Man, this is just getting sillier and sillier. You Anti-Capitalists have got to start learning a little bit about economics before you get involved in these debates.
Here’s a clue: The supply is NOT fixed. If a product cannot be made for whatever amount you can afford to pay, then it won’t be made. That’s why there are no Ferrari distributors in Cuba or Haiti. If there’s already a supply there but no one can afford to buy it, it will be discounted to the point where it is cheaper to ship it all off somewhere where people WILL buy it, and then it will all go away.
I get the feeling you guys think there is something magical about economics. Raise the minimum wage high enough, and everyone will be rich. Get rid of the evil rich capitalists, and we’ll all be better off. Get rid of the sweat shops in the Philippines, and all those sweatshop workers can live lives of leisure instead.
No wonder Marx has you hooked. He’s got all the simple answers too.
However, some of us live in the real world, where people are paid for the value they add to products, and where products sell for what people are willing to pay (or don’t sell at all if people can’t pay what they cost to make).
In the real world, if you arbitrarily set the pay for someone to be more than the value they add, they won’t be hired.
In the real world, poor countries have poor people not because of a capitalist conspiracy to keep them all in sweatshops, but because the country doesn’t have the infrastructure needed to make its people more valuable. That means roads, cheap power, cheap transportation, stable governments, low taxes, an educated populace, etc. If you want to make those poor countries richer, you need to help them help themselves. Today’s ‘sweat shops’ are building the infrastructure necessary to allow the workers’ value to go up.
Remember I said that in Marx’s time industrial workers saw their wages rise by 40% due to market forces? What do you think those forces were? Competition, rising productivity, improved methods, better training, etc. The same kind of things that can happen today in the 3rd world, IF WE LET IT. If you yank the rug out from under them by forcing all the ‘sweat shops’ to close, they will never become richer.
For example, let’s say that it costs Nike $5.00 to ship a pair of running shoes back to the U.S, and the power to run the factory in the Philippines adds another $2.00 per shoe. Also, the roads are bad in the Philippines, and trucks don’t last as long. Periodic power outages cost huge money in lost productivity. The average worker needs more basic education investment by the company before they can start. Corrupt governments demand kickbacks. Unstable politics forces the company to take a risk that it will lose all the assets it built in that country, requiring them to carry added insurance. All these costs add up.
Now, let’s say that a pair of Nike shoes sells for $50. That means the wholesale cost is about $25, which means that Nike sells those shoes to the wholesaler for maybe $15.
Let’s say Nike makes a profit of $5 per shoe (and it’s almost certainly not that much). That means that the shoe cannot cost more than $10 to make. If a pair takes 1 hour of labor to make, then they can afford to pay an American worker somewhere between $5 and $10 per hour, depending on what their other variable costs are. But the Philippine shoes already have an extra overhead of $7. So the most Nike could pay is $3.00, but if their variable overhead is $2.00 per pair, then Nike can only afford to pay $1 per hour to the Philippine worker.
But when the roads are improved in the Philippines, and enough products are made their to enable economies of scale in shipping, then perhaps the overhead of making shoes there will drop to $3.00. Now Nike will not only be able to pay those workers more, it will HAVE to. Because if it doesn’t, other competitors will open factories and draw those employees away with the promise of more money and/or better conditions.
If you force Nike to raise the pay of the factory in the Philippinesto the point where it costs more to make shoes there than in the U.S., it will simply shut it down. If you put enough social pressure on Nike that it hurts their sales too much, Nike will shut the factory down.
One thing is certain: This will hurt the people of the Philippines. They lose the infrastructure, and they lose what to them is a cushy job. As I said before, what we consider a ‘sweat shop’ might beat the hell out of working in a field all day for 1/3 as much.
You may not believe it, but most of these ‘sweat shops’ have huge waiting lists of people who want to work in them.