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It would be a race to the bottom. We largely already see that in the "developing" world. When a factory causes sufficient growth that a country demands higher w

It would be a race to the bottom. We largely already see that in the "developing" world. When a factory causes sufficient growth that a country demands higher wages, the multinational that owns the factory picks up and moves to an even more impoverished nation, and the worse-off are climbing over each other trying to create the most lenient regulations to attract business. Then once the corporation has departed, the original country collapses back into poverty. Rinse and repeat over decades.

yummyfajitas 16y ago
Then once the corporation has departed, the original country collapses back into poverty. Could you provide an example of this part?
- lukeschlather 16y ago
  Venezuela or Nicaragua. Though obviously the departure isn't necessarily the choice of the corporation in either of those cases. Well, in Nicaragua I'd say the most recent event was the hurricane, and so regulation wasn't the cause of industry's (tourism's) departure. But I still stand by the general theme, that multinational corporations are engaged in something of a bait-and-switch, even if there's no intentional malice behind it. And in Venezuela, one can blame Chavez, but clearly his platform resonates with people because of a pattern of exploitation, even if Chavez himself turns out to be merely a new vector for exploitation.
  - yummyfajitas 16y ago
    I agree that corporations departing can cause (or be caused by) a bad economy. But neither of your examples are part of the chain of events you described: Investment -> growth -> higher wages -> low-wage seeking investment leaving -> decline I fully agree with all steps in this chain besides the last. As you say, Nicaragua was a natural disaster and Venezuela was an unnatural disaster. I agree that both of these things can cause a nation to decline, and can also cause foreign corporations to flee the country. But I wasn't asking whether disasters can harm a country and also chase away foreign investment.
- krschultz 16y ago
  Doesn't China's currency manipulation really support his argument? If the currency floated at its "correct" levels, China would instantly be uncompetitive and the factors would move to another country. I've already seen several companies moving their production to countries other than China (from China) based on increasing costs relative to other countries.
  - yummyfajitas 16y ago
    I fully agree that low wage seeking companies might leave the newly prosperous country. I was asking for examples where "once the corporation has departed, the original country collapses back into poverty." That has not happened in China, as far as I'm aware. Or India - in fact, India is becoming a seller of higher quality labor, and wages are skyrocketing [1]. [1] A girl I went out with told me she left Bombay (for NY) for the experience. The money would have been better had she stayed (though admittedly Manhattan is cheaper).

yummyfajitas 16y ago

Then once the corporation has departed, the original country collapses back into poverty. Could you provide an example of this part?

lukeschlather 16y ago
Venezuela or Nicaragua. Though obviously the departure isn't necessarily the choice of the corporation in either of those cases. Well, in Nicaragua I'd say the most recent event was the hurricane, and so regulation wasn't the cause of industry's (tourism's) departure. But I still stand by the general theme, that multinational corporations are engaged in something of a bait-and-switch, even if there's no intentional malice behind it. And in Venezuela, one can blame Chavez, but clearly his platform resonates with people because of a pattern of exploitation, even if Chavez himself turns out to be merely a new vector for exploitation.
- yummyfajitas 16y ago
  I agree that corporations departing can cause (or be caused by) a bad economy. But neither of your examples are part of the chain of events you described: Investment -> growth -> higher wages -> low-wage seeking investment leaving -> decline I fully agree with all steps in this chain besides the last. As you say, Nicaragua was a natural disaster and Venezuela was an unnatural disaster. I agree that both of these things can cause a nation to decline, and can also cause foreign corporations to flee the country. But I wasn't asking whether disasters can harm a country and also chase away foreign investment.
krschultz 16y ago
Doesn't China's currency manipulation really support his argument? If the currency floated at its "correct" levels, China would instantly be uncompetitive and the factors would move to another country. I've already seen several companies moving their production to countries other than China (from China) based on increasing costs relative to other countries.
- yummyfajitas 16y ago
  I fully agree that low wage seeking companies might leave the newly prosperous country. I was asking for examples where "once the corporation has departed, the original country collapses back into poverty." That has not happened in China, as far as I'm aware. Or India - in fact, India is becoming a seller of higher quality labor, and wages are skyrocketing [1]. [1] A girl I went out with told me she left Bombay (for NY) for the experience. The money would have been better had she stayed (though admittedly Manhattan is cheaper).