26-05-2003 06:48									#31
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quote: Originally posted by Imran Siddiqui quote: I picked my nose in 1997 and our economy did well that year. Do the 2 have anything to do with each other? Sorry, that isn't the same thing at all, and you know it! The 'slave wages' and 'sweatshops' were instrumental in South Korea and Japan's growth. It created a middle class of people, who, when powerful enough (and skilled) were able to create their own businesses and corporations. Take out the sweatshops, and I'm not sure I have a Sony TV.

Wages are not going to grow like that, because there is so much labor. There could never be upward pressure on wages due to demand alone.

edit: I think your TV was made in Mexico

	26-05-2003 07:38									#32
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quote: Wages are not going to grow like that, because there is so much labor. There could never be upward pressure on wages due to demand alone.

Well why not? You give people jobs and they spend more with the more money they get (increasing their living standard). They are richer than the normal folk, right? They have more disposable income than they would otherwise. They'll have more money. Their kids will be more educated because of it (through taxes and spending). By being more educated, they will be more skilled labor, getting more money... as generations grow, they will get more and more skilled.

	26-05-2003 07:41									#33
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"

I can't agree that starvation wages and child labor lead to prosperity. "

Even if that is not the case, it will at least provide jobs for the exponentially growing population.

"
South Korea? Japan after WW2? Come on, it has happened in the past!"

Good point, in fact every industrialized country strarting with Britain went through a sweatshop/child labor conditions period at one point.

	26-05-2003 08:22									#34
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quote: Originally posted by Imran Siddiqui quote: Wages are not going to grow like that, because there is so much labor. There could never be upward pressure on wages due to demand alone. Well why not? You give people jobs and they spend more with the more money they get (increasing their living standard). They are richer than the normal folk, right? They have more disposable income than they would otherwise. They'll have more money. Their kids will be more educated because of it (through taxes and spending). By being more educated, they will be more skilled labor, getting more money... as generations grow, they will get more and more skilled.

There is so much cheap labor that the increase in wages isn't enough to do all this. The money that is injected into the local economy isn't enough. Furthermore, wages won't increase because as you say MNCs can just build the next factory some where else.

	26-05-2003 08:25									#35
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quote: Originally posted by Shi Huangdi " South Korea? Japan after WW2? Come on, it has happened in the past!" Good point, in fact every industrialized country strarting with Britain went through a sweatshop/child labor conditions period at one point.

All those nations protected their own markets. Britain and Japan used mercantalist strategies. The US is just the US, expanding frontier, British heritage, etc.. Things can't work like that in say Indonesia.

edit: Even with this I think the higher wages in the industrial nations are more the result of pro-labor laws and the realization of business that if they didn't do something for labor that they would be facing revolt. Supply and demand only played a secondary part.

	26-05-2003 08:47									#36
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quote: Originally posted by Shi Huangdi "You forgot that this happens because of the WB or the IMF forcing these countries to open their markets as conditions for loans." Neither of those institutions can force a soverign nation to do anything, any assistance by them is voluntary. It is their own fault if they enter into bad deals.

Yeah, like sh!t never happens.

	26-05-2003 09:21									#37
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:yawn:

Same old arguments. If the developed nations did do this it would be the same as refusing trade from these nations anyway since cheap labor is the only reason to import manufactured goods from them.

	26-05-2003 09:25									#38
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quote: There is so much cheap labor that the increase in wages isn't enough to do all this. The money that is injected into the local economy isn't enough. Furthermore, wages won't increase because as you say MNCs can just build the next factory some where else.

It slowly but surely builds. The MNC only helps at the lower rungs, the higher up rungs (the more skilled) can try to create their own companies... or get jobs at other MNCs that may try to come in to capitalise on the new skilled laborers. The cycle continues.

	26-05-2003 09:32									#39
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quote: Originally posted by Imran Siddiqui quote: There is so much cheap labor that the increase in wages isn't enough to do all this. The money that is injected into the local economy isn't enough. Furthermore, wages won't increase because as you say MNCs can just build the next factory some where else. It slowly but surely builds. The MNC only helps at the lower rungs, the higher up rungs (the more skilled) can try to create their own companies... or get jobs at other MNCs that may try to come in to capitalise on the new skilled laborers. The cycle continues.

Assuming that an increase in demand for labor increases wages you would need just that. If the demand for labor stays the same there will be no increase in wages. They will stay the same. So you won't get the increase in productivity that you are talking about.

	26-05-2003 09:35									#40
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Why wouldn't you? If you have a further educated class, they will form their own businesses or have another MNC (or the same one) offer them higher wages. Simple as that.

	26-05-2003 09:39									#41
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I could see the American people being 100% behind a law which would block out sweets shop products and the proceeds of Child labor. If we could force 3rd world countries to also play on an even enviromental and ecological playing field then so much the better.

