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What you probably noticed during the Transnational Capital Auction was the “race to the bottom.” Various countries underbidding each other can quickly lead to selling out the workers and enabling pollution. The alternative–losing the auction–would mean no jobs for anyone. “Winning” ends up exploiting your own workers. It really seems like a no-win situation. To reflect on the Transnational Capital Auction, please answer the questions below.
FOLLOW UP QUESTIONS
What does it mean to have no environmental laws in a country? What might Capital do?
What would be the social effects of such low wages? How would families be able to survive? How could a family supplement its income?
Consider some of the ideas that are presented as obvious & absolute in the media: Is corporate investment always a good thing? Create a chart listing benefits & harmful effects of investment.
In the game, why did you keep driving down conditions in your country? Why didn’t you get together & refuse to bid each other down?
Who benefits & who doesn’t benefit from the “race to the bottom?” How could people in various countries get together to stop attacks on their social & environmental conditions?
What could we do in the U.S. to respond to the global “race to the bottom?”
Look over your auction “bids” – on minimum wage, worker organizing, taxation rates, & environmental laws. If Capital were to accept your “bid” & come to your country, what would be the real human & environmental consequences here? Explain in detail.
Based on your experience with the auction, agree &/or disagree with the following statement & back up your answer with evidence: Poor countries need investment, so it’s a good thing when transnational companies invest there.
The global process that we simulated in class is sometimes called “downward leveling” or the “race to the bottom.” What, if anything, could people in poor countries do to stop this race to the bottom?
One company used to manufacture all of its products in the U.S., paying wages that averaged (with benefits) around $16 an hour. The investment director for this company now travels every month to places like Indonesia, El Salvador, & Nicaragua looking for sites to produce his company’s products. He says that he would prefer to keep all production in the U.S. Based on this simulation & what you know, why do you think this person’s company feels forced to send production to countries that have a lot of “Friendly-to-Capital” points?
What impact does the face to the bottom have on workers in this country? In what ways might it affect your lives? In answering the question, you might think about the three quotes below:
“It is not that foreigners are stealing our jobs, it is that we are all facing one another’s competition.” William Baumol, Princeton University economist
“Downward leveling is like a cancer that is destroying its host organism – the earth & its people.” Jeremy Brecher & Tim Costello, Global Village or Global Pillage
“Globalization has depressed the wage growth of low-wage workers [in the U.S.]. It’s been a reason for the increasing wage gap between high-wage & low-wage workers.” Laura Tyson, former Chairperson, U.S. Council of Economic Advisers