How do we reconcile decent wages on the home front with helping the third world ou

[egb_hibs]

A number of topics over the months have touched on this conundrum, so I thought feck it, let's tackle it head on.

How can the equally meritorious ambitions to ensure a decent living for domestic workers and providing the means for the developing world to escape poverty, be reconciled? Moreover, if they cannot, then what ought to be the priority?

If we take the 'teach a man to fish' principle as being a given for developing self-sustaining economies elsewhere (if anyone has any alternative suggestions let's hear 'em) then offshoring of industry to the developing world, means removing opportunites for domestic employment. For all the cynicism about globalisation, there is as I see it, considerable evidence that countries that start off hosting less skilled jobs, with good governance, can and do proceed to take on more specialised work. The south east asian economies are of course a good example of this, but india is another - what is starting with call centres will soon end up with india as a dominant player in world technology markets.

For all that their are exploitative practices going on here and there, if these can be sorted out, it still remains very much the case that foreign workers can be paid what are, by local standards, very good wages, and still massively undercut the domestic workforce.

How then do we balance the internationalist goal of improving conditions for the poor of the world, without driving down wages on the home front, or even creating unemployment? The market-darwinist answer is of course that exporting what have become commodotised activities, should result in new jobs being created domestically that have more 'added value'.

I see a couple of problems with this however (and I'm sure others will see more):

a) Added-value, in this context, usually although not always, implies skilled or specialised work. We will always have a section of the workforce who will find it difficult to keep up with the demands this poses in terms of acquiring new skills, so what happens to them?

b) Secondly, if we look at things at a very high level, there is not that much new under the sun. Most commercial activity, whether of hard or soft goods, has similar components: manafacturing, infrastructure, sales and marketing and servicing. Manafacturing is already something we've largely exported, infrastructure - which in large parts these days means IT and telecoms - is on the way out, as is servicing. That only really leaves sales and marketing, which is not much to be going on. What I'm saying is that unless there is another transformative change round the corner akin to industrialisation or the dawn of IT and global telecomms, I'm struggling to see where the domestic labour force can retain an edge that keeps it ahead of cheaper labour overseas.

The other side of this is of course bringing the labour to industry rather than moving the industry to the labour, through mass migration. While this provokes different political responses, the dynamics are essentially the same, if perhaps not so acute: cheaper labour has the potential to drives down wages, not to mention returning migrant workers removing money from the domestic economy.

So, what do we do? This seems a really thorny problem to me tbh. It's partially mitigated by our shrinking population, which of course brings it's own problems (but for this thread let's leave that aside) but to far too small an extent to be decisive I expect.

I hope this thread provokes debate cos it will be interesting to see, for example, a left of centre take from Al or Gareth, versus (perhaps) ColR's free market approach.

[pilrig70]

Selective import controls.

Where its proven, payment of slave wages in third world countries should debar the goods from entering this country.

Why should we install a national minimum wage here, and have trade unions fight for decent wages, when exploitative businesses in the thrid world are paying buttons and then flooding our market with their cheap products?

This is one way we could rebuild our production infrastructre and create more jobs.

[egb_hibs]

but as i mentioned even if good wages are paid rather than exploitative ones you still massively undercut westerm workers...

[egb_hibs]

bump - come on Al, Col, anyone...

[Colr]

China has carried off the world's largest reduction in poverty by grasping that market economies cannot be left on autopilot

Joseph Stiglitz
Thursday April 13, 2006
The Guardian


China is about to adopt its 11th five-year plan, setting the stage for the continuation of probably the most remarkable economic transformation in history, while improving the wellbeing of almost a quarter of the world's population. Never before has the world seen such sustained growth; never before has there been so much poverty reduction.

Part of the key to China's long-run success has been its almost unique combination of pragmatism and vision. While much of the rest of the developing world, following the Washington consensus, has been directed at a quixotic quest for higher GDP, China has again made clear that it seeks sustainable and more equitable increases in real living standards. China realises that it has entered a phase of economic growth that is imposing enormous - and unsustainable - demands on the environment. Unless there is a change in course, living standards will eventually be compromised. That is why the new plan places great emphasis on the environment.

