Business 2K Blog Place

By 1989, labor costs in Sweden, the Netherlands, and West Germany exceeded our own, and costs in France, Italy, and Japan were not far behind. Yet American imports of Toyotas from Japan, Volkswagens from Germany, and Volvos from Sweden grew as wages in those countries rose relative to American wages.

By comparison, European and Japanese wages were far below those in the United States in the 1950s, and yet American industry had no trouble marketing our products abroad. In fact, the main problem then was to bring our imports up to the level at which they roughly balanced our bountiful exports. Ironically, our position in the international marketplace deteriorated as wage levels in Europe and Japan began to rise closer to our own.

Clearly, then, cheap foreign labor need not serve as a crucial obstacle to U.S. sales abroad-as a “common sense” view of the matter suggests. In this chapter we will see what is wrong with that view.

This entry was posted on Thursday, March 1st, 2007 at 11:36 am and is filed under Economy, Employment. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.