december: replies to the wide spread between Western and Asian wage levels which I’d described as bad economic policy since it creates too much supply and too few buyers. “No, this is not economic policy at all. These wage levels occurred due to the interaction of many complex factor – economic, social, historical, cultural, political, etc. We cannot control these costs any more than King Canute could control the tides. A policy based on the belief that we can control them is doomed to failure, and it will produce Heaven only knows what unintended consequences.”
Well thanks for delving into myth december which aptly describes your mystical attitudes towards economics. Of course countries–with the help of economists–can agree upon what might constitute an appropriate minimum wage specific to a particular nation. Just as we do in the United States. And of course, it’s part of economic policy to allow such wide wide differentials to exist. You act as though the economy were like the weather: something that occurs without human action! That isn’t to say that it isn’t complex: but economic policies can and do impact such conditions. In any case, the point isn’t so much how the conditions arose, as how unhealthful they are for a global economy. If anything, Western countries should be eager to do what they can to see the global wages improve: that is, we need third-world workers to buy our services, technology, etc. Just as we buy their manufactured goods. Have you taken a look at the US’s trade deficit lately?
erislover:“Whoa… you mean I should revolt because I cannot purchase the $200,000 instrument I help to manufacture?”
Historically industrial economies cannot thrive unless the workforces that produce them are capable of consuming lots of what they produce. Obviously that doesn’t mean that Rolls Royce employees drive Rollses (though many Mercedes employees do drive Mercedes), or that Boeing employees own their own jets. But it does mean that factory workers producing clothes, or toys, or electronics ought to be able to purchase these things themselves. At present they generally can’t. That’s unsound. Ask Henry Ford about it if you want a right-wing view on the matter
“Unless you mean pay them wages comparable to what other workers were paid at the industrial revolution, in which case, they probably already are.”
Well the problem there is that workers during the industrial revolution were dealing with domestic companies who relied on their labor. In the US and eventually in Britain they were also enfranchised citizens in democratic countries. Hence, they were able to use their leverage to improve their quality of life relatively quickly. Workers in Britain got the 10-hour day, the vote, and the ability to unionize within a relatively short span of time. Their employers could not threaten to move to China where they could count on a repressive regime to do the dirty work for them.
Seen historically, globalization has weakened the collective power of average citizens in the West, and the next logical step is to have citizens organize transnationally as many NGOs and trade unions are already trying to do. So actually, from a labor point of view you are a luddite with your antedeluvian notions of the nation-state, and your 18th-century attachment to laissez-faire.
Move out of the way of progress erislover
Minty: “If the government is imprisoning people for joining labor unions and such, I would submit to you that the government falls under one of the other categories I highlighted in my OP.”
Well the problem there Minty, is that many multninational corporations are complicit with these repressive governments. That’s the beauty of globalization: you can’t simply localize the problem of repression and blame it on bad old non-Weterners and their unenlightened ways. Such practices are both directly and indirectly encouraged by multinational corporations and Western-controlled institutions such as the IMF.
“None of those factors allowed the Western economic powers to “stabilize, democratize, and spread prosperity.” To the contrary, I think you’ll find that there were few or no restrictions on wages, the environment, and worker safety in America until relatively late in the 20th century, long after America became stable, democratic, and prosperous.”
Completely incorrect (and this is fairly close to my professional area of expertise). Industrialization required active government support: protective tarriffs and mercantilist regulations that helped new industrial economies (such as 18th-century Britain’s) to get off the ground. It was after they already had the edge that the industrial middle classes demanded and got laissez-faire. When other European nations industrialized they also relied on government protections. As did the Japanese and new Asian economies to achieve their “miracles.” Laissez-faire capitalism benefits those who already have the edge. Historically, no nation has ever successfully managed to industrialize without practicing “economic nationalism” (interventionist and subsidizing policies that protect new industries against foreign competition)."
By insisting that developing countries adopt neo-liberal policies that only advanced industrial economies can benefit from, institutions such as the IMF basically create conditions that are bad for development but good for investors’ short-term profits.
Here, to show you what I mean, are some excerpts from and a link to a relevant article: “Another IMF [International Monetary Fund] Crash.” It concerns Argentina.
“Argentina is the latest Latin American economy to be mismanaged into a crisis by US-trained economists. Unemployment is above 17 percent, the economy is in its fourth year of recession and the country is now in the process of defaulting on its unpayable foreign debt.”
