Even an eventual reversal of the trend toward globalization will
not result in a return of American wages to the purchasing power
levels of the 1970s. There are two reasons for this. One is that al-
though sentiment for political, and to a greater degree economic,
isolation is never very far beneath the surface in America, isolation
movements historically generate more noise than widespread sup-
port. That freer trade contributes to the prosperity of everyone is
accepted as fact in political and economic circles today.
The second reason is that there are many places in the world
where wage rates are a lot lower than in the United States and the
European Union. Although there have been recent increases in the
purchasing power of American wages, a long and continued up-
ward trend in wage rates is very unlikely simply because there are so
many places where wages are lower. (See Table 3.1.)
In Western Europe, a general sustained upturn in the pur-
chasing power of wages (except possibly in Britain) is unlikely.
Throughout the rest of Europe, persistent unemployment rates
exceeding 10 percent almost everywhere will stand in the way of
widespread wage increases.
What the Global Economy Means to You 29TABLE 3.1 Manufacturing Wages 1996Index USA = 100
Belgium 147
Denmark 137
Europe 125
Japan 119
Italy 102
United States 100
Canada 94
Australia 93
United Kingdom 80
Ireland 80
Spain 75
Singapore 47
South Korea 46
Taiwan 33
Mexico 8
Source: Statistical Abstract of the United States
1998 (Washington, DC: U.S. Government
Printing Office).