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This is the way globalization is supposed to work, isn't it? Over time the difference in wages between one country and another for the same work should diminish
by cageface 15y ago
This is the way globalization is supposed to work, isn't it? Over time the difference in wages between one country and another for the same work should diminish.
- AndrewDucker 15y agoYup. I'd expect exactly what's happening at the moment - richer countries to stagnate, poorer countries to see rocketing wage inflation, and eventual stability. It'll take a couple of generations though, what with differences in education, training, etc. to work through.
- ck2 15y agoYup, I don't actually have a problem with this - if only it meant domestic production would be more viable but that is unlikely. However won't a wage increase for thay many workers just mean their local inflation will also rise? I still want to know we can buy 50 cent items from China off ebay and have them mailed individually for free. How on earth does their postal service (and our local country's) mail something that cheaply? Cannot quite grasp the logic.
- jrockway 15y agoDomestic production is already viable for many, many consumer products. The margins are so high that the minimum wage difference doesn't matter. It's stuff like 99-cents-for-ten-gallons shampoo that is most profitably produced in China, and that will probably remain the case.
- electromagnetic 15y agoIt'll just be $1.29-for-ten-gallons shampoo after the wage hike.
- rdtsc 15y ago> if only it meant domestic production would be more viable but that is unlikely. What would probably happen first is other countries will be targeted for low wage labor, I am thinking Vietnam.
- yxhuvud 15y agoThe problem is that most other countries are a lot smaller, meaning the same situation will happen again, only a lot faster.
- moonchrome 15y agoNot exactly, minimum wage laws aren't actually market forces and I think two things are likely a) further inflation in essential goods, seeing how China already has inflation problems this is probably a response to that but will only add fuel to the fire b) fewer jobs, especially considering the part of their economy based on construction - and that bubble is bursting ATM. China has to compete with India, the rest of Asia, and automation on top of that. This doesn't look like it's going to end well.
- _delirium 15y agoThey may or may not come out of it on top, but China's government does have some pretty solid technocrats running the numbers when they do these sorts of things. One guess is that they're worried that without the lower-end workers getting somewhat more money, there will be unrest that the government will have to do something about, for example by subsidizing housing if a typical worker in the area can't afford housing on the minimum-wage salary. If that were the case, this would be basically a way of internalizing the externality--- baking the social-unrest-reduction fee into the wages, rather than using taxes (on the same companies) to spend out of a separate pot for welfare.
- moonchrome 15y agoChinese "technocrats" created probably the largest real-estate bubble yet by focusing on short term GDP growth numbers. Look up china ghost cities. People bought in to these as retirement/savings to avoid their constant inflation (which is increasing). They are in a situation where they can't inflate that bubble anymore because the inflation would get out of hand, and are willing to risk economic downturn to slow it down (that should tell you how serious it is).
- wisty 15y agoLocal governments make a lot of money (both formal revenue and informal bribes) off real estate development. The states / cities can't balance the budget without selling housing plots to developers. And the banks have low interest, while inflation is insane (due to both government monetary policy, and the good inflation of wage growth - both of which encourage development at the cost of encouraging bubbles). Then there's the cultural preference for boys and the one child policy leading to more boys than girls, so the girls only want to marry boys with houses, encouraging parents to buy a house for their son. On the other hand, China's deposit requirements for houses are draconian. Think 40% down. And the national government has been screaming bloody murder at house prices for quite some time, trying to ram all sorts of measures through to control house prices. Also, some of the ghost cities are kind of fictitious. I know one which was built on edge of a growing city, which rapidly filled up. There were some more developments in cheaper locations that looked a little iffy, but the one on the international news sites wasn't really a ghost city. What they really need to do is widen their tax base. Income taxes are a joke, because people lie on their tax returns. Taxing the sale of houses creates perverse incentives. One option (which fits in well with their Marxism and focus on productivity) is to tax land. That would keep house prices down, and create a fair tax base - no more millionaires living in mansions paying no tax because they have better accountants. They also need to reform government spending, and make the local governments more honest, but that's easier said than done - they are already executing bad eggs left right and center.
- maximusprime 15y agoAnd we all end up poor! Great.
- known 15y agoUnlike in America, Economic mobility and Social mobility are mutually exclusive in Chindia.