As jobs continue to disappear in the industrialized world, many blame technology. They are partially right. However, there is another culprit: delocalization. Most of our products are now manufactured in developing countries, where human resources are substantially cheaper. This allows us to have greater purchasing power, since we can acquire goods that would otherwise be prohibitively expensive, were they made at home. That’s the story they tell us, anyway.
However, all this talk of cheap products being beneficial for the working class is deluded at best and an outright, deliberate lie at worst. The working class is disappearing precisely because of this: all of those jobs have left and been turned into precarious, nefarious ones in countries that would allow this. The people who relied on these jobs have gone on to unemployment or a lower-quality, lower-pay position. How do I know it is lower pay? The answer is straightforward: as jobs get outsourced to developing countries, there is less demand for workers, whereas offer stays the same. Hence, less pay. Also, the data shows I’m right (see below).
So yes, we can afford an iPhone, but not because it is made in China. If it wasn’t made in China but in the US and every single manufacturing job that’s been outsourced had stayed in the US, you would be paying more for your phone, but you’d have a considerably higher salary. Don’t be fooled: outsourcing only has one beneficiary. I’ll give you a clue: it is not the working class.
There’s something baffling about the whole outsourcing conundrum. If I have a company in, say, Spain, and I offer salaries under the minimum wage, with no social security, I will go to jail. The reason I’ll go to jail is what I’ll be doing is against the law; it’s against the law because it’s considered immoral. However, I can start a subsidiary of my company in China and do exactly that, but to Chinese people. In fact, I can be even more brutal and, if I’m lucky and have friends within the Party, get away with polluting, exploiting and pretty much whatever tickles my fancy. Why do the laws of my country allow me to do this? Beats me. I thought human beings were the same everywhere; apparently, I was wrong. Spanish people don’t want to be exploited? Never mind! I’ll go to China and find someone who does.
The fact that a Spanish company (or a Chinese company that exports to the West) can do this puts companies who do the right thing at a disadvantage. Now, before we go into why good companies are at a disadvantage, let’s focus on what I mean when I say “the right thing.” To me, it is a combination of:
- Offering decent wages.
- Having reasonable working hours.
- Providing social security coverage and/or insurance.
- Not abusing their workers verbally or physically.
- Other common-sensical stuff I’m sure I don’t need to add here, like maternity leaves, etc.
Now to why good companies are at a disadvantage. Let’s see: if I have a company that makes some product and wants to compete with the rest, I have a choice. I can either act immorally (exploiting workers in developing countries with working conditions that would be inadmissible in the West) and have a competitive edge; I can also act morally and lose it, since my products will be more expensive than those of the competition.
But careful! This does not happen because companies are evil: this happens because our laws are made in such a way that they pretty much enforce this behavior.
(Of course, let’s not be naïve. If we have the laws we have, it’s because they’ve been lobbied for by companies. So probably they didn’t have a drive to not be evil in the first place. Like Eric Schmidt said when confronted with his Google’s questionable tax-evasion practices: “we are proudly capitalistic. I’m not confused about this.” Apparently, for Schmidt “capitalism” means not paying the taxes that allow roads, hospitals and schools to be built.)
This situation was, until now, quite beneficial for Western companies. Only now they’re starting to realize it may not have been such a great idea. The Chinese, apparently, weren’t content with being exploited: they started creating their own businesses, using every single tactic from their Western counterparts and harboring the good will of their government, which enables them compete in even more favorable circumstances. This has resulted in the almost complete control of the telecommunication infrastructure market by Huawei, for example, which has strong ties to the Chinese government. Suddenly, Western companies are losing the edge.
This situation could be easily averted, though. It would be as simple as banning imports from countries which do not respect human rights or, at least, taxing them severely, so that employing people in sub-human conditions would stop being a good business decision. This way, manufacturing would go back to the West and jobs would be recovered. At this time of economic uncertainty, they’re sorely needed.
What would be reasonable conditions for lifting the ban/taxes and establishing a free market zone? Equal labor laws. It makes sense to have toll-free circulation of goods between countries with the same standard of living which treat their workers similarly. It doesn’t make sense to give the countries which do the wrong thing an unfair advantage. The recent attack against social welfare in Europe can be seen as the logical consequence of this: if countries like China do better, precisely because their workers are less protected, it seems logical to follow their steps in order to grow as fast as the Asian giant.
But this is a terrible idea: it aims to level the playing field to the lowest possible conditions. Shouldn’t be doing the opposite? Shouldn’t we be leveling the playing field so that all workers, Chinese included, had better conditions? Aren’t we going backwards? Who, exactly, benefits from this? I would argue not even the Chinese do. If China was not allowed to export to Europe unless it had better labor laws (and human rights, since we’re at it) the pressure on the government to make some changes would be huge, especially with the growing middle class and the amount of companies which depend on exports to the West in order to survive. This law would not only benefit workers in the West, but workers everywhere, by forcing their countries to treat them right or be left out of the free market zone.
Someone may question the economic viability of this. I would reply that this is not an economic argument: this is a moral argument. Companies should not be allowed to treat their workers unfairly. If they do, they shouldn’t be allowed to sell their goods, regardless of the benefits this may have for the economy. The economy, let’s not forget, is the people. And if the people cannot lead a dignified life, then the stock market can rise as high as it wants to. It won’t make a lick of a difference.