About a year or so The Economist published the article titled "The future of Factory Asia - A tightening grip" where it describes the continually raising wages of Chinese people. This article is interesting because although it was published by a bastion of mainstream economics (yeah… the type that does not work), still managed to get all the facts right… although… they didn't push these facts to their ultimate results.
Let's do it!
It so happens that Chinese wages have been rising and rising and rising since the Chinese discovered that vile, vile process called capitalism… or they invented it… or they plagiarized it… or whatever. The point is that they ditched communism and embraced whatever worked. In this case it would seem that "it is glorious to become rich"… as opposed to poor and a "Hero of the Chinese People". In any case and according to the article Chinese wages have been rising by about 12% per year. Of course, this is plain and simple concentrated Bull Shit because it does not account for inflation… but still. Yes. Chinese wages have been rising. Sure, they minimum wage is still about 25% of the minimum wage of worker in a "civilized" country… but then… living in China is cheaper!
What is interesting from the article is that they not only acknowledge that wages are rising, but they also acknowledge that the old concept that poor countries should concentrate in labour-intensive goods and expensive countries in capital-intensive products is quite…well…Bull Shit again!
As the article correctly points out, it is simply a matter of regional advantage. Industry will move wherever the advantages are greatest to develop whatever it needs to develop. Mainstream economic theories be damned!
The article also points out that large corporations such as Hewlett-Packard, Foxconn, and several other have begun to move towards China's interior. Why? Because wages are lower, taxes are lower and the workforce is more stable since it is local. Voila! Industry automatically moving to raise standards of living through self-interest! Of course, the article didn't mentioned this part, but the conclusion is nothing but unavoidable.
The article also looks into the future, where it sees how the rising of Chinese wages will inevitably push costs so high that the industry will begin to move into cheaper places such as Vietnam, Indonesia and so on. Again, that vile, vile, blood sucker, corrupt, greedy bastards raising automatically the standards of living of the poorest people. How dare they!
Continuing with this overwhelming nonsense of capitalism, the article says "Trade more, not war"!!! WOW!!! and WOW!!! again. What an epiphany! It so happens that… believe it or not… war is actually bad for business… unless… of course… you are in the business of manufacturing war implements… but it so happens that most companies are not in said business!
Furthermore (and we are astonished at this point), the article also gets right the idea that "Politics could yet complicate matters…" but that trade agreements between neighbouring countries "has brought them close together". WOW!!! again. Incredible. Go figure. It so happens that business (i.e. self-interest) is an antidote against war! WOW!!! again!
We are positively mindboggled.
A well-known and well-respected mainstream economic magazine has reported that:
Wages of poor people go up when industry step-in (so much for exploitation of workers).
Wages continue to rise until they reach a level at which companies begin to look for other advantages.
When companies cease to find such local advantages, they simply move to cheaper locations thus automatically rising the standards of living of the poorest people.
Taxes are bad for business.
Wars are bad for business.
Tensions between governments are bad for business.
Business actually help mitigate the aggressive tendencies of governments.
Has this magazine become libertarian overnight? Not a chance. But we give credit where credit is due. This article did not try to "massage" the data nor the implications. It simply reported the truth as objectively as possible. Chapeau!
Articles like this one give credibility to what we have been saying ever since we began and what libertarians and Austrian Economists have been saying pretty much forever. It's simple; you can't improve on a free market!
Sure, free markets are not perfect but they are a heck of a better solution than any other alternative. And before you begin arguing that China is an exception, we have to ask; is India an exception? Vietnam? Indonesia? Myamar? Thailand? And countless other countries whose governments have discovered that all they had to do is to get out of the way for riches to poor in. Coincidence? Not a chance!
Sure, Chinese politicians did the so-called "fee market" their way, that is, commu-capitalism, but they did do capitalism. Not pure. Not pristine, but... Take a look at the graph below. Do you think this is "coincidence"… right…right…
Take a good look. You could be there… but no. What you are getting is "social justice" and "equality". Sure. You deserve it. Now, why don't you run a simple experiment? Why don’t you ask Chinese people if they prefer "social justice" and "equality" or money in the bank? Not your type of question? Not politically correct? We see. Please feel free to enjoy your politically correct poverty. You truly deserve it.
Note: please see the Glossary if you are unfamiliar with certain words.