Checks and Balances – Undercover Economist
My eye has been caught recently by the contrast between two stories the FT has been covering. Burberry, the luxury goods manufacturer, is to close a factory near Treorchy, South Wales, and expand production in Spain and China where rents and salaries are lower. This decision has drawn condemnation from everyone from the local MP to Charlotte Church. In other news, Glasgow has been persuading companies such as JP Morgan to move jobs away from London. Two of Glasgow’s attractions are said to be, well, lower rents and lower salaries.
One of these stories is widely regarded as good news, and the other as a disaster. But the motives of Burberry and JPMorgan seem very similar: they are profitable businesses, aiming to stay profitable. The effects look similar too. Some people in the poorer of the areas (China is poorer than Wales, Glasgow is poorer than London) will get better jobs. Some people in the richer areas will lose theirs. Prices will adjust too: the richer areas will become just a tiny bit more affordable. When the new jobs go to Glaswegians, all this appears to be acceptable, but when the new jobs go to foreigners it is regarded as appalling.
The queue of celebrities eager to hitch themselves to the Burberry backlash seem to have entirely missed the xenophobia inherent in their views, but that is the risk of allowing the debate on globalisation to be carried out by Charlotte Church and Sir Tom Jones. Yet more sensible observers also seem a little confused. Several people have complained that when jobs move from Britain to lower-wage countries, this just goes to show the need for stronger global regulations, even a global government to protect exploited workers in both Wales and in China.
But a lack of appropriate regulations doesn’t seem to be the problem in this case…
Continued at ft.com, subscription free.