The Dolphins Make Me Cry.com - Forums

So, Crazy_Scar_Man had this thread in which he asked whether more war is inevitable.  I posted this long, long answer in which I basically statet that so long as we (the West) are rich and others are poor, there will be war.

My question:  what would you like to be seen done (within the realm of reason) to move underdeveloped nations into a place where more of its citizens could reap the rewards of modern life (in whatever form they desire - I'm not pushing my values on anyone)

I'd want Congress to pass laws forcing a minimum wage for workers employed by U.S. corporations (and partially and wholly owned subsidiaries).  In this way, two things happen: 

First: U.S. firms may not legally employ (place your country of choice here) workers to build shoes or clothes for rates like $.75 an hour, and must instead pay at least, (arbitrary figures) $4.00 per hour for manufacturing, $6 for service.  These employees get to enjoy a comparatively good standard of living, and may even - GASP!! - be able to afford some of the products they are paid to produce. 

Second:  Moving operations from the U.S. to other countries (cue South Park "They took our jobs!!) becomes a little less cost efficient.  It maybe convinces some U.S. firms to keep manufacturing and service jobs in the U.S. instead of outsourcing.

Would corporations just "relocate" their "headquarters" in this instance? In the world of video conferencing, tele-commuting, etc. what would keep them from doing this?

Our SVP is hardly in the office. People can work from anywhere in this day and time.

If you're a registered U.S. Corporation, you're a U.S. Corporation, no matter where your "home office" is.  By "relocating" you'd lose all the tax breaks and benefits of being a U.S. firm.  Now, could they allow themselves to be eaten up by a foreign corporation?  Maybe, I guess.  Still, the U.S. could attempt to come up with "nexus" laws whereby corporations that do "significant" business in the U.S. would be subject to penalties to their U.S. Source income if they do not comply.  Obviously, the matter is complex, and would only really be completely successful if the major industrialized countries agreed to all do this.  It's definitely a tough sell, and companies would lobby like hell to kill the concept, but I believe it to be a reasonable way of both expanding markets (to people now making enough money to buy things) and of helping people in countries that right now have seemingly hopeless situations.

The problem is that if you up the minimum wage in another country, you have just lowered job demand and increased job supply at the same time.  The result is a huge unemployment group.  So, sure maybe the employeed people might be able to afford the products, but there won't be nearly as many of them.  Secondly, if you increase manufaturing costs of products (variable costs go up with wages) then you will also in turn raise the selling price of these products.  So in the end, the US citizens that used to be able to afford this products will also have to cut back on the goods they cosume.  

Maybe I'm a selfish American here, but I have a lot more sympathy for the US working poor than I do for another coutry's poor.  I'm not going to support anything that makes the struggling US citizen's lives harder at the expense of pulling up foreigners.
 

I think that there should be some kind of minimum wage for outsourcing (not at high a wage as keeping the work here, but something.

...in the long run, it seems like the right decision.  It would cost our country money now, but would be worth it.

Realize, though, that I'm not talking about upping the minimum wage in another country.  I'm upping the amount U.S. corporations must pay foreign workers for their jobs, and bringing these wages closer in line with American wages.  Not even 1/2 of what you'd pay an American worker, but not 1/10th, either.  How would job demand be lowered?  The job still needs doing and the wage is still less than what's paid to a U.S. worker.


As an American, then, surely the loss of manufacturing jobs to foreign nations concerns you.  This concept could help to make outsourcing a less appetizing idea to a corporation looking to cut costs.


The struggling U.S. Citizen (and, let's face it:  compared to the rest of the world, the struggling U.S. citizen is a wealthy, wealthy king) is the kind of unskilled labor that is most affected by job outsourcing.  If Ford does a cost analysis and decides that moving operations to Mexico will cost almost as much as it saves, maybe a U.S. plant gets to stay open.

Everyone makes fun of me because I like to do a lot of R & D before i purchased anything, but I like to do my best to purchase items from American companies. Made in USA instead of just assembled in USA, and so forth. I would prefer my money to benefit people here than pay wages to some guy in the middle of nowhere, who probably won't buy american items in return. Basically just giving my money to some other country.

You miss the point.  I make the argument as a two-fold solution:
One, pay fair wages to people for their work.  Not American, Unionized $18 bucks to drive a truck wages, but, say, one third of that.  They do the same work, they should have the right to a decent life.  You are no better than they just because you were born within these borders.  These workers may then, because of higher wages, become consumers of our goods, helping American companies in the long-term.

