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Post by unlawflcombatnt on Oct 12, 2008 11:32:35 GMT -6
[glow=red,2,300]Revised 11/22/08[/glow] (This is a revision of the original post, as the original was confusing to follow. However, the original post has been reposted later in this thread, as an alternate explanation. The final numbers are still the same, but they were calculated in a different order.)49¢/hr. Chinese WagesIn an article from Yahoo News about Chinese labor, I was able to calculate that the average Chinese worker's wage is 49¢/hour. However, even this may be an overstatement, as it is based on a 40-hour workweek. If the workweek is 48 hours, this drops to 40¢/hour The article states that the income of China's farmers is currently around $590/year per person. Later in the article, it further states that China has 750 million rural dwellers who own land. It seems that "rural dwellers" and "farmers" are being used synonymously. Thus the $590/person/year income would apply to at least these 750 million. So how much are these 750 million Chinese persons' incomes per day? How much are Chinese workers making per day and per hour? I'll calculate this 2 different ways. The 1st way ( #1) assumes all 750 million are actually working. The 2nd way ( #2), which will be done following this, assumes that not all 750 million are working. #1$590/year ÷ 365 days/year = $1.61/day. Thus $1.61/day is the per capita income of 750 million of China' people. To determine the hourly labor rate, however, the number needs to be adjusted by the number of days worked (in addition to the number of hours worked per day). Let's assume they work 5 out of 7 days per week. $1.61/day ÷ 5/ 7 = $2.25/day *$2.25/day is the average daily wage of Chinese workers. Next Hourly wage, based on 8 hours/day: $2.25/day ÷ 8 hours/day = 28¢/hr. (for a 40-hour workweek) *28¢/hr. is the hourly wage of Chinese workers for a 40-hour workweek. Now if we increase the average workweek to 48 hours, the wage becomes even lower. The reduced hourly rate can be calculated as follows: 28¢/hr. × 40/ 48 = 23¢/hr. *23¢/hr. is the hourly wage of Chinese workers for a 48-hour workweek. Again, all of the above assumes that this applies to 750 million working Chinese persons. But it does seem probable that this actually applies to all Chinese persons living on farms/in rural areas--including those who are not actually working. As such, the wages of those actually working would be higher. So we may need to apply this to only those of that 750 million who are assumed to be working. -------------------------------------------- #2 Using the CIA's economic statistics for China and calculating ( *see below), it appears that 58% of the total Chinese population is working. This would make the per-worker income $3.88/day. Below is the calculation: ($2.25/day ÷ 58% (or 0.58) = $3.88/day) for an 8 hour day, this should be divided by 8 $3.88/day ÷ 8 = 49¢/hour. *49¢/hr. is the hourly wage of Chinese workers for a 40-hour workweek. It's likely, however, that the average Chinese worker is working at least 48 hours/week. If so, the hourly wage should be reduced as follows: 49¢/hour × 40/ 48 = 41¢/hour *41¢/hr. is the hourly wage of Chinese workers for a 48-hour workweek. From this, using the a 58% total employment rate for these 750 million Chinese people, there would be 435 million Chinese workers making between 40-49¢/hour. It's impossible for American workers to compete with Chinese workers based on such low labor costs. The average American worker makes roughly $18/hour, or over 36x as much as a Chinese worker. In order to be "competitive", American workers would have to be 36 times as productive as Chinese workers. This is absolutely impossible when Chinese workers receive the same amount of productivity-increasing capital investment. Again, the only way to offset this wage differential is through TARIFFS. ________________ CIA China infowww.cia.gov/library/publications/the-world-factbook/geos/ch.htmlLabor force: 800.7 million (2007 est.) Population: 1,330,044,544 or 1,330 million (July 2008 est.) * Using the stated unemployment rate of 4%, the employment rate would be 96%. Therefore, the total number employed of the 800 million labor force would be 768 million. (800 million X 0.96 = 768 million) Thus, the employment-to-population ratio would be ~58% (768 mill. ÷ 1,330 mill. = 0.5774) Note: This is not the same thing as the US's employment-to-population ratio, which is instead determined by dividing total employment by only the working age population of 234 million. Age structure: 0-14 years: 20.1% (male 142,085,665/female 125,300,391) 15-64 years: 71.9% (male 491,513,378/female 465,020,030) (491 mill Males + 465 mill Females = 956 mill)[/b][/ul] Unemployment Rate: 4.0% (at least, that's what they claim)
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Post by graybeard on Oct 12, 2008 20:20:36 GMT -6
Although it's probably minor money in the case of the Chinese, what is their total equivalent income? Do they have free or low cost medical care? Do they receive any fringe benefits we don't? Is their food subsidized?
