Thoughts And Trivia

Is Low labour cost in countries like, India, an advantage or disadvantage?
What are the ill-effects of low labour cost regime, on various classes in society.
Minimum quantum of Food, clothes & roof over-head, required for survival for a human, is approximately, same in poor countries and in richer countries. (I am talking of humans, not of sub-human unfortunates, who have to survive by sleeping on footpaths). But prices for food, clothes and real-estate are much lower in poor countries. Therefore its possible for the bottom layer of society, to survive on low wages, in poor countries.
But the low cost of these survival-minimums, is itself a reflection of low wages, paid to producer of these - the mason, farmer and mill-worker etc. All this is a vicious chain of human oppression. Its a medieval and unequal social contract, between various sections of society - which democracy and market forces are expected to level-up. In final analysis, the low wages are determined by low social concern for human values, than by economics.
In India, due to the caste system in olden times, the lower strata of people did not have the social might, to ask for reasonable prices for their goods and services. Because of poor returns, these classes could not even gather the commercial might, to dictate price.
Human value index of Indian society, would improve, when a shoe shine boy will get equivalent of 1US$, at least, instead of 5 cents, for a shoe polish. Similarly, significant increases in prices of goods and service, from socially and politically weaker section, would be a sure sign of increase in Human Values in the Society. The price of individual human services, should become so high, that these should pinch the buyer. This would reduce demands for such services and thus provide an equilibrium at high-price level. People can shift to more productive professions. The over all cost of labour would go up in the society. The society, will then really become a Human Society. The mediaeval social contract would get replaced by its 21st century version.
Will this push up prices of Indian goods in international market - and have backlash on Indian Economy making higher wages unsustainable.
This is not true.
Lets look at similar chain of oppression, in International Trade between poor countries and Richer ones. There is also a similar mediaeval and unequal, political and economic contracts, between the poor and rich nations.
In next post, we will see that, the economic power and the rate of exchange of foreign currencies, is determined more by military might of nations than its economic performance.

Posted by Girish Bhatnagar at Monday, May 23, 2005