We asked one of our regular readers, who does not see the opening up of the EU IT labour market as a threat, to expound his thinking on the matter.
End of the World
Since the announcement that the EU have offered to open up their job markets to labour from the developing countries, and to open it up completely for migrant IT labour, there has been a terrible brouhaha over the ‘End of the world as we know it’.
What all those gloom mongers are forgetting is that all the great advances in living standards in the past century have come after world agreements to free up trade some more.
It is always been said, after any of these agreements, that foreigners would come and take our jobs. This was said to be going to be the case after we joined the free trade area called the Common Market. It was also said to be going to be the case when the lower paid countries Spain and Greece were to be let into the then EEC.
Neither of those scenarios happened.
Flooding Us Out
Now it is being said that when we let the eastern European nations into the EU that they will all flock immediately over here and crowd out the local workforce.
The even greater fear is that if and when the EU implements its offer to the developing world to open their doors completely to developing country labour that there will hardly be a UK IT person left working in the country, as they will all be undercut by Indians who are prepared to take a much lower salary or rate.
That many Indians and others from developing countries will come here seeking employment is not in doubt. Many have come here already even though there are quotas.
However, IT contractors and permanent workers aren‘t seeing the bigger picture.
There will be two major advantages to freer markets – and developing countries will have to open THEIR markets for our goods and services if we open our markets to them.
1) Greater Wealth for everybody
When trade is opened up and barriers to free trade come down, history has shown that this benefits everybody. All countries become richer on average. The faster that money flows, through free trade, then the richer everybody gets.
The poorer countries, and the people in them, will get richer, and this will suit both those countries and the richer countries who can then sell more goods and services to them. The number of jobs around, like the wealth of a country, is not finite. It‘s not just about how much of a cake that everybody can get. If we can make a bigger cake then everybody will benefit.
The increase in trade will mean that more countries and companies will want and be able to pay for, more computer systems, which will mean that more people will be needed to build them
2) Freeing the world of Poverty
In the last century, communism sprung up supposedly to help the worker cast off his chains, and to allow the workers to share in the spoils with their capitalist masters.
This did not free the world from poverty!
In the western world there was capitalism. This worked much better, but it still excluded many countries of the world from the benefits.
This was because the developed world worked as a cartel against the interests of the 3rd world. Despite their talking up the creed of capitalism, they put barriers up to free trade. They did this through various tariffs put on finished goods coming into countries or trade blocs.
Raw Materials Only
What they did was allow raw materials to come into, for example, the EU, tariff free. They put heavy tariffs on finished goods from the 3rd world, making them more expensive than they were inside the trade blocs.
This meant that 3rd world countries were able to export raw materials to the developed world, which the developed world added value to and turned them into finished products, often selling the finished products back to the 3rd world at inflated prices.
This was keeping the 3rd world as just growers and miners of raw materials at knock down rates, keeping them in eternal poverty.
These tariffs and barriers were ant-capitalist!
Harder with Service Industries
With the dawning of service industries like IT, it was much harder to erect tariffs and barriers. However, most countries now have them, preventing one of the main tenets of capitalism, i.e. free mobility of labour.
The developing world has seized on software development, and the manufacture of hardware, as the way to become global players of added value products. As their industries are still in their infancy, one of the best and cheapest ways of earning western currency is by selling labour into western markets at cheaper prices – which UK and other countries will benefit from.
Many of the developing countries had very anti-capitalist systems themselves. Many of them had markets which were closed to many western goods and services. They had their own tariffs and barriers.
Now, in exchange for allowing western companies to have more free access to their markets, developing countries are demanding one of the tenets of capitalism for themselves, i.e. complete mobility of labour.
Some Early Disruption
Of course, thee may be some disruption in the early stages, as trade barriers and tariffs are ripped down, and fixed interest groups have to change their working practices and ideas to adapt to this new world.
However, history has shown that, in the long run, the easing of trading barriers, the lifting of tariffs, the freer flow of trade, and the greater mobility of labour will mean greater benefits to us all – and we will all emerge richer and better off down the line.
If this doesn‘t work then capitalism doesn‘t work.
It has to be this way. This is progress. We can‘t live forever in the world of trade barriers and tariffs, and where the poor are excluded from the banquet.
Even those who will have short term problems will have to admit that this is for the greater good of mankind.
No One Will Starve Here
No one in the western world is going to starve, but if we do finally ‘˜tear down these walls‘ to free trade, then a lot more of the wrold‘s population will be able to feed themselves and escape from poverty.
And that will happen at the same time as western nations grow richer from freer trade, and are able to employ more people.
It‘s a win-win situation.
According to the World Bank, liberalisation of services in developing countries could provide as much as $6 trillion in additional income in the developing world by 2015, four times the gains that would come from trade in goods liberalisation.
That‘s marvelous – for all of us.
Roll on this brave new world!
Let those who would stand against it be consigned to the dustbin of history!
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