On Global Capital Mobility and Downward Leveling
April 11, 2007
The following quote is from a book I’m reading and I think most succinctly describes the trend of “downward leveling” that many economists and citizens around the world are concerned about of late:
“As economist David Ranney writes, “There is a strong interconnection between capital mobility and the cheapening of the costs of production.” Mobility offers the opportunity [for companies] “to move to low cost areas” and “pit the peoples of different nations against one another.” By using the threat of moving as a club, “corporations can extract wage and work rule concessions from workers in their home country.” And mobility allows companies to challenge or escape such claims on value as “health care, welfare, and subsidized housing programs; worker and consumer safety standards; and environmental regulations.”"
-from Global Village or Global Pillage: Economic Reconstruction from the Bottom Up, Jeremy Brecher and Tim Costello, p. 52.
What are your thoughts or experiences with this?
Think it’s valid logic? Maybe not?
Do you see this happening in the company you work for? Are labor unions enough to counteract this trend? (I’m thinking not…)
Is this just “first-world” economic protectionist rhetoric?
Just tossing some ideas out there….I want to know what you think!
Entry Filed under: Global Village or Global Pillage, Jeremy Brecher, Tim Costello, american economy, capitalism, downward leveling, economic competition, economy, employment, global economy, international corporations, job losses, labor. .
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1.
adkgirl06 | April 11, 2007 at 3:09 am
rynato, Phoenix, Arizona, United States; Today, 9:34pm:
You should rent the film “Network” sometime. Here’s a quote from it:
“You are an old man who thinks in terms of nations and peoples. There are no nations. There are no peoples. There are no Russians. There are no Arabs. There are no third worlds. There is no West. There is only one holistic system of systems, one vast and immane, interwoven, interacting, multivariate, multi-national dominion of dollars. Petro-dollars, electro-dollars, multi-dollars, Reichmarks, Yen, Rubles, Pounds, and Shekels. It is the international system of currency which determines the totality of life on this planet. That is the natural order of things today. That is the atomic and subatomic and galactic structure of things today…. There is no America. There is no democracy. There is only IBM and ITT and AT&T and DuPont, Dow, Union Carbide, and Exxon. Those are the nations of the world today. What do you think the Russians talk about in their councils of state — Karl Marx? They get out their linear programming charts, statistical decision theories, minimax solutions, and compute the price-cost probabilities of their transactions and investments, just like we do. We no longer live in a world of nations and ideologies, Mr. Beale. The world is a college of corporations, inexorably determined by the immutable bylaws of business.”
2.
adkgirl06 | April 11, 2007 at 3:09 am
Yock, Fairfield, Ohio, United States; Today, 9:52pm:
The late, great Milton Friedman taught that markets would attain equalibrium through any means necessary. The migration of labor to foreign markets is directly related to market complications here in the US. Things like minimum wage, price controls, and protectionism all drive labor out of our market and into other cheaper markets because they drive up the cost of doing business. Something has to give.
3.
adkgirl06 | April 11, 2007 at 3:09 am
WiiredShawn, Plano, Texas, United States; Today, 9:59pm:
Such behavior does strike me as eerily reminiscent of company attitudes during America’s industrial revolution, that is, companies constantly seeking means of lowering costs at the expense of individuals. The trouble is that while it may be relatively easy to exercise control over a corporation that remains in one country, the global economy is still in a youthful stage and too few nations are united enough to impose collective laws upon these companies in order to maintain fair labor policies. The trouble is that the countries some companies mobilize to may need that business support in order to grow their national economy, and they wouldn’t want to risk the corporation mobilizing elsewhere by trying to enact legislation in tandem with, say, the United States. I still wonder if unions have outworn their welcome, but certainly some organizations need to exist to coordinate with government officials worldwide so that large companies can have standards imposed upon them, just as they were during the industrial era.
4.
