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Free Trade of Labor

Making globalization fair
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Everyone seems to be very upset over one word: "Globalization." If you read a smattering of economic theory you will find many positive arguments for globalization. It is true that reducing tariffs will increase trade and create wealth (but for whom?) So, what's the problem? I would like to suggest that it might be the fact that most of the proposed plans for globalization deal with goods and not labor. In other words, If you grow corn you can export it without paying a tariff but, you cannot export your services as a grower of corn, that is, as a laborer.

As a strong proponent of the idea that "the best government is that which governs least" I am theoretically in favor of globalization, provided that it is implemented along with measures to make migration from one country to the next easier for workers.

Oh My God the US is Going to be Overrun by Poor, Brown Mexicans!!

Exactly. Now calm down. Imagine that you are a multinational corporation. You want to make sprockets cheap, but US labor is expensive. Yay! There's NAFTA now you can move your factory and send the goods back home with fewer tariff costs. Sprockets are cheaper for people in the US and so Mexicans got some jobs. Well, the jobs aren't that great and every time they threaten to get a union together you can just threaten to leave. Life is good.

Now, let's give every Mexican the same power as the multinational. Never mind forming a union! They're all going to Disney World, (or the US rather) where labor prices are higher. Of course once enough Mexicans go to the US the price of labor in the US will start to fall and the price of labor in Mexico will start to rise. (That's supply and demand in action, baby) In other words, the labor market in the free trade zone starts to equalize. It is no longer possible to move a factory to a poor nation to exploit low labor costs. Now you just have to put the factory in the most logical place (ie. where it is near to the resources it uses, on a major shipping route) Factories become more efficient, more workers have a stable enough power bases and enough other employment options to unionize. The real upward spiral of wealth begins.

futurebird, Jul 08 2001

(?) An Example of Free Trade -- Blagoveschensk http://www.sras.org.../blagoveschensk.htm
Capitalists would be mighty upset if all that cheap labor was to just up and move somewhere nicer to live! [reensure, Jul 08 2001]

(?) Another example of free trade, Tulare http://www.naco.org...urrent/counties.htm
Counties pay residents on welfare to move [LoriZ, Jul 08 2001, last modified Oct 05 2004]

Lost Profits http://www.delocorp.net/trade/
Explains the real reason for free trade, and the real downside [ldischler, Oct 04 2004, last modified Oct 05 2004]

[link]






       I've been studying a lot from econ textbooks and all I see is positive arguments for things that make life better for outgoing salescritter types and harder for me. They seem to be mocking me, trying to persuade me that my complaints are with the laws of nature themselves, and the sooner I get with the program, the better it will be for all of us.   

       You say that globalization plans deal with goods, not labor. I would say that, in general, they deal with things (businesses, goods, contracts, etc.) not people (workers, consumers, etc.)   

       It's supposed to be getting a lot easier to move wholesale goods through customs, but it's not getting significantly easier to move people through immigration. It's like people who work in wholesale quantities get privileged access to the system. That seems to have been the case throughout my life, probably longer.   

       It seems Calvin and Hobbes are in charge of policymaking, as usual.
LoriZ, Jul 09 2001
  

       Listen bubba, that's true but the point is that you can sell your goods to people in other countries but unless your labor happens to make a good that is exported, you can't sell labor. As a director my labor can't be exported without me going with it.   

       To work on ONE show in the UK I had to jump through a ton of hoops (mostly designed to show that you aren't poor or brown, considering I'm both it's a wonder I got through) So, now that I'm back in the US it baffles me why I can't go work in Canada (easily) while I *can* do web design for people in Canada.   

       Speaking of design ... I need some contract work to do over the next few months got any leads?
futurebird, Jul 09 2001
  

       It may be a simplistic suggestion (economics is not my strong suit), but if the price of labour in Mexico rises would not Mexican employers just up sticks and relocate where labour was cheaper?
Eight or ten years ago, there was an increase in minimum wage in US (confirmation, please; I know it was something along these lines) and a couple of guitar manufacturers simply moved part of their production to Taiwan because there really are some jobs which are not worth that sort of wage.
angel, Jul 09 2001
  

       "There really are some jobs which are not worth that sort of wage" or to look at it another way there are some products that aren't worth making.   

