Should developed nations refuse to take exports from LDCs that have weak labour laws?

[Kidlicious]

Originally posted by Imran Siddiqui
Why wouldn't you? If you have a further educated class, they will form their own businesses or have another MNC (or the same one) offer them higher wages. Simple as that.

I see what you're saying. You are thinking of it as a dominoe effect, but it's not that simple. Globalization is just a step increase in the demand for cheap labor. The demand is not going to increase much so things have gotten about as good as they are going to get for the third world worker. I would say that things could get worse, but even with globalization people are working for subsistance wages. So they can't get worse.

[ranskaldan]

Originally posted by Kidicious


I see what you're saying. You are thinking of it as a dominoe effect, but it's not that simple. Globalization is just a step increase in the demand for cheap labor. The demand is not going to increase much so things have gotten about as good as they are going to get for the third world worker.

Demand IS increasing - because richer countries continue to grow while poorer countries are becoming richer. And with this, the cycle propagates itself - the demand is created for even more poorer countries shift from agriculture to industry - and hence, to build their own middle classes.

The first rung of cheap-labour-land has graduated to the rich club (South Korea, Taiwan, etc) and the second rung is following close behind (Malaysia, Thailand, etc). Globalization is frankly very amazing.

[Urban Ranger]

Originally posted by ranskaldan
Demand IS increasing - because richer countries continue to grow while poorer countries are becoming richer.

Not all of them. In fact, many LDC's, particularly those in SA and Africa, are becoming poorer.

[ranskaldan]

Originally posted by Urban Ranger


Not all of them. In fact, many LDC's, particularly those in SA and Africa, are becoming poorer.

Well yea, I should have said some. But then, it's not like those were an important source of middle class demand anyway.

Once the current sweatshop-lands are raised up into reasonable wealth, MNC's will descend on those countries. Give it some time.

[Kidlicious]

The developed countries aren't growing very fast either. The world economy as a whole is growing less than 2% a year. I could be off a bit. In fact it could be closer to 1%.

[Shi Huangdi]

"Sweet shops do keep products cheap but if we forced the sweet shops to...oh... hire only adults instead of child laborers then we might just improve the world a bit."

Until without the income from child labour goes away and suddenly there isn't enough money to feed the children.

Life isn't so simple.

[ranskaldan]

Originally posted by Kidicious
The developed countries aren't growing very fast either. The world economy as a whole is growing less than 2% a year. I could be off a bit. In fact it could be closer to 1%.

A lot of places in the world are imploding, which drags the number down. What we are depending on right now are the countries that are growing at healthy rates, like China or India. These are the future homes of a wealthier middle class that will be able to kickstart other nations on their paths to development.

Pull out of China or India (which is the point of this thread) would stop that process. Then the 3rd world nations of the world can simply spend the next 50 years collapsing economically, imploding into small factions, and fighting nuclear wars with each other.

[Kidlicious]

Originally posted by ranskaldan
A lot of places in the world are imploding, which drags the number down. What we are depending on right now are the countries that are growing at healthy rates, like China or India. These are the future homes of a wealthier middle class that will be able to kickstart other nations on their paths to development.

Pull out of China or India (which is the point of this thread) would stop that process. Then the 3rd world nations of the world can simply spend the next 50 years collapsing economically, imploding into small factions, and fighting nuclear wars with each other.

I would say that right now it depends on the US. The whole world depends on US demand. If we could change that it would be great. I would like to see Japan develope its domestic economy. That would do wonders for China. As long as China is just a source for cheap labor growth will be restrained there though. They need to make changes, and those changes are the topic in this thread.

[ranskaldan]

Originally posted by Kidicious


I would say that right now it depends on the US. The whole world depends on US demand. If we could change that it would be great. I would like to see Japan develope its domestic economy. That would do wonders for China. As long as China is just a source for cheap labor growth will be restrained there though. They need to make changes, and those changes are the topic in this thread.

Not really. Having prices for consumer goods shoot up here in North America wouldn't be good at all; you're hurting profit and competitiveness for many American firms and reducing the purchasing power of all American consumers. Plus, you're killing a potentially large middle class in China. [If even 20% of China enters the middle class, that's a huge number, and it's not that hard to do; but it depends first and foremost on large-scale MNC investment. The same goes for India.]