I didn't read it, but there was a headline on Bloomberg today saying China will now concentrate on their internal markets now that the US market is tanking. That's a good thing.
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Post by unlawflcombatnt on Oct 13, 2008 9:20:10 GMT -6
Although it's probably minor money in the case of the Chinese, what is their total equivalent income? Do they have free or low cost medical care? Do they receive any fringe benefits we don't? Is their food subsidized? From what I've seen on PBS, the Chinese have little or no health care benefits--at least among production workers. At least one of their TV spots showed workers that had 0 health care benefits, and said they simply worked until they died. I haven't heard anything about food subsidization, one way or the other. It certainly is a good thing, for us as well as them. They certainly have the budgetary capacity to pay workers more, and provide benefits. It is true that Chinese PPP (purchasing power parity) income puts their spending power at over 2X as much as their exchange rate income. But this applies to domestic consumption only. It's their exchange rate income that determines how much in the way of American goods they can purchase, since they'd have to buy American imports in US dollars. Their PPP income only determines their buying power related to Chinese goods.
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Post by judes on Oct 18, 2008 10:28:15 GMT -6
Hard times are about to be felt by the Chinese. The golden goose that supported their economy has been killed, and now the effects are beginning to be felt. news.aol.ca/article/workers-gather-at-shuttered-china-toy-plant/384076/I have read in other news that about 50% of toy makers have folded in China so far. Who needs toys when they are having a hard enough time paying for food and housing?
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Post by unlawflcombatnt on Oct 18, 2008 13:38:01 GMT -6
Using some of the previously mentioned CIA stats for China, some interesting comparisons can be made. CIA China info www.cia.gov/library/publications/the-world-factbook/geos/ch.html
Labor force: 800.7 million (2007 est.)
Population: 1,330,044,544 or 1,330 million (July 2008 est.)
* Using the stated unemployment rate of 4%, the employment rate would be 96%. Therefore, the total number employed of the 800 million labor force would be 768 million. (800 million X 0.96 = 768 million) Thus, the employment-to-population ratio would be ~58% (768 mill. ÷ 1,330 mill. = 0.5774)
Note: This is not the same thing as the US's employment-to-population ratio, which is instead determined by dividing total employment by only the working age population of 234 million.
Age structure: 0-14 years: 20.1% (male 142,085,665/female 125,300,391) 15-64 years: 71.9% (male 491,513,378/female 465,020,030) (491 mill Males + 465 mill Females = 956 mill) [/b][/ul][/size][/quote] China has 756 million employed workers, with a working age population of 956 million. This leaves 200 million working age Chinese persons not employed. This is a potential labor surplus of 200 million. In the US, the potential labor surplus is 89 million (234 mill working age persons - 145 mill employed persons = 89 million) The huge 200 million labor surplus in China will continue suppressing Chinese wages for the foreseeable future, thus continue to put downward pressure on the wages of American workers, who must compete with them for jobs in the Globalist New World Order, where capital flow has no national boundaries, and the richest consumer market on Earth, the US consumer market, puts no restrictions on imports. The 89 million labor surplus in the US will continue putting downward wage pressure on ALL America workers, while China's labor surplus will put additional pressure on the wages of American workers in outsource-able industries. This downward slide in American wages, and resultant decline in living standards, can only be solved by a government willing to protect its workers from competition with the semi-slave labor of foreign workers. And the only effective tools in our arsenal are tariffs. We need tariffs NOW, not later. The loss of American jobs is a much, MUCH bigger problem than the trumped up "Financial Crisis." Without the ability to produce wealth of our own, along with the ability to spend wages earned into our own economy, we will remain "in crisis." Americans have spent borrowed, artificial wealth to maintain a bubble economy, instead of spending wages earned from production of real wealth. The "Financial Crisis" is not one of reduced liquidity. Rather, it is one of reduced solvency. Banks aren't lending not only because they're insolvent, but because there are few profitable opportunities to make loans. Banks won't loan to someone with a bad business proposal (i.e., one with little probability of being paid back), regardless of how much reserve capital they have. By its nature, a recessionary economy provides fewer profitable investment opportunities, thus providing fewer profitable loan opportunities as well. Americans have been spending borrowed, artificial wealth to maintain a bubble economy, instead of spending wages earned from the production of real wealth. The solution to the current financial "crisis" is to produce the real wealth needed to pay down the insolvency, not to borrow more to mask our insolvency, and make it even worse. We could easily raise additional Federal revenue, and increase domestic production demand, with one simple policy: TARIFFS. The silver lining to the current $700 billion trade deficit "cloud", is that we have so much to gain by reducing non-oil imports, and so little to lose from "retaliatory" tariffs on our minuscule amount of manufactured exports. It's difficult for China, Mexico, Canada, Britain, or the Euro zone to hurt us much with retaliatory tariffs. They're buying almost nothing from us except raw materials and component parts used in the goods they export back to us. The next "stimulus" package needs to be one that truly stimulates American production, not foreign production of imports in to the US. The next stimulus needs to be a revenue-generating tariff on imported goods. If there is a direct handout to consumers — in the form of tax breaks (and for the non-affluent only), infrastructure spending, extension of unemployment benefits, or food stamp increases — it needs to be 100% financed thru TARIFFS.
