William Henry considers the effects of expensive production costs
Over the course of the last few years, a seismic shift has effected the working populations of what we used to refer to as the developed and the developing world.
In the latter part of the twentieth century, industrialists and manufacturers moved offshore – away from expensive, unionised labour – to the bosom of cheap and willing labour forces. For decades, firms from rich nations sold goods with “Made in Taiwan”/”Made in China”/”Made in Vietnam” (delete for whichever decade you’re talking about) tags, reimporting for still cheaper rates.
The cheaper inputs invited greater profit margins and employee bases that can be closed down with little notice. And who can blame capitalists from running the system the way the system is meant to be run?
Governments watched merrily as lower income industries moved abroad. Trade agreement after trade agreement was ratified, as regimes in wealthier nations offered industrialists the opportunity to seal labour deals abroad, increasing real and monetary disposable income.
The expectation for those left unemployed was a long term solution in which they would hopefully retrain and move into out of low paying manufacturing and into service sectors. Write off those incapable of doing so as structural unemployment and promise future generations better things through education and opportunity.
But what if those countries we’ve been calling undeveloped all these years have the same plans? What if our industrialists in richer nations from the last generation become service and professional capitalists and apply the same theory of labour restructuring again? Further, what happens if the infrastructure and regulatory framework in western economies is in the midst of a financial meltdown?
Europe and North America are about to witness a mass migration of skilled employment opportunities, leading to long term unemployment unless a replacement for service industries is found quickly. Developing nations will reap the benefits of offering competitively rated workers in a variety of industries over the last half century, and can look forward to sustained progress. The west, on the other hand, can only wait for the next homegrown bubble.