OLEC: Global Cartel For Labor
In today's globalized economy, manufacturing and other labor-intensive jobs are increasingly out-sourced, moved to developing countries, where people come cheap and social safety-nets do not exist. This leaves workers in the industrialized countries out of a job and puts them before the choice of accepting a lower wage or not to work at all.
Henry C.K. Liu believes that the reason for this is a fundamental imbalance between the bargaining position of capital as personified by multinational corporations and that of labor personified by all of us collectively, regardless of where we live. Labor, says Liu, does not have sufficient bargaining power, because the principles of free trade allow production to move to places where "the price is right", while restrictive immigration laws do not allow people to move where the best job offers are.
The result is decreasing compensation for labor and increasing profits for the large conglomerates world wide. While this may seem great for capital, it also leads to economic contraction, simply because hardly anyone has enough money to buy what is being produced. OLEC, a cartel of "Labor exporting" countries on the model of the petroleum exporting countries' OPEC, could re-establish the balance between labor and capital, says Liu.
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After reading the first part of Henry C.K. Liu's article "World Trade Needs a Global Cartel for Labor - Background and Theory", I commented as follows:
"Liu puts a fresh viewpoint up for discussion for the first time in decades. If policy makers don't pay attention, the current decline will continue and we will end up in God knows what ghastly place, because we weren't able to think. Henry C.K. Liu helps us think on the subject of economy, which is praiseworthy all by itself.But he also shows up a real way to reverse the downtrend, one that gives hope.
It is tempting to say that all he does is prop up a system that needs to be replaced. But replaced with what? We need to look at all the options, and Liu's suggestion is certainly worth examining.
Liu's proposal is firmly grounded in today's economic realities and that may not be to everyone's liking. There are those hoping that the present system may collapse to give way to ... something better. But there is no agreement of what such a better system could be. My view is that Liu's essay is highly interesting as it can stimulate our thoughts to eventually find a sensible way towards positive change.
The essay, which comprises a series of articles, has been published in Asia Times and it is also available on Liu's own site:
World Trade Needs a Global Cartel for Labor - Part I: Background and Theory
World Trade Needs a Global Cartel for Labor - Part II: Rising Wages Solve All Problems
Wages, Rent and Exchange Rates
See also related:
The Coming Rebalancing of the Chinese Economy - Stephen Roach
China is sending the world an important message: A key mid-course correction in its development model is coming - a shift away from export- and investment-led growth to more of a consumer-driven dynamic. This change will not be abrupt but it will be an increasingly dominant characteristic of the Chinese growth outcome over the next five years. It is aimed, first and foremost, at providing greater stability to the Chinese economy. It will also have profound implications on the global economy and world financial markets.
While very perceptive, Liu's analysis leaves out two very important factors:
1. The unwillingness of those in power in poor countries to raise workers' wages. Such a move would threaten their lifestyles, as can be observed by anyone who cared to spend an hour counting Mercedes, BMW and luxury SUVs passing by in any street of Nairobi City Centre.
2. The impact of usury on the economy of production. Henry Ford could quintuple the minimum wage of his workers because he was never in debt. Any indebted producer is but a broker of workers' wages to the usurer's coffers. This phenomenon is brought out by Gesell (1862-1930), whom Liu doesn't appear to have read.
Silvano Borruso
Michael Robb comments (by email):
I see no value in this suggestion. The value of coercion in forcing individuals into another set of restrictions they demonstrably do not want will hardly return results worth the effort. Union membership has dropped so low it no longer has any influence with the populace (except for the constant fear of self-survival, of course, but that is all).
The only life left in unionism is with gov'ts' own employees. All other occupations have rejected unionism or have disappeared, -- as will hospital and medical care services dry up and disappear where unionism is forced on nurses and other hospital employees.
Two wrongs won't make a right, and adding more fuel to the fires of tyranny will not aid extinguishing it. The only result will be more damage done to the fringes of free enterprise which is counterproductive to our resistance toward tyrannical infractions against our lives, property and liberty.
The one positive thing I see on the horizon is the energetic public switch out of worthless fiat paper money substitutes, (foisted on the citizenry and residents of all countries by all governments) to gold payment transaction mechanisms.
This is a profoundly hopeful sign for a resurgence of respect for liberty. Liberty can mean absence of gov't intrusion and freedom from gov't force or control. Some would leave out the word gov't but that seems to be a serious omission to me. Only the overwhelming monopolistic force over ammunition, firepower, and vindictive will to field militant mercenaries, of a gov't, can actually restrain affairs; a private combine of coercion and forceful means, can be as easily destroyed as it formed by superior competitive enterprises.
In this sense it seems important to avoid inflicting even further forceful means on a courageous and animated populace; especially now, when for the first time in many decades is the opportunity before them to weaken the hold that involuntary servitude has taken over their lives and affairs, from rotten monopoly phony money; and they are achieving this enormous benefit via their own individual and absolutely voluntary exchanges of fiat for specie, held in secure and private vaults.
Fortunately, there is nothing to be done about this matter except to enjoy the view, offer praise when moved to do so, and hope for continuation of this now immensely popular movement.
Sincerely,
Michael Robb
Michael,
I agree that the articles by Henry Liu are not in line with our thinking of how things should be.
But I do think they are an excellent way to show how the current system is not working, and that something needs to be done urgently, if we don't want it to fall apart. Liu shows the trouble of the current system in a very straightforward way.
Whether we prefer for the system to fall apart to then construct something more sane, or whether we cast around for ways to change things in a more smooth fashion - without losing the economic game altogether - is really a matter of preference.
You say that unionism is not going to make it. Agree completely, and of course the more free our economic and other activities can be, the better. Only we are in a situation where this change is not even on the radar yet. Any discussion that brings the problem closer into focus is going to help us find our way.
I haven't read the book. But a global labor union makes sense as long as it doesn't get corrupted.
If work in china cost the same as here, why would business go there.
Then again, labour will never have that right as globalism takes those rights and money away. You would really need an inner government to govern all the labour on the planet and have the power to ban low-wage.
At the moment (as always) labor is on the losing end, and the employer is the one who makes the rules in his favor and gets all the money.
As labor never has the money to govern itself, no global labour union will ever form.
At present, the 1% (or less) of whole population gets all the money while the rest 99% does all the work and gets just enough (or less) to get by.
From Max News: New Chinese labor laws prevent exploitation of workers by multi-national firms comes the following article, which shows that the Chinese are actually moving to better the lot of their workers, while western 'economists' comment that they should not overdo it, lest the multinationals go to other countries for their production. Shows up the need for a real cartel as proposed by Liu...
Chinese labor laws set to tighten
Jun 19, 2006, 19:00 GMT
BEIJING, China (UPI) -- Domestic pressure is driving China to introduce labor law changes that could drive some non-Chinese firms out of the country, a report said.
A bill introducing tough laws that prevent the exploitation of workers, including regulations that exceed even European standards, is heading for the Chinese People`s Congress, even as industrial unrest and wage inflation threaten the economy, the Times of London reported Monday.
The proposed law would strengthen safety and workplace inspections, force employers to consult with workers` representatives over significant job cuts and tighten the enforcement of minimum wages that already apply in provinces. It may also reduce the maximum workweek and impose higher pay rates for overtime.
Dr. Keyang Wu, a Chinese relations expert for the British Chambers of Commerce, supports the bill but also warns that China doesn`t have 'the luxury to put in labor laws that are totally out of reality.
'It cannot be in parallel with Europe. Business is attracted to China not only because of its labor costs but also because of its efficiency. If regulation starts to affect that and flexibility, then companies could turn to India, Pakistan and South East Asia,' Wu said.