“The sacrifice of Argentina’s economy [in the interests of Western bondholders] fits a pattern at the IMF, including some of the most high-profile interventions of recent years. In Russia and the transition economies, the first priority has been to execute a rapid, irreversible change to a market-driven society, regardless of the economic consequences. Russia lost half its national income in about five years of IMF-led transition, an economic decline never before seen in the absence of war or natural disaster. In Asia, the fund’s desire to open these economies to US capital flows–in countries that because of their high savings rates had little need for foreign borrowing–caused a severe financial crisis in 1997-98. The fund then exploited the crisis to further open these economies, worsened it with exorbitantly high interest rates and fiscal austerity and convinced the governments of the region to guarantee the debt owed to foreign lenders.”
Why, you might say, do these countries not “choose” to have nothing more to do with the IMF then?
“The IMF is able to decide these major economic policies for dozens of countries because it sits atop a creditors’ cartel, much like the OPEC oil cartel. Those who refuse to take the fund’s “advice” find themselves ineligible for credit from the World Bank and other multilateral lenders–like the Inter-American Development Bank or G-7 governments–or even for private credit.”
I could post literally hundreds of articles like this one; and point you to dozens of books on the subject. Put simply, neo-liberalism is an irrational model for helping developing countries to develop.
Neurotik: “I do not agree, however, that global labor standards should be put in place, particularly a minimum wage. Putting in that minimum wage would likely spike incomes to a degree where inflation would be nearly unavoidable as a sudden influx of income would occur without a corresponding increase in supply.”
I agree that the minimum wage is the trickiest part: though the present recession is driven by oversupply and even before the recession there was lots of underused capacity (e.g., empty factories) to boost supply when and if demand is there. So I don’t see inflation as the problem.
What I visualize are EU-type collaborations within regions developing, a process that can’t happen too soo, as far as I’m concerned. As to reasonable safety standards: it’s positively criminal not to have them. It would be relatively simple for G7 nations to pass legislation barring the import of any manufactured goods where basic safety was not ensured (or taxing such goods relative to “safe” goods). If this meant that the $12 pair of jeans you buy at K-mart cost $13 it would not be that big a difference. And it would increase the productivity of countries that benefit from the increased safety. As Demosthenesian says: economics isn’t a zero sum game.
Cyberpundit: “Employers will make cuts on some other margins. Ie if they are forced to raise wages they will reduce benefits.”
Benefits? Cyberpundit, most of these people are lucky if they’re allowed five minutes to pee. They’re sometimes forced to purchase high-priced meals from the employee cafeteria. They’re paid a subsistence wage in exchange for a gruelling day’s labor.
“The employers will take a cut in profits and all will be well(?). No evidence of this in any academic literature as far as I know.”
Of course employers sometimes have to reduce profits! And undoubtedly some of this cost will be passed on to the consumer. Which may depress demand or it may not. Because perhaps better-off factory workers will themselves create demand; or more productivity.
Cyberpundit, these kinds of arguments were continually made during the nineteenth-century: oh, if we reduce the working day from 12 hours to ten we’ll all go out of business and there won’t be any employment. Some employers at the time undoubtedly believed it.
"If you mean that poor countries should have safety and labour regulations similar to rich countries forced onto them then no it doesn’t make sense and not only that, it would be completely disastrous for the welfare of their people.
Ironically, CyberPundit, what has been “forced onto” developing countries is laissez-faire (or neo-liberalism). So you’ve got it backwards. (You repeat the same error in your most recent post.) You seem to assume that people like myself are arguing for a new “White Man’s Burden” in which enlightened economic policies are “forced” onto exploitative native governments as though multinational employers, Western capital and the IMF have nothing to do with it.
Another excerpt from the linked article:
“Over the longer term, the neoliberal program of the IMF and the World Bank–and their ability to enforce it–has contributed to a substantial decline in economic growth over the past twenty years throughout the vast majority of low- and middle-income countries. In Latin America, per capita GDP has grown a mere 6 percent over the past two decades, as compared with 75 percent in 1960-80.”
Demosthenesian "as is alleged by the anti-globalization types…
Oh dear, would that include me? I’ve never been called a “type” before. And, FTR, I’m not at all anti-globalization–although I realize that you may have not intended to apply the term to me. In any case, welcome to the SDMB.