	26-05-2003 09:40									#42
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quote: I could see the American people being 100% behind a law which would block out sweets shop products and the proceeds of Child labor.

Until they see how much the price of shirts have risen .

	26-05-2003 09:43									#43
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Sure they'd pay a bit more but as soon as the Democrates roll out a bunch of textile workers from the south who no longer have to compete with child labor from south Asia people will stay happy enough. Especially when the millions of union ad dollars start to tell them how wonderful everything is.

	26-05-2003 09:45									#44
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I think you underestimate how sweat-shop labor keeps our products cheap .

	26-05-2003 09:47									#45
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Sweet shops do keep products cheap but if we forced the sweet shops to...oh... hire only adults instead of child laborers then we might just improve the world a bit.

	26-05-2003 09:48									#46
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quote: Originally posted by Imran Siddiqui Why wouldn't you? If you have a further educated class, they will form their own businesses or have another MNC (or the same one) offer them higher wages. Simple as that.

I see what you're saying. You are thinking of it as a dominoe effect, but it's not that simple. Globalization is just a step increase in the demand for cheap labor. The demand is not going to increase much so things have gotten about as good as they are going to get for the third world worker. I would say that things could get worse, but even with globalization people are working for subsistance wages. So they can't get worse.

	26-05-2003 10:29									#47
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quote: Originally posted by Kidicious I see what you're saying. You are thinking of it as a dominoe effect, but it's not that simple. Globalization is just a step increase in the demand for cheap labor. The demand is not going to increase much so things have gotten about as good as they are going to get for the third world worker.

Demand IS increasing - because richer countries continue to grow while poorer countries are becoming richer. And with this, the cycle propagates itself - the demand is created for even more poorer countries shift from agriculture to industry - and hence, to build their own middle classes.

The first rung of cheap-labour-land has graduated to the rich club (South Korea, Taiwan, etc) and the second rung is following close behind (Malaysia, Thailand, etc). Globalization is frankly very amazing.

	26-05-2003 10:31									#48
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quote: Originally posted by ranskaldan Demand IS increasing - because richer countries continue to grow while poorer countries are becoming richer.

Not all of them. In fact, many LDC's, particularly those in SA and Africa, are becoming poorer.

	26-05-2003 10:34									#49
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quote: Originally posted by Urban Ranger Not all of them. In fact, many LDC's, particularly those in SA and Africa, are becoming poorer.

Well yea, I should have said some. But then, it's not like those were an important source of middle class demand anyway.

Once the current sweatshop-lands are raised up into reasonable wealth, MNC's will descend on those countries. Give it some time.

	26-05-2003 11:05									#50
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The developed countries aren't growing very fast either. The world economy as a whole is growing less than 2% a year. I could be off a bit. In fact it could be closer to 1%.

	26-05-2003 11:11									#51
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"Sweet shops do keep products cheap but if we forced the sweet shops to...oh... hire only adults instead of child laborers then we might just improve the world a bit."

Until without the income from child labour goes away and suddenly there isn't enough money to feed the children.

Life isn't so simple.

	26-05-2003 22:31									#52
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quote: Originally posted by Kidicious The developed countries aren't growing very fast either. The world economy as a whole is growing less than 2% a year. I could be off a bit. In fact it could be closer to 1%.

A lot of places in the world are imploding, which drags the number down. What we are depending on right now are the countries that are growing at healthy rates, like China or India. These are the future homes of a wealthier middle class that will be able to kickstart other nations on their paths to development.

Pull out of China or India (which is the point of this thread) would stop that process. Then the 3rd world nations of the world can simply spend the next 50 years collapsing economically, imploding into small factions, and fighting nuclear wars with each other.

	26-05-2003 22:41									#53
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quote: Originally posted by ranskaldan A lot of places in the world are imploding, which drags the number down. What we are depending on right now are the countries that are growing at healthy rates, like China or India. These are the future homes of a wealthier middle class that will be able to kickstart other nations on their paths to development. Pull out of China or India (which is the point of this thread) would stop that process. Then the 3rd world nations of the world can simply spend the next 50 years collapsing economically, imploding into small factions, and fighting nuclear wars with each other.

I would say that right now it depends on the US. The whole world depends on US demand. If we could change that it would be great. I would like to see Japan develope its domestic economy. That would do wonders for China. As long as China is just a source for cheap labor growth will be restrained there though. They need to make changes, and those changes are the topic in this thread.

	26-05-2003 23:01									#54
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quote: Originally posted by Kidicious I would say that right now it depends on the US. The whole world depends on US demand. If we could change that it would be great. I would like to see Japan develope its domestic economy. That would do wonders for China. As long as China is just a source for cheap labor growth will be restrained there though. They need to make changes, and those changes are the topic in this thread.

