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Old 05-09-2008, 02:45 PM   #36 (permalink)
Duffman
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Lost Cause,
It is not so easy. In economic terms labour is just a factor of production or something that can be traded exactly like a commodity for money which is just a store of value. Goods such as gasoline vary in price around the globe, in oil rich counties like Venezuela and Arab nations gas can be bought for 10 cents/Litre while other countries are paying in the ballpark of what you or I pay because we don’t have more oil than we know what to do with. It also follows that different areas of the country have different minimum wages than others because things cost more or less in different areas.

The supply and demand model does a pretty good job of explaining prices for nearly everything and labour is no different. As Hvatum said “Nobody in America digs ditches…. People in America use digging equipment.” Hits the nail squarely on the head. Production requires two things, capital and labour where capital can be anything from buildings, to tools and machinery. When labour is scarce then the returns from production flow largely to labour and not capital, so we have high wages and low dividends for investors. The opposite is true when labour is abundant relative to capital. The best way I can illustrate this example is to think of farming in the U.S. and Mexico. The U.S. farmer has an abundance of capital in the form of tractors and combines while the Mexican has none and does everything by hand. The American farmer is obviously as productive as a couple hundred Mexican because of his machinery and will receive a higher wage because of it.

So the African’s labour is worth less because as a region they have an abysmal Capital to Labour ratio and because the region has no wealth there is no trickle down to the poor either. Again this is just an explanation, not that I view Africans as worthless human beings.

Mods: sorry for getting off topic, a question was asked, I answered.
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