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Ok. But thinking aloud here, when and how does exchange rate come into play? The only reason I have been lifted out of poverty living in India is because of "We

Ok. But thinking aloud here, when and how does exchange rate come into play? The only reason I have been lifted out of poverty living in India is because of "Western" consumers - I do work for which my employer gets paid in dollars, and they give me a fraction which is enough for me to lead an upper middle class lifestyle in India. No Indian company will pay, or has the ability to pay, as much money as I am getting now doing the same work for Indian consumers. So if a large percentage of "Western" consumers don't consume as much as they used to, it directly affects my livelihood. Is it a paradoxical situation that I am probably taking away the job of someone in US thereby temporarily improving my livelihood in the short term, whereas I actually don't have a livelihood in the medium / long term?

zanny 12y ago
The hope is that the temporary wealth transfer until you reach equilibrium can fuel your own countries growth to the point where it can self perpetuate the cycle with its own infrastructure. IE, you built factories and call centers and all manner of things to service western tastes, and even when the western money dries up by then you should have enough in your own little money cycle plus the infrastructure to produce enough to compete globally to maintain equilibrium. It is an efficiency game. You start out with a farmer who has no tools, but because they live in an impoverished nation he sells his crops for next to nothing and that next to nothing money is considered a lot where he comes from. That money gets him funds to buy tractors and plows and other productivity boosters or maybe self driving combines to just outright replace some of his labor. Now while a lot of that might come from the same western market, he will still spend some of it locally, and macroeconomically that effect will spread wealth in the local area assuming locals can buy something from each other. As long as the equation has money flowing out of another country into yours you are boosting your economy through your citizens productivity. By the time the equation equalizes, the farmer should have all the modern tools of the farming trade such that there is price equalization between himself and all other farmers - their countries economic deficit gave him an opportunity to invest in his farming, yielding a more efficient farm that can produce significantly more food and by the time it is done sell it at western market value because their economy has equalized with the first world. Of course, the farmer could also blow all his temporary profits on drugs and women, and end up screwed when he cannot produce enough crop to sustain himself as the cost of living rises with a modernizing economy.
- amirouche 12y ago
  > that effect will spread wealth in the local area assuming locals can buy That's the problem you can't be sure once there is no more "western jobs" that they will remain enough money in the country. You are just assuming without proof. The exact thing neocon have been doing for years.

zanny 12y ago

The hope is that the temporary wealth transfer until you reach equilibrium can fuel your own countries growth to the point where it can self perpetuate the cycle with its own infrastructure. IE, you built factories and call centers and all manner of things to service western tastes, and even when the western money dries up by then you should have enough in your own little money cycle plus the infrastructure to produce enough to compete globally to maintain equilibrium. It is an efficiency game. You start out with a farmer who has no tools, but because they live in an impoverished nation he sells his crops for next to nothing and that next to nothing money is considered a lot where he comes from. That money gets him funds to buy tractors and plows and other productivity boosters or maybe self driving combines to just outright replace some of his labor. Now while a lot of that might come from the same western market, he will still spend some of it locally, and macroeconomically that effect will spread wealth in the local area assuming locals can buy something from each other. As long as the equation has money flowing out of another country into yours you are boosting your economy through your citizens productivity. By the time the equation equalizes, the farmer should have all the modern tools of the farming trade such that there is price equalization between himself and all other farmers - their countries economic deficit gave him an opportunity to invest in his farming, yielding a more efficient farm that can produce significantly more food and by the time it is done sell it at western market value because their economy has equalized with the first world. Of course, the farmer could also blow all his temporary profits on drugs and women, and end up screwed when he cannot produce enough crop to sustain himself as the cost of living rises with a modernizing economy.

amirouche 12y ago
> that effect will spread wealth in the local area assuming locals can buy That's the problem you can't be sure once there is no more "western jobs" that they will remain enough money in the country. You are just assuming without proof. The exact thing neocon have been doing for years.