4. Translation from page.

Translate from page the passage expanding on the subject of the text.

How can you compete in a global economy?

Armies of low-wage foreign work­ers haunt the dreams of many Americans. Are there ways to pro­tect your financial future? Might pressures from international trade even boost your income? Fortu­nately, the answer to both ques­tions is yes.

Standards of living everywhere are improved through specializa­tion and exchange. International competition is also a powerful force to equalize prices globally, both for goods and for resources. A stereo sold in Budapest must generate the same net revenue to a competitive producer (after transportation costs, taxes, etc.) as one sold in Quebec City. Interna­tional competition in certain labor markets also tends to equalize pay for, say, basketball players in Orlando and Rome (after adjusting for costs of living, regional prefer­ences, etc.). But how does trade exert pressure to equalize wages for all comparable occupations in Barcelona, Melbourne, and San Diego?

One part of the answer is that, under fairly reasonable assump­tions, free trade almost perfectly substitutes for resource mobility.

International trade intensifies pressures for firms everywhere to adopt similar technology. Micro­chip makers in Malaysia use the same basic technologies as firms in Silicon Valley, which ultimately translates into similar productivi­ties for labor, and, consequently, similar wages.

A second form of international competition among workers arises from location decisions by multi­national corporations. Consider a janitor in an Indiana plant that manufactures mirrors. If the com­pany operating this plant could produce mirrors in Manila instead, then the Indiana janitor must com­pete for a job with a Filipino jani­tor. If the Indiana plant is relatively more costly, manufacturing will shift to the Philippines.

The third part of the answer is that workers compete with other workers within their national bor­ders.

How does this analysis help answer the title question? Competitive forces com­bine to equalize wages, interest rates, and rents for comparable land throughout the world. This means that if the resources you control are relatively scarce internationally, then your share of the gains from international trade (the increased purchasing power of your income) will exceed the aver­age. But if your resources are even more abundant internationally than within your own country (e.g., unskilled labor), then your gains from trade will be less than average.

A sad reality is that unskilled Americans gain less from interna­tional trade than those with more human capital do, both absolutely and relatively, because they must compete with abundant unskilled foreign labor. This may be the major reason why the share of earned income going to Americans at the bottom of the economic spectrum has declined over the past decade or so, while the share going to Americans toward the top of the spectrum has been rising.

One Strategy. The world is full of bright, industrious people. The trick is to tailor your resources so that they are relatively scarce in the rest of the world, even if rela­tively abundant in the United States. This usually entails acquisi­tion of human capital. On average, Americans have better access to education than most people, although many foreigners are catching up quickly. Thus, the answer to our major question is almost a cliche: Get as much edu­cation as you can stand, and try to develop expertise that will be increasingly in demand as interna­tionalization continues into the twenty-first century. 2935 digits