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[egb_hibs]

interesting article Col. China are rapidly becoming part of the developed, rather than developing world imho. that said, they still benefit from lower local wages, and therefore can undercut the west.

they really are a formidable prospect; efficiency and effectiveness of capitalism, with none of the complications found in a free society. they're gonna be the daddies of this century. they may also become what confused people think america is.

[Colr]

Originally Posted by egb_hibs

interesting article Col. China are rapidly becoming part of the developed, rather than developing world imho. that said, they still benefit from lower local wages, and therefore can undercut the west.

they really are a formidable prospect; efficiency and effectiveness of capitalism, with none of the complications found in a free society. they're gonna be the daddies of this century.

Xinhau tracker shares have made 60% return over the last year - that is fecking impressive given that they have yet to reach capacity. Better learn some Chinese (and buy soem of their shares).

[egb_hibs]

Originally Posted by Colr

Xinhau tracker shares have made 60% return over the last year - that is fecking impressive given that they have yet to reach capacity. Better learn some Chinese (and buy soem of their shares).

Indeed. I've said it before. This stuff with 'islam' is a sideshow. History will record that the 21st c is about US v China.

[Colr]

Originally Posted by egb_hibs

Indeed. I've said it before. This stuff with 'islam' is a sideshow. History will record that the 21st c is about US v China.

Guess where Ken Livingston is this week.

[egb_hibs]

bumped one more time- one more go, till i conclude that the lefties haven't got a response to such a conundrum for them.
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[Archie]

Originally Posted by egb_hibs

bumped one more time- one more go, till i conclude that the lefties haven't got a response to such a conundrum for them.
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Not one of the Board's lefties, but surely the seeds of change in this are sown in the process itself. The system of low wage economies exporting to high wage economies only works as long as there is a viable export market. Should the west be unable to sustain imports then it would require and endogenous market in the exporting country to sustain production - in other words the domestic market would need to be able to sustain the consumption. But as a low wage economy they can't, but when they become a high wage economy then they don't have a competitive advantage, so to a certain extent there is lock in.

Japan is probably the last example of an economy that really transformed itself, but in the distorted post war circumstances and with a very protectionist approach. and it is looking to creak at the seams. China is a powerhouse, no doubt. But it has to make the leap from being an outsourcing low cost economy to a self driven and technologically leading economy. When it does this it may well then plant the seeds of its own destruction but time, of course, will tell.

[wee 162]

Originally Posted by EGB_Hibs

A number of topics over the months have touched on this conundrum, so I thought feck it, let's tackle it head on.

How can the equally meritorious ambitions to ensure a decent living for domestic workers and providing the means for the developing world to escape poverty, be reconciled? Moreover, if they cannot, then what ought to be the priority?

If we take the 'teach a man to fish' principle as being a given for developing self-sustaining economies elsewhere (if anyone has any alternative suggestions let's hear 'em) then offshoring of industry to the developing world, means removing opportunites for domestic employment. For all the cynicism about globalisation, there is as I see it, considerable evidence that countries that start off hosting less skilled jobs, with good governance, can and do proceed to take on more specialised work. The south east asian economies are of course a good example of this, but india is another - what is starting with call centres will soon end up with india as a dominant player in world technology markets.

For all that their are exploitative practices going on here and there, if these can be sorted out, it still remains very much the case that foreign workers can be paid what are, by local standards, very good wages, and still massively undercut the domestic workforce.

How then do we balance the internationalist goal of improving conditions for the poor of the world, without driving down wages on the home front, or even creating unemployment? The market-darwinist answer is of course that exporting what have become commodotised activities, should result in new jobs being created domestically that have more 'added value'.

I see a couple of problems with this however (and I'm sure others will see more):

a) Added-value, in this context, usually although not always, implies skilled or specialised work. We will always have a section of the workforce who will find it difficult to keep up with the demands this poses in terms of acquiring new skills, so what happens to them?

b) Secondly, if we look at things at a very high level, there is not that much new under the sun. Most commercial activity, whether of hard or soft goods, has similar components: manafacturing, infrastructure, sales and marketing and servicing. Manafacturing is already something we've largely exported, infrastructure - which in large parts these days means IT and telecoms - is on the way out, as is servicing. That only really leaves sales and marketing, which is not much to be going on. What I'm saying is that unless there is another transformative change round the corner akin to industrialisation or the dawn of IT and global telecomms, I'm struggling to see where the domestic labour force can retain an edge that keeps it ahead of cheaper labour overseas.

