Labor Arbitrage… Better Known as Cheap Labor

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Labor Arbitrage… Better Known as Cheap Labor

By Thomas Dawson
October 12, 2005


It’s time we stopped kidding ourselves! The continuation of the illegal immigration from Mexico is the direct intention of our government. When a government enforces a law, we are inclined to think that the enforcement is their duty. However, when a government does not enforce the law, we are inclined to think that perhaps it is their choice. It is not. Not when it concerns the security of our borders. Of course there are reasons for our government’s overt support for the illegal immigration on the southern border.

Since the end of the “Cold War�, our international companies have turned their attention and swayed the attention of our government toward the domination of world economics without concern for the domestic consequences. This variation on the economic system is referred to as the neo-liberal economic system and is generally understood as globalization. It is part and parcel of the modern democratic theory as expounded by the United States and is to be imposed upon the rest of the world, by force if necessary. Even our children understand by now that globalization favors corporate profits above the common good, or anything else.

The most obvious example of the effects of globalization in this country is our relationship with Asia. Over the past few years, we have not only outsourced our jobs, but have moved our manufacturing to the Asian countries, especially China and India. Corporate money has influenced our government to allow the transfer of practically any business into these new rising economies at the expense of American jobs. There are two major reasons for this interest. First, Asia is seen as the future of economic progress because of their tremendous population and potential buying power. Second, labor and manufacturing plant is so cheap that exorbitant profits can be made when Asian manufactures are sold here; at American prices of course.

It is not difficult to understand that when the cost of plant and equipment is about half of the costs required in the United States, and labor costs are only 10% of the costs in the United States, corporations will naturally choose to manufacture in Asia. Our government officials are no longer concerned about the common good of its citizens; rather they are interested in their personal gain to be acquired through corporate influence.

At home, our service industries can only exist as long as there is enough money circulating among the middle and lower classes to support the consumerism. Our Financial industry can only continue to exist as long as the asset bubble continues. Our only real source of income is our military weapons business. We supply most of the world’s weapons. Where does the money come from to maintain our economy? It is the consistent growth of our national and personal debts that maintains the momentum of our economy. Our government needs to maintain that momentum for a while longer.

As far as our corporations are concerned, the writing is on the wall. Real, or long-term investment will be made in Asia where a huge population with rising incomes will eventually dominate the economic world. The unemployed population in China alone is greater than the entire population of the United States. As the income of the average American citizen continues to erode, we are viewed by the corporate world as a mature market. The United States is no longer a prime market for investment. It is time to reap the profits of past investments and maintain the cash cow as long as possible, or at least until a prosperous Asian economy can be built. Unfortunately, it is obvious that our government supports this corporate view, regardless of what their lips tell us.

A few years ago, these investments would not have happened. There were laws against unfair trade, concerning environmental issues, unfair labor practices, and a plethora of other rules and considerations for the public good. In the past few years many of these laws have been expunged or relaxed in the name of deregulation to allow for the international exploitation of labor. This is our government at work in behalf of their corporate constituencies.

Lest they lose their corporate sponsors, our media is now blaming Asia and especially China for the loss of our jobs and their excessive use of “our� oil. It is our own government that encourages companies to invest in foreign countries, even to the point of awarding tax breaks for doing so. It is our own government that is encouraging the displacement of American workers with cheaper foreign workers. China is not the villain here. It is our own government encouraging and aiding international corporations to move their business overseas in search of that Holy Grail, profits.

What about corporations that are not international in nature? Our government is doing its best to take care of them as well. It has deliberately brought in well over twenty million illegal Mexicans to work at menial wages and continues to dilute the work force. Of course, the government will explain that farm labor is still in short supply and we need more workers there. It seems that “illegals� don’t want to farm either. They are coming in faster than the great immigration of the late nineteenth and early twentieth century. To be sure many of them eventually earn more than minimum wages. However, they can secure few, if any rights and are treated poorly. They do not generally get health benefits, nor do they get retirement benefits. Just as the international companies can exploit cheap labor, a similar arrangement has been made for the national companies. Labor is arbitraged just as any other commodity.

Our population is estimated at somewhat less than three hundred million people. If we have only twenty million illegal immigrants, it means that one out of every fifteen people in this country is illegal. It is a significantly higher portion in the work force.

Notice that even in the rebuilding of New Orleans, the prevailing labor rates will not be paid to workers. The contracts will be generally given out without competitive bidding at cost plus, to insure corporate profits to preferred companies. Restricting labor expenses will be the only means to hold down costs. For some strange reason there seems to be a shortage of workers. The government is bringing people willing to work from Central America. Is this because construction is just one more type of work that Americans won’t do? Many of them will probably remain in this country to further dilute the work force. Meanwhile the poor of New Orleans have been dispersed around the country and will probably not be heard from again.

Reducing labor costs is the mantra of our time. This first attempt to dismantle Social Security is only the beginning. Many of our corporations are hiring illegal immigrants and do not pay any benefits. Other corporations will soon be crying that they cannot compete if they have to pay for health benefits or pension plans or perhaps even paid holidays. Our government intends to get cheap labor for their corporations by leveling the labor of the world at the expense of the American citizen. We have embraced a Darwinian system of economics to the detriment of our citizens! Or is this the Intelligent Design at work? In either case, it looks like plain old government sponsored greed.