Religion and business rarely mix well. This shows up in the encyclical of Pope Benedict XVI. The encyclical generally supports globalization, but criticises Western companies that outsource business to developing countries.
This criticism has an unfortunate ethnic slant. The Pope echoes the wish of a white labour aristocracy in the West to snatch jobs and income away from much poorer but more competitive workers in Third World countries. That is repugnant in both economic and moral terms.
The Western argument cannot quite be called racist. Politicians and workers in the West are not all white—some are black or brown. Yet the ethnic implications of the Western protest against outsourcing cannot be ignored. The protest rarely focuses on outsourcing to white countries like Poland, Latvia or Bulgaria. It focuses overwhelmingly on outsourcing to black, brown and yellow nations.
This is mainly on economic grounds—wages are lower in Asia than in Eastern Europe, and so the scope for outsourcing is far greater. Yet the ethnic implications cannot be ignored. The mainly white labour aristocracy of the West is clamouring to get companies to shut down jobs and production in countries with black, brown and yellow workers. This means impoverishing poor workers to subsidise the labour aristocracy. Instead of being ashamed of trying to rob the poor of jobs, the labour aristocracy talks in high moral tones, as though it has a God-given right to jobs that have actually gone entirely on merit to the Third World.
For most of history, China and India were the richest countries in the world, with the most advanced technologies and best jobs. The Industrial Revolution changed that—the best jobs moved to the West, and millions of Indian textile workers were rendered unemployed by British mills. The Western labour aristocracy never complained of that shift of the best jobs from the East to the West, but cannot countenance a shift in the opposite direction.
One valid Western objection, on both economic and moral grounds, relates to the use (mainly by China) of prison labour, forced labour and child labour to produce cheap goods for export. Such exports have largely been checked, and now constitute a negligible part of outsourcing. This objection does not apply at all to India’s burgeoning exports of software or BPO, or to the shift of 80,000 IBM jobs or 35,000 Accenture jobs to India.
China has become the world’s biggest supplier of manufactured goods, while India has become a major exporter of computer software, back-office services and R&D. This has transformed the economies of the two most populous countries in the world, made them the fastest-growing in the world, and helped hundreds of millions of poor people to rise out of poverty.
You might think that the Pope would hail this as a great development for humanity. Instead he has parroted the bogus claims of the white labour aristocracy.
His encyclical says, “the so-called outsourcing of production can weaken the company’s sense of responsibility towards the stakeholders—namely the workers, the suppliers, the consumers, the natural environment, and broader society—in favour of the shareholders, who are not tied to a specific geographical area and who therefore enjoy extraordinary mobility.”
The racial implications of this leave me dumbstruck. The Pope has posed the issue as one of stakeholders versus shareholders. But are white stakeholders the only ones that matter? When IBM shifts 80,000 jobs to India, 80,000 Indian stakeholders replace American ones. Are the rights of 80,000 Indian stakeholders any less than those of the American ones they replace? When Chinese suppliers outbid American ones in supplying hardware to IBM, are the Chinese lesser stakeholders than the Americans they replace?
The Pope is simply wrong in posing outsourcing as a conflict between shareholders and stakeholders. Outsourcing merely globalizes stakeholders across the world instead of leaving them within narrow national walls. And as a believer in one world, the Pope should be encouraging this spread of stakeholders across all humanity.
Shareholders are getting globalised no less than workers, suppliers or consumers. Many shareholders of Citibank and IBM come from the Middle East, China or Japan. Are they not stakeholders on par with American ones? There is no moral imperative at all for Japanese or Arab shareholders of IBM to try and shift jobs from the Third World to the US. Yet US politicians and trade unions talk as though morality lies in US jobs alone.
In truth, it is a perversion of morality to penalise non-American workers and shareholders just to promote US jobs. Hopefully Pope Benedict will have the courage to say so in his next encyclical.