Almost 20 years ago when the globalization fad first began, I wondered aloud what would happen once the corporations had used up all the low-wage workers in all the low-tax countries? I mean, their own rationale, publicly at any rate, was that they were bringing jobs and economic strength to poor countries so that they, too, could become middle class. Well, if that happened, weren't wages going to rise? Weren't those low-tax countries going to discover the necessities behind more rational taxation?
In private, the answer was: "Doesn't matter. If they do, we'll just move to another low-wage, low-tax country. There are dozens left to exploit." The corporate managers I talked to seemed to think the supply of safe, poor countries was, to all intents and purposes, endless.
I tried to explain why they were wrong but received wisdom - low payrolls in perpetuity! - was all the rage. No one, of course, bothered to listen to the voices suggesting that the current status quo was unsustainable, including, I'm sorry to say, union organizers I spoke to. I thought they should start working on developing connections with foreign-based unions and maybe even start forming overseas chapters because the day was going to come when the corpo's ran out of cheap labor. They didn't think it was worth discussing.
Well, sooner than anybody appears to have suspected, it's happening.
The free ride for American consumers is ending. For two generations, Americans have imported goods produced ever more cheaply from a succession of low-wage countries — first Japan and Korea, then China, and now increasingly places like Vietnam and India.
But mounting inflation in the developing world, especially Asia, is threatening that arrangement, and not just in China, where rising energy and labor costs have already made exports to the United States more expensive, but in the lower-cost alternatives to China, too.
“Inflation is the major threat to Asian countries,” said Jong-Wha Lee, the head of the Asian Development Bank’s office of regional economic integration.
It is also a threat to Western consumers because Asian exporters, even in very poor countries, are passing their rising costs on to customers.
The problem with the Race to the Bottom is that at some point the Bottom rises up to meet you.
Whatever will they do now, our poor corpo-fascists? Addicted to low wages and high profits, they're about to run into the same difficulties that drove them mad in America for so many years, only far worse. The AFL-CIO is a pussycat compared to Asian trade unions, which - once they get a foothold - are more like nationalist militias than anything else. They're tough and they, unlike US unions, fight back.
The corpo's won't like that. They'll pay, but they won't like it one bit. They've been working for 40 years to get their profit margins to 50% and they're more than half-way there. They won't like lowering them. So they won't. They'll raise prices instead. If anybody's going to do any belt-tightening, it won't be them.