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Post by judes on Oct 18, 2008 13:44:51 GMT -6
Absolutely agree with you Unlawfl, well said.
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Post by unlawflcombatnt on Nov 22, 2008 15:33:05 GMT -6
This is the original post from October 12, 2008:An article today from Yahoo discusses the Chinese economy, including annual Chinese wages. The article states that the income of China's farmers is currently around $590/year per person. It later states that China has 750 million rural dwellers who own land. It seems that "rural dwellers" and "farmers" are nearly synonymous. Thus the $590/person/year income would apply to at least these 750 million. So how much are these 750 million Chinese person's income per day? How much are Chinese workers making per day and per hour? They're basically living on $1.61/day. ($590 ÷ 365 days = $1.61/day.) Using the CIA's economic statistics for China and calculating ( *see below), it appears that 58% of the total Chinese population is working. This would make the per-worker income $2.78/day. ($1.61/day ÷ 58% (or 0.58) = $2.78/day) But this is spread out over 365 days. Assuming a 5-day workweek would put daily wages at $3.89/day. ($2.78 ÷ 5days/7days = $3.89/day) Assuming 8 hours/day (40 hours/week) gives an hourly wage of 49¢ per hour. ($3.89/day ÷ 8 hours/day = 49¢ per hour) Assuming a 8 hours/day, 6 days/week (48 hours/week) gives a daily wage of $3.24/day, and an hourly wage of 40¢ per hour. ($2.78 ÷ 6days/7days = $3.24/day) From this, using the a 58% total employment rate for these 750 million Chinese people, there would be 435 million Chinese workers making between 40-49¢ per hour. It's impossible for American workers to compete with Chinese workers based on such low labor costs. The average American worker makes roughly $18/hour, or over 36x as much as a Chinese worker. In order to be "competitive", American workers would have to be 36 times as productive as Chinese workers. This is absolutely impossible when Chinese workers receive the same amount of productivity-increasing capital investment. Again, the only way to offset this wage differential is through TARIFFS. ________________ CIA China infowww.cia.gov/library/publications/the-world-factbook/geos/ch.htmlLabor force: 800.7 million (2007 est.) Population: 1,330,044,544 or 1,330 million (July 2008 est.) * Using the stated unemployment rate of 4%, the employment rate would be 96%. Therefore, the total number employed of the 800 million labor force would be 768 million. (800 million X 0.96 = 768 million) Thus, the employment-to-population ratio would be ~58% (768 mill. ÷ 1,330 mill. = 0.5774) Note: This is not the same thing as the US's employment-to-population ratio, which is instead determined by dividing total employment by only the working age population of 234 million. Age structure: 0-14 years: 20.1% (male 142,085,665/female 125,300,391) 15-64 years: 71.9% (male 491,513,378/female 465,020,030) (491 mill Males + 465 mill Females = 956 mill)[/b][/ul] Unemployment Rate: 4.0% (at least, that's what they claim)
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Post by Inaccurate on May 8, 2009 22:58:43 GMT -6
This is not true at all. The CHinese actually work "less" hours per week, than the average American. The average work week is 38 hours (average), in the US it's 46 hours. It's illegal in China for an employer to allow an employee to work more than 40 hours. If they make an exception, they have to pay "double" their normal salary in CHina, so this rarely happens, unless absolutely necessary
The average income in china is approx $2,500 US. However $2,500 a year in China is comparable to the Average $28,600 income for an American. Also, many chinese have free housing expenses, so they are doing quote well. Even the lowest of paid workers in china, are doing much better, than the US Min wage, once you take all the variables in consideration.
