Tuesday, June 15, 2010

Labor In China

Via Reihan, FLG finds this series of takes on recent Chinese labor unrest. What FLG finds interesting is how close to type people play. That's probably how the Times wanted it, but FLG thinks the authors aren't stretching to fulfill those expectations.

So, of course, the journalist wants to tell a cultural story and talk about how complicated it is. Then the social science professor focuses on how workers haven't gotten their fair share of the economic growth in China and how these protest perhaps mark the beginning of a post-sweatshop age driven by labor organization. The economics/business professors take is basically that all workers always want more money, but that China's economic advantage is its low labor costs, and, if you read between the lines, he's concerned that pay rises through strikes, the outcome of a political -not economic- process, can become economically unsustainable over the long-term. Then there's the Chinese dissident who argues this is about being respected as human beings. The political science professor, unsurprisingly, focuses on the role of labor in the history of the Chinese Communist movement, which seems redundant to FLG, and then on the ability of the state to help deal with a widespread culture of striking.

FLG thinks they're all partly right. He looks at it like this. Economically speaking, whether the strikes are effective or not in getting pay increases isn't going to be a huge deal in the global economy. Over the long run, however, FLG is less sanguine. The introduction of low cost labor over the past 20 years or so has kept prices down. It is also what has led to China's development. Development that isn't finished. FLG fears that political processes, like labor organization, will disrupt economic growth. If pay increases too fast for some workers, it will create a big chasm between rural, agricultural workers and more urban, factory workers. Moreover, it could undermine the urban factory worker's ability to compete in the global economy.

But then the Chinese state will ultimately decide, so this is all political anyway. It's just a matter of whether the Chinese government is more worried about long-term economic growth or short run political unrest. FLG's guess is that they'll follow some middle ground between acquiescence and strike busting. They'll allow modestly higher wages, but stamp out anybody who presses too hard.

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