisses the role of multinational companies that "offer no benefits" to the people of Peru, and he speaks of a new division in the world.
Where once Cuba's Fidel Castro could harangue the US with talk of the colonisers and the colonised, Ollanta Humala attacks globalisation as a plot to undermine Peru's national sovereignty and benefit only the rich on the backs of Latin America's poor.
From the March 31 edition of The Rush Limbaugh Show:
CALLER 1: Why is it, do you think, that you haven't heard hardly anything from Jesse Jackson or Al Sharpton about the whole immigration thing? I mean, the silence is deafening from --
LIMBAUGH: Well, they're busy.
CALLER 1: -- the NAACP [National Association for the Advancement of Colored People] and the --
LIMBAUGH: They're -- they're busy. They're busy. The Reverend Jackson is in New Orleans. He's leading a big march there tomorrow. The march is -- what is it called? The -- the march for the right to return a protected vote and reconstruction. He's trying to -- they got problems down in New Orleans. They don't have voter base, and Sharpton's working on a New Orleans deal, too. He's trying to figure out how he can get involved in the deal down there at Duke where the lacrosse team --
CALLER 1: Yeah.
LIMBAUGH: -- uh, supposedly, you know, raped, some, uh, hos.
CALLER 1: But I don't think they're very happy about all of this.
LIMBAUGH: Yeah, well, but, the problem -- that -- that has a possibility down -- that Duke thing's got a possibility of being a Tawana Brawley situation. That -- and Sharpton's got a balance -- can he afford another one of those as -- as his life's going on? New Orleans is a big deal to him, and I -- I'm gonna tell you something. You'll -- you'll see these guys -- at some point, they will get involved, be-because when Ted Kennedy calls it the new civil rights movement, that's Jesse Jackson's turf. He owns it. So --
CALLER 1: Right.
LIMBAUGH: Yeah, anyway, I gotta run here because of the constraints of time out there. [Caller], a great, great question. Uh, exotic dancer, OK, say rape -- whatever happened. You know what it is down there at Duke. It's -- you watch what happens in that. That's --
LIMBAUGH: It's open-line Friday, and I am Rush Limbaugh, America's anchorman and your host for life. This is -- this is [caller] from Bryant, Texas. Hello, [caller], great to have you with us.
CALLER 2: Rush, did you just call those young ladies "hos" on the nationally syndicated program?
CALLER 2: Do you know something about them that perhaps we don't know?
LIMBAUGH: Yes, yes I did.
CALLER 2: Oh, you --
LIMBAUGH: It was a, it was -- hang on -- now, what, what did you say there, [caller]?
CALLER 2: I said, because -- and if they are hos, it doesn't mean that they can still -- you can do to 'em whatever you want.
CALLER 2: Well, why would you call them hos on the national --
LIMBAUGH: Well, because, because I'm running on fumes today, [caller], and I felt terrible about it. And I knew somebody was gonna call and give me a little grief so I'm takin' the occasion of your call to apologize for it. That was, it was a terrible slip of the tongue. I'm sorry. But it wasn't the worst one that has been said recently. You want -- do you know who Keanu Reeves is?
Invest Globally, Stagnate Locally
By DANIEL GROSS
IN the United States and Europe, there has been a curious disconnect in recent years between the performance of the corporate sector and the performance of the overall economy.
For example, median incomes for American workers have barely budged since 2000, while corporate profits have nearly doubled. In Germany, wages have fallen in real terms in the last two years, while earnings for the companies in the DAX 30 index have more than doubled. And in Germany and much of the rest of Europe, the overall pace of economic growth has remained sluggish.
"All in all, the widespread prosperity of companies does not lead to prosperity for domestic economies or wage earners in Germany, France or Japan," wrote Patrick Artus, chief economist of IXIS, the Paris bank, in a recent report.
In theory, corporate profits and wages shouldn't be a zero-sum game. Rising corporate profits are supposed to stimulate investment, which leads to job creation and rising consumer demand, which in turns tends to push up wages. But that process has broken down, at least within national borders, thanks to two related trends that stem largely from globalization.
It's a truism in the large developed economies that capital is strong and labor is weak. From 2001 to the fourth quarter of 2005, corporate profits as a percentage of United States G.D.P. rose significantly, to 11.6 percent from about 7 percent. Companies have been able to keep a larger share of the cash they generate, rather than pay it out in wages, in part "because the labor market recovery has been weak," said J. Bradford DeLong, professor of economics at the University of California, Berkeley. Professor DeLong notes that while unemployment is low, other measures of labor-market health, from hours worked to the employment-to-population ratio, show it to be less than robust.
In Europe, where unions remain strong, the growing ability and desire of French and German companies to invest beyond borders gives management new leverage over labor. "Capital has mobility in Europe," said Stephen King, chief economist at HSBC in London. "German companies are able to tell workers that they can either accept reduced pay, or see the company close factories and reopen new ones in Poland or India."
The heightened mobility of capital allows companies to invest their profits around the globe with considerable freedom. "American companies really haven't been sinking much of their gains back into domestic investment," said Jared Bernstein, senior economist at the Economic Policy Institute in Washington. In the United States, nonresidential fixed investment as a percentage of G.D.P. fell to 11.56 percent in 2005 from 12.55 percent in 2000.
Thanks to globalization and the opening of new markets, Mr. King said, "it's increasingly difficult to argue that companies themselves are attached to a country." He notes, for example, that Vodafone, the giant British telecommunications company, has more than 80 percent of its sales and employment outside of Britain. And as of 2002, Mr. King found, the 50 largest multinational companies had 55 percent of their employees and 59 percent of their sales outside of their home countries.
The trend of corporate cosmopolitanism is most pronounced in Europe. In a report published last November, Mr. Artus of IXIS found that for the members of the German index, the DAX 30, about 53 percent of employment and 34 percent of sales were in Germany; for the companies in the CAC 40, the French index, 43 percent of employees and 35.5 percent of sales were in France.
The trend is less pronounced in the United States. Standard & Poor's estimates that the companies in the S.& P. 500 derive about 60 percent of their sales at home, according to Alec Young, equity market strategist at S.& P. But for some of the largest companies, like McDonald's, the domestic market counts for only one-third of revenue.
More important, Mr. Young said, a disproportionate share of the revenue growth is coming from overseas, which means that domestic companies may be less likely to hire and invest in the United States as sales and profits grow.
In Dell Computer's most recent quarter, foreign sales were 43 percent of total revenue, up from 40 percent in the previous quarter. Dell is hiring in the United States: last fall, it opened a plant in North Carolina that will employ 1,500 people within five years. In late March, Dell announced plans to hire 10,000 new employees over the next three years — in India.
Given these trends, the combination of rapidly rising corporate profits and stagnant or falling real wages seems less paradoxical. But some economists are wondering how much longer these trends can continue.
"When you have labor shares shrinking relative to capital shares, you tend to get a rise in economic nationalism, which is a democratic response to some of the effects of globalization," Mr. King said.
In other words, the arguments over Chinese imports, cross-border mergers and investments by companies from the Middle East in America's infrastructure could just be the beginning.