Chapter 4: A Futile Chore
Footnote: Barriers: Unfair Foreign Competition
Exponents of a global free market are obsessed with the idea of maintaining a 'level playing field' in which every individual and every business must fend for itself in a world wide free-for-all. But while the world is divided into self ruling nations with different currencies, the 'playing field' can never be level.
A cleaning service, by its very nature, can only sensibly be done by somebody who is local to where they do the cleaning. It makes no sense for a person or business in the UK to hire a cleaning service provided by a firm based in India or the Caribbean. As a result, a cleaning service provider and his market is completely contained within a small locality. The proprietors of competing cleaning services generally all live and work in the same locality. Their costs and living expenses are roughly the same. They operate on a level playing field.
Other kinds of businesses operate in a nation-wide market. There may be variations in the local costs and prices of things in general. However, prices of goods and services which are exchanged on a nation-wide basis tend to gravitate towards a single national level. Individuals and businesses who operate in a nation-wide market therefore also, for the most part, operate on a 'level playing field'.
But this is not the happy situation for individuals or businesses who, by the very nature of what they do, reluctantly and unwittingly find themselves in a global market. I am a computer programmer. The kind of work I do can be done equally well anywhere in the world. It can also be delivered to anywhere else in the world in seconds. Distance and national boundaries are irrelevant. For me to write computer programs it is not necessary for me to be in my brick box in the endless boring suburbia of South East England. I could be anywhere in the world where there is access to the Internet.
Don't kid yourself. Academic levels in the Third World are every bit as high as they are in the West. India, the Pacific Rim, Latin American countries now have software engineers, systems analysts and programmers who are every bit as good as we are. And despite former embargoes, the countries of the former Soviet Union have world class experts who are equally well versed in our latest hardware, software techniques, programming languages and development tools. I know! They sent me some samples, one of which was an image processing suite which, in my opinion, is second to none.
The problem this gives me, and those like me, is that these foreign sources can provide these same software development services at about a tenth the price. The result is that our government and our captains of industry jump at the opportunity to buy software services at such low prices from these Third World providers, leaving us unemployed and languishing on State welfare. Their attitude to our predicament is that we must simply become more competitive. Any form of national protectionism would be anathema to their political ideology. They are determined to uphold their free-market dogma of maintaining what they perceive to be an international 'level playing field'.
What seems to have escaped them in their blind pursuit of their free market dogma is that it is not we (programmers etc) who are uncompetitive. It is they - their national economy - which is uncompetitive. We can compete easily with Third World software experts on a fair and equal basis. Our misfortune is that we have to do our competing from within an uncompetitive national economy. The UK economy is so uncompetitive compared with the former-Soviet and Third World economies that it cannot hope to provide an honest hard-working productive software expert with a living - or even a basic existence - for the amount of money it is now prepared to pay for his services.
To place us on the same so-called 'level playing field' as our former-Soviet and Third World competitors, the UK government would have to, among other things:
- instruct UK supermarkets and stores to sell us our food and consumables at the same prices as an Indian street market or Russian State store
- instruct our clients that, when we to turn up on a 1957 Lambretta motor scooter wearing jeans and sweater, they take us as seriously as if we had arrived in a BMW wearing a suit
- remove all cost and tax differentials with our Third World competitors on equipment, overheads and profit
- provide us with the same level of help, state subsidies, trade preferences and protections with which their governments provide them
The fact is that, while different currencies exist between which the exchange rates are determined daily by the whims of free market forces, this can never happen. So long as the price (in roubles) of a loaf of bread in Russia is not directly equal to the price (in £s) of a loaf of bread in Britain, there will be no equivalence between the cost of an hour of a British programmer's time and the cost of an hour of a Russian programmer's time.
Therefore a British programmer can never compete with a Russian programmer in a global market. The result must be that the software development industry in Britain must die as did the cotton industry and many others before it. This will quickly lead to an intense polarisation of skills on a global scale. The Third World will then doubtless hold British industry to ransom by raising its prices which British industry will then have no option but to pay. Moreover, in the event of war or sanctions, Britain could find itself unable to obtain such expertise anywhere at any price.
Parent Document |
©May 1998 Robert John Morton