Arbitrage or Exploitation?

As a student of international relations, I have been taught to look at issues of global governance, international bodies, and political relations. One particular case study I read was on the Nike scandal of sweatshop workers in China. We debated and teased out arguments about corporations' rights, human rights, and whose standards should be upheld, the domestic worker's or the corporation's homeland? With this background you can imagine my surprise when I took a Global Strategy business class that mentioned "arbitrage" as the strategy of taking advantage of differences between nations. Wait, wait. This fancy word arbitrage = exploitation right?

It was with this that I was dropped into the deep end of the business mentality. No longer are children in India being denied their right to education by working in factories. It is that their families need the money so it is better for the children to go to work. This twisted logic, or excuse making is at the heart of the conflict between government and business. Business is driven by bottom-lines, efficiency, and innovation. International relations is concerned about the society, quality of life, and responsibility of these corporations.

Having dipped my toes in both fields I can see where business derives its mentality as well as international relations. However, where is the happy medium? The relationship of government and business is mutually dependent. Government needs business to fuel its economy, keep people working, and to contribute much to their bank account. But business also needs government to regulate their competitors, set standards for consumer products, and keep crucial industries afloat in hard times *coughbanksinthecreditcrisiscough*

One movement in the business world that I feel is noteworthy is the move for social responsibility. Companies that have micro-finance operations or give back to the community are starting to make themselves known. The Economist even had a feature section on corporate social responsibility recently. A friend I know who works for Philips electronics was griping about how Philips spends so much on its packaging because of its incorporation of recycled materials that it almost hurts the company. I feel that if all companies looked at their business practices and how they can tweak things so that they don't have such a negative social impact, that society, government, and business would all benefit.