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Column : North, South, dependency and austerity

Part of the good life is the comfort assured by migrant labour managing jobs locals no longer want to do.

The global financial crisis is revealing strange truths which, however stark, were clearly not appreciated before. But now with panic looming large, the world has to come to terms with these realities. In the process, the dynamics between the world?s economic core and peripheries?the rich North and the poor South?are being reinforced, more than five decades after the Pauls?Baran and Sweezy?had conceptualised them in the dependency theory.

The biggest problem of the world economy today is undoubtedly the debt crisis in Europe. Much has been written and spoken on it and much more is awaited. What is till now not clear is whether Europe will be able to overcome the problem the way suggested?by accepting hard austerity measures. It is also not clear if these measures, targeted at cleaning up the debts of national governments will mark a decisive end to Europe?s problems. The bailouts may not make much difference to the large individual debts that have piled up in Europe countries over the years. They also won?t make much difference to the enormous costs of social security that Europe bears and which European people are most unhappy to dispense with.

The unhappy responses to austerity measures underline the extent by which several advanced economies have acquired lifestyles that are difficult to change. These lifestyles involve high propensity to consume with low propensity to save. The low savings propensities are results of the generous social securities provided by states. Interestingly, the lifestyles have also been perpetuated by active contributions of the Southern economies in an almost identical fashion as they were during the 18th and 19th century industrial revolution.

Domestic labour markets of the high-income Northern economies have marked presence of labour from the South. Vancouver and London used to be the ?most seen? locations for migrant labour from South Asia. But now the latter have spread deep in the Western hemisphere. Even crisis-hit Spain, where the man on the street appears completely unaffected, has supermarkets being manned by managers speaking hindi and urdu. Every third taxi driver in Sydney and Melbourne is unfailingly South Asian. The manager of a Mexican eating joint at Broadway in New York took great pains to explain to us that he was not Mexican, but as Indian as we were.

It is not only South Asia that is dominating the Northern labour market. Latin American and Caribbean migration, particularly from Uruguay, Cuba, Dominican Republic and Puerto Rico, are providing the bulk of blue-collar services in the US. Migration from regional peripheries is also high within Asia with relatively higher-income countries continuing to exert their ?pulls?. The movements from the Philippines, Indonesia and Sri Lanka to Singapore are clear examples. So are movements from the mainland China to Hong Kong, Taiwan and South Korea. The high-income countries in the Middle East have benefited for long from migration from South Asia and Africa. North African migration is considerably deep both in Europe and the US.

One of the main reasons behind austerity measures failing to find popular support is the unwillingness of local populations to shift to some of the jobs that peripheral country labour forces are handling. Social security in most of the North is not a function of productivity. It is assumed granted and part of the ?good life? contributed by the state. The other part of the good life is the comfort assured by migrant labour by managing the tough and unsought blue-collar functions. Thus while there is rising unemployment in the Northern markets, a part of it is voluntary, since the idle labour does not have enough white collar opportunities. While national governments are lamenting the situation and blaming foreign workers, they are unable to force their own people to do jobs being done by foreign workers. From a business perspective, with respect to the white collar jobs too, people recruited from overseas and particularly Asia, are often better skilled and more competitive than the average skilled labour at home. There?s a crunch that way as well.

Cutting debt levels in Europe means making people work harder save more and give up at least some of the state freebies. All consumption theories suggest it is far more difficult to shift to a lower standard of living than the opposite. Europe and the rest of the financially struggling North are holding up the consumption theories well. Paradoxically, even the South does not want the North to change its habits. Its migrants secure large remittances by making life easier for the common man in the North. The core-periphery dependency works as well in a globalised world as it did when the Pauls had articulated it.

The author is a visiting senior research fellow at the Institute of South Asian Studies in the National University of Singapore. amitendu@gmail.com. These are his personal views

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First published on: 09-07-2012 at 01:59 IST
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