Not really. Having prices for consumer goods shoot up here in North America wouldn't be good at all; you're hurting profit and competitiveness for many American firms and reducing the purchasing power of all American consumers. Plus, you're killing a potentially large middle class in China. [If even 20% of China enters the middle class, that's a huge number, and it's not that hard to do; but it depends first and foremost on large-scale MNC investment. The same goes for India.]

	26-05-2003 23:51									#55
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quote: Originally posted by ranskaldan Not really. Having prices for consumer goods shoot up here in North America wouldn't be good at all; you're hurting profit and competitiveness for many American firms and reducing the purchasing power of all American consumers.

Huh? Chinas economy depends on its exports. Right now the trade surplus with the US is over $100b and growing. Inflation in the US can't change that because China has the yuan pegged to the dollar. Higher prices in the US can only be good for China. That is unless the US economy goes sour, or the US gets sick of the undervalued yuan.

quote: Originally posted by ranskaldan Plus, you're killing a potentially large middle class in China. [If even 20% of China enters the middle class, that's a huge number, and it's not that hard to do; but it depends first and foremost on large-scale MNC investment. The same goes for India.]

Yes, it depends on foreign investment, especially since Chinese don't seem willing to make that investment themselves, but I would never want to depend on FDI. China could lose that so quick it would make their heads spin. Then it will be all over.

Two things can cause capital flight in China, Risk and Wage cost

	27-05-2003 01:35									#56
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quote: Originally posted by ranskaldan Pull out of China or India (which is the point of this thread) would stop that process. Then the 3rd world nations of the world can simply spend the next 50 years collapsing economically, imploding into small factions, and fighting nuclear wars with each other.

...or China and India could choose to have reasonable labor laws, which would share the wealth that's being created with their working classes...thereby accelerating the growth of their middle class, thereby increasing the number of their consumers, thereby increasing demand, thereby increasing prosperity for all concerned. ---which is the point of this thread.

	27-05-2003 02:22									#57
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quote: Originally posted by Kidicious Huh? Chinas economy depends on its exports. Right now the trade surplus with the US is over $100b and growing. Inflation in the US can't change that because China has the yuan pegged to the dollar. Higher prices in the US can only be good for China. That is unless the US economy goes sour, or the US gets sick of the undervalued yuan.

You really didn't refute my point there. I wasn't talking about the Chinese economy.

quote: Yes, it depends on foreign investment, especially since Chinese don't seem willing to make that investment themselves, but I would never want to depend on FDI. China could lose that so quick it would make their heads spin. Then it will be all over.

Unwilling? There simply isn't enough money in China in the hands of entrepreneurs. Of course you can let them go slowly, build up like the Western nations over 200 years, etc, and God knows how many civil wars and revolutions there will be in two centuries and how much danger that would pose to the world's stability. Or we can take a shortcut and launch China and India into wealth.

quote: Two things can cause capital flight in China, Risk and Wage cost

And you seem to be proposing both. That doesn't make sense.

	27-05-2003 02:24									#58
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quote: Originally posted by Zkribbler ...or China and India could choose to have reasonable labor laws, which would share the wealth that's being created with their working classes...

Not really.

If that happens, Nike and Sony would simply grab their money and run off to some other place that is even less prepared for creating a middle class. The newly laid-off Chinese and Indians workers would return to the overworked farmlands and continue starving. Then the vicious cycle that created the poverty of China and India would simply continue.

	27-05-2003 10:04									#59
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quote: Originally posted by ranskaldan Unwilling? There simply isn't enough money in China in the hands of entrepreneurs. Of course you can let them go slowly, build up like the Western nations over 200 years, etc, and God knows how many civil wars and revolutions there will be in two centuries and how much danger that would pose to the world's stability. Or we can take a shortcut and launch China and India into wealth.

The Chinese are investing in the US much more than the visa versa you see that by the trade surplus. At some point that will have to change. It's not going to just happen atomatically.

Wage increase will help, but the whole strategy will have to change. My point is that the current strategy must be changed for much improvement to occur. I would even say that the current strategy will lead to colapse if the Chinese government can't change it.

	27-05-2003 10:50									#60
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quote: Originally posted by Kidicious The Chinese are investing in the US much more than the visa versa you see that by the trade surplus. At some point that will have to change. It's not going to just happen atomatically.

The reason for the trade surplus is because MNC's prefer to produce their goods in China (or outsource these to Chinese subcontractors). We're still a long way away from Chinese MNC's investing in the US.

If you mean just the trade surplus - what's wrong with it? What exactly makes it so bad that "it will have to change"?

quote: Wage increase will help, but the whole strategy will have to change. My point is that the current strategy must be changed for much improvement to occur. I would even say that the current strategy will lead to colapse if the Chinese government can't change it.

Why would wage increase help? (It wouldn't.) And what other changes are you thinking of? Why wouldn't the current strategy lead to improvement? Why the inevitable "collapse" if the current strategy is allowed to continue?