Race To Where?

Let's talk about words - two in particular: 'top' and 'bottom'. These words have a huge variety of meanings in a huge variety of contexts but, when it comes to outcomes, their meaning is fairly clear - you'd rather come out 'on top' then 'hit bottom' - better to be a 'top gun' than a 'bottom feeder'.

OK, enough about words, let's talk about jobs. Let's say that you work (i.e. earn a wage) for your living. I'm guessing that, for the most part, you would generally prefer more pay to less pay, a 35 hour week to a 60 hour week, good benefits to no benefits, fewer people looking to take your job, not having to learn another language to keep your job, and, if you are in a union, the government not making it illegal for you to go on strike.

So would it be fair to say, that if you had a job with high pay, reasonable hours, great benefits, little threat of being replaced and a legal right to strike you might feel like you had come out 'on top' - and if you had a job with less pay, really long hours, no benefits, no right to strike and a high likelihood of just being replaced if you ask for anything better then you would be more likely to feel you had 'hit bottom'?

Now perhaps you are wondering, why am I insulting your intelligence with this mind-numbing discussion of the obvious? Well, the reason, dear reader, is that apparently the foregoing is not at all obvious to some people. And not just any some people, some people who study this kind of thing for a living and write for a famous newspaper.

Which brings me to Thomas Friedman's column in the New York Times from the other day. It is titled, 'A Race to the Top'.

And this isn't just the work of some rogue headline writer, the column itself states that, "They [Indians] are not racing us to the bottom. They are racing us to the top"
So let's examine this race for the top, using only Friedman's column for source material:

"French voters are trying to preserve a 35-hour work week in a world where Indian engineers are ready to work a 35-hour day. Good luck."

So people will have to work more hours than they do now, or want to, because desperate Indians will work 35-hour days. From our earlier discussion, more work = bad = bottom.

"I feel sorry for Western European blue collar workers. A world of benefits they have known for 50 years is coming apart,"

You know the game by now: fewer benefits = bad = bottom.

"how explosive the next decade in Western Europe could be, as some of these aging, inflexible economies - which have grown used to six-week vacations and unemployment insurance that is almost as good as having a job - become more intimately integrated with Eastern Europe, India and China in a flattening world"

fewer vacations, less unemployment insurance = bad = bottom.

"Are you willing to learn another language to get a job. The Indians are, "A grass-roots movement is now spreading, demanding that English be taught in state schools - where 85 percent of children go - beginning in first grade, not fourth grade. "What's new is where this movement is coming from," said the Indian commentator Krishna Prasad. "It's coming from the farmers and the Dalits, the lowest groups in society." Even the poor have been to the cities enough to know that English is now the key to a tech-sector job, and they want their kids to have those opportunities."

having to learn a new language to get job = bad = bottom.

but wait, what about:

"The dirty little secret is that India is taking work from Europe or America not simply because of low wages. It is also because Indians are ready to work harder and can do anything from answering your phone to designing your next airplane or car. They are not racing us to the bottom. They are racing us to the top."

First I note that lower wages, harder work = bad = bottom.

Second I point out that just because the Indians are doing high value added work doesn't mean they are racing us to the top, it means that the race to the bottom they are part of affects not only our bottom but also our top.

But won't Indian wages just catch up with Western ones and then after a little adjustment period we can all have good benefits like the Europeans do?

It looks promising...

"This is not about wages at all - the whole wage differential thing is going to reduce very quickly," said Rajesh Rao, who heads the innovative Indian game company, Dhruva. It is about people who have been starving "finally seeing the ability to realize their dreams."

but the very next line reads,

"Both Infosys and Wipro, India's leading technology firms, received more than one million applications last year for a little more than 10,000 job openings."

Yeah, I can see a real incentive for them to raise wages when they have 100 applicants for every job. Ever heard of supply and demand? Of course there is a way for workers to earn a reasonable share of the value from the work they do even when there is an oversupply of their labour - it's called unions.¹

But things aren't looking too good on that front.

"The Indian state of West Bengal has the oldest elected Communist government left in the world today. Some global technology firms recently were looking at outsourcing there, but told the Communists they could not do so because of the possibility of worker strikes that might disrupt the business processes of the companies they work for. No problem. The Communist government declared information technology work an "essential service," making it illegal for those workers to strike. Have a nice day."

Strikes made illegal = bad (if you're a unionized worker) = bottom

The thing is, everything Friedman describes in this article is really happening, and it makes for a very graphic depiction of exactly what a race to the bottom is - communist governments banning strikes, downward pressure on wages and benefits, upward pressure on hours, huge numbers of desperate people willing to accept whatever job is offerred - but I can scarcely imagine the cognitive dissonance he had to face down in order to categorize it as a race to the top. And I can only wonder why he would feel compelled to put such a ridiculous spin on the message his own column is trying so hard to get across.


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¹ Of course, the truly effective way to raise wages by limiting supply is by instituting some arbitrary examination requirements (see doctors, lawyers, accountants, actuaries etc.) but I don't see Indian IT workers forming some sort of exclusive IT profession which only admits a limited number of people allowed to work in IT every year, so that's not too relevant to this post.