The other side of this is of course bringing the labour to industry rather than moving the industry to the labour, through mass migration. While this provokes different political responses, the dynamics are essentially the same, if perhaps not so acute: cheaper labour has the potential to drives down wages, not to mention returning migrant workers removing money from the domestic economy.

So, what do we do? This seems a really thorny problem to me tbh. It's partially mitigated by our shrinking population, which of course brings it's own problems (but for this thread let's leave that aside) but to far too small an extent to be decisive I expect.

I hope this thread provokes debate cos it will be interesting to see, for example, a left of centre take from Al or Gareth, versus (perhaps) ColR's free market approach.

Okay. First thing to mention is that the SE Asian countries you mentioned certainly were not laissez faire economies during their heavily developing stages. They had very strong protectionist policies, including strict state controls on the flow of money to avoid capital going abroad, heavy government involvement in creating the superstructure to support industry, and government support of selected industries which went as far as having board members of these companies as advisors to government, and government approval of those directors (Hyundai in Korea I believe did this).

The countries which have opened up their financial markets already are fecked imo in terms of being able to develop in a similar way. It's unfortunate that this type of development has not been the one pursued by supra-national bodies such as the World Bank or IMF since it has been shown to have worked. These organisations have instead led with a dogmatic insistence that countries own economic needs are less important than their ideological agenda.

The main point you are talking about is simply post-industrialism. The theory is that all service based industries remain internal and that is what drives the economy. The economic gains from developing nations still flow towards the already rich nations because that's where the capital is held. To use an example if you buy a Dell PC the material which go to make it are plastic, silicon, and some aluminium. The source is (usually) developing nations but the companies which own the extraction rights for these things are usually multi-nationals with the share-holders and employees living in already highly developed nations so most profits go there anyway. The profit from transportation will be to shipping companies owned by multi-nationals (you guessed it). The assembly of the parts will go all around the world, and these companies will also be owned by multi-nationals. The biggest added value that happens is when the PC becomes assembled and sent to your home and that company is probably based in the country it is going to. The software for the PC is probably designed and developed here on the grounds that there is a highly educated computer literate workforce, which means the profits, as well as the wages for workers, go here as well. Servicing of these machines will obviously be local. To sum up, all the profits from added value is probably going to end up in already developed countries to shareholders, those who provide services, and workers for multi-nationals. You could say we could pay a bit more for some things so that developing nations workers will at least be better recompensed, but while some companies may be willing to do this they will be shafted by their competition because if they don't follow that lead their product will be undercut and they will soon find themselves in trouble.

In the current economic structure of the world, it's an intractable problem imo.

[egb_hibs]

Interesting stuff Al, but not quite what I was aiming at. Your points are taken about shareholders, but I was talking about labour forces.

Increasingly, they are going to be overseas or drive down domestic wages. As I keep saying, if the genuinely exploitative practices were eliminated, then foreign labour can still easily undercut domestic workers.

Moreover, higher value work is following more basic industries. The sw guys in your Dell example, are on borrowed time. It may be the case that hw assembly stays within domestic economies, but only due to proximity to customer; given the short half-life of commodity IT components, your assembly / delivery has to be pretty quick in order that stuff isn't outmoded or over-priced by the time the customer receives it.

The move to a service economy actually makes it easier for the next stage of offshoring to take place (I suspect). It's a lot cheaper to relocate a call centre or an office full of programmers, than it is to move manufacturing (for heavy industry anyway).

I actually think that I tend to agree with you that the problem might be intractable, in the short term at least. And I can't think of another economic system that could sort it either
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[wee 162]

Originally Posted by egb_hibs

Interesting stuff Al, but not quite what I was aiming at. Your points are taken about shareholders, but I was talking about labour forces.

