Quiz question: what can you do better, in the eyes of a CEO, than a talented graduate from India or China? Take a couple of moments to think about it. Ready? The answer is nothing.
That’s not meant to be an insult. It’s just a reflection of different economic values, namely, your work costs more. As a college graduate in this country, you probably expect a minimum income of $30,000 at an entry-level position, and much more over the course of your career. Prices in America are set to our high standards of living, and, as a result, we cannot suddenly see our wages fall to the levels in third-world countries and hope to survive.
Now what if I told you that people with similar levels of education and skill would do your job for much less, say for $10,000 a year. What self-respecting businessman would hire you over the competitor? You can’t hope to compete, unless you accept unacceptable wage decreases, or move to the country of your competitor.
America faced this first with deindustrialization: the decline of America’s manufacturing industry. All around us are the shells of former industrial cities: Holyoke and Springfield provide two of the best examples, marked by corruption, high crime, and unemployment. What was once America’s industry has deserted for Mexico, China, or wherever the wind blows, the wages are low and government is oppressive.
None of us are going to be working in industrial jobs. College students aim for work in areas like business, law and medicine, in professions where we expect only to compete with other Americans. However, increasingly any industry that can be exported or outsourced will be, because the new technology can support it. When you call for technical support on a product, oftentimes the person on the other end of the line will be in India. Medical tests such as MRI or CT scans can be interpreted in other countries. Outsourcing now occurs in healthcare, computers, law and research, and it will only grow, and there will be ever fewer good jobs.
Outsourcing and global competition are accepted, thanks to a little joke that’s been running rampant in our society – trickle-down economics. This is the belief that by giving the rich people lower taxes, they will reinvest in the economy, propelling it to new heights. It isn’t true. As a businessman, why would I invest in America, where the economy grows at 3 percent per year, when I can put my money in China, where economic growth tops 10 percent annually? The purveyors of this myth maintain that such efficiency keeps prices lower, but Americans without well-paying jobs will not be able to afford even slightly cheaper products.
On a global scale, we will see a race to the bottom. Every industry that can be moved abroad to areas of cheaper labor will be. If wages should rise in an area, then companies can move on to the next cheap labor zone. This will play out idiotically. For example, China might become an economic powerhouse tomorrow, but the second wages rise too high there, or the government clamps down on business, the jobs will go elsewhere. Then if India tries to raise wages and better working conditions, companies will flee. Businesses will look out at the entire world and force everyone to compete against each other, while raking in enormous profits. The trends towards greater centralization of wealth will continue, until a few people scattered across the world will own most of it.
So how do we deal with global competition? There are two ways to approach this: protectionism on the national level, or rising above it. Protectionism is what we’re used to – using tariffs and other governmental restrictions to encourage domestic business while keeping out foreign competition. However, this won’t work, for a variety of reasons. The problem is not that American companies are being squeezed out – it’s that most major companies have no loyalty to any country. All we can do to keep them here is try to lower standards, which doesn’t work, or use the force of legislation.
As long as we try to compete, as long as we view workers in other parts of the world as enemies, we will be unable to succeed. A war of all against all will only line the pockets of the corporations, while sinking everyone – Chinese, Indians and Americans – into poverty. Instead, we need to rise above competition. We must cooperate across the oceans and across the world, to raise the value and standards of labor, and to limit corporate exploitation, because there is no viable alternative.
Andrew Freeman is a Collegian columnist.
