Hard News: The Creepy Party
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after all, the big attraction for so-called "runaway productions" to places like Wellywood and the slave school of West Auckland is the access to high skill, relatively low-cost labour without having to deal with the US trade guilds.
Exactly. Our competitive advantage in that market (as with most others) is the cost of labour. But now we've got gio and RoO wanting to take that away. Except they probably don't see it that way, and will doubtless trot out the "But that's different" defence.
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Coastal Coalition watch: John Ansell still assiduously pushing things along on the web:
It was interesting to hear Linda Clark ranting against spokesman Dr Hugh Barr on Jim Mora’s show the other day.
Hugh was calmy laying out the facts and Linda was getting extremely huffy.
Emails the next day revealed that the audience clearly sided with Hugh. (As they did on the Stuff poll by a margin of three to one.)
Jim neglected to mention that Linda is now a lawyer with Chapman Tripp — lawyers to iwi.
To learn more about your prime minister’s plan to trade at least 10% of your country for Maori Party votes, go to www.CoastalCoalition.co.nz.
And a challenge to the Prime Minister just to cap it off.
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Gah, Ansell's using the same Wordpress theme as the one I've gone back to. I feel the need to change my theme pronto.
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I see no problem with introducing a law that says you need to pay the minimum wage of the country in which you're selling your products
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Don't tell Peter JacksonA technical quibble, but the current minimum wage in California is roughly NZ$11.35.
What you're describing is not a problem with the minimum wage.
* based on us$8.00 from this http://en.wikipedia.org/wiki/List_of_U.S._minimum_wages#State
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I see no problem with introducing a law that says you need to pay the minimum wage of the country in which you're selling your products
It's difficult to see how that would work in practice. What if my factory exports to 20 different countries, all with wildly different wage structures? Do I pick the top one? Won't I suddenly decide to stop selling to that country to reduce my wage bill?
Does it work in reverse? Can Fonterra sell milk to China and only pay its NZ workers 50 cents/day?
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the big attraction for so-called "runaway productions" to places like Wellywood and the slave school of West Auckland is the access to high skill, relatively low-cost labour without having to deal with the US trade guilds.
Coincidentally, I have just been writing about these issues, for the forthcoming Te Papa Press history of NZ film. Technically, the LOTR trilogy was not a 'runaway' production as it was never seriously considered as a US-based film project. Of course, it greatly benefited from the incentives offered in NZ ie a de-unionised workforce, tax breaks, ancillary support and labour (eg the NZ Army building roads), the exchange rate etc.
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I see no problem with introducing a law that says you need to pay the minimum wage of the country in which you're selling your products
It's difficult to see how that would work in practice. What if my factory exports to 20 different countries, all with wildly different wage structures? Do I pick the top one? Won't I suddenly decide to stop selling to that country to reduce my wage bill?
And what if you're selling a product that's competing against a unionised industry, like cars into the US? Suddenly the minimum wage looks really, really mean, and you're still under-cutting significantly on labour costs. What then? Do you pay on the graduated union award scale for the appropriate industry? For a particular member of the industry? What about benefits packages? Do you have to account for their 401(k) schemes too?
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It's difficult to see how that would work in practice. What if my factory exports to 20 different countries, all with wildly different wage structures? Do I pick the top one? Won't I suddenly decide to stop selling to that country to reduce my wage bill?
Fine, do that. It's what's happening now with environmental standards. If you want to sell cars in California, you have to adhere to their standards, which are stricter than everybody else's. A maker could decide to not sell to Californians, or to have different models, but few do. At any rate, we make it work for environmental standards, and it is plenty complicated. No reason why we shouldn't try to make it work for labour standards.
Does it work in reverse? Can Fonterra sell milk to China and only pay its NZ workers 50 cents/day?
No, sorry, if the country minimum wage is higher than that, you'll have to start at that level. (Plus remember I'm indexing to cost of living, so it wouldn't be 50cents anyway.)
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gio, you realise that you've just demolished the aspirations of the entire developing world, reducing them to beggars at the doorstep of the developed world, and ensured that global poverty will remain? Right?