[Kidlicious]

Originally posted by ranskaldan
Not really. Having prices for consumer goods shoot up here in North America wouldn't be good at all; you're hurting profit and competitiveness for many American firms and reducing the purchasing power of all American consumers.

Huh? Chinas economy depends on its exports. Right now the trade surplus with the US is over $100b and growing. Inflation in the US can't change that because China has the yuan pegged to the dollar. Higher prices in the US can only be good for China. That is unless the US economy goes sour, or the US gets sick of the undervalued yuan.

Originally posted by ranskaldan
Plus, you're killing a potentially large middle class in China. [If even 20% of China enters the middle class, that's a huge number, and it's not that hard to do; but it depends first and foremost on large-scale MNC investment. The same goes for India.]

Yes, it depends on foreign investment, especially since Chinese don't seem willing to make that investment themselves, but I would never want to depend on FDI. China could lose that so quick it would make their heads spin. Then it will be all over.

Two things can cause capital flight in China, Risk and Wage cost

[Zkribbler]

Originally posted by ranskaldan
Pull out of China or India (which is the point of this thread) would stop that process. Then the 3rd world nations of the world can simply spend the next 50 years collapsing economically, imploding into small factions, and fighting nuclear wars with each other.

...or China and India could choose to have reasonable labor laws, which would share the wealth that's being created with their working classes...thereby accelerating the growth of their middle class, thereby increasing the number of their consumers, thereby increasing demand, thereby increasing prosperity for all concerned. ---which is the point of this thread.

[ranskaldan]

Originally posted by Kidicious

Huh? Chinas economy depends on its exports. Right now the trade surplus with the US is over $100b and growing. Inflation in the US can't change that because China has the yuan pegged to the dollar. Higher prices in the US can only be good for China. That is unless the US economy goes sour, or the US gets sick of the undervalued yuan.

You really didn't refute my point there. I wasn't talking about the Chinese economy.

Yes, it depends on foreign investment, especially since Chinese don't seem willing to make that investment themselves, but I would never want to depend on FDI. China could lose that so quick it would make their heads spin. Then it will be all over.

Unwilling? There simply isn't enough money in China in the hands of entrepreneurs. Of course you can let them go slowly, build up like the Western nations over 200 years, etc, and God knows how many civil wars and revolutions there will be in two centuries and how much danger that would pose to the world's stability. Or we can take a shortcut and launch China and India into wealth.

Two things can cause capital flight in China, Risk and Wage cost

And you seem to be proposing both. That doesn't make sense.

[ranskaldan]

Originally posted by Zkribbler


...or China and India could choose to have reasonable labor laws, which would share the wealth that's being created with their working classes...

Not really.

If that happens, Nike and Sony would simply grab their money and run off to some other place that is even less prepared for creating a middle class. The newly laid-off Chinese and Indians workers would return to the overworked farmlands and continue starving. Then the vicious cycle that created the poverty of China and India would simply continue.

[Kidlicious]

Originally posted by ranskaldan
Unwilling? There simply isn't enough money in China in the hands of entrepreneurs. Of course you can let them go slowly, build up like the Western nations over 200 years, etc, and God knows how many civil wars and revolutions there will be in two centuries and how much danger that would pose to the world's stability. Or we can take a shortcut and launch China and India into wealth.

The Chinese are investing in the US much more than the visa versa you see that by the trade surplus. At some point that will have to change. It's not going to just happen atomatically.

Wage increase will help, but the whole strategy will have to change. My point is that the current strategy must be changed for much improvement to occur. I would even say that the current strategy will lead to colapse if the Chinese government can't change it.

[ranskaldan]

Originally posted by Kidicious

The Chinese are investing in the US much more than the visa versa you see that by the trade surplus. At some point that will have to change. It's not going to just happen atomatically.

The reason for the trade surplus is because MNC's prefer to produce their goods in China (or outsource these to Chinese subcontractors). We're still a long way away from Chinese MNC's investing in the US.

If you mean just the trade surplus - what's wrong with it? What exactly makes it so bad that "it will have to change"?

Wage increase will help, but the whole strategy will have to change. My point is that the current strategy must be changed for much improvement to occur. I would even say that the current strategy will lead to colapse if the Chinese government can't change it.

Why would wage increase help? (It wouldn't.) And what other changes are you thinking of? Why wouldn't the current strategy lead to improvement? Why the inevitable "collapse" if the current strategy is allowed to continue?