Most Chinese have extra income to go out to eat, drinking, movies, and have expensive electronics. So their standard of living is of high quality.
Once you understand that their expenses to live life are only 1/10 of Americans, things are not different than in the US.
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Post by Honest Facts on May 8, 2009 23:01:41 GMT -6
I used to live in CHina, and I still have many close friends in China, namely Shanghai. This is not true at all. Chinese actually work "less" hours per week, than the average American. The average work week is 38 hours (average), in the US it's 46 hours. It's illegal in China for an employer to allow an employee to work more than 40 hours. If they make an exception, they have to pay "double" their normal salary in CHina, so this rarely happens, unless absolutely necessary
The average income in china is approx $2,500 US. However $2,500 a year in China is comparable to the Average $28,600 income for an American. Also, many chinese have free housing expenses, so they are doing quote well. Even the lowest of paid workers in china, are doing much better, than the US Min wage, once you take all the variables in consideration.
Most Chinese have extra income to go out to eat, drinking, movies, and have expensive electronics. So their standard of living is of high quality.
Once you understand that their expenses to live life are only 1/10 of Americans, things are not different than in the US.
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Post by graybeard on May 9, 2009 0:24:35 GMT -6
Yeh, we have 6 million unemployed; they have 98 million unemployed.
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Post by unlawflcombatnt on May 9, 2009 2:40:56 GMT -6
This is not true at all. The CHinese actually work "less" hours per week, than the average American. The average work week is 38 hours (average), in the US it's 46 hours. It's illegal in China for an employer to allow an employee to work more than 40 hours. I'll say one thing for you, "Inaccurate Guest" -- you sure got your own name right. The average workweek in the US is 33 hours, not 46. In this area you're so far off that you've shot your own credibility to start with. It's been pretty well documented on specials done in China that workers are working 6 days/week. This has actually come live from the workers themselves. It's also been stated in multiple news articles--some of which I've quoted and referenced here on this forum. Once again, "Inaccurate," you are factually wrong. And very wrong at that. The PPP of Chinese wages is $6,000/year, not $28,600. This information comes from CIA economic data for China which I have referenced on this site. Have you ever heard of something called "TV"? There are shows in the US where they actually interview and film people in China, especially the workers. Many of us have seen these films. It is clearly apparent from these films and interviews that Chinese workers are treated like dogs. According to at least some of the interviewees, they have no health insurance whatsoever.
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Post by jeffolie on May 9, 2009 9:25:04 GMT -6
The Chinese do not have many of the freedoms that Americans have and take for granted. How do you put a price on freedoms?
The 49 cents per hour wage in China is not our only poverty wage competitor. The world has India, South America, Africa, etc where poverty level wages prevail. If Obama and his cohort have their way, American wages will be in a race to the bottom.
Under Obama America is devolving into an UNDEVELOPED country.