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Gio: you do realise that there's absolutely no motivation for a company in a low-wage country to increase its wages when a tariff removes one of its advantages?
If I'm making shoes and paying my employee $2/shoe, and selling them to the States for $20/shoe, then I can afford to cut some of the profit I'm making & pay my employee $3/shoe. But if my $20 shoe now costs $50 from tariffs and the locals prefer to buy a locally made brand, then I'm gonna have to keep making shoes at $2/shoe, or even lay off staff. The only people benefiting are the ones taking the tariffs.
Oh, and why would I ship to the US? The US can be stuck with their expensive manufacturers, I'll just sell my shoes locally and save the shipping costs.
[Edited for the apostrophe nazi Matt]
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*takes a bow*
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Gio: you do realise that there's absolutely no motivation for a company in a low-wage country to increase its wages when a tariff removes one of its advantages?
Actually if the tariff was set to increase your wages to a set amount, there's no motivation to pay less than that amount.
If you're paying $1/hour, and then the tariff puts another $9/hour on top of that, you might as well pay your employee $10/hour. Same price that you're selling at the end, more money going to your employee rather than some foreign government.
Whether or not you'd sell any shoes in that market as a result is more the question.
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gio, you realise that you've just demolished the aspirations of the entire developing world, reducing them to beggars at the doorstep of the developed world, and ensured that global poverty will remain? Right?
Yeah, but that's really what I enjoy, so it's a win-win for me.
What do you think would happen, out of curiosity, if all of a sudden US sneaker companies who wanted to sell shoes in the US at abominable mark-ups were forced to quadruple their wages to continue manufacturing in China? Do you think they'd stop making shoes? Do you think they'd keep operating in China, and eat the lower margins? Do you think they'd keep operating in China, and raise the price of their shoes? Do you think they would bring manufacturing back to the US? And which of these scenarios would make beggars of the developed world, any more than they are now?
Gio: you do realise that there's absolutely no motivation for a company in a low-wage country to increase its wages when a tariff removes one of its advantages?
When did I talk about introducing a tariff? All I'm saying is: want to sell your product in the US? It has to be made to an enviromental and a labour standard. Otherwise you just don't get to sell it, there's no tariff involved.
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If you take the film industry as an example, eventually someplace will offer pixelbashers at even lower rates than NZ and the work will go there.
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Ahhhh !!! I've just fucked up BIG TIME.
Yesterday I suggested Craig Ranapia wrote a letter to the Dominion Post a few years ago supporting George W's invasion of Iraq and warning of the imminent danger of Saddam's "weapons of mass destruction". This is what happens when you write something off-the-cuff, based on a vague memory, and without even remotely verifying your facts.
Because I've just checked on the Index New Zealand newspaper site and found that Craig certainly did have a letter on Iraq published in 2003 in that newspaper but his argument was the polar opposite of the one I suggested. He was in fact casting absolute doubt on the supposed threat from Iraq and its purported links to 9/11.
So I unreservedly apologise to Craig for this monumental fuck-up. And I think I'll keep a particularly low profile for the next few weeks out of sheer unbridled shame. Certainly the last time I'll make that sort of accusation without some verification first !!!.
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What do you think would happen, out of curiosity, if all of a sudden US sneaker companies who wanted to sell shoes in the US at abominable mark-ups were forced to quadruple their wages to continue manufacturing in China? Do you think they'd stop making shoes? Do you think they'd keep operating in China, and eat the lower margins? Do you think they'd keep operating in China, and raise the price of their shoes? Do you think they would bring manufacturing back to the US? And which of these scenarios would make beggars of the developed world, any more than they are now?
If the requisite increase in wages brought the cost of manufacturing to roughly equal to the cost of manufacturing the States (and isn't that really the aim of your proposal?), the obvious answer is d: bring manufacturing back to the US. Why? Because once you save on shipping, and when you can stick a "Made in the USA" label on the product, you're probably going to have more margin in the RRP. Especially if you convince your purchas^Wlocal legislative representative to cut you some tax breaks in the next round of statutory pork distribution.
