Originally Posted by Maverickprime
Obama in his recent interview with Prince Harry, talked about the inability of workers to unionise effectively across boarders in our new globalised world. I couldn’t help but think of the current situation at Ryanair.
As an outside observer of Europe, this is a symptom of a bigger picture:
Globalised Regulatory Arbitrage.
In a globalised word, corporates have effectively figured out how to use country level regulation to exploit & suppress labour cost as it is relatively, immobile whilst shifting mobile assets to avoid costs, taxes & regulation. They shift their revenues, costs and obligations to jurisdiction of choice. The Tech companies are at the leading edge of this.
They operate everywhere, but are based nowhere. . Effectively beyond almost any regulation at all.
In effect, any costs above the lowest common denominator such as skilled labour, taxes, regulatory obligations are optional. If they can find the lowest cost jurisdiction for each of their cost centres, then the cost base will be sent there, yet charged through a shell to the high tax jurisdiction (tax arbitrage through transfer pricing). Labour in the high cost countries are for the most part immobile, and are therefore faced with lowering their price to compete or risk losing jobs.
Globalisation was sold as a way to gain access cheap manufactured goods, but the end game was always the importation of third world labour rates to the first world. This aim has substantially been achieved.
Europe with its EU federation structure of sovereign states seems to have been most vulnerable to this trend with a great deal of scope for arbitrage. The US seems to have less, however they have had Chapter 11 as a tool since deregulation.
Asia is the next area, however, it seems that history & culture have made it more difficult for Western corporations to exploit. One Oz operator tried to use this system in Asia, but found they had no understanding of how business was done in that part of the world & has been skinned alive by the local elites.