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Post by judes on May 9, 2009 10:58:41 GMT -6
hmm curious there inaccurate guest, what was your business in China? You are certainly making claims counter to all the news facts I have read, and my own experience with my company that has business in China. Here is the top story that popped up when I googled average work week in China. This is more in line with the facts as I have come to know them regarding China and it's treatment of workers. This study is chilling and is right in line with ULC's calculations in this thread of hourly wages. I highly recommend reading this in it's entirety, it is blood curdling, and maddening, that multinational corporate thugs can have such a total lack of regard for human beings all for the sole purpose of richly lining their own greedy silk trouser pockets, sickening!!! Also, common sense tells you if workers in China are doing so great why are they unable to support their own economy with their wages, why is China so dependent on exports to us? I have posted before on a news letter that stated only 1 in some 150 households in China own a vehicle. And ULC is right also about the wage parity figures $6000 per year is what it is, look it up, I have. As if we needed more reasons to boycott Hewlett-Packard, Dell, Lenovo, Microsoft and IBM., here they are: www.nlcnet.org/article.php?id=613# Two thousand workers, mostly young women, produce computer equipment including keyboards and printer cases for Hewlett-Packard, Dell, Lenovo, Microsoft and IBM. # Management instructs the workers to “love the company like your home,” “continuously strive for perfection” and to spy on and “actively monitor each other.” # Workers are prohibited from talking, listening to music, raising their heads, putting their hands in their pockets. Workers are fined for being one minute late, for not trimming their fingernails—which could impede the work, and for stepping on the grass. Workers are searched on the way in and out of the factory. Workers who hand out flyers or discuss factory conditions with outsiders are fired. # The young workers sit on hard wooden stools twelve hours a day, seven days a week as 500 computer keyboards an hour move down the assembly line or one every 7.2 seconds. Workers are allowed just 1.1 seconds to snap each key into place, repeating the same operation 3,250 times an hour, 35,750 times a day, 250,250 times a week and over one million times a month. # The workers are paid 1/50th of a cent for each operation. # The assembly line never stops, and workers needing to use the bathroom must learn to hold it until there is a break. # All overtime is mandatory, with 12-hour shifts seven days a week and an average of two days off a month. A worker daring to take a Sunday off—which is supposedly their weekly holiday—will be docked 2 ½ days’ wages. Including unpaid overtime, workers are at the factory up to 87 hours a week. On average, they are at the factory 81 hours a week, while toiling 74 hours, including 34 hours of overtime, which exceeds China’s legal limit by 318 percent! # The workers are paid a base wage of 64 cents an hour, which does not even come close to meeting subsistence level needs. After deductions for primitive room and board, the workers’ take-home wage drops to just 41 cents an hour. A worker toiling 75 hours a week will earn a take-home wage of $57.19, or 76 cents an hour including overtime and bonuses. The workers are routinely cheated of 14 to 19 percent of the wages legally due them. * Ten to twelve workers share each crowded dorm room, sleeping on narrow metal bunk beds that line the walls. They drape old sheets over their cubicle openings for privacy. In the winter, workers have to walk down several flights of stairs to fetch hot water in a small plastic bucket, which they carry back to their rooms to take a sponge bath. In the summer, dorm temperatures reach into the high 90s. * Workers are locked in the factory compound four days a week and are prohibited from even taking a walk. * To symbolize their “improving lives” the workers are served a special treat on Fridays—a small chicken leg and foot. For breakfast, they are given watery rice gruel. The workers say the food has a bad taste and is “hard to swallow.” * Illegally, workers are not inscribed in the mandatory work injury and health insurance and Social Security maternity leave program. In the Molding department, due to the excessive heat, the workers suffer skin rashes on their faces and arms. * One worker summed up the general feeling in the factory: “I feel like I am serving a prison sentence.” ........................
All the workers know is that they all—“feel like we are serving prison sentences.”
God help us if the labor-management relations being developed in China becomes the new low standard to be accepted by the rest of the world. The $200 personal computer and the $22.99 keyboard may be seen as a great bargain, but in the long run they come at a terrible cost.
A good question is: Would you want your daughter to work in this factory? Corporations attempt to dumb down every job so they can slash wages and benefits. If workers oppose this and try to fight back, the work is outsourced. The result is a Race to the Bottom, where workers are pitted against one another to compete over who will accept the lowest wages, the least benefits and most miserable working and living conditions. There are no winners in this battle.
“Goods produced under conditions which do not meet a rudimentary standard to decency should be regarded as contraband and not allowed to pollute the channels of international commerce.”