How would it beggar the developing world? When you can offer consumers a locally-made product at roughly the same cost as a foreign-made one, probably with tax incentives to encourage you to bring the production back on-shore, you'll take it. So the developing economy loses jobs that pay more than the national median (even those "exploitative" firms like Nike are paying more than the national median in the economies in which they operate), and tosses a bunch more people back into a job market that's already over-supplied. Those people lose their incomes, and their confidence.
The longer-term picture is that manufacturing stays on-shore in the developed world, because you're going to end up paying at least the minimum wage for your local economy anyway so you may as well get the benefits of a "Made in XYZ" campaign and probably the tax benefits as well, plus in developed nations you get the extra plus of not having to pay bribes to all the local officials in order to stay in business. That "Buy local" campaign probably gets you extra unit sales over what you'd have got if you were selling the same shoes for the same price but imported, because consumers generally will buy a locally-produced product if there's no qualitative or economic difference to favour the imported one. And the "I'll buy local at any price" crowd will also love you. Hell, you may even be able to up the price slightly and still move more units because of that "buy local" cachet.
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If the requisite increase in wages brought the cost of manufacturing to roughly equal to the cost of manufacturing the States (and isn't that really the aim of your proposal?
No, it isn't. Cost of living in China is far lower to the cost of living in the US, so it would still cost a lot less to manufacture in China.
So I'm going to stop you right there, except, out of interest: what would be so bad about a reduction in the pace of the outsourcing from the developed world? I don't know about you, but I've got nothing against the few remaining car factory workers in Detroit keeping their jobs.
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gio, the problem is that you consider these jobs to be exploitative because the pay is very low relative to wages in the developed world. But until you compare those wages to the median income in that same country you cannot possibly make that assumption. Is it better to have a job that pays you $2/day, against a national median of 50c/day, or no job because some uppity westerner decided that the company has to pay $90/day and the company thus decides to just bring the jobs back to its home country? Because that's what will happen.
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You keep not listening to me: I want to index it to the cost of living. But by all means continue talking to yourself if that's your preference.
I also assume you don't want me to start rattling statistics and examples of brutal exploitation in factories controlled by Western companies in the developed world, right? Let's assume you don't.
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what would be so bad about a reduction in the pace of the outsourcing from the developed world?
Hate to say it, but I'm something of a free-market purist when it comes to trade. I don't believe in artificial protection of industries. If your local supplier cannot make a convincing case to be retained, why should you continue to use them? If cost is the only consideration for your company then you're pretty bloody stupid, but if you go out of business because people stop using you and start using your competitor who's still using the local supplier, well, sucks to be you. You should've looked more widely than just the $ figure at the bottom.
You talk about indexing this minimum wage concept to the local cost of living, but what makes you think that the wages being paid by these "exploitative" companies isn't more than sufficient for the local economy? In which case, what are you gaining? And how do you do these index calculations?
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gio, and it's only western companies that exploit workers in developing economies, eh?
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gio, and it's only western companies that exploit workers in developing economies, eh?
No, but we might have more jurisdiction on Western ones. Although I suppose so long as we mandate that it's the product that has restricted access, rather than this or that manufacturer, then it doesn't really matter who the company is, or where it is headquartered for tax and legal purposes.
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(And by the way I'm aware that what I'm suggesting is tantamount to a form of labour protectionism, and that it has its critics besides the usual neoliberal suspects. I'm just fine with that particular degree of protectionism. It will still be cheaper to produce in Vietnam or cambodia or China - just not quite as cheaper as it is now. And if it means that some more Italian or American or New Zealand workers get to keep keep their job, or they get to keep it for one year longer, I don't see that as a problem.)
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An old (very old) Krugman piece in support of your side of the argument springs particularly to mind.
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Musing: if I was from a developing country I'd find it terribly wearying to be expected to be so *aspirational* all the time.
(Sorry, just a thought. As you were.)
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