The Great Divergence

One Billion Chinese Aren’t Going to Turn Bourgeois All at Once
New books dissected over email.
April 25 2012 7:30 AM

The Great Divergence


It’s going to take a long time to change the wages of 1 billion Chinese.

Chinese auto workers at a car plant in Hefei.
Chinese auto workers assemble vehiclesat a car plant in Hefei,east China's Anhui province.

STR/AFP/Getty Images.


Hmm, you didn’t take the bait on Bryce Harlow. All right then: globalization.

You’ve described pretty well the trade part of the story. Until the aughts, trade wasn’t much of a contributor to income inequality in the United States because the United States wasn’t doing much trading in manufactured goods with low-income countries. In 1994, Paul Krugman and Robert Z. Lawrence calculated that the average manufacturing wage for countries that traded with the United States was 88 percent of the U.S. average. Now it’s 65 percent. That increases downward pressure on U.S. manufacturing wages (and therefore increases income inequality).

Normally, when a poor country (say, South Korea in the 1980s) starts trading with a rich country like us, you can expect average wages in the poor country to rise rapidly. But when the total population in the poor country exceeds 1 billion, as it does in China, average wages are going to rise a lot more slowly. The embourgeoisement of China’s proletariat may be the inevitable result of its industrialization, but “inevitable” isn’t the same as “speedy.”

The other part of the globalization story is the offshoring of service-sector jobs. Indeed, for the future that may become the main story, since at this point the United States doesn’t have all that many manufacturing jobs left to lose. Service-sector offshoring is kind of a good news/bad news story. To the extent that it displaces trade as a driver of income inequality, its impact won’t be as severe. Less inequality will be created. That’s the good news.

The bad news is why it won’t be as severe: Those distressingly capable workers in Bangalore and elsewhere will be about as likely to compete with highly-skilled labor as with medium-skilled labor. If anything, Princeton economist Alan Blinder thinks service-sector offshoring may hit the affluent slightly harder than the nonaffluent. Blinder wonders, for instance, whether Princeton will want to pay people like him a lot of money to give lectures on economics when it can pay someone standing in front of a TV camera in New Delhi a whole lot less. Business journalists like yourself, I’m sorry to report, are already getting offshored by Reuters. So are some of the stock-market analysts who are often their sources. Don’t tell Slate editor David Plotz!

The Great Divergence, by Timothy Noah.
The Great Divergence, by Timothy Noah.

(I, on the other hand, should be slightly safer, because I write a New Republic column that from time immemorial has been called “TRB From Washington.” If New Republic editor Richard Just ever shortens that to just “TRB,” I’ll start scanning the want ads.)

These gloomy thoughts about the imminent decline of highly-skilled labor in the United States reside entirely in the realm of prediction. Predictions are something I try in the rest of the book to avoid, because they are almost always wrong, and 10 years later you almost always look stupid for making them.

One important countervailing factor concerns whether the affluent, who right now tend to think globalization should proceed unimpeded by vulgar protectionist politics, will retain this principled commitment once it’s them, and not a bunch of blue-collar strangers, whose livelihoods are in peril. A noisy and influential yuppitariat might turn the conventional wisdom protectionist overnight. The liberal economist Dean Baker has had a cackle or two over the prospect of such rank hypocrisy. Should the affluent find a way to get the U.S. government to prevent the offshoring of their jobs, which after all are so very important to the national interest, then globalization’s role in creating income inequality will proceed unimpeded.





The Democrats’ War at Home

How can the president’s party defend itself from the president’s foreign policy blunders?

Congress’ Public Shaming of the Secret Service Was Political Grandstanding at Its Best

Michigan’s Tradition of Football “Toughness” Needs to Go—Starting With Coach Hoke

Windows 8 Was So Bad That Microsoft Will Skip Straight to Windows 10

A Plentiful, Renewable Resource That America Keeps Overlooking

Animal manure.


Cringing. Ducking. Mumbling.

How GOP candidates react whenever someone brings up reproductive rights or gay marriage.

Building a Better Workplace

You Deserve a Pre-cation

The smartest job perk you’ve never heard of.

The Ludicrous Claims Women Are Pitched at “Egg Freezing Parties”

Piper Kerman on Why She Dressed Like a Hitchcock Heroine for Her Prison Sentencing

Oct. 1 2014 11:48 AM An Up-Close Look at the U.S.–Mexico Border
  News & Politics
The World
Oct. 1 2014 12:20 PM Don’t Expect Hong Kong’s Protests to Spread to the Mainland
Business Insider
Oct. 1 2014 12:21 PM How One Entrepreneur Is Transforming Blood Testing
Oct. 1 2014 11:59 AM Ask a Homo: A Lesbian PDA FAQ
  Double X
The XX Factor
Sept. 30 2014 12:34 PM Parents, Get Your Teenage Daughters the IUD
  Slate Plus
Behind the Scenes
Oct. 1 2014 10:54 AM “I Need a Pair of Pants That Won’t Bore Me to Death” Troy Patterson talks about looking sharp, flat-top fades, and being Slate’s Gentleman Scholar.
Brow Beat
Oct. 1 2014 12:26 PM Where Do I Start With Leonard Cohen?
Future Tense
Oct. 1 2014 11:48 AM Watch a Crowd Go Wild When Steve Jobs Moves a Laptop in This 1999 Demonstration of WiFi
  Health & Science
Bad Astronomy
Oct. 1 2014 12:01 PM Rocky Snow
Sports Nut
Sept. 30 2014 5:54 PM Goodbye, Tough Guy It’s time for Michigan to fire its toughness-obsessed coach, Brady Hoke.