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Price of Freedom Is Higher Than Minimum Wage

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Jacob
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Re: Price of Freedom
Jacob   4/16/2013 12:53:07 AM
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Proclivis, there is no doubt that the living standards and working environment/conditions are very much improved in China and nearby countries. Much of the employees have a better living standard and they are happy with the current way of living/work environments in their country.

Ned Ludd
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Re: Price of Freedom
Ned Ludd   4/14/2013 12:56:09 PM
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Proclivis:

Two weks ago, when I noted that the British halted its slave trade for two reasons, the first that I cited was "moral." Yours is the first comment I've received that gives full (or any) consideration  to the moral implications of unregulated global capitalism. Thanks for a thoughtful response, and one more comprehensive than my original thesis (I have to observe a word count).

Benjamin

Proclivis
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Re: Price of Freedom
Proclivis   4/13/2013 2:17:48 PM
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I think it is important to keep in mind that not all businesses in China are sweatshops. I have been in several electronics factories in Shanghai and Chengdu where the workers lived in apartments and got back and forth to work by walking, biking, bus, etc. They were not living in dormitories, and their work hours were long, but they tended not to work weekends and you would see them at the mall on Sundays and they had dinner with family like most people. I drove past Foxcon after the explosion, and the workers were not jumping out of windows.

This is not to say that exploitation does not exist. Capitalism loves to build hierarchies that take more than they give. A hard core capitalist will say they deserve a risk premium, which as an investor in my own company I agree with, but at some point the premium becomes something akin to externalization. I view this as an abuse of power, unchecked or worse, supported by a legal system and mythology. At its worst is the CEO who stands on principle and says he followed the law, and therefore is just. Reminds me of the Friedman vs. Brandeis case study in my MBA program. We have just as much of this behavior in the US as in China. It is just that we don't notice it as much in the US because the overall economy is more developed, so the misery at the bottom is not as pronounced.

This might change if we are not careful. I don't relish living and sleeping in a camper outside Walmart and stocking shelves at night. I have seen this in my local community. I don't view this as being much different than the situation in some Chinese factories, except the dormatories may be less prone to bed bugs than the camper, because of routine spraying. Locally, we actually had a Walmart that discovered bed bugs on a couch where the employees took naps or rested. I have a hard time believing the guy in the camper is any more free than the factory worker just because he can drive the camper around the block; if he can afford the fuel.

I have heard that in China the govenrment has been slowly raising standards and requiring companies to pay a tax that supports long term social security. They have to do this because they have the same demographic problem that the western world has with a large cohort that will eventually be too old to work, or companies simply wont hire them, whichever comes first. It always feels a bit odd to me, becasue on the one hand, I am glad to see the government do this, on the other hand, this same government is authoritarian and self appointed by the party; not eactly representative or participatory democracy.

I saw an interesting sign in China that basically says the country is on a mission of civilizing. I view this to mean, creating discipline and economic order. There are companies that take young people from the countryside and teach them cultural values such as showing up to work on time, sanatary practices, proper dress and work behaviors, etc. The purpose of such education is to make them good workers. It would be hard to run any factory without some of this. I suppose these programs could be looked at very differently depending on one's point of view. However, they don't have a religion playing that role, so this seems to fall under the Chinese axiom that they don't care what color the cat is as long as it catches mice.

I am not so sure I would use the term slavery except for the worst abuses, such as human trafficking. Endentured servant is a better metaphor. As far as I know, the workers have not been shipped from some other country against their will with no status as citizens, housed in cages, etc. They enter into employment agreements. However, the pratical side is that they can become trapped. I have heard that in many cases young girls and boys enter the factory and save money for 5 years and then go home and try to make a better life. It is always possible for a large company to stack the deck against them so they can't leave. I have no idea how often it happens, but in the factories I worked in, the work conditions were similar to electronics manufacturing in the 80's in silicon valley. I don't see why any company in China would need to stack the deck, as there are plenty of workers to replace anyone that leaves. I suspect it is more about extracting every last penny of profit possible.

Many businesses in China are in low cost markets where the margins are very slim. In one factory I was at when a work cell (machine) went down, within one hour the CEO was out of the floor enraged that the line was not up. The reality was that if the machine was down for a day, it would take a month to make up for the losses. This is the nature of a market with too much competition and not enough value add. These are the markets that developing countries enter because they have large amounts of unskilled workers they can train and employ on the cheap.

The only way I know how to get around this is to create and enforce a standard that levels the playing field. A world wide minimum wage would do that. But how do you pull that off politically in a world of sovereigns? How do you get the few and powerful to work against their short term economic interest for the sake of long term stability? We can't even get that done in the US let alone the world. The other way is to allow the market to consolidate until it stabalizes at a natural labor rate, if you can accept that the market determines the labor rate and not some other values, and can live with the pain.

