Global Labour Market - PART 4 Isokratia Global
The gap left between advanced economies, of the developed world and the undeveloped countries, is reflected in the global labour market. The search for cheaper labour cost, becomes the motive for the creation and even the continuing maintenance of such low cost economies. These low labour cost bearing economies, have become an absolute necessity for the stability of not the capitalist system, but the advance economies of our times. Simultaneously, the need for low labour cost, becomes a motive and a necessity, for the development of such countries, with low economic activity. Is it a catch 22 scenario?
The norm now, is the natural and accepted method of industry relocation. We witness the relocation of whole industry production from region to region and from country to country; even from continent to continent. Such examples are the continuing emigration of the labour intensive industries, such as the clothing and shoe industry. Other examples can include even heavy production industries, such as the electronic and car assembly industries.
Asia and the Far East, along with the South American undeveloped countries, used to be the main pool of low labour for such industries. The Ex Soviet Union countries, such as Rumania, Bulgaria, Poland, along with other European peripheral countries, such as Turkey, Morocco and Syria, are at the present time, pools providing low cost to all labour intensive industries.
Some of these countries, virtually steal the low labour cost markets, by artificially holding down their cost of labour. Examples here are the Ex East German and present day Chinese economies. Even raw materials are kept artificially low, to penetrate or hold onto vital market share, of the low cost production group.
By internal controls they are able to hi-jack production in some countries. Even super economies such as the USA complain of low price raw materials being dumped on their market at the expense of their home production, through the use of artificial subsidies and other artificial cost cutting practices. Now a days the rumour is that the Bush administration is considering action to protect their iron industry from such dumping practices.( I believe by now 2003 they have done so).
At other times, the necessity for such low cost production, on both the labour and raw material fronts, becomes the motive for the advanced economies, to interfere and artificially force the continuation of the supply of such low labour cost resources. By the use of their mere economic power and influence, advance economies can and have caused, the periodic collapse of the economies of low labour cost countries.
In so doing, they trigger the collapse of demand, which leads to high unemployment, week economies, and devaluations, which in turn lead to a reduction of labour and raw material costs, in such countries, upon which the advance economies have come to rely on. Such reductions, can be in the forms of both direct lower labour cost by reduced wage packets and by the lowering of the currency value, through forced devaluation. Powerful multinationals can blackmail local governments to change policy to suit their concerns.
This inevitably leaves big gaps in the global economies. These gaps become bubbles, which will keep growing, until one day they over-stretch, over inflate, and burst. These bubbles can be classed as ‘economic ulcers’. Clear examples of this are the creation and then bursting of the Asian market’s bubbles. First, the small ones burst in countries like Malaysia, Korea and so on.
Followed close by, are bigger bubbles which, when they burst, cause explosions in economies such as that experienced in the miracle economy of Japan. The affect of the leading economy’s burst bubble, triggers further bubbles to be formed and burst, on the weaker economies. Such bubbles grow very fast, and burst out equally as fast. In a contagious manner the effect causes further fast growing bubbles, in weakened leading economies. If such situations are not checked, they can lead to global economic upheaval and instability.
If enough of these economic bubbles burst simultaneously, they very fast affect the rest of the global economy, even the advanced economies. It was only the quick interference of the advanced economies, that prevented a catastrophic collapse of the Asian Tiger economies, after the turmoil, which caused the finance industry collapse and which in effect threatened their economy at large, as it sent the Japanese market to stagnation. Why the interference to prevent catastrophe? Was it a Samaritan act? Or was it because they felt that if not stopped it could reach their own economies?
I believe that the advanced economies came to the rescue, only because they felt the threat of catching the bug too. Some say after realising, it was the advanced economies, which triggered or caused the turmoil in the fist place, by the sudden en mass, massive withdrawal of their capital investment. The aim of course, being to maintain the pool, of low cost labour and raw material markets. In so doing they can fuel economic growth at the home front without inflationary pressures. How true is this?