More on the free market in China.

Mr. Powell (link here)has done me the favor of converting our conversation to HTML markup for the sake of posting on my blog. He has also given me access to the comments section of his blog so now I can respond directly to articles he writes. I thank him for this.

Also here is my response to his counter response:

Dear Mr. Powell,

Nice to hear from you.

> It would seem that because people traveled so far just to get sweatshop
> jobs that they are better than the alternative, no?

Unfortunately, that only speaks poorly for the alternative. In fact,
your links were great, they shed a little light there. For instance,
the NYT article pointed out:

Government policy is playing a role in creating the coastal labor
shortages. Trying to close the yawning income gap between the urban
rich and the rural poor in China, the national government last year
eliminated the agricultural tax, and it also stepped up efforts to
develop local economies in poor, inland and western provinces, which
have mostly been left behind.

Perhaps some people, at least, were leaving their homes because of
intolerable taxation. There are precedents.


Which is hardly the responsibility or the fault of western factories, which is my point. Westerners don't force anybody to work in their factories; these people are merely invited to apply.

> Wage slavery can only exist where someone holds a monopoly on
> employment. With hundreds of companies owning factories in China,
> this is not the case.

Maybe we're using the term differently; the point is, if people will
work under such intolerable conditions, there must be some severe
external pressure at work, severe enough to be at least analogous to
that which keeps people enslaved. I don't see why you need a monopoly;
all you need are the majority of factories having the same deplorable
conditions. That's how it worked when Dickens wrote *Hard Times*, that's how
it works today.


The reason you need a monopoly is simple. Without it, people always have a choice. They could always move to the factory with slightly better conditions and the original factory would have to improve conditions to bring back the workers. This means that the low wages and poor conditions must be due to pressures beyond the employer's control, ie. lack of productivity (employees can only be payed what they produce) or something else. The term "slavery" implies that someone is forcing someone to do something and they have no choice but without a monopoly on labor, the employer clearly cannot force people to work for them.

Incidentally, the second article's report of a rising GNP and per
capita income in China proves very little regarding working
conditions. As you know, if a millionaire on a desert island employs
three people for 1 cent a year, the per capita income is about
$250,000.01. Nor is the example frivolous, when even in the U. S. the
compensation for an average CEO is hundreds of times that of the
average worker. Imagine the ratio in a country where people get paid
cents a day.


Actually, this rasies the question of how the millionaire (by which I assume you to mean someone with an income of $100,000,000 per year) makes all that money a year with so little labor. Chances are that this millionaire's contribution to the enterprise is far more valuable than his employees. Otherwise, with such a small labor market, It is unlikely that he could coerce them to perform anything for such a small amount, all they would have to do is refuse to work until he gave them a better wage.

It is also interesting that you chose an example where there was a monopoly on employment. What say there were two competing millionaires and six people in the labor market. An employee would merely have to threaten to work for the other guy and his employer would be forced to raise his wage lest he be outproduced by his rival. In this way, the wages would be forced up to the productivity level of the employees (past which wages cannot rise unless the employer is willing to go into loss.)

In the case of American CEOs, they are far more essential to the company than the average employee. While an individual pizza cook can be replaced easily, it's unlikely that Dominoe's would be nearly as big as it is today without Thomas Monaghan. Leadership is simply more valuable than individual effort. Otherwise, it would be impossible for them to coax such large salaries from their employers (CEOs are actually employees, not owners. In huge coorperations, such a Apple or Walmart, ownership is usually in the hands of a board of shareholders who hire and fire CEOs at their discretion somewhat like a major league Baseball coach.)

With increased productivity of the Chinese nation and the greater wealth of the nation as a whole, means there will be more job opportunities. With people making more money, no matter how much a minority, there will be a larger local market and thus more job opportunites. Only a few people can really afford a Porsche but that minority is enough to provide employment for everybody at Porsche. Also, with a rising wealthy class with more varied and sophisticated tastes will likely encourage an increase in the variety of jobs, many of which of much higher quality.

Now, the NYT article indicates that many factories are being forced to
improve their conditions because of labor shortages. This is a recent
development, but it's great. Of course it would be wrong to blame
foreign buyers like Home Depot for *all* China's internal
problems--merely another variation on imperialism. Still, we can take
responsibility for our part in the mess, and that's the point of
restricting imports from sweatshops. You may believe this would only
discourage more factories, but what is this belief based on? If these
factory bosses are raising wages in response to labor shortages,
mightn't they do the same if threatened with losing the U.S. market?


Actually, it might make matters worse. Generally, when there is less potential in the market for a particular item, the company produces less of it. Because of the reduced production there is a reduction in need for labor and consequently wages drop. Basically, because there is less need for labor, the company can relax and focus on attracting only the most destitute. Thus conditions can worsen and wages decrees. Or, alternatively, The factories can be moved to nations where the restrictions don't apply and nothing is solved and the Chinese are worse of than before.

However, by purchasing more Chinese made goods, the factory owners have incentive to increase production and the increased need for labor will cause wages to rise. Generally with the huge population which China has, demand will have to rise pretty high before a real dent can be made which is partially why conditions are still so poor. Moreover, by cutting China's income by refusing to trade with her, will reduce the local market for goods and labor and thusly hurt the Chinese employees. Their conditions will be even worse than before.

Lastly, there's the question of whether it's moral to knowingly buy
the fruit of such horrid labor. If the factory described in my article
was down your street, and the people were living in the same
conditions, an average of 5 of them losing fingers each month, getting
paid the U. S. equivalent of those wages...would you go to the gift
shop?


The standard of living is much higher in the United States than in China, largely because of the huge wealth of the nation. It wouldn't be possible to run such a factory because we are so well off. There is always an alternative, ie, Burger King. This is the reason that the national wealth of China needs to be increased. With a higher GNP, more and better jobs will be available and Chinese workers will be able to better than these factories. Something that is already happening.

Thanks again for writing! No obligation to write back, of course, but
I'll welcome any further thoughts you have.

Bill Powell


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Adventures of an Ex-Suburbanite

www.billpowellisalive.com

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In conclusion I would like to leave you with something I found a while ago and found fascinating. Basically this is a curriculum for a program that teaches the benifits of the Free-Market for poorer classes and it uses China as its key item of study. It is worth takeing a look at.

Andrew Stine

More on this later.

God Bless.