FX macroeconomics
part time jobs in exchange for jobs absorbed by the networked economy. In spite of political rhetoric, jobs have not gone from the US to Mexico. Should the Mexican government unilaterally increase minimum wages, those jobs now in Mexico may move elsewhere. Value has not migrated from the US
economy to the
Mexican economy, per se. Value has migrated from the US economy to the networked economy; Mexico is a temporary beneficiary9
of that value.
Te networked economy provides efficiencies unattainable within any one border10
. Its only governing rule
is to seek out optimum efficiency no matter where it is.
Te value lost is actually measurable. In spite of a relatively healthy economy, a recovered housing market,
consecutive record yearly Chart 1: European Union Labor Cost Comparison
in the standard of living. Workers in Bulgaria, China
and Vietnam
attain a slight increase in standard of living. Hence, the product network not only circulates monetary value, but also standard of living value. Te important point in this hypothetical example is that value may be measured in other than monetary terms and the product network becomes the store of that value, also.
Te networked economy has had a real effect in the North American free trade zone known as NAFTA. Te average monthly wage in the US
48 FX TRADER MAGAZINE April - June 2016 Source: Statistisches Bundesamt
is $3,263 and major trade partner Mexico $609. Many American workers had to migrate to lower paying full time jobs or several lower paying
automobile sale, and record setting low unemployment, wages in the United States have not grown in recent years and have actually declined in some sectors.
Extreme wage differentials are global. Te average wage in Japan is $2,522 and it’s top trade partner China
Chart 2 : Total Compensation for Private Industry Workers 2005-2015
Source: US Bureau of Labor and Statistics
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