Specialization and Its Cost

In people’s mind, Shanxi Province is always associated with illegal collieries and brick kilns which hundreds of people have been killed or wounded due to explosions of gases, collapse of mines or tortures by the foremen and the owners. People and the Press are always angry with these phenomena but curious about the continuous happening of the serious cases. Has Shanxi fallen into a vicious cycle?

When the focuses are concentrated on the social, moral, or even political systems, the economic factor may be neglected.

How could economy make Shanxi fall into the vicious cycle of illegal collieries and brick kilns? Some people argue that it’s the fault of specialization. The abundant natural resources and cheap labour forces make Shanxi Province acquire the comparative advantages in producing coal and bricks. The more specialized Shanxi Province is, the more mono-form its economy takes. As a result, the pursuit for higher profit by trading these low value-added goods drives officials and local magnates to exploit those poor peasants and migrant workers.

It seems to be reasonable. However, it is not the whole picture. In economists’ minds, specializations should bring a win-win situation for both parties participated in the trade. They will tell you the stories of a painter and a carpenter, or a country specialized in sea food production and a country producing agricultural products. In their cases, specialization makes both parties better off. If that’s true, then how can we explain those phenomena in Shanxi Province?

If we give a second thought on the stories economists present, we may find that both parties are equal in the legal status. Individuals exchange with individuals and countries with countries equally. The specialization is based on the fair trade as an assumption. In this sense, Shanxi Province is getting better economically through the exchange of coal and brinks with other provinces for the goods they need. However, the tragedy happens when there is inequality between the two parties. The tragedy happens in the relationship between the owners of the mines and brick kilns and the education-inadequate peasants and migrant workers.

Why there is inequality? Maybe the answer is the lack of choices. The aim of peasants and migrant workers is to survive and support their families. If there are any better choices for the peasants and migrant workers, they will flow out of the industry which might take their lives as a cost. Since there are no other choices, they take the risk of death to do the dangerous work.

Is it the specialization limits the choices of peasants and migrant workers? To some extent, it is. The limit of choices reflects the strict ranks of jobs. However, this is one of the results of the specialization. You use your comparative advantages to do the job fit you best. However, the fittest job may not be a highly-paid or even enough paid one. Actually, this is the cost of specialization society has to pay.

This cost does not mean that specialization should be totally given up. The cost exists with the probability to compensate. A good social security system can compensate the cost and help the poor out. This required a strong government in exercising welfare policies.

As a result, it can be concluded roughly that specialization can bring benefit on the equal basis, but bring some negative impact when there is. However, if the government is weak and could not provide well social security system, the cost of specialization will be very obvious. If we extent our conclusion a bit further, we may find something more surprising. If there is no government (world government as for the international arena), the specialization (globalization as it is called) may bring great benefit only to those who are strong. The small and developing countries may suffer a lot as a victim billing the cost without any compensation.

First drafted: June 18^th, 2007

Second drafted: June 19^th, 2007

[此贴子已经被作者于2007-6-20 0:18:55编辑过]