A Sad Benchmark: Chinese Communists Teach American Capitalists Econ 101

There's something really, well, sad about America having to learn its lessons about the free market from communist China. But hey - a lesson is a lesson, right?

In a business section story, the New York Times reports on the shocking - shocking, I tell you! - news that wages actually rise when the supply of labor tightens and the laws of supply and demand are permitted to actually work.

Here's an excerpt:

"Chinese wages are on the rise. No reliable figures for average wages exist; the government's economic data are notably unreliable. But factory owners and experts who monitor the nation's labor market say that businesses are having a hard time finding able-bodied workers and are having to pay the