Thomas Friedman, the New York Times columnist wrote a book called, The World Is Flat, signaling that globalization and international trade will help lift all nations. Essentially, my little blog here is a refutation and extension of that hypothesis. Friedman uses the "flat earth"metaphor, although I don't quite understand the analogy. What is patently true, both literally and figuratively, is that the world is finite.
Prior to even just the 1980s, one could reasonable model each nation as one element in an open system. (I'm using thermodynamics as an analogy here.) Each nation, even those bunched together like those in the current European Union, was a separate entity. And when viewed in aggregate, the planet's nations could be modeled as islands within an infinite ocean. An ocean of what, you ask. An economic ocean of economic resources. The resources are raw materials such as oil and ore, or human or animal resources for labor. They were essentially infinite for the nations to exploit.
Let's look just at the human resource. Currently, the earth's population is slightly greater than 7 billion. As large as that number is, it's still a finite number. Finiteness mean many things. One of which is that it's possible to put a theoretical cap on maximal amount of production of things. How much food does it take to feed the world? 10 trillion calories per day would be more than enough to feed the world. (I'm assuming 1,500 calories per person, averaged over babies and youths and the aged that need about 1000 calories, to the teens and adults that need no more than 2500 calories.) How much water is needed? How much land is needed? All those questions can be answered by multiplying the needs of one by 7 billion and throw in some fudge factor to account for the non-scalability of some needs. Some needs, like living space, does not scale linearly with the number of people. If 500 square feet of land is needed for one person, it's not true that 10 people need 5000 square feet of land. A lot of that 500 square feet is redundant: common walkways, plumbing and electrical can be combined. Also, we can house people atop each other on multiple floors.
But let's look even more focused on just the labor cost. Here in the United States, a big concern is outsourcing jobs. I feel for those who see their jobs outsourced. But the economics dictate that it occurs. They should, however, be glad that it is happening, and happening now and happening quickly and thoroughly. It will be a tough time, certainly, for those negatively impacted by the process. What happens to their jobs that are sent to China or India or Indonesia? Well, those workers will become better paid and better skilled and better educated, over time. With the advent of the internet and the globalization of communication, these workers have an aim to attain that we here in the United States didn't have.
When US workers led in labor in the 1950s and 60s, we did not know what we can attain for ourselves. Is it a home to call one's own? A car? Two cars? A television? 40 hour work-weeks? The US workers (and others in other first-world countries at the time) led the way. Now, Chinese and Indian workers know what they can attain, so their demands will be quicker and the corporations have to accede to those demands. China and India are like the younger sibling who sees what the first born did and say, "Hey I can do that too, and I can do it quicker because you showed me the way."
Of course, corporations could outsource to yet another country. But what other country is left? Currently, the only area that is relatively untapped for human resources is Africa. Africa has 1 billion people, most of whom live in what we politically label as the Middle East: the nations abutting the Mediterranean Sea or the Indian Ocean just south of Saudi Arabia. Those countries already are close to first-world status. They're outsourcing their jobs already. The remaining nations still available for "exploiting" would be the sub-saharan nations. And again, with the advent of global communications, these nations are already learning how to plan for them. Some are smart and are making sure that their citizens aren't being exploited at all while offering skilled laborers. Some are still dictatorial and have no reservations to letting corporations exploit their citizens.
Then what happens? When there are no more nations in the world to exploit for human labor, there will be no more incentive for a corporation to outsource. Corporations will pay whatever wages as demanded at the local level. What corporations will then be willing to pay for will be people who can out innovate, out create their competitors. A laborer's benefit to his company is no longer just being able to do things for cheap. The laborer who can provide new methods and ideas will be much more valued.
When will this happen? For now, I give China and India another generation, so about 20 years, before they are no longer the destination point for outsourced labor (much like Japan is no longer the destination point for cheap labor in the 70s). Add another 20 years for the rest of Africa and other smattering of nations to also achieve this level. The progress can be sped up, which will benefit the workers in first world countries. How? More communication and more direct involvement with the workers in those outsource-to nations. Rather than treating them as the enemy for taking our jobs, we should assist them in getting organized and getting them to see what goals, what ends they can achieve. Extending the hand of friendship and cooperation will help them rise to our level sooner, and the sooner they rise to our level, the sooner we can rise to the next level.
What specific things can we do? Promote more international goodwill activities like the Olympics and other international competition. Open up immigration (and emigration: movement should be two-way). Encourage more cross-border education; not just for students, but for educators as well. Speed up outsourcing, but labor unions should play a role by outsourcing their values and principles. And the weird beauty of this is that there's literally no one on earth who would want to impede this march. If anything
So is this just some fantastical imaginations of yet another blogger? Well, not quite. There are plenty of evidence of exactly just this happening. There are about 200 nations around the world. Any new nation that forms in the future will only be a splintering of existing nations. There are no unclaimed hospitable land on earth. The earth is finite. We already see how many very backwards countries from 50 years ago are now first world countries through good governance, and how some countries are still backwards through bad governance. As knowledge and understanding of how good and bad governance can help bring a nation up or impede that growth, there will be little excuse for the poorer nations to stay poor. While the earth is finite, the wealth of the planet is decidedly not finite.
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