Behind the New View of Globalization – Economix – NYTimes.com

Map usa unions

Map usa unions (Photo credit: Wikipedia)

This is a very interesting article from the Economix blog published by the NYT. It’s well worth a read. Check it out!

Behind the New View of Globalization – NYTimes.com.

Some twenty plus years ago, I was European General Manager for a US multi-national in manufacturing (bearings and engineered components). I frequently visited plants in North America. Even in those days, there was pressure to keep jobs in the US. As cost of labor in unionized Northern states became expensive, capacity was created in new factories in non-unionized Southern states.

The key variables were always:

Relative cost of labor was always an important variable, and even in those days, we had joint ventures to exploit lower labor costs off-shore from the US. I saw that US and European manufacturers were too costly because of inflexible unionized manufacturing plants. Full-blown off-shoring to low labor cost countries was soon to follow.

Personally, I have always been a strong believer in open markets and globalization and challenge the new views of globalization as a form of backdoor protectionism which is restricting international trade. In this regard, I do not subscribe to the fashionable view of localism. For me localism must compete openly and fairly on my original three variables:

  • Relative cost of labour
  • Productivity
  • Quality

Perhaps the answer is retraining and re-skilling but I have always seen this as problematic in an inflexible unionized environment? At the corporate or national level too, a far greater emphasis on competing internationally is required, especially in countries like the UK, in my view which urgently needs an industry policy – it is far too dependent on high risk Financial Services.

What do you think?

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2 responses

  1. This one really made me think. I, too, have worked in a highly unionised industry and found some union practices ghastly. Others, however, were not. I am a member of a trades union – The Society of Authors (yes, a registered trades union) but I accept that a union that represents self-employed artisans – which is what most of us writers are – cannot have the clout of on that represents the employed.

    There are two aspects of the matter of labour costs that bother me. The first is a moral one: western society wages are over ten times that of urbanised workers in some developing countries. We have a minimum wage here that is based on a moral argument and yet we are happy to but goods which, by being much cheaper than those made here, encourage employers to pay far less than our minimum wage. Isn’t there a flicker of hypocracy here?

    The second is that I am a firm believer that any action to distort market forces eventually causes far more problems than it solves. That, of course, means that the UK is likely to be uncompetitive in many areas until the global playing field has leveled off. I have to confess I really do not know how to address that problem.

    Rodney Willett

    • Rodney, many thanks for your thoughtful response here. I do not disagree with your views. Personally, I am internationalist, pro-Europe, anti-trade regulation and in favor of open markets. I too disagree with exploiting third-World labor. For me, the challenge of the disparity in labor costs between developed and developing nations must be addressed at both ends. I plan to pick this thread up again in future. On the subject of unions, I need to reflect a little and perhaps put out a separate blog.

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