The two sides of globalisation that we need to acknowledge
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The two sides of globalisation that we need to acknowledge
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I'd like to share an anecdote of how we dealt with globalization + respond to some points.
I was in a company that designed and manufactured cars for the domestic market in Australia that was protected by high import tariffs - around 60% in the 1980s. (not too different to Malaysia, right?). The government then pursued a free trade / globalization agenda that reduced car import tax to virtually 0% over a period of three decades.
This policy would result in an influx of cheaper cars from overseas (primarily Thailand) that destroyed the local car manufacturing industry, eliminating roughly 50,000 jobs. Those people would lose their income for a period of time until they retrained, but it would benefit the other 99.7% of the people in the country who then got to buy a car for much cheaper. This would permanently raise the standard of living in the country.
Our company closed the manufacturing operations then transitioned into a pure design and engineering center. We quadrupled the number of designers and engineers, opened a factory in Thailand and leveraged the scale of their industry and low labor cost to build our vehicles there, then imported them back to Australia tax free.
The two other local competitors pursued a different strategy. Both of them invested heavily in local manufacturing hoping the increased scale, automation and efficiency would enable them to compete with lower cost countries. They set up ambitious export programs to the US, Middle East and Asia. That is also in theory a viable path forward - leveraging export markets as part of globalization. But for various reasons it did not work out for them resulting in the closure of their operations.
Some thoughts -
1. To raise everyone's incomes, you have to stop doing lower value-add jobs in order to start doing higher value-add jobs. This inevitably means job losses and business closures. Thus outsourcing the bank customer service staff to Malaysia could be not only necessary, but even a good thing.
2. The role of the government isn't to prevent job losses or company failure. Their job is to ensure an "orderly exit". The best outcome is for them to provide subsidies and incentives for companies to pivot out of declining industries while retaining their core expertise and talent. If job losses are inevitable, then they would mandate or even supplement generous retrenchment packages and retraining for affected workers. Basically the 99.7% of people who are better off have an obligation to temporarily help the 0.3% affected by the transition. If people perceive the "gains were not evenly distributed" then it's squarely on the government to fix that - if there TRULY are gains from this policy, why aren't you redistributing it fairly? I believe the government should take responsibility for its policies. They can't wash their hands and go "too bad you lost your customer service job, but you know, other people in the economy got richer so it's all good!"
3. I've had the privilege of working closely alongside colleagues from all over the world. We could hire 5 people in a high cost country, or 25 people in a low cost country for the same cost. That's your real competition now - not your colleague in the same building who earns the same as you vying for the same promotion. You have to be 5x as productive as someone in India who also has a 4 year engineering or finance degree.
I'd like to share an anecdote of how we dealt with globalization + respond to some points.
I was in a company that designed and manufactured cars for the domestic market in Australia that was protected by high import tariffs - around 60% in the 1980s. (not too different to Malaysia, right?). The government then pursued a free trade / globalization agenda that reduced car import tax to virtually 0% over a period of three decades.
This policy would result in an influx of cheaper cars from overseas (primarily Thailand) that destroyed the local car manufacturing industry, eliminating roughly 50,000 jobs. Those people would lose their income for a period of time until they retrained, but it would benefit the other 99.7% of the people in the country who then got to buy a car for much cheaper. This would permanently raise the standard of living in the country.
Our company closed the manufacturing operations then transitioned into a pure design and engineering center. We quadrupled the number of designers and engineers, opened a factory in Thailand and leveraged the scale of their industry and low labor cost to build our vehicles there, then imported them back to Australia tax free.
The two other local competitors pursued a different strategy. Both of them invested heavily in local manufacturing hoping the increased scale, automation and efficiency would enable them to compete with lower cost countries. They set up ambitious export programs to the US, Middle East and Asia. That is also in theory a viable path forward - leveraging export markets as part of globalization. But for various reasons it did not work out for them resulting in the closure of their operations.
Some thoughts -
1. To raise everyone's incomes, you have to stop doing lower value-add jobs in order to start doing higher value-add jobs. This inevitably means job losses and business closures. Thus outsourcing the bank customer service staff to Malaysia could be not only necessary, but even a good thing.
2. The role of the government isn't to prevent job losses or company failure. Their job is to ensure an "orderly exit". The best outcome is for them to provide subsidies and incentives for companies to pivot out of declining industries while retaining their core expertise and talent. If job losses are inevitable, then they would mandate or even supplement generous retrenchment packages and retraining for affected workers. Basically the 99.7% of people who are better off have an obligation to temporarily help the 0.3% affected by the transition. If people perceive the "gains were not evenly distributed" then it's squarely on the government to fix that - if there TRULY are gains from this policy, why aren't you redistributing it fairly? I believe the government should take responsibility for its policies. They can't wash their hands and go "too bad you lost your customer service job, but you know, other people in the economy got richer so it's all good!"
3. I've had the privilege of working closely alongside colleagues from all over the world. We could hire 5 people in a high cost country, or 25 people in a low cost country for the same cost. That's your real competition now - not your colleague in the same building who earns the same as you vying for the same promotion. You have to be 5x as productive as someone in India who also has a 4 year engineering or finance degree.
It's crazy how incredibly spot on your comics are, always! I wait keenly for them every single time 😁🔥