-Franklin Delano Roosevelt
.................continue reading at link above
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Post by judes on Jun 10, 2009 20:28:34 GMT -6
I just had to come back to this post and reflect on this reality. 49 cents per hour is where we are headed, if all the corporate cheerleaders and their elected partners in crime have their way. I am so tired of reading over and over how wages have to come down, that worker benefits have to be eliminated, all social welfare programs need to be eradicated, unions are the causes of all the problems, and from the same crowd also come the cries that corporate taxes need to be eliminated. How can these people not seem to make the logical jump to conclude that people without a decent income or social safety network can not buy what the corporations are selling. (Both literally and figuratively.) This is what has caused the current crisis, the declining wages of the majority of Americans and the huge gains that have transferred to the top tier. In a closed system if a higher and higher percentage of the nations earnings are going to a smaller and smaller share of the people, mathematical certainty has it that a growing number of people will be left with less and less. Now don't argue that it isn't a closed system because even if dollars are being pumped in and they are flowing to the top in the same proportion (and they are) then things remain the same, all things are relative. I have and will continue to argue, it is the disparity in wealth of the top few percent and the rest of the wage earners that really matters, everything else is a diversion, like taxes and unions. With that being said, back to the point for me coming to this thread. I don't know if anyone read the clips from the study I posted above, but if not I urge you to do so, because this is where we are headed. The dire conditions described of the Chinese factory workers are startling indeed, conditions of human bondage really. Where is the joy in living that kind of life. Honestly, if it gets to this point, and it probably will, people are better off abandoning the corporate deities altogether. I would rather live in the forests foraging and hunting for food and depending on myself and my close family and friends for our survival. At least then we could set the rules, take a break, have some autonomy, some laughs and most of all freedom from the bondage of the corporate master. Really, read the study above, these people are imprisoned in their factory fortresses, they live in Alcatraz without even the luxury of free thought. The entire idea behind a corporation or a business entity is to utilize resources to the best of each persons ability at what they have to contribute, jointly the synergy is to the benefit of the organization, where the sum output of the whole exceeds the sum of the parts. This should lead to a sharing of those benefits among all participants, other wise what is the point in contributing. Everyone who has something to contribute should have something to gain from it. I am so tired of those who claim business owners don't owe anyone a job, workers need businesses. Well, hello, businesses need workers too, this is a joint effort and should be a joint reward for efforts. If not, what is to stop us all from moving to the forests, it is getting to that point. If not forests then possibly it will be favelas. I was researching "favelas" when I saw it mentioned on another message board. I was shocked to read the description and history of the Brazilian favela's. It described perfectly the path we are on. Where roughly one third of the Brazilian population lives in such extreme poverty, they are forced to live in make shift hill side slums. It said Brazil has one of the highest disparities in wealth amongst it's inhabitants. Well this is our future, better hope your one of the few top percenters, oh wait you have to be invited and indoctrinated into that elite club. en.wikipedia.org/wiki/FavelaThe people who live in favelas are known as Moradores da favela, or pejoratively as favelados. Favelas are associated with immense poverty. Brazil's favelas can be seen as the result of the unequal distribution of wealth in the country. Brazil is one of the most economically unequal countries in the world with the top 10 percent of its population earning 50 percent of the national income and about 34 percent of all people living below the poverty line. The Brazilian government has made several attempts in the 20th century to improve the nation's problem of urban poverty. One way was by the eradication of the favelas and favela dwellers that occurred during the 1970s while Brazil was under military governance. These favela eradication programs forcibly removed over 100,000 residents and placed them in public housing projects or back to the rural areas that many emigrated from.[10] Another attempt to deal with urban poverty came by way of gentrification.
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Post by unlawflcombatnt on Jun 11, 2009 1:21:48 GMT -6
Well said, Judes. Society should share in the benefits of increased productivity and real innovation, not just those at the top. And as you've stated, businesses need customers to buy their products and services. And the only way that happens is if businesses pay their workers enough to do so.
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Post by unlawflcombatnt on Jan 22, 2012 13:24:06 GMT -6
This is a re-post of part of an earlier post from Jan 2009. It refers to a calculation of Chinese wages in Jan 2009. Despite all the claptrap about American workers' "competitiveness," the biggest issue is the difference between American worker and Chinese worker wages. It is impossible to understate the difference the wage differential makes. Though this calculation is somewhat outdated, the same general situation still exists today. $19/hour American workers cannot compete with 72¢/hour foreign (Chinese) workers on wages. Americans would have to produce 26 times as much product per unit of time to "win" the competition with 72¢/hour workers. Needless to say, this is absolutely impossible when Chinese workers have equal access to American capital and productivity-increasing technology. The soundbite that Americans must be "better trained" to be more "competitive" ignores this irrefutable truth. Implying the American workers could truly be 26 times more productive is beyond just ridiculous — it's psychotic. The regurgitators of this delusion have completely lost touch with reality. The arguments in favor of globalization are twisted academic arguments that make little sense. They completely omit workers and their buying power from the equation. Their arguments exclude the effect of reduced consumer demand caused by the job losses & wage suppression from outsourcing. When the original free trade mantras were being concocted (e.g., Comparative Advantage by David Ricardo), it was assumed by the economic world that "supply creates demand." As a result, it was assumed that there would be no demand decline from the resultant employment and wage declines in the domestic economy. This was a fatal flaw in every economic doctrine originating before the 20th century. Most contemporary economists still can't get their arms around the idea that aggregate & consumer demand will fall when American jobs are outsourced. And the replacement of $19/hour workers with 72¢/hour reduces both American consumer demand, as well as total global demand. (Replacing a higher-paid worker with a lower-paid worker reduces aggregate world worker income, regardless of where the exchange takes place.) This is the argument that those of us in the real world should continue to make, and publish/post widely. And every psycho-babbling politician, should be asked how $19/hour American workers can compete with equally capitalized 72¢/hour foreign workers. Do they really think we can outproduce them 26:1 ? ? Or do they think American workers should only make 72¢/hour? And if they answer the latter, or anything like it, then how will Americans buy their products?
