End of the Race?
I have a passing interest in analogies which cause people (including me) to question their basic beliefs and mythical stories. This one makes an analogy between fossil fuels and education which is designed to make people question their commitment to "free" public education or to fuel taxes.
What about natural resources in general? There is an analogy which suggests the earth is like a spaceship, equipped with all of the things we need for life*. As we race to consume those resources, we are only depleting them faster and racing towards our own doom. Eventually, so the theory goes, we will run out of new places to explore, prices will shoot up, and we will wish that we hadn't been in such a hurry.
Does the same logic apply to labor? As transnational corporations search for the cheapest labor, they thrash from one previously uncharted territory to the next: first Japan, then Mexico, then Korea, then Vietnam, then China. This is the so-called "race to the bottom".
What happens when that labor race is over? The consequence claimed by "pro-labor activists" is that all labor will be paid at the same low rate as the cheapest labor, but this relies on such assumptions as equal productivity and zero transportation costs (those activists are frequently either self-interested, i.e. union workers, or mistaken in their theory and therefore anti-labor in practice). The actual consequence is that once you have hired the last untapped laborer, the same thing will happen as when you open the last natural resource mine and still have unsatisfied demand: the price of labor goes up.
That is exactly what is happening in China. See, for example, here at Gapminder (check off the China and USA boxes and watch Chinese income start to catch American income, noting that American income does not fall, directly contradicting the "race to the bottom" theory), here, here, here, and the latest, which I have both on good authority and from here is that there is now a shortage of stitchers on the apparel fabrication lines. They are no longer living in abject poverty, and they are becoming consumers who will eventually demand more of China's manufacturing output. Eventually, they may even move up to importing high quality goods - the type that are still manufactured here in the US. Thus, we have little to fear from export-based foreign countries, and they have much to gain. By blocking them out with trade protection, we also grant truth status to the claims of their demagogues that claim America wants to keep them poor.
Go back to the Gapminder graphic and note something: Africa is the home of last remaining unexploited workers. They could use a sweatshop or two to pull them out of their poverty.
* In reality, the earth was randomly equipped. We happen to have discovered uses for many of those resources, adapting them to our needs. We have barely scratched the surface. "Spaceship earth" is an idiotic parable.
What about natural resources in general? There is an analogy which suggests the earth is like a spaceship, equipped with all of the things we need for life*. As we race to consume those resources, we are only depleting them faster and racing towards our own doom. Eventually, so the theory goes, we will run out of new places to explore, prices will shoot up, and we will wish that we hadn't been in such a hurry.
Does the same logic apply to labor? As transnational corporations search for the cheapest labor, they thrash from one previously uncharted territory to the next: first Japan, then Mexico, then Korea, then Vietnam, then China. This is the so-called "race to the bottom".
What happens when that labor race is over? The consequence claimed by "pro-labor activists" is that all labor will be paid at the same low rate as the cheapest labor, but this relies on such assumptions as equal productivity and zero transportation costs (those activists are frequently either self-interested, i.e. union workers, or mistaken in their theory and therefore anti-labor in practice). The actual consequence is that once you have hired the last untapped laborer, the same thing will happen as when you open the last natural resource mine and still have unsatisfied demand: the price of labor goes up.
That is exactly what is happening in China. See, for example, here at Gapminder (check off the China and USA boxes and watch Chinese income start to catch American income, noting that American income does not fall, directly contradicting the "race to the bottom" theory), here, here, here, and the latest, which I have both on good authority and from here is that there is now a shortage of stitchers on the apparel fabrication lines. They are no longer living in abject poverty, and they are becoming consumers who will eventually demand more of China's manufacturing output. Eventually, they may even move up to importing high quality goods - the type that are still manufactured here in the US. Thus, we have little to fear from export-based foreign countries, and they have much to gain. By blocking them out with trade protection, we also grant truth status to the claims of their demagogues that claim America wants to keep them poor.
Go back to the Gapminder graphic and note something: Africa is the home of last remaining unexploited workers. They could use a sweatshop or two to pull them out of their poverty.
* In reality, the earth was randomly equipped. We happen to have discovered uses for many of those resources, adapting them to our needs. We have barely scratched the surface. "Spaceship earth" is an idiotic parable.
Labels: labor, poverty, sweatshops, trade
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