Lovely topic actually. Incoming wall of text!
This drives down the wages because the supply of workers is near infinite
That is definitely not true. If you are an American, perhaps you say this because you see other countries with poor(er) people willing to do the same work as you for less money. If outsourcing didn't exist and immigration slowed to a trickle, you would fully understand how limited is the supply of labor in "first world" countries. There would be significant upheaval in American society. Eventually it would turn out very well for our society (I think), but it would come with some ugly side-effects.
Moving jobs from one area to another isn't the issue. Automation is and there is nothing anyone will do about it.
Automation is the long-term problem . . . assuming you want everyone to define their life and continued existence through being someone else's employee. Certainly there other ways for humans to spend their lives. Then automation becomes more of a boon. However, automation and globalism (or what we often define as globalism) don't necessarily have anything to do with one another. Exporting production to an undeveloped country often prevents automation of tasks (by temporarily reducing labor costs to make human labor more competitive with machine labor). Eventually machine labor will wipe out even those jobs. If the factories return to developed countries, they won't be bringing back the old jobs that were lost in years past.
We are not losing if some poor fuck elsewhere has to do it for less and export it out for foreigners to consume. The problem with trade is how the gains are distributed.
A few points:
1). Except in cases of prison/slave labor, "some poor fuck" doesn't have to do anything. Usually they jump at the chance to work if it means earning more money.
2). Gains are distributed according to equity. If workers held equity in their company, they would realize the gains as well as the opportunity to purchase cheaper products. Sadly, few American workers ever hold much (or any) meaningful equity in their employer . . . or anyone else's employer for that matter.
this. The Friedman style economic school of thought is what has made the gap. Imagine if the middle class shared the wealth generated over the past 40 years. Middle class would be a much higher wage than it is now.
Imagine if the middle class had prioritized acquiring partial ownership of American corporations, instead of . . . whatever else it was they spent money on. Vacations, nicer cars, better clothes, tastier food, and what have you. Consumer spending would suffer, but . . .
Wage stagnation wasn't the result of globalization but because of the average workers' growing inability to negotiate their own pay.
Bingo! Even non-union employees could, once upon a time, negotiate pay. Today you are paid according to scale set for all employees. Even if you demonstrate a particular skillset that makes you more valuable to your employer, you can't ever negotiate a pay increase based on that skillset (or anything else). You follow the same wage scale as everyone else. Typically.
credit is often used as income replacement (or augmentation) in a large number of US households.
Credit allows the finance industry to slowly bleed away everything you've ever earned, or will earn.
At some point machines can do things better, faster and cheaper than everyone here.
That's the real problem
It's a problem, but it's also a possible solution. Overall, you want increased production of goods and services, even if it requires only a few highly-skilled workers to facilitate that increased production. Dumping more goods/services on the market reduces prices and increases availability . . . at least in a market that is not manipulated. The question is, how does anyone buy those cheap goods/services when their income is $0? And what's the economic incentive to produce those goods when nobody can afford to buy anything? Do you produce anything you like and give it away for free? That doesn't seem realistic.
Embrace globalization and make sure no single individual steals the loot.
That's a sticky problem. We currently live in a society where organized corporations are best able to produce products and sell them to a wider market. Equity defines who shares in the profits. So if someone legally founds (or buys) a corporation and captures some significant percentage of all income for themselves, did they steal anything? What, in general, has Amazon stolen from anyone? It was a bookstore started in a garage. It was not founded by a plutocratic cabal hell-bent on spreading poverty for the sake of spreading poverty. Amazon got rich because a bunch of customers rejected other businesses and instead chose to do business with Jeff Bezos. A great many people who are potentially harmed by globalization willingly yielded a significant amount of wealth to Amazon without necessarily considering the ramifications of what they were doing. We continue to do this every day. Apple, Google, Microsoft, Nike, General Motors, Levi's . . . when you buy their products, you fuel globalization. People have been voting with their wallets for globalization for years.
re: China vs USA - One of these is experiencing an economic miracle with a ballooning Middle Class while the other has been experiencing a shrinking Middle Class with no hope for a turn around in sight. Poverty is decreasing in one while increasing in the other.
The light that burns twice as bright, burns half as long.
Lower wages also lead to lower prices over time so it's not like consumers get no benefit.
