One big reason is that globalization has given America foreign-born tech workers without whom the Information Revolution is unimaginable. They run almost half of Silicon Valley’s startups, transforming the way Americans live, play, work, and conduct business. Some years back, Reason.tv interviewed random people on the street and asked them if they’d give up the internet for a million dollars. It was hardly a scientific poll, but there were no takers. And with good reason.
The internet has not only put free music, social media, and entertainment at everyone’s finger tips, but free e-platforms that have radically lowered the costs of doing all kinds of business. Over two million independent merchants sell their wares on Amazon without any major marketing expenditure of their own. Over 6 percent of retail in America is conducted via e-commerce and is projected to touch 20 percent by the end of the decade. AirBnB, the homesharing service, and Uber, the car service, have allowed people to turn their personal effects into money-generating assets, boosting middle-class incomes. The vast majority of AirBnB hosts in Chicago have household incomes of less than $100,000. And the typical Uber driver is married with kids, with a bachelors degree and a car that he uses to supplement a full- or part-time job with a gig that rakes in, on average, $400 a week from 15 hours of driving. Over the last two years, Uber drivers in Chicago have earned more than $250 million.
Here’s a challenge: When you next hear a politician or pundit exclaim that “high-wage Americans can’t compete with low-wage foreigners,” re-word the claim so that it becomes “high-productivity Americans can’t compete with low-productivity foreigners.” The two statements, for all practical purposes, mean the same thing; they’re just worded differently. Yet no one would for a moment take the re-worded version seriously [as a reason to ‘protect’ Americans from foreign competition].
Here’s John Cochrane at his best. Among the errors that Cochrane challenges is the one that proclaims that forced wage-hikes pay for themselves by increasing worker productivity or by boosting aggregate demand. Cochrane also is very good on the politicization of economics that occurs to give unjustified credibility to the belief in such miracles.