Today I posted this on the Alternative Money and Economics Tribe

Michael, you ask three questions :

1) how do you define poor?

2) what are the necessary conditions for creating new wealth?

3) Why do people in Hong Kong earn 10 times as much as people in China?

Well, to take 3) first, maybe people in Hong Kong earn 10 times as much as people in China because people in China earn only a tenth of the Hong Kong salary.

I'm interested in your reaction to this quote. (Assuming it's true.)

Multinational companies sourcing production in China are having an enormous impact on the global economy, lowering wages and rolling back labor rights. Workers in China assembling healthcare products for companies such as Viva and Sport-Elec are being forced to work 16 hours a day, seven days a week (with just 12 days off a year) for 16 cents an hour. There is no overtime premium. The workers have no health insurance and no pensions. If they try to organize, they will be fired, perhaps even beaten and imprisoned.

http://www.commondreams.org/views03/0922-01.htm


Now we can agree that it doesn't matter if the (arbitrary) value on the wage-slip seems to be falling, as long as the price of what you need is going down as fast or faster. Sure, a number is meaningless. But it seems that with this race to the bottom it's not just the number on the pay-slip. It's conditions of work which are getting worse.

So, one way I'd define 'poor' is not merely that low number on your pay-slip, but a position of economic disempowerment, where you are obliged to take lousy jobs, with long, hard and abusive conditions *because* those are the best of the lousy options available to you.

When I say poverty is increasing, I don't mean just wages going down, but that this group of poor and disempowered people is *growing*. More lower-middle class Westerners are falling into it as they lose permanent jobs and have to take on less secure, lower-paid, temporary jobs. And more third-world farmers are losing their livelihoods and land (due to competition from heavily industrialized and government subsidized Western farmers) and are being pushed into it. Once again, it wouldn't matter if the poor farmers were just freely choosing to exchange hard, unrewarding work on the land for hardish, slightly better paid work in factories. But they aren't. They are really being *pushed* by the market. (And by governments that tolerate rich groups enclosing land. Last week my friend here in Brazil went to look at a slot in a condominium which was built illegally on previously common land less than 10 years ago. The government or other authorities are unlikely to do anything about this theft, although the enclosed land contains 3 rivers and many fruit trees. Before the enclosure that fruit would have been available to anyone who decided to go and pick it.)

So let's get to the second question. Is all this, perhaps, worth it? Do we need this kind of crap exploitative economic system to create wealth and progess in society?

I don't see why.

Between the late 40s and early 70s, under a roughly Keynsian consensus, and where centre-left governments often pushed for improvements in Labor protection, we saw plenty of technological innovation. Scientists and inventors are as much motivated by curiosity and acclaim as they are by wealth. And capitalism could function perfectly well to create new industries and millionaires, despite the greater government restriction. So clearly innovation and wealth can be created without extreme exploitation.