Not necessarily, no. In fact, wages vs. inflation trends would show that (overall) you're wrong. Certain sectors, such as housing; food; and medical care show price inflation above median wage growth in the United States. Since 2000:
Median American income has grown by ~49.8%
Food prices have increased by 53.6%
Housing prices have increased by ~56.2%
Medical prices have increased by ~89.4%
Yeah if I'm a worker in the company whose wages have gone down I'm worse off, but all the other consumers of that company's products are better off.
Not if the products are sold at the same prices. The only thing that happens is an increase in profit margin for the company selling said products.
This graph obviously isn't perfect because it makes a complex sector into a single line or two on a graph but it gives the basic picture. Electrical appliances are another example, a washer/dryer set used to cost around $500 in the 1950s now they work considerably better and in constant dollars are obviously quite cheaper.
You only buy a washer/dryer set once every so many years. Typically they last 11 years. You pay for housing every month. You buy food every day. What good are those consumer products going down in price, if you are having problems buying food and paying for housing?
Rant
The real problem isn't so much globalization, or global trade: it lies in our equity model, and how that equity can be handled. Example: you found a widget company in the United States in 1951. You invent the widget, you create your own automation process for producing the widget with marginally-skilled labor to operate the machines, and you organize the sale of widgets in the United States and abroad. Great! You have created your own business. But it goes nowhere until you have staff. Without staff, it dies completely. So you get some investors, offer them shares in your company, use the money to hire workers, and off you go.
The workers earn a wage. You and your investors have equity in your company. Shares of stock. You go public, and you issue more shares, which you distribute to more investors. The workers continue earning wages. Foreign competition pops up in Japan. The Japanese have invented their own widgets (early models are likely retrofitted from your design, but 1-2 years in the models are obviously novel) and developed their own automation process. Their workers are cheaper than yours. They enter the global widget market, and you initially take a beating. You have to lay off some workers, but you update your models, fight back, and stabilize. You weather another assault from Taiwanese and German widget manufacturers who come online shortly thereafter. The Germans normalize their designs for the international market (they were operating in local European markets, not in competition with you except in limited areas) while the Taiwanese crib from the Japanese by knocking off their designs for a bit before attempting original designs. The Taiwanese and Germans both produce their own automation processes and hire their own talent. Just like you did decades ago. You continue to compete, and though you've lost majority control over the worldwide market, you're still a force in the United States. Sales are stable. Ish. Your workers are still employed, though wages aren't rising as much as they were in the 50s when you were new.
Then your board gets a bright idea: let's try using some of that cheap labor like the Japanese used to have and the Taiwanese had just a few years ago. In 1988, they vote to explore expanding production into new industrial parks opening up in China and Mexico. Nobody is able to produce a widget factory in either country. Nobody is able to design a competitive widget in either country. Left alone, they will likely never compete with anyone in the global widget market. But your board knows that they can build factories using your engineering talent and produce widgets from your designs in those countries at a much lower cost. Those factories will not just compete with the German, Taiwanese, and Japanese factories; they will also compete with your own widget factories in the United States (albeit in a slightly different way). So despite the fact that the Mexicans and Chinese do not have the talent or the technical skill to produce their own widget manufacturing sector, by the mid 1990s, they become dominant in widget production thanks to the export of all of your talent and skill. The shareholders realize significant increases in profits (since your prices don't drop as much relative to inflation as does your cost basis), but your workers face mass layoffs and factory closures. Eventually, due to IP theft, knock-off widgets start creeping into markets. Your board agrees to a merger/sale with a manufacturing concern in Guangzhou, and you join the sale, retiring with great wealth. Your Mexican facilities are spun off to a German AG. The last of your American factories close. Your brand is now a foreign one.
Despite the fact that your widget business had zero value until American labor (and the stable American society that made such labor available in the first place) made it possible, said labor reaps no reward when you move the majority of your business into impoverished and underdeveloped/uneducated labor markets. How does that make sense? If we want to compete with countries that can develop their own industries with their own talents using their own human resources, then great! I welcome the competition. Let's see who can innovate best. But why are we taking entire industries and transplanting them into countries that can't (or won't) develop local resources and businesses on their own? Why did we have to drop ready-made factories with modern designs into China, Mexico, Bangledesh, Malaysia, Vietnam, and other countries when we could have encouraged them somehow to develop their own industries instead?
Why can't we encourage our corporations to stay in the country where they started or restrict expansion of production into countries that have the necessary stability to produce their own domestic competition?