Offshoring as an Ethical Issue

Offshoring as an Ethical Issue

Robert A. Schultz (Woodbury University, USA)
Copyright: © 2006 |Pages: 18
DOI: 10.4018/978-1-59140-779-9.ch007
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Abstract

Removal of jobs from one country to another to exploit lower paid workers tends to raise objections from those whose jobs are removed. However, historically, such jobs have tended to be low-wage, low-skill jobs, and the people holding them have typically not been able to mount effective resistance. Recently, highly skilled, highly paid IT jobs have begun to be exported from the United States, and although some of the questions raised are the same as for the earlier low-wage jobs, there are some different considerations. What are the relevant ethical considerations involved in exporting jobs to exploit lower wages? In certain circumstances, there seems to be nothing wrong with this practice. If, for example, the currency exchange rate makes work done in the U.S. cheaper than work done in France, but otherwise the standards of living of the workers in the two countries are comparable, it is hardto see an ethical issue here. This seems to be a form of arbitrage on labor prices. “Arbitrage” is defined as buying the currently relatively low-priced commodity and selling the currently relatively high-priced commodity in the expectation that the market will correct one or both prices. In liquid markets, it serves a scavenger function to even out price disparities. For example, New York-London gold arbitrage is a recognized function performed by some firms. They buy the cheaper gold and sell it into the more expensive market. The net effect is to reduce or eliminate price disparities. It is a sort of benign communication function in a market economy, helping to even out prices consistently throughout markets. Although offshoring has some of the features of arbitrage, it does not seem to have all the relevant features that make arbitrage a benign, healthy function of a market economy. The most important difference is that the “commodity” subject to arbitrage in offshoring is labor. In a true arbitrage situation, the commodity’s location does not change the nature of the commodity, and this is why price differences in gold are simply fluctuations due to market functioning. But it makes a big difference where labor is located. The whole point of offshoring jobs is precisely that we don’t want to move laborers from India or China to the United States, because then we would have to pay them prevailing U.S. wages. For offshoring to work, we must take advantage of a social context with prevailing lower wages. Offshoring is in fact a new ethical problem brought about by the availability-at-any-location feature of information technology. By the use of IT, we can take advantage of social contexts with prevailing lower wages when the relevant features of the job can be performed great distances away.

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