Thursday, December 30, 2004

Economic Enivronmentalism

It has been a truism for the anti-free-trade position that opening markets world wide will cause multi-national corporations to farm out their polluting processes to countries too poor to make much of a fuss. A Tech Central Station article by Radley Balko points out data that indicates that this is not happening, however. The "Race to the Bottom" described above is running into a new phenomenom named the "Green Ceiling".

The Race to the Bottom implies that the cost of moving the facility, retraining workers, and transporting materials and finished goods will be offset by the lower wages and savings on environmental technologies. While the salaries being paid are, to many people in the developed world, unacceptably low, they are still an increase in wealth to those getting the jobs. What has been seen in many instances though, is that polluting companies are not leaving developed nations.

The reason for this is that the costs are not offset as well as the figuring would accomplish. Not only are environmental technologies not too costly for large corporations, but the option of doing business in areas that are politically unstable is a particular turn off. Nothing like having the winners of the next coup decide that it would be a good idea to nationalize your industry.

The Green Ceiling is where the wealth of the citizenry has risen high enough to meet survival needs and luxuries become affordable. The Race to the Bottom correctly points out that environmental controls are such a concern. The changes don't even need to be regulations on business. The increase in wealth in Mexico has lead to more people being able to afford better engineered cars with catalytic converters and cleaner burning gasoline. If the industries are hit with new regulations, then the decision has to be made again as to the costs/benefits of yet another move. Sooner or later, the bottom has to be reached as to the last place on earth without environmental regulations, or the wage difference between the pittance and pittance just isn't effective.

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