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One World, Ready or Not: The Manic Logic of Global Capitalism Chapter 4 – "Gleiche Arbeit, Gleicher Lohn" William Greider
Key Concepts • Arbitrage – Buying a commodity in a local market where it is cheap, then selling it in a neighboring market where price is higher. p. 57 • Wage Arbitrage – Where production and jobs move from a high wage labor market to another where the labor is much cheaper. p.57 • Unions – A group of workers united for the same goal. p.58
Wage Arbitrage Graduate Engineers – India vs. U.S. p. 64 • India’s Engineers < $10,000/year • U.S.’s Engineers = $60,000 - $80,000/year Steel Industry – Brazil vs. U.S. p. 75 • Brazil – 5.8 hrs/ton (1/10 wage rate of the U.S.) • U.S.–3.4 hrs/ton (10 times the wage rate of Brazil)
Wage Arbitrage Clothing Industry – Bangladesh vs. U.S. p.75 • Bangledesh – 25 min./shirt x $0.25/hr. = 2.4 shirts/hr • U.S. – 14min./shirt x $7.53/hr. = 4.3 shirts/hr. Production Workers – Germany vs. Japan p. 66 • Germany – Paid $25.56/hr (after cutbacks accepted) • Japan – Paid $19.20/hr. (still sending jobs overseas)
Advantage/DisadvantageOf Wage Arbitrage • Advantage:Reduction of labor costs p.59 - “… the opportunity to capture savings at home and abroad by taking advantage of the gross surpluses of human labor that exist around the world.” • Disadvantage:“Social dumping”p.59 - The exiting of companies from their home countries to other countries.
Wage Arbitrage Effects on Unions Manufacturing Workers – East vs. West Germany p. 61 • Helmut Kohl – “Gleiche Arbeit, gleicher Lohn” - Same work, same pay. (E. Germans make about $6.70 < W. Germans) Electrical Workers – Malaysia vs. China/Vietnam p.64 • Malaysia – government prohibits unions to prevent corporations from moving to lower wage countries like China and Vietnam
Unions Purpose - Limit the supply of workers Issue -Unions have been decimated by the mobility of capital IMF -International Metalworkers Federation -Federation of more than 90 metalworkers unions
Union Issues Engineering and Electrical union- Timex -Accusation on Timex for dumping 343 employees at their plant in Scotland Metalworkers- Shipbuilders -Major shipbuilding countries losing market share to wage arbitration
Union Issues Machinist Union-Aerospace Industry -U.S. aerospace industry to cooperate with Airbus Swiss engineering unions-Asea Brown Boveri -ABB plans to lay off 1,000 workers to invest $1 billion in Asia IG Metall- Eastern Germany -3.4 million member union begged for support to East and West Germany
Union Issues Hungary- Auto Industry -Complain that U.S. and European companies are trying to turn Hungary into union-free zone Electronics – Malaysia -Possible establishment of unions in Malaysia’s electronics industry
Summary • Basic outline of chapter 4 given • The definition and concept of Arbitrage was introduced. Examples from Greider’s text was given for illustration purposes. • The Union and the effects that Arbitrage has on it.
Notes • Financial Times • The Wall Street Journal • Office of Technology Assessment, U.S. Congress • The Trap (La Piège) • The Oxford University Press • The American Prospect • U.S. Labor Department • World Bank • Der Spiegel