Increasingly, they are going to be overseas or drive down domestic wages. As I keep saying, if the genuinely exploitative practices were eliminated, then foreign labour can still easily undercut domestic workers.

Moreover, higher value work is following more basic industries. The sw guys in your Dell example, are on borrowed time. It may be the case that hw assembly stays within domestic economies, but only due to proximity to customer; given the short half-life of commodity IT components, your assembly / delivery has to be pretty quick in order that stuff isn't outmoded or over-priced by the time the customer receives it.

The move to a service economy actually makes it easier for the next stage of offshoring to take place (I suspect). It's a lot cheaper to relocate a call centre or an office full of programmers, than it is to move manufacturing (for heavy industry anyway).

I actually think that I tend to agree with you that the problem might be intractable, in the short term at least. And I can't think of another economic system that could sort it either
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You've picked me up wrong I think. I'm talking about lack of development being intractable whilst the vast bulk of profits are coming to already developed countries.

The system to fix this is protectionism for the developing countries, and us having to accept a slight decrease in overall living standards to stop half of the people in the world living on less than $1 a day. I'd be willing to accept that, but try and get someone elected on those policies and you are in trouble. We accept starvation, people having an life expectancy of similar to 500 years ago in Scotland, illiteracy being a bigger percentage of people than the literate, and all so that we can buy a better car every couple of years. In all honesty it disgusts me.

[hoagy boy]

Originally Posted by wee 162

You've picked me up wrong I think. I'm talking about lack of development being intractable whilst the vast bulk of profits are coming to already developed countries.

The system to fix this is protectionism for the developing countries, and us having to accept a slight decrease in overall living standards to stop half of the people in the world living on less than $1 a day. I'd be willing to accept that, but try and get someone elected on those policies and you are in trouble. We accept starvation, people having an life expectancy of similar to 500 years ago in Scotland, illiteracy being a bigger percentage of people than the literate, and all so that we can buy a better car every couple of years. In all honesty it disgusts me.

It's a Gimme Gimme Culture now
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[egb_hibs]

Originally Posted by wee 162

You've picked me up wrong I think. I'm talking about lack of development being intractable whilst the vast bulk of profits are coming to already developed countries.

The system to fix this is protectionism for the developing countries, and us having to accept a slight decrease in overall living standards to stop half of the people in the world living on less than $1 a day. I'd be willing to accept that, but try and get someone elected on those policies and you are in trouble. We accept starvation, people having an life expectancy of similar to 500 years ago in Scotland, illiteracy being a bigger percentage of people than the literate, and all so that we can buy a better car every couple of years. In all honesty it disgusts me.

in that case, i think it is untenable to be opposed to globalisation Al. I think that instead, the focus needs to be on improving conditions.

moreover, it makes defence of western protectionism a bit questionable. you talk about us having to accept paying a little more for things - should we also accept a greater price - and this is the nub of my question - decreased wages or unemployment in the west?

[egb_hibs]

Originally Posted by hoagy boy

It's a Gimme Gimme Culture now
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is it? on whose behalf?

and how do we combat that?

for example - should we buy only clothes made in europe to register protest at 'sweatshops'?

how many of us do that?

and what would the result be, but job losses in asia?

if we are going to complain about these things I think we need to look at ourselves, as well as some nebulous 'men in suits'.

nike et al, manafacture as they do, because of the prices we are prepared to pay. and if they didn't do that, where are the alternative sources of employment for their workers; presumably if there were more attractive alternatives, they couldn't maintain the arrangements they do.

[hoagy boy]

Originally Posted by egb_hibs

is it? on whose behalf?

and how do we combat that?

for example - should we buy only clothes made in europe to register protest at 'sweatshops'?

how many of us do that?

and what would the result be, but job losses in asia?

if we are going to complain about these things I think we need to look at ourselves, as well as some nebulous 'men in suits'.

nike et al, manafacture as they do, because of the prices we are prepared to pay. and if they didn't do that, where are the alternative sources of employment for their workers; presumably if there were more attractive alternatives, they couldn't maintain the arrangements they do.

It is Gimme Gimme,How do we change it,I gie the weans a slap N tell them they will have to wait
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Serious its Endemic in our young.