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Post by spudbuddy on Mar 27, 2012 4:55:05 GMT -6
Initially, the plan started out that declining wages should have relative purchasing power by supplying demand with ever-cheapening discounted junk. This still goes on, but is aided and abetted by ever-increasing leveraged debt ( though the retraction of available credit is part and parcel of the current economic meltdown) and as such, betrays the diminishing purchasing power of western currency. When I was still a teenager, the monthly wages of $260/mth had more relative purchasing power then - than 15 times that amount does now. Credit hardly existed at all - for any but the upper classes. My city had relatively few truly homeless people, because the downtown core was peppered with 50-cent/night flophouses. These were miserable places to be sure, but still offered a roof, warmth, running water and hydro (and the landlords still made profit.) Profit margins too.....the 50% markup of that time is now replaced by margins ten or twenty times that amount. Economies of scale live or die on sales that rise off the charts, whereby corporate retail both bullies the suppliers whose workers make the stuff, and their workers who sell it. The short-waged worker historically - has been offered back the difference between his real wage and a living wage - by credit, lent as profit- earning interest. What a marvelous shell game! Should fully one-third of Chinese workers ever attain the equivalent of a sustainably consuming middle class (a powerful corporate wet dream, to be sure) that still leaves two-thirds of all workers out in the cold, on the outside looking in. They have already had their revolution (still quite alive in the memory of many) and are quite capable of having another. The sheer amount of worker rebellions annually in China is one of the most closely guarded secrets of the politburo...any news leaking in on how their expats are actually living in the west - just stirs the pot. But they labor under the same delusions: that the untold wealth of the relative few in Hong Kong, and in the sprawling landscapes of North American styled McMansioned subdivisions - is the carrot that all should strive for. They don't belive, nor do they want to believe - that there simply isn't enough to go around, nor will there ever be. If Chinese car ownership per capita ever approached North American levels, we would need another planet to provide the fossil fuel resources to supply such a fleet. Ain't gonna happen. This is the sick puppy that barfs its breakfast all over the global carpet. Not a pretty sight. Although they smoke an awful lot, this is hardly what is responsible for the sheer amount of respiratory-related disease that is decimating the population....that belongs to the air quality fouled by rising industrial concentration and the burning of the dirtiest of fossil fuels for the energy so desperately needed to keep it all going.
The solutions to all these messes were always readily available - by utilizing democratic processes through public will, and societies most capable of this are by far the healthiest. The opposite holds true - the more successful the dismantling of such instruments - the greater the inequality of sharing in resources.
Sadly, too...........two full-time $20/hr jobs in many North American cities, would hardly budge a family into a middle class existence now (without seriously leveraged debt) - which is why the sprawl grows ever outward and away from the core.
And finally - how can a nation retain its identity without the artifacts of domestically designed, innovated and self-produced products? Answer: it can't. This identity is not reproduced artificially by cheap delusional culturally distorted stand-ins. Just as an Asian worker on the other side of the world can never really replace the concept of my size....(mistakenly thinking that a north american middle-aged male has to have a waist size wider than the leg length is long) so too....in just about everything. Nothing really fits the way it should. And so we have given over post-modern design to an ever-cheapened knockoff, that has the peculiar quality of completely lacking in pride of craft. (Supposedly, the world cannot afford this anymore, unless very wealthy.) And back we come full circle, where the climb up the ladder to the top, dances to the death with the race to the bottom.
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