Globalization Cheap Labor

Globalization and Cheap Labor, are operations that have many dimensions that influence the complex system that structure aspects like economics, politics, and the environment for every country in the world. Countries that are developing, globalization has leveled their economies to compete with larger ones like the United States and larger western economies. In the past few years, globalization and cheap labor have been successful in creating integration and mass makes all over the world. However, critics say that it weakens economies especially the industrialized nations like the United States. The negative impacts of globalization are that it has caused living standards to increase and decrease income distribution, an increase in trade deficits,
and fluctuations for firms that are big and small. Overall, with cheap labor and globalization, it may have helped certain economies grow; however, it is bad for the American economy.

The effects of globalization and cheap labor has helped increase high skilled wages dramatically while it has hurt low skilled workers causing their wages to remain flat or even decline.
Over the years the income distribution has been unequal as, “Labor income fell as a share of GDP by 3.5 percentage points from 1993 to 2009.” With these fluctuations, industrialization has only risen taking place from third world countries and fallen in the developed ones such as our very own economy of America. The problem is that companies go to third world countries where labor is cheap which snatches the jobs from low skilled workers in America. While the employment levels increase in these countries which boost their economy, America’s employment starts to decline as competition for jobs start to stretch in the immediate marketplace. When there is such a high level a competition it lead to the poor not being able to afford basic necessities to live. When patterns like this keep continuing, the gap between the rich and poor will keep increasing. This shows that globalization and cheap labor are endless cycles that only increases, it will effect developed countries leading to increased prices or situations for everything. These are only short term solutions and has no long term effect or
answer.

Furthermore, other changes like trade deficits have raised sharply from globalization and cheap labor.
Some changes can be typically seen in the trade from the North American Free Trade Agreement (NAFTA) which was a complete failure. Results from NAFTA show, “ deficit with Mexico in 2010 was over $97.2 billion dollars for the year and according to the Economic Policy Institute displaced 682,900 American jobs.” The reason that many American jobs were displaced is because they relocated to East Asia. Manufacturers believed that U.S. consumers will continue to buy products at the U.S. prices. The problem with NAFTA was that it allowed free trade agreements which let corporations run as they please. This alone does not only effect the American automobile industry, but other industries like steel, tire, and other component that make automobiles. Critics state that globalization has, “redistribute America’s wealth and industry over to Asia all to the detriment of the American people while a select few have gotten wealthy off this. These “free trade (agreements)” are just another policy that has traded away our future for the personal gain of a few.” Free trade with other countries only hurt American workers as they have to compete with others
internationally.

In addition, globalization has initiated a lot of competition between firms making many alterations. Before the expansion of markets, small firms had to only worry about companies surrounding them. However, integration of mass markets has led to firms to compete with others in the international market. From a big business leader viewpoint by Forbes states that, “ For conomic elite, globalization is good. Cheaper labor overseas enables them to build production facilities in locations where labor and health care costs are low, and then sell the finished goods in locations where wages are high.” This may be a pro for the elite, but the small business owners are now on a pedestal as they do not have resources or connections that big businesses can provide internationally. Small businesses have to work really hard because they do not have the capital to achieve higher targets. Therefore, they perform on higher levels of scarcity against the big businesses.

In conclusion, the connection between globalization and cheap labor are inadequate as they do not rationalize the theory of improving every economy. With the booming economies of developing countries from cheap labor has a huge impact on the developed countries. The gap of the poor and rich grow because the developing countries are providing labor at cheaper prices increasing competition level. Small business have to really work in order to survive in the mass markets, otherwise they will end up being bankrupt or in losses. Along with competition, propositions like NAFTA will increase the trade deficits causing American markets to drop dramatically. Therefore, the dimensions of globalization are poor as they have not created equality amongst all the countries.