adkgirl06 | April 11, 2007 at 3:10 am
SilverJaeger, Harvey, Louisiana, United States; Today, 10:00pm:
I’m not a business major. I just wanted to get that out there so that no one start tossing classical economic arguments at me. I think it makes sense. With a global economy, you’ve got companies that want nothing more than to increase the bottom line (ah sweet capitalism) and a whole slew of places for them to make that happen by paying some poor kid 15 cents a day to sew soccer balls. Now, there exists no economic reason (I’m talking from an average person on the street who just wants to get nice things as cheaply as they can) for anyone to buy American. Why? Aside from that nifty flag and the pride you feel, you’re going to be paying more for that t-shirt than you would if you bought the one made in China. By the same token, governments have a duty to keep their own industries strong. That’s why tariffs and subsidies were invented. This is all well and good (or maybe not) if everyone on this planet got along, but as you can see by watching CNN, that’s not really the case. I’ll use an example I’m a little familiar with: Intel. Intel has all sorta of billion dollar factories where they make microchips. That’s billion with a ‘B’. They’re building a 2.5 billion dollar factory in China. Yeah, China. Of all the counties one might consider a superpower (okay, there’s not a lot. Russia sorta got kicked off that list. Okay, you got me. China’s the only other real superpower besides the US and maybe the EU sometime in the next 10 or so years, which isn’t really a country… okay, I’m getting off on a tangent here.) China’s the only one that we could have serious problems with, especially considering North Korea and the whole Taiwan thing. It just makes me a little uneasy that Big Red is playing host to bleeding edge manufacturing technology courtesy of Intel. And don’t get me started with Lenovo buying out IBM’s computer division… What I’m trying to say is this: Capitalism is cool. People get rich. Other people get screwed. The circle of life, yeah? Well, when you add international politics to the mix, things can get real messy real quick. When a company screws up, you can put people on trial a la Enron. When countries screw up things get a little more interesting. Reading over that, I definitely jumped ship from the original post. Sorry.
5.
adkgirl06 | April 11, 2007 at 3:10 am
OneLoveAmaru14, Saint Petersburg, Florida, United States; Today, 10:05pm:
I think if you look at the history of economics, it has been this way since the beginning. We can’t stop it. The company I work for, 1,600 of the employees are in India. The error rate is about 10 times greater in India since English isn’t their first language. I think we live in a crazy time. Imagine where India and China are going to be in 20 years. Who will be the world powers then? I think that India and China are slowly going to creep up like the United States did, pass labor laws, raise the standard of living and eventually be where we are. Who is going to be our source of cheap goods/labor then? Where then will the US stand in the world of military/economic super powers? If you think we are invading countries(up for debate really) and assassinating elected leaders(this is a fact, the CIA has admitted it) of other countries now to keep our standard of living up and the oil prices down, what do you think China and India will do when they get there?
6.
adkgirl06 | April 11, 2007 at 3:10 am
poetnartist, Wilmington, Illinois, United States; Today, 10:06pm:
All things follow the path of the river. Always seeking the lowest ground, the easiest method to flow. Water, over time, can carve through mountains, but it prefers simply to go around. And truthfully, in the long run, it’s the consumer’s fault. If given two products- one from, say, the US…. the other from taiwan…. both essentially the same thing…. and one costs five times what the other does- we’re taking the cheaper one. So even if a company *REALLY WANTS* to stay loyal to a nation- they can’t- not in a first world nation, at least.
7.
adkgirl06 | April 11, 2007 at 3:11 am
nevinera3, Alpharetta, Georgia, United States; 42 minutes ago:
Though I see the problem (from the standard point of view), I’m unconvinced that it should be solved the way people mean. In a non-cooperative system like this one, the only options are to make the ‘activity’ illegal (a sweeping rule that would be absurd under scrutiny AND bring along some serious infrastructure), or accommodate the system. The human rights problem is purely one of enforcement, and it’s NOT one that we solved quickly locally – I truly doubt that the global market could sustain such labor rights as we have heaped up in the US. Sadly, our ‘rights’ are an outgrowth of our prosperity, in large part. The most BASIC of labor laws cannot be enforced without either global cooperation (a slow and unsuccessful route, thus far), or global dominance (hegemony, an inherently unstable situation in the long run).
In essence, this situation is caused by continuing inequality of markets finally grasping the ephemeral nature of our services and informational economy.
The competition doesn’t actually bother me – I picked a field and skillset that leaves me in demand regardless, and if you look from the viewpoint of those copmeting for ‘our’ jobs, the situation looks less bleak and more wondrous.
Be patient, push for education worldwide, and make noise about the problems you care about; the market will resettle, and the world as a whole will be better off for it.
8.
adkgirl06 | April 11, 2007 at 3:11 am
nevinera3, Alpharetta, Georgia, United States; 40 minutes ago:
Because you asked, btw, half of the company I work at is in or from india, and all of our major meetings are over speaker-phone. It’s not ideal, from a development standpoint, but they do their work, and they get their money.
Of course, my company started OUT that way..
9.
adkgirl06 | April 11, 2007 at 4:15 am
DCWL, Melbourne, Florida, United States; 52 minutes ago:
Just need another world war to reset the economy.