Column #34 THE MATTER OF "CHEAP LABOR"

(Week 6 - Thursday, Sept. 4)

The virtual closing down of the automotive industry in Flint, Michigan is an arch-typical example of what has happened to the industrial base across America in the name of industries having to move their operations abroad, driven by the "realities," supposedly, of having to remain "competitive" in a new global marketplace. A less artful way in which the issue is often stated is that American corporations have felt compelled to search the globe for "cheap labor." What, we should ask, is "cheap labor?"

The very idea that there is something that can be properly called "cheap labor" implies that there are "cheap people." To even utter such an expression without being mindful of what one is really saying is to demean inadvertently the work of all people. It is regrettable that this phrase seems to have been picked up by activists of all hues of the political spectrum. Even those who have presented themselves (sincerely so) as heartfelt champions of the victims of globalization too often repeat, without due reflection, the argument that industries leaving one country for another ostensibly because of "cheaper labor" is some new "global reality" that we have to live with, and premise their arguments from there.

If only, I have heard it said, we could improve secondary education, provide universal health care, offer inexpensive day care, inspire workforce motivation, make more investment in infrastructure or cut taxes, then we could "compete" more successfully in the global marketplace. Don't misunderstand. I am not suggesting that education, health care, child care, workforce motivation, infrastructure and wise fiscal management are not essential in their own right (one could find "debt"-based money at the root of their debilitations also). My point is that they are not the core of the perceived "competitiveness" problem, any more that taxing and spending parameters are at the heart of the "national debt" (see columns # 25 –31).

The problem is not "cheap labor," but rather "cheap money." If workers in different countries around the world were paid in national currencies that reflected the real value of exchanges of goods between those countries, the values of the currencies themselves would tend naturally to a just and equitable balance relative to each other. In fact, this is a long-held principle of classic economics.

What, then, has kept it from happening after the passage of centuries of time for such leveling to occur? The answer is that there have always been inequitable currency patterns established that more or less guarantee the dominance of one part of the world over the other.

For example, when the colonial powers were establishing their dominance over Africa in the eighteenth century, one of the first measures they would take was to levy a tax on every household that had to paid in a currency that was set up for that purpose. The only way the people could get the money to pay the tax was to work for their new rulers or supply them with the fruit of their land. As a matter of course, this currency was kept in short supply so a certain portion of the people, and eventually the country as a whole, were fated to sink into "debt." These patterns of "debt" still exist in "third-world" countries today, and the essential foreign currency is mostly dollars.

I sometimes detect in the usage of the expression "cheap labor" a certain "first-world" hubris that regards the workforce that lives in relatively "third-world" conditions as being "less developed," "less skilled or educated," "harboring lower expectations," or otherwise being expected to resign themselves to a lesser state of living. There are many variables at work here, and I don't want to be simplistic. Truth is that even such stereotypical labeling reflects some degree of reality, and/or alternative values and virtues described in a pejorative manner. For example, the lesser material "prosperity" of a given society may in part reflect their authentic valuing of less material wants, and embody its own virtues in the end.

Whatever the truth of the matter, such personal and cultural preferences deserve the chance to find their own natural expression. To have millions of people around the world laboring under inhumane conditions because they get paid in a currency that hardly buys anything, while they spend their days and life energies making luxury goods for those who have borrowed dollars to spend, is not something that can be lightly attributed to their misfortune of living in areas where labor is "cheap." There is cause and effect at work in such conditions, and one cannot get to their root without taking into account the monetary parameters under which each society labors.

The bottom-line truth is that nobody's labor is "cheaper." Humanly speaking, we all exert and sweat just the same to perform a given task. We all have the right, in freedom, economic and otherwise, to seek our full measure of dignity, development and expression. That won't be fully realized in a world in which there is "cheap money" posing as "cheap labor."

Richard Kotlarz
mailto:Kotlarzrichkotlarz@gmail.com

The complete set of columns from this series is posted at the following websites:
http://economictree.blogspot.com/
http://www.concordresolution.org/column.htm