Personally, I think we need some regulation because I think markets are more stable when there is a balance of power between labor and capital. When either side gains too much power, things go badly. I think we could have a good discussion about how we know when it is balanced, and how to achieve it, justify it, mystify it, etc. I think the discussion is much more complex that a discussion of unions, and it is highly contextual. What works in the US may not work in China.

As to the specific issue of throwing economies out of balance. I think the rate of change is more of a problem than the change itself. If there is a large developing country in the same economic system as developed countries, there is going to be shifting around. There will be winners and losers. Some people are going to economically rise, and some are going to fall. As long as the change is gradual, the system will maintain stability. This instability applies as much to the developing country as the developed. We have wage pressure, they have pollution. China knows that if growth slows, and they have millions of unemployed workers, and they will have political instability. They have just as many worries as we do. We both have a lot to gain or loose.

What alternative is there to this kind of development? China could have tried to develop markets on their own, isolated from the western world. But that would have taken 10 times longer than engaging in the world economy. By engaging, they can attract the capital required to develop. Now they will slowly develop their local economy and eventually things will stabilize. It is a painful process, but so was the first industrialization in the west. I think we could have a healthy discussion on alternate models, and the political process required to implement them.

I certainly don't think we should just call this a natural process and let it go unmanaged. I think we just have to struggle against the worst excesses as best we can. But I think the proper place to attack the problem is at the level of ethics and social values. No political or legal system can beat a value system in the long run. At the end of the day, every economic system has to be somewhat managed to keep it healthy, and that begins with values.

From another poitn of view, I think all these issues are short term problems. The longer term problem is whether any civilization survives. All capitalist systems tend to rely on consumption and growth. It consumes raw resources such as precious metals used in permanent magnets, oil, etc, and by polluting, it consumes our natural environment. The carbon load we are placing on the envronment causes global warming, which is the untimate externalization. Unless the world economy shifts to a sustainable concept, something more like natural capatalism, eventually the whole system will collapse. This will make the current problems of exploitation look like childs play.

As much empathy as I have for those at the bottom struggling, I am much more concerned about the long term problem, which is firmly rooted in our current worldview which is very difficult to change. Our base value system may have to make a painful shift in order for civilization to survive.

Ned Ludd
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Re: Price of Freedom
Ned Ludd   4/12/2013 11:27:37 AM
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Fascinating. It appears that the entire readership of this esteemed publication subscribes to the philosophy of "I got mine." They inform me, the class ingenue, that conditions in some parts of the word suck, and there is no power on earth that can keep these conditions from sucking. So, the best we can do is to turn our gaze away from the exploitation of the poorest people in these rotten places, consoling ourselves with the assumption that their meager wages allow them to feed themselves a higher grade of catfood 'til they're used up and discarded by the Western corporation that prospered on their hardship. Then we hope they die quickly, so that their suffering doesn't become obvious and bother us.

I am informed by my commentators that not only is it dumb to lament the near-slavery of sweatshop wage-slaves in places like Bangladesh and China. It is pointless and in bad taste to notice these conditions, lest I tweak the consciences of the well-off into a state of discomfort.

As yet, none of my respondents, for some reason, has addressed the practical issue of how underpriced labor in a global market throws entire economies out of balance and puts it in constant peril of a collapse that stretches across the entire supply chain.

 

prabhakar_deosthali
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Re:
prabhakar_deosthali   4/12/2013 8:13:54 AM
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In some of the poor countries or in the poorer sections of the developing countries , "Getting some work" to feed oneself and one's family is so difficult that such people prefer to work in a sweatshop for a seemingly meager money , because that meager money is like a pot of gold for them because it allows them to stay alive and keep their families fed.

 

FLYINGSCOT
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nirvana
FLYINGSCOT   4/12/2013 5:35:50 AM
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I dream of a world where everyone is equal and no one gets abused.  The reality is very different.  Sweatshops of today are not the same as slavery as slaves had absolutely no choice.  We need to help less fortunate countries develop by themselves and surely inward investment from "richer" western companies must help this.

Jacob
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Price of Freedom
Jacob   4/12/2013 12:57:50 AM
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David, in most of the countries, employments are governed by their own internal labour/employment rules. In that rule and it may be clearly specific about the working hours, minimum wages, overtimes, employee privileges etc. in my country it's very clearly mentioned that working time will be 9 Hours, including one hour rest/break in between and if anybody put more than this, they are entitled for over time allowances.



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