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Thursday, November 10, 2011

China: No More Cheap Labor-CONSEQUENCES

I've been talking about this for the past two years, but I'm glad to see it gaining some traction.  Given the typical demand and supply curves, the most obvious way for companies to make profits is to lower the costs of production.  Right?  Simple economics.  There are two ways to do that: Technology and Cheap Labor.  Western democracies have done both, no need to explain that.

Politicians and pundits have used this fact on both sides of the aisle, often for conflicting purposes.  If its not the mexicans stealing jobs, it's the factory jobs getting outsourced to Asia, Bangladesh, India, etc. And everywhere the ray gun of capitalism is fired, populations are roughly enslaved--forced to work in deplorable conditions for a pittance.

At first, this doesn't seem so bad.  Factories often provide certain amenities (even the terrible ones) to its tenant-workers, room and board (taken from their already meager salaries,) minimal healthcare (cuts and scrapes).  In some countries where the local economies have been demolished through autocratic rule and farm-based economies are reduced to corporate serfdoms, this can often even lift up the population. Wage slavery, after all, requires enough sustenance to keep those brown and yellow hands a flutter with activity.

However, global capitalism (globalism) has for the past twenty years made a practice of finding the absolute perfect site for production of each part in the line.  A Dell computer, for example has its genesis in a spider web of nations, back and forth across the Atlantic Ocean several times.  How is this efficient production? I apologize for the shoddy map, my business textbooks had a much better one.  Every time the price of labor goes up in one country those lines change.  Of course, there are reasons NOT to change as well.  Overall stability is a big one.  No one will be building any factories in Afghanistan anytime soon (unless they're refining Opium).  Security in monetary systems are imperative as well.  If a dictator can seize your profits on a whim, then building a factory in North Korea may well be out too. (I was going to say Libyia, oh well).

Regardless, there comes a point, when the sheer amount of dollars (even when it disproportionately favors "the Haves" begins to lift up the local economy regardless of everyone's efforts.  Kennedy coined this phrase, though its been used repeatedly by the right recently: call it, "a rising tide lifts all ships."  It's not that things get better-because they get worse (see Apple factories), but reforms must be made. I've been wondering why that works out, and I think its because even when you funnel that supreme wealth into a tiny 1%, enough humane, reform minded people are able to be educated, and see how things work outside of the system, that they campaign for change. Usually the children of scientists, doctors, and lawyers, who are all trained in the humanistic doctrines of liberalism, because there would be no knowledge without equality and fraternity.

But I digress again, keep it together Ravingleftatic.

The point is--rising costs of production will change the game of globalism entirely.  Those changes will be endemic, and could be dangerous, causing market instability, currency fluctiatons and trade inequities.  Still, this is the time to do it.  No one will notice in a market that drops and raises 300 points a day.

But more on this later.

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