By: Jabram Raven Allen
June 26, 2012
Because a nation’s socioeconomic health is directly related to its unemployment rate, nations suffering from high unemployment, or possessing an extremely vulnerable work force may exercise forms of protectionism to prevent rampant unemployment. Issues of illegal immigration often become enmeshed with issues of protectionism; if labor/services is viewed as goods; then just as unwanted surplus goods can be dumped into a nation's market place by other nations so can their surplus labor. Excuses that justify the dumping of surplus labor into a nation’s work force consist of accusing its indigenous population of possessing a lack of technical proficiency, or a desire to work in difficult areas of employment. However, when applying unbiased research to substantiate such claims, their discovered to be false.
As stated by Forbes magazine’s contributor Micheline Maynard ) in her article Cheap Labor, Taxes, Location: Why Apple Dosen’t Build Products in the U.S. published 1/24/2012, University of Michigan professor and author of the best-selling series of books on “Toyota, for a Midwestern take” Jeffery Liker, “China actually has a far greater shortage of skilled workers than the U.S. Demand for workers in China is so high that factories there have trouble holding on to people. Liker says turnover rates of 20-30 percent are common in Chinese factories.” Like their employees, as consumers, corporations seek to purchase cheaper products/labor; in fact, the most desirable trait possessed by immigrants as a labor force is that their cheaper and easily disposable through political, legal and social forces.
Thus; it could be said that corporations utilize their home nation’s fear of not being able to compete internationally, due to a lack of skilled, educated indigenous labor, with those countries that they are either outsourcing employment too, or whose populations they are using as cheap foreign labor to replace their nations’ indigenous work force in order to create larger profits; while avoiding spending part of those profits on training, education and updated equipment for their nation’s indigenous work force.
According to S.E. Smith and Nancy Fann-Im of Wise Geek (2003 -2012, Conjecture Corporation et al), this behavior would be categorized as social dumping “Social dumping is the use of labor with wages and benefits that do not meet a country’s set labor standards to cut costs of production. Companies may rely on foreign labor or employees amenable to substandard conditions. Their use of cheap labor allows them to increase profits, as they can sell goods at standard prices even though they cost less to make.” However, when nations consistently purchase cheaper labor/products from outside its national borders there is an adverse effect upon its economy.
In terms of trade and labor diversity, protectionism can prove detrimental to a country's ability to compete internationally by failing to introduce new technologies, skills and production methods into its labor force. However, this fact often been utilized to flood national economies with unwanted surplus products, and labor produced by other countries. This action forces a nation’s lower skilled workers out of its labor market and onto its unemployment and welfare rolls; while causing displacement of state and municipal tax revenues. Because tax revenue is needed for infrastructural repairs, social services, and subsidy payment programs; varying degrees of worker displacement is directly related to government’s need for raising taxes to compensate for the loss of tax revenue that occurs through worker displacement.
According to Valentino Piana of the Economics WEB Insititute (2003), “linked to GDP dynamics as it is, the tax revenue is pro-cyclical. In recessions, tax revenues fall because of narrower base - and possibly because of tax rate cuts made by the government in name of stimulating the economy. In booms, tax revenues rise because of larger base, and possibly because of higher tax rate introduced to reduce the public deficit (which usually soared because of the previous free-falling tax revenues and possibly of public expenditure increases made to stimulate the economy).”
In short, lack of protection concerning trade and labor can lead to high unemployment rates amongst groups of workers extremely vulnerable to dumping. Dumping of unwanted surplus products combined with excessive immigration into a county's work force has a direct negative effect upon its national economy by placing unnecessary strain upon its social welfare system through displacing its indigenous workers and reducing its tax base. Thus, the problem isn’t simply protectionism, but to what degree or in what areas of labor and production should protectionism be practiced.