Thursday, March 24, 2011

The Ethics of Globalization

A lot of consideration is being given to globalization, and to corresponding changes that may be necessary to prepare our students for an increasingly global society.  Personally, I think that is a good thing!

I've had some very interesting talks with junior high students over the past few years discussing what the phrase "China and India have more honors students than we have students" (as shared in the Shift Happens video prepared by Karl Fisch and Scott McLeod) means to them.  

The most recent version of Shift Happens can be viewed here.  If you haven't seen it yet, take a few minutes and watch it.  It is great for stimulating reflection!

Most recently, tonight, I was engaged in a discussion online about the ethical implications of globalization and the outsourcing of production.  I have to confess that despite my more liberal tendencies, I think quite highly of profit!  

In my conversation tonight he impact of moving production from our society to areas where labor costs are substantially cheaper definitely raises ethical issues worthy of attention.  It is a very complex issue though, with some interesting twists possible in the conversation.

I think the primary reason why organizations move their production is to attain a lower cost of production and correspondingly higher profits.  Other ways to do achieve higher profits would be to leave production where it is, and to either lower wages or to increase revenue.  Both are viable means to achieve the same end result, yet for two reasons only one option is realistic.  Organizations are not likely to seek to increase profits by lowering wages because western workers are not likely to accept lower wages.  Also, organizations are not likely to increase profits by raising revenue because the public is not very likely to pay higher prices.

I believe it takes strength of character, of an organization's Board and of those in formal leadership positions, to strive for a balance between profits and what is right for all concerned.  The vision of the organization, to be responsible and ethical profit seekers, is an especially crucial element to achieving this balance.

Focusing solely on the wages paid the workers is, I believe, another concern that can at times be a red herring of sorts.  Without question, if workers are physically at risk or are taken unfair advantage of, or if vulnerable populations are taken advantage of, the organization should be taken to task.  In other cases, the low, by our standards, wages are quite welcomed by the workers receiving them.  Relatively speaking, the wages paid in some developing countries are having a very positive effect on their societies.

One of the pleasant end results of the movement to outsource production to developing nations is the rapidly expanding global middle class (Das, 2009).  Das shared the increased prosperity in developing nations is significant, and while the typical wages are generally substantially lower than those paid in developed countries, the standard of living, as measured by per capita consumption levels, has grown dramatically.  With more money available, middle class comforts such as options for health care are more likely to be made available for people to choose.  

In a book that I thoroughly enjoyed, New York Times Reporter Thomas Friedman shared compelling statistics about the implication of a greatly rising middle class composed of people from Brazil, Russia, India, and China as well (Friedman, 2005).  Ethically speaking then, outsourcing can be seen as having a positive benefit to some geographical regions while having a negative influence in others.  How relevant is it to look at the balance on the whole?  I think this thought shows the importance of our challenge to convert Alberta's economy to a knowledge-based economy from a resource-based economy.  I see that as significant urgency to act!

From this perspective, I believe it will be interesting to see the implications of the increasing costs of production in societies where the middle class outgrows the low wages offered, as I believe happened in our society.

In summary, I believe the ethical impact of choosing to outsource production is something companies must consider carefully.  The choice, if made correctly, is something I believe can be mutually beneficial. 

Statistician Hans Rosling excels at graphically representing data and has several interesting talks posted on the Internet.  In a short video, approximately 5 minutes long, he creatively and graphically illustrates how the health and wealth of countries has changed, illustrating how the gap between the west and the rest has decreased. I find it fascinating, and hope you might find it interesting too!



Das, D. K. (2009). Globalisation and an emerging global middle class. Economic Affairs, 29(3), 89-92.

Friedman, T. L. (2005). The world is flat: A brief history of the twenty-first century. New York, NY: Farrar, Straus & Giroux.

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