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| IT IS TO THE BENEFIT OF CONSUMERS |
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Globalisation is driven by a well known factor: the search for profit.
For companies in rich countries the profit originates from
lower labour costs; for companies in emerging
countries the profit originates from higher prices than on the local market. Many studies have demonstrated, however, that the higher profits are restricted to the companies which first undertake this process, and are short-lived. The reason is competition. In rich countries the early adopters of globalisation are indeed able to translate the lower manpower costs into higher profits. However, as the practice spreads some companies start making use of the cost reduction to acquire new customers, by reducing prices. Even early adopters at that point must follow. The price war brings back the profits of companies to their original levels and passes the benefits of globalisation to consumers. The more competition is allowed, the more this happens fast. A mirror mechanism is at work in emerging countries where salaries rise. There is an irrefutable counter-proof that the competition mechanism works to the benefit of the consumer, that is, the price of those products (first of all food and textiles) where international trade is not allowed or severely restricted. In these sectors the producers, protected by "quotas" and "tariffs", maintain their usual levels of profit, while the consumers pay considerably higher prices than those on the international markets. "Thanks" to the Common Agricultural Policy each citizen of the European Union, toddlers included, spends for food each year more than 200 € in addition to what would be required by the prices on the international market (this is in addition to about 105 € -again each year and for each EU national; 2002 data- of public money distributed as "subsidy" to farmers and food industries). |
Choosing Globalisation I How To Contact Us