Wednesday, January 16, 2008

International Competition and Lay-offs

Here in Barre, Vermont, granite has reigned as the king of industry for more than a hundred years. So, it is obviously a sad sign when Rock of Ages corporation announced the permanent lay off of about twenty-fve workers last night. Although you'd have to trust me that there are a lot of interesting issues of local concern here, I thought I'd open up the discussion on a more national (global?) issue: international competition.

Barre's granite industry is facing stiff competition from overseas granite producers, rumor is mostly from China, who can produce similar products at a fraction (some say an obscene fraction) of the cost of producing a better product here. It costs so much less that it is more profitable for granite cutting and shaping firms here in Barre to have the granite shipped from China to Vermont than to have granite shipped a couple of miles from local quarries.

The reason for the cost disparity is very likely labor costs. Workers at Rock of Ages are paid well, are represented by a union, and have great benefits, as you would expect for people who work in a dangerous business such as mining. Abroad, however, quarrymen don't have the same benefits, are paid a pittence for their work, and worker safety is simply not a concern. I think this is common knowledge by know. In a free international market, Barre workers simply cannot compete.

Now, I want to be clear: I'm neither for regulating international markets nor am I for workers here giving up the benefits and wages they've negotiated through years of union representation. I think both are fantastic examples of how a capitalist market should work. What I am frustrated with is the lack of a similar worker's movement abroad. Right now, I'm firmly convinced that the greatest American export of the 21st century ought to be ideas that will level the playing field for working folks. Ideas about collective bargaining, ideas about how a worker ought to be treated, and ideas about how a worker ought to be compensated. An Asian worker's time, skill, health, life, and products are no less valuable than the American version. But they aren't paid the same. I've not heard of strikes. I'm not sure they're even allowed.

So, I guess, in my frustration, I've come to think that the greatest question of the 21st century might just be "when will the Third World get its James Connolly?"


Dews said...

Worker's rights and unionization of labor is not exactly an "American Ideal" :)

If anything, it ran very much counter to the ideals established at the founding and really only became an annoyance after the coal worker wars in West Virginia and Appalachia...

Only problem is that worker's rights were established in our country from the perspective of a free market to that of unionized, not that of a brutal communist state towards a free market one.

Dewey, Cheatem, & Howe said...

I think that unions are part of the American, free market ideal. We've often put emphasis on economies of scale, so why not deal with the purchase of labor on an economy of scale? If you can negotiate with a hundred workers instead of one at a time, why not do it? I think that it empowers both the worker and the firm.

You're right though; we're really talking about a complete change in mentality. We began as an economy that believed in the individual right to bargain for, well, everything. It's not hard to go from that to the concept of labor as private property that can be bought and sold. In a communist regime, it's hard to bring people to that realization after they've been schooled for their entire lifetimes to think otherwise. Allen Greenspan has a great chapter on this in his new book.