Exploitation
I notice a great deal of publicity to third world “exploitation of workers, to the direct benefit of greedy westerners, who neither know, nor care of the hardship and misery etc. ad- infantum, that is caused by it.”
The only way for the third, or developing world to advance is by producing products and services that people there or in other countries need and are prepared to pay for, or securing investment capital, which will allow them to do this.
This starts the process of paying for jobs, and causes an immediate benefit to those who do them, and for the suppliers of raw materials for the process, transporters and so on. This does not stop there, as extra money in the pocket is not in itself a benefit, the benefit is in what can be obtained from it, either immediately in food clothing housing, and so on, as well as future benefits that savings can bring.
By this process others benefit by providing goods and services, accessing saved funds by borrowing, or from investment by the savers, passing the benefit further. With each step someone benefits from his own work, passes on that benefit from the work of others, who go on to do the same into infinity.
Low pay is an issue often mentioned. Actual pay figures quoted for developing countries are irrelevant unless taken in the context of the economic situation in those countries as a whole. It is ok to say that the average worker in some place or other only gets x dollars per week or month, but the matter of significant importance is not the amount, but what that amount will buy in that country, and then only in the context of the general standard of living in that country.
We have all seen the type of documentary that features some unfortunate people in some poor country going out into the desert to chip salt and cart it in for a pittance. We all feel sorry for them, but they do this because that is a better option than the others available to them, sad but true. This is because of the poverty of the countries involved, the lack of economic development and opportunity, and in many cases the result of poor governance.
In far too many cases, the passed on economic benefit referred to above is hijacked along the way, not by private enterprise thieves, but by government thieves ripping the people off to engage in activities which are in many cases corrupt, of no benefit to the people from whom it came, and designed to benefit their own supporters and to keep themselves in power.
This is not our fault, unless we have allowed our governments to interfere in the political process there. It is the fault of the people in charge there and to some extent the culture there that allows such people to retain power.
Foreign aid can help to some extent, as can charitable foundations, but the fact is that the only way to make a lasting difference is for the people themselves to do it. If the whole GDP of the west was poured into the third world the results would probably be; impoverishment for us, some very rich dictators with wealthy hangers on, and sleek well-fed armies with excellent equipment, to keep the people in their place.
The best way that the world can help the developing countries is to trade with them on equitable terms, invest in industry and infrastructure, and in doing so improve the lot of thousands of people in the long term, however, for this to happen investors must have stability and security.
Such stability and security can, for this purpose only come from a fair society, where human rights were respected.
Companies dealing with brutal repressive regimes to the detriment of the population are likely to incur a consumer backlash against themselves. Modern consumer ethics and the rapidity of communications virtually guarantee that they could not get away with it for any length of time.
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I don’t usually post on economics as its not one of my strong points, so get stuck in to me to help get my thinking straight.
Be nice though.
An excellent Essay.Right on the button.
As a “constitutionalist” I look at matters differently then most people do. This, as we do have a constitution for certain reasons, such as to make sure we have certain rights.
For example, the Framers of the Constitution inserted Subsection 51(xxvi) so that the Commonwealth of Australia could deliberately discriminate against coloured races and by this secure a white Australia policy as much as possible.
It is irrelevant for this that personally I oppose any form of racism, as I am bound to accept that the will of the people is that the Commonwealth of Australia not just is racist but in fact expanded this to become racist against Aboriginals, in view of the 1967 referendum having passed.
Prior to federation “inferior” “coloured races” came into Australia and many Australians found to be out of a job because of the “coloured races” working for a lower pay. Hence the basis to have Subsection 51(xxvi) of the Constitution.
What no one seems to understand is that contrary to the purpose of having Subsection 512(xxvi) to protect Australian jobs, we now find that even the Federal Government is outsourcing jobs overseas! In my view this is unconstitutional as the onus is upon the Federal government to protect Australian jobs.
Those who stood by with the exploitation of low paid workers in so called third world countries now may discover they are next on the line, if not already being subjected to it.
The Federal Government is time and again spending billions of dollars on contract for works overseas while we have business competent to perform the work here. While today the hardship might only affect a few, in a matter of years we will slowly end up like the low paid workers in other countries!
Ignore their plight and standards, perhaps because you were all right mate, may just drive home that you are next in line for the same! Hence, look after your fellow human being and stop racial views to somehow justify for others to suffer.
Jim I thought that was a very good post.
The very idea of ‘exploitation’ does not apply to consensual transactions in my opinion. Implied in the idea of exploitation is that there is a difference between the market price for the labour of the worker, and the fair price. The difference is supposed to be the amount by which the worker is being exploited. The problem is, there is no objective way of determining what the fair price is. It is a matter of arbitrary opinion. The protection of the worker is in the requirement of consent. This guarantees that he will not enter into a transaction unless, from his point of view, he will be better off than in any other possible transaction. It is ironical that those who want to protect the workers have done the most to hinder the process by which people and countries get richer.
Wages should be based on what they will buy, not the amount.
After a trip to china, and getting some retail prices that we both consume in both countries, I found that Chinese wage could buy more of the same product then the Australian factory worker.
Not saying this is across all products and services, but does apply to the vast majority.
This means that 3rd world wages is far better than people realise.
What is forgotten, and what is not to be talked about, is Australia’s farmers feed these factory workers, their by also earning a 3rd world wage while having 1st world expenses.
It seems the real people being exploited are the 1st world farmers, not the 3rd world labour market.
The same trousers, at retail, are far cheaper in terms of kilos of wheat in china than Australia.
If you pass regulations to enhance the wages a worker is paid, where does the money come from?
No one has ever answered that when I have asked it, so maybe some one here could.