       I don't see why I should get paid huge amounts of money do work I (mostly) enjoy In a air condition buildings, and if I have to work late I can charge the ride home to the company. I don't think my skills are really worth THAT much more than anyone's skills. I mean I'm good, but not THIS good. I feel guilty. Don't any of you guys ever feel guilty?   

       Yes, the companies would move out as the cost of labor rises but if all the countries in the world are doing free trade and free trade of labor then the best place to go is the most logical site of production... and I think that's the way it should be.
futurebird, Jul 09 2001
  

       futurebird, the essence of your logic makes me wonder what kind of pharmaceuticals are being substituted for thinking by those who so energetically protest "globalization." By your reasoning (which I think is more correct than not) these protesters are working to impede the best chance for advancement available to the very people for whose sake they are purportedly protesting.
beauxeault, Jul 09 2001
  

       I think the protesters generally are trying to protect jobs in their own country. For example, if there is a high guitar tariff you have to pay americans american wages to make them. Remember "the great sucking sound" ?   

       As for the crappy jobs people in poor countries get from free trade, as it stands, it's hard to say if it's a good thing or not. In theory if people are WILLING to do work they should be allowed to do it, but still, many of these places have company stores (that keep the workers in debt) and the WTO has done some strange things to poor countries who try to pass laws that allow people to unionise easily.   

       In this case I do think the protesters have a point. It's very cruel to give people jobs and then make it difficult (by sending in the tear gas and dogs) for them try to form a union. Of course Unions in the US do more harm than good, but I think they are an important means by which workers can leverage the power of their labor--- and they are perfectly compatible with free trade and minimal government.
futurebird, Jul 09 2001
  

       [futurebird] "I think the protesters generally are trying to protect jobs in their own country. " Yet again, people aren't thinking the whole problem through...   

       Let's say Guitar-Corp moves 100% of the guitar-making jobs to Mexico. We now get US-quality guitars at half the cost.   

       Do you think Guitar-Corp is going to just pocket that net gain? No, they're going to open a guitar-tuning plant in the US, because only American workers are skilled enough to tune all these guitars being produced in Mexico.   

       Guitar-tuning jobs pay more, because they require more skills. Quality of life increases for Guitar-Corp's Mexican workers; quality of life increases for Guitar-Corp's American workers.   

       The problem -- we end up with some structural unemployment (right number of workers, wrong skills). But that's a short-term problem -- the demand for those high-paying guitar-tuner jobs will fill this gap soon enough...
MrWrong, Jul 09 2001
  

       // ... Unions in the US do more harm than good ... // Auugh!!   

       No: The active unionists grow more skilled at their trade, on average, while the actual benefit forthcoming of their individual effort decreases. The net result of a union involved in contract negotiation is to secure better pay and work conditions, underpinned with tighter control of the labor pool, better job security, and safe retirement. When the average non/shop worker aquires the same benefits, any benefits attributable to the union effort seem less significant; because, more employees are benefiting by the effort of fewer influential representatives. This makes the strong showing of union negotiators at contract talks a very visible and sometimes contentious part of contracting talks, but does it do any harm to employees of the company or to the managment's livelihood? Huh-uh.   

       Sorry if you missed your plane.
reensure, Jul 09 2001
  

       My God, waug, have you ever seen a more appropriate name for a person making such a statement? Mr. Wrong, indeed. Is your first name "Dead"?
globaltourniquet, Jul 09 2001
  

       [waugqueke] I think the people from lots of countries can tune guitars... I was merely continuing the (seriously simplified) analogy.   

       [Fox Mulder] I never said I was anti-union... Unions are a great thing when used in situations like the one you described (garment district of NY in 1900).
MrWrong, Jul 10 2001
  

       The one possible problem that I see with this is that even with eased immigration laws, it probably isn't as easy as you make it sound for a mass migration of labor forces to areas where the wages are higher, and therefore things may not end up balancing out as you expect. Moving a long distance (to another country) takes money and resources which people from a poorer nation may not have.
PotatoStew, Jul 11 2001
  

       Good point Mr. Stew. Still, a large number of people seem to be more than willing to *walk* into the US even though they risk being shot by Texans on the way in.
futurebird, Jul 12 2001
  

       How superficial and dissmissive of you, bubba.
futurebird, Jul 12 2001
  

       I couldn't agree more futurebird. that's very on to it. At the moment New Zealand is getting screwed by the whole free trade thing.   

       We have the least barriers to trade of anywhere, but all it means is all the stuff we buy is made in indonesia or india, and anyone who can goes to Australia or the UK to work (to pay off their student loan).   

       One of the greatest things about the NZ economy is; when the US dollar goes down, so does the NZ dollar, when the US dollar rises, the NZ dollar stays the same.
zero5, Aug 24 2001
  

       Just a side comment: it seems that a lot of "pro-globalization" people think that people are moving more easily across borders. I tend to think that borders are becoming harder to cross, overall. There's less mobility for labor. Also, most wars seem to be civil wars, and they don't end up shifting borders so much as breaking countries into smaller parts.
wildgift, Sep 10 2001
  

       And then again, given the closing of borders to, and deportation of, football hooligans and anti-capitalist protestors, and the break-up of former Yugoslavia, you might not.
Guy Fox, Sep 10 2001
  

       Free trade is great, but the good normal countries (i.e. United States, UK, Canada, all english countries yes that means you folks down under :), and G8 nations) have to many laws that make it an unfair playing field for our jobs to compete on. One is that people in the deplorable countries (I.E. India, Pakistan, China, and other places) just are happy enough to work to get food on their plate that they will not be buying from the normal countries. The problem is we need to make it so that the whole world's labor market is on a fair playing field. If the government in the united states for example has labor and enviromental laws that don't have to abide by in china then that is unfair competition.   

       China basicly has worse-than-slave-labor and is sucking our jobs and infrastructure away from us. It isn't good because these people cant afford our products and wont buy them essentially. You cant buy products from china no matter how darn cheap they are if you dont have a job! So lets not allow them to take our jobs and make a UN or WTO law punishable by terrifs that forces all countries to have equal labor laws and minimum wages. Go see my idea on that called "world minimum wage"
JoeLounsbury, Feb 13 2004
  

       [Joe] you really scare me. Why are "english countries" "normal", whereas others are "deplorable"? Because this is where you live? Seems a little selfish.
Worldgineer, Feb 13 2004
  

       You're forgetting that the US has a minimum wage, so wages wont fall. Also - wages are 'sticky downwards'. People wont accept a reduction in what they are payed. Supply and demand is a difficult situation in the labor market.
kanes, Mar 21 2004
  

       Following on from PotatoStew's comment about the costs involved in re-locating, there's also the problem of where the new migrants are going to live.

For example, in the UK at the moment there's a great kerfuffle about a housing shortage. The governments solution is to implement an extensive program of housebuilding across large swathes of the green belt. This may solve the housing problem but it doesn't do much for quality of life. Unrestricted immigration might only serve to exacerbate this, creating extra housing requirements, extra road capacity requirements etc. It may be OK in a huge country like the USA where there is still room and to spare but in smaller places it could result in a massive devastation of the environment.
DrBob, Mar 22 2004
  

       // The real upward spiral of wealth begins.//

The US was wealthy to begin with. Leveling it with the rest of the world is not going to make the average working American richer. Quite the opposite. Wages (in constant dollars) have been falling for decades because of the reduction of tariffs. See the link to my write-up on free trade, entitled “Lost Profits.”
ldischler, Mar 22 2004
  

       There's a practical difficulty with this which may prove insurmountable, namely, making the politics work.   

       Hypothesis: Globalisation version 1 (mobile capital, immobile labour) got implemented because there was quite a large constituency in rich countries willing to vote for it, namely, not only the very rich but also people in professions which are hard to offshore (ranging from shopkeepers and plumbers to lawyers and accountants).   

       To implement Globalisation version 2 (featuring mobile labour as well), you'd need to persuade those same people to expose their own standard of living to the chilly winds of low-cost competition. Listen out for soundbites like this: "No disrespect intended, but those foreign qualifications are rather, well, foreign, aren't they... so on balance we feel that Dr Siddiqi should stick to driving his taxi... in the best interests of patients, obviously."   

       I'm not trying to fan the flames here, just trying to illustrate the kind of problem that you'll have to solve to make this idea happen.
pertinax, Jun 27 2006
  
      
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