Two:  The jobs are already leaving.  Something needs to be done so leaving is not quite as enticing as it once was.  If leaving costs almost as much as staying, companies may decide that the "negative goodwill" (is that badwill?) that moving would cause among consumers such as yourself is not worth the savings.

I don't think we should do anything. I enjoy the fruits of our neo-imperialistic society that allows me to buy cheap goods in total disregard that people who are making our stuff are treated as defacto slaves (thats a joke). But in all honesty, if we started paying overseas workers in China 4 bucks an hour, that cost would just be passed along to the US consumer and everyone here would start bitching. It won't be absorbed by the US corporations. Yes, we could use tax laws to direct US corporate action, but that will just hurt our corperate competitivness in the world.  Its a a complex problem.

The demand curve does not shift, but you will travel to the left on it.  If you are a company, you may be willing to hire 100 employees at rate X, but only 50 at rate Y.  If you only need 50 employees to get the job done, that is all you will hire.  However at a lower pay rate you will hire more employees because the revenue return you get from each additional emplyee is more than their wages (cost).

There's a simple way around this.

What about contract labor?  Here at Motorola, we have contractual agreements with Chinese companies who build our products.  They're even getting into designing our products.  These companies are not US- corporations, thus cannot be regulated by any US lawmaking body.  So, great, Motorola has to pay the people in their Tanjin factory a minimum amount, but the contract manufaturers can still pay their people a quarter an hour.  All that's going to do is cost more people (in this case, Chinese people) their jobs, as more work will go to the contract manufacturer.

Does the point really get across?

So, you raise the hourly wage of 2,000 people in your Chinese factory by $3 per hour.  They each work the full 40 hours, 52 weeks.  that's $12,480,000 in additional payroll (3x2000x40x52).  The company, let's say, produces 25 million widgets per year, of which 8 million are sold in the U.S., each retailing at $12.99 (for $103,920,000 in gross U.S. income per year).  To cover costs, widgets go up in the U.S. only (worst case scenario) to $14.55 per ($12,480,000 / 8,000,000 = $1.56 + $12.99 = $14.55).  Is $14.55 versus $12.99 going to drive you to insolvency?  
Don't we all bitch already?  Cheapest gas in the world.  We bitch.  Average salary of $40,000.  We bitch.  Life expectancy of almost 80, we bitch that it costs too much to stay alive.

I have no clue what most of these political threads say...and I really don't care...
The rest of the world can kiss my hairy white ass....

JVides, Have you taken an economics class?  Because if you haven't, I think you might enjoy it.  It sounds like you have some interest.

Point taken. But, we are not just taking about widgets or one single product that would be affected. I wouldn't care if I had to pay 2 bucks extra on one thing, but its the cummlative effect that matters. Paying 2 bucks extra on everything I buy overseas from current low wage countries would really hurt. The American consumer (and the politicians in DC that need their vote) would not tolerate it.

I love widgets!

You're right.  There's always a loophole.  I'd bet the contractor would not charge Motorola "cost" for manufacturing labor, though it would still be cheaper, no doubt.  This is why I mentioned "nexus" laws that perhaps penalize foreign corporations with substantial U.S. source income for not paying fair wages.  Again, something like this would work best if most of the "industrialized" nations agreed to pass similar laws.

Many countries are poor due to corrupt governments - Mexico is a great example.  If we force American companies to pay Mexican workers more there's a good chance that we'll just be enriching the government.

I have.  I'm an accountant, so it was required.  While I admit to having no great "in depth knowledge" of econimics, I do understand the supply-demand curve, and your previous post regarding its relevance.  I understand my concept is simplistic, but I've thought about this independently, without aid of a feasibility commission... :-\

That's hardly the sole reason Mexico is poor.  Corruption is alive and well in all governments, ours included, and we're rich and powerful.  Mexico is poor because it lacks resources, is under-educated, and relies on tourism (which is highly competitive and subject to people's whims) and agriculture (a very low value-added business) for a large part of its economy.

This is true, but we need to make better decisions as consumers and not be willing to pay $150 for Nikes....buy their equally good competition for $100.  (I'm just making an example)  We are a country of excesses, because we're in a position to be.

And gas is a good example.  Look how much hybrid and alternative fuel source cars have come forward in the last few years...we have changed, because the gas price was really high.