In a legislated wage rise the money comes from increased prices to the consumer. Where competition precludes this, the money comes from reducing the workforce, hence our opposition to a minimum wage.
If there is a reason why the employer can’t do either he closes down, with subsequent job losses for all, sells up, and moves on.
You and I then give the government more tax money to pay those people unemployment benefits.
Of course if the increased wages are for government workers, we then simply pay more taxes.
I think describing yourself as a “constitutionalist” might be a bit of a lend, G. H. Schorel-Hlavka. You sure are confused.
S51(xxvi) merely says: The Parliament shall, subject to this Constitution, have power to makes laws for the peace, order, and good government of the Commonwealth with respect to: The people of any race for whom it is deemed necessary to make special laws.
It was amended in 1967 by removing the words, “other than the aboriginal race in any State”, so that the Commonwealth would have authority to legislate in relation to aborigines. Pre-federation racism is simply irrelevant.
There is no constitutional onus on the Federal government to protect Australian jobs, in that section or elsewhere. Your assertion is quite false.
Assuming the Federal government is spending billions on contracts for work overseas while we have business competent to perform the work here, as you claim, it has not been bad. Unemployment is the lowest in decades.
Indeed, the more Australian industry is exposed to world competition, the more competent it becomes. That’s how free enterprise works, actually.
Indeed, even it there was a constitutional onus, this is a government that just declared it wasn’t interested in the constitutional niceties. I suppose that means it would ignore any onus. As Mugabe, one-time friend of Frasier, said about his own country’s constitution- it’s just a bit of paper!
‘As Mugabe, one-time friend of Frasier, said about his own country’s constitution- it’s just a bit of paper!’
A very African attitude to constitutions. This tends to prove Jefferson’s Law – ‘the musical ability of a people is in inverse proportion to their political stability.’
Howard’s attitude to the constitution is a matter of concern given that Bush in the USA currently echoes it with his attitude towards Habius Corpus. Both remind me of Lord Acton who once said, “There is no error so monstrous that it fails to find defenders among the ablest men.”
Both of our countries have been soundly rooted in our constitutionality, and we need to keep a good eye on the flippant attitude with which our leaders dismiss the importance of these documents.
This digression needed to happen in the light of comment 3 however this thread is on economics in the third world, and I am waiting for constructive criticism, or better still, more remarks like that of Ronnie Kitching.
Q. How many sceptics does it take to change a light bulb?
A. First, you need to convince them that enlightenment is possible!
Good article.
I thought, as a generalisation, 1st world countries’ economies don’t actually interact that much with 3rd world countries’ economies. I don’t have any numbers to back this up but wonder if anyone has some good links regarding this.
To still hold onto the outdated notion that we in the 1st world are only rich because we are exploiting the 3rd world, surely you’d have to think there’d be significant 1st world investment into 3rd world countries. But most 1st world investment is in other 1st world countries.
People in the west rightfully recognise that most 3rd world countries don’t have a working system of protecting basic human rights. But 1st worldians incorrectly focus on “rights” such as education or minimum wage laws. Libertarians need to advertise the fact that it’s the real human rights protections such as private property laws that will encourage investment and raise quality of life in other countries. Then people’s wages and education levels will rise, not the other way around.
Isn’t it amazing how easily so many 1st world people are fooled by simple wage rate comparisons between two different countries in an out of context manner?
In regards to foreign aid, I read this interesting interview of a Kenyan economist recently entitled, “For god’s sake please stop the aid”: http://www.spiegel.de/international/spiegel/0,1518,363663,00.html
That was really interesting Tim, a real eye opener.
Untill I read this I had no concept that our help could be counterproductive, but the way it is told, this makes sence.
It may be the case that lack of interaction may be because of the corruption and instability in these countries. If a company were to invest in an unstable nation and as result loose that investment then the shareholders would probably crucify the directors.
Charity to Africa is like giving money to a alcoholic beggar. You merely facilitate the problem. I’d always had this feeling, but it is good to read an African’s account of the situation.
Not only is aid counterproductive in Africa, but agricultural subsidies in developed countries are as well.
Look here:
http://www.signonsandiego.com/news/business/20070622-0719-trade-africa-cotton.html
Also here:
http://www.ipsnews.org/news.asp?idnews=32906
(I can’t put multiple links in a post or it gets put into spam)
And here:
http://update.unu.edu/archive/issue42_21.htm
David;
You have been busy. My post was pretty much a thoeretical effort to exercise the brain a bit. There is obviously a great deal more to this than I suspected.
Thank you,- all of you.
‘Unfortunately, the Europeans’ devastating urge to do good can no longer be countered with reason.’
Yeah, that article on African aid just says it all doesn’t it? How can anyone compete with donated goods?
I read a book once called ‘Fishing in Africa’. It was a study on how tin-pot dictators, rebel armies, and aid workers form an interlocking life-cyle of what are in effect, three classes of parasites, as Bob Marley would say ‘sucking the blood of the sufferers’.
The basic concepts of “third world” and “first world” are both simplistic and rather elitist. It’s an out of date political concept that actually comes from the Cold War (the Second World was Russia/China, etc, just in case you wondered).
That Spiegel article is interesting. I’ve heard something similar from.. I can’t remember who, but he was the brother of the president Zimbabwe, I think? Mugabe’s brother. Said that foreign aid doesn’t solve the problem. The problem is corrupt governments and local warlords that simply take the aid that’s sent.
Hola faretaste
mekodinosad
I realise that we are liberty-loving people here, but if you want to communicate to us, Anfer, you would do better to speak plain English, and refrain from the liberty of speaking Tuto-tongue, thanks.