What you thought about globalisation is probably wrong.


What you thought about globalisation is probably wrong. Globalisation is associated with a race to the bottom with employers cutting wages, so they can compete with producers in the third world. Employers have been so successful in Britain that they have made Britain the low wage, low cost capital of Northern Europe. Many of the conditions that are associated with third world economies are now to to found in Britain. Millions now receive inadequate wages, live in squalid accommodation that was last seen in the slums of the Victorian era, children malnourished and many thousands forced to rely upon charity handouts to survive. The justification for this imposition of mass misery, is that to compete in the world market Britain needs cut to costs, better to have a poor wage than no wage at all. However the prevailing view is wrong, it need not be a race to the bottom.

The advocates of the globalisation theses conveniently ignore world agriculture, which demonstrates the contrary of the usual globalisation argument. Probably because much agricultural land is owned by big corporations or the super rich. The example I want to use is the beef trade. In the nineteenth and early twentieth century Argentina and Uruguay grew rich from exporting beef to Europe and the USA. Now that trade is effectively prohibited and the reason given is disease control. Beef imports are prohibited from countries that lack effective controls on cattle diseases, that is Argentina and Uruguay. The disease they fear in ‘foot and mouth’, a disease which if it got established in the UK would decimate the British cattle herd according to the farmers union. In fact it does something much worse than killing cows, it is a flu like disease from which the cattle recover but with a permanent weight loss. As beef cattle are sold by weight it means less the cattle would sold for less than they would otherwise. Cattle barons would lose thousands of pounds when selling their vast herds, therefore extreme measures have to be taken. I don’t wish to go into detail about agri-business and its pernicious effects on the world economy, but want I to do is demonstrate that world trade even in an era of globalisation can be regulated for the benefit of European and American producers.

The case for paying low wages has many flaws. One is that many low wage occupations in the service industry don’t have any real foreign competition. Services such as hairdressing and coffee shops are not going to disappear abroad if the wages of hairdressers and baristas are increased. Starbucks cannot relocate from Britain to a foreign location to avoid higher wages.

Some of the worst abuses of the free movement of labour could be stopped with effective legislation and law enforcement. The current system encourages employers to use foreign agency staff, who can be paid less than the minimum wage. As the workers are employed at arms length from the company they do not have to take responsibility for the wages paid to them. They therefore ‘unknowingly’ pay workers at less than the minimum wage, pricing British workers out of a job. Making large companies responsible for the conditions under which agency staff are employed would end this abuse. Particularly if large fines were imposed on firms that tolerated such abuses. This would discourage firms from hiring agents to import low cost workers from Europe, it would reduce the pull factor which attracts the low paid to work in Europe.

While there must inevitably be the move of some manufacturing to the low cost economies of the third world. The race to the bottom could be minimised if there were regulations about unfair competition imposed on third world suppliers. Why should there not be a world wide minimum wage for all workers? It need not be so high that it would put third world producers out of business. A doubling of the wages of garment workers in Bangladesh would only have a minimal impact on prices paid for clothes in Britain as the wages of such workers form only a small part of total costs. What it would do is reduce the excessive profits of the Bangladesh garment markers and the various traders in cotton goods.

The advantage of paying a worldwide minimum wage is that it would discourage the default setting in the mind of British businessman, that the only way to increase profits is to relocate abroad. There has been a steady flight of manufacturing and service industries from Britain to the third world. The move to low cost locations cannot be justified if the only reason is to exploit the lowly paid in a third world country.

This could be achieved quite simply by making use of the current organisations that regulate trade. In Europe at present the European Union regulates trade within Europe but that regulations n has been to the benefit of large corporations. It has opened European markets to the low cost out of Europe subsidiaries of large business corporations to the detriment of Europeans. Instead the European Union could work to the benefit of the population by ensuring that all imports from third world countries are from importers that adhere to fair market competition. This would benefit the Italian clothing industry which is struggling to compete with low cost out of Europe producers. Perhaps even encourage the revival of the much decimated British clothing industry, as clothing manufacture becomes more profitable. Slowing the gadarene rush to the exit would enable European industry to adjust to changing market circumstances and maintain the employment of local labour. Globalisation cannot be stopped but it cannot be allowed be imposed in terms that penalise the people to the benefit of large corporations. Why should not European manufactures have the same rights as farmers?

Britain provides one of the best examples of how not to manage globalisation. The Labour government of the 1970’s financed the equipping of the Swan Hunter shipping yard at Sunderland with the most modern of shipbuilding equipment, so it could compete in the international markets. The incoming conservative government thinking only in the short term and ignoring the long term prospects, shut yard. All they could see was the costs of supporting this ship building yard, not the long term benefit from ship sales. The ship building equipment was sold at a knock down price to Korea. No doubt the Korean ship builders used that equipment to make ships to sell to Britain. It is such short sighted action that makes globalisation so unpopular.

One objection to my proposals is that insisting on high standards of manufacture in third world countries would interfere with their sovereignty. The right to national sovereignty does not override the right to fair treatment at work. Why should not Europe insist on that countries which trade with it uphold the universal right to a fair wage? With Europe being one of the largest importers of goods from the third world, this action would lead to rise in living standards there, not a perpetuation of misery.

Globalisation cannot be halted but for the benefit of the people’s of the world it must be regulated. There is little benefit to be gained from an unregulated market in global trade, that is run in the interests of big business. There is no reason why globalisation should mean the reduction in living standards in the West. What is required is some protection for European industry from unfair competition. Competition which is dependent on paying poverty level wages to workers. There is no logic in Britain readily embracing third world standards in its desire to remain competitive. Making people poor is rarely a solution to any problem.


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