Craig -
...as capitalism and what goes along with it (freedom; enlightenment; opportunity) becomes pervasive, people in underdeveloped natural resource rich countries are going to wake up to the notion that america's been living the high life at their expense. chinese and indonesians have been working 80 hour work weeks for mere pittance over the last 20 years so you can enjoy low prices for all that you consume. well they are catching on to the fact that there's more to life than working in a textile factory. they don't want to work 16 hours a day in a factory for 10 cents an hour so you can drive a big SUV and chat on the internet all day....
While your overall post has a good deal of correct and useful comments, this passage shows clear indications of having fallen for anti-capitalist propaganda.
First of all, the idea that workers in third world countries are being unconscionably exploited whenever a first world company builds a factory to employ a relatively large number of workers at wage rates that appear to be preposterously low by developed world standards is simply at odds with reality.
If the workers are filling out job applications in droves, and actually appearing for work every day, how can they be said to be exploited unless they are being drafted to work at the point of a bayonet?
Wages are determined by productivity, and productivity above the barest subsistence level requires the infusion of capital and capital equipment employed in a division-of-labor economy.
It is the factory that makes the wages of even the equivalent of 10 cents an hour possible. In its absence, the alternatives are far worse.
To talk about a 10 cents per hour wage rate is deliberately misleading. To a high degree of probability, the workers never see US currency, but instead are paid in a local currency that can only be said to have an equivalency to US currency because of speculators and government manipulation.
What is important is what can be purchased locally with whatever wages are received, in whatever form. It should be clear from the desire of the workers to obtain and keep the factory jobs that the wages paid are sufficient to make purchases that provide an increased standard of living, however low on an absolute scale, than would otherwise be possible.
The key point of concern is whether overall progress over time is made, rather than having just an isolated factory or two subject to the vagaries of the world economy. To accomplish this, there must exist a local capitalist economy and a government that respects and defends private property rights.
The idea that the US standard of living depends in a significant way on the existence of low labor cost factories in the third world is also wrong. The factories exist because they provide the promise of a profit to someone. The flexibility of a free market economy will rapidly adjust to whatever the circumstances are, and while the loss of the factories may well change the mix of products available at particular prices, the overall end effect on the economy will be minimal. When the masses of low cost labor are not available, more capital will be added to multiply the productivity of a much smaller number of workers. The masses of low cost labor are used because they exist, not because they are necessary.
Regards, Don |
