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Strategies & Market Trends : Asia Forum
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To: Mark Myword who wrote (7024)10/9/1998 2:27:00 PM
From: shadowman  Read Replies (2) of 9980
 
Perky,

Now I know I'm not the only person who see's a direct correlation between overcapacity and under-consumption in some of the newly developing economies. At the obviously exploitive wage levels that most of the work forces in these countries work at, the chances of developing a domestically based demand for the products that these economies manufacture is nil. This situation was all well and good when the export markets were vigorous, nobody seemed to mind...including US banks and multi-national corporations. Now that the chickens are beginning to come home to roost these inequities might actually get a little lip service but I expect not much else. The free marketeer's nirvana of capital flowing to the most cost-effective labor markets may come home to bite them in the a**.

Common sense has indicated for many years that healthy economies must include a reasonably prosperous middle or working class...these folks provide most of the consumer power. The idea that distribution of wealth and the inequity of it is not something to be concerned about is ridiculous. I guess it's fine if you live in a isolated economy such as a third world dictatorship with an abundance of exploitable natural resources?

Although I'm sure there are many self-interested politicians and "industrialists" who would love to see a readily exploitable low cost labor pool out there in the underdeveloped world....the truth is that economic stability will be elusive until wages are at least at a level where workers have some possibility of becoming consumers of consumer goods. The idea that a few "smart" or well connected people deserve to reap the economic rewards at the expense of the people who produce these goods is and has been a reality that should be addressed.

No argument on the micro-economic basis...corrupt business people and politicians along with the cronyism that exist, contributes to the problem. But from a macro-economic stand point...the goose that lay the golden egg....low production costs (low wages) is a double edged sword.
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