Labor Unions Good for Economies and Equity, Says World Bank

[Lawrence of Arabia]

hehe. no. There is a comparative advantage in labor in third world countries because it they demand less wages. Simple as that. They are less skilled, and unemployment is much higher. Just like any good which is in large supply but low demand, the price will be less. How is labor in the US 'better?' And what is 'fair?' Is that an opinion? I think so.

[DuncanK]

Originally posted by Lawrence of Arabia
hehe. no. There is a comparative advantage in labor in third world countries because it they demand less wages. Simple as that. They are less skilled, and unemployment is much higher. Just like any good which is in large supply but low demand, the price will be less. How is labor in the US 'better?' And what is 'fair?' Is that an opinion? I think so.

Ricardo also said that it would be more efficient not just cheaper. That is that there would be a greater division of labor. Cheaper does not amount to a greater division of labor if the only thing that makes it cheaper is greater exploitation of labor.

[Lawrence of Arabia]

Not necessairly. remeber that firms are trying to maximize profits, not efficiency. In most third world countries, there is are very few machines. This is because machines were invented to be the work of many humans. Machines in third world countries will lead to more unemployment, and increased costs. Firms replace union workers in the US who monitor hi tech equipment with non union workers who do the work all by themelves without any capital. Also, how do you define exploitation? It is definitly not with wages, because when multinationals go to third world countries, their wages are a lot higher then the average.

[DuncanK]

I'm not talking about profits. That has nothing to do with the division of labor.

Yes, paying lower wages and breaking up unions is exploitation.

[Japher]

I don't know a whole lot about labor union economics, nor have I ever worked in a union, but I have seen their effects and several things about them concern me:

a) the ability for the employees to control market prices... this should be base on demand and not what they are willing to make the product for.

b) the ability of the employee to control production based on personal agendas... I know this will happen all the time, but what I am worried about is that because of belonging to a union they are not encouraged to flex their power on the work floor, book over time, or attempt to better their performance.

c) Incredulous Labor Unions can control the destiny of too many people... So could an incredulous company, but at least you aren't paying the Co. to protect your rights as an employee.

I am sure that the standard of living for union members is much better than those in the same job that are not in a union, yet the union automatically sets the roof of their potential when they join.

I see a union as the choke chain and leash when training my dog... If she does as I say she gets a treat, and as long as she continues to do as I say she will continue to be happy and well feed. But, if she wants to go off running, or roll over, or tries to take a treat from my hand... whamoo!!! she can't.

[DuncanK]

LoA,

Adam Smith was really the first one to discuss the concept. In the wealth of nations. The wealth of nations increases as greater division of labor is experienced. One nation can produce more of one thing another nation can produce more of another thing. The nations trade and there is more consumption over all. He doesn't talk about the cost of labor in these countries at all, and he isn't saying that one countrie should send its corporations to the other country and take advantage of its cheap labor. He is only saying that one resourse (not labor) is in greater supply in one country and another resource (not labor) is in greater supply in the other country. The two countries trade the two goods to increase overall consumption in both countries.

The inclusion of trading labor itself totally bastardizes his idea. Because when corporations start exploiting labor around the world then they neglect to factor in where the goods would be produced if labor costs were the same everywhere. Where the goods would be produced if labor costs were equal everywhere is where the division of labor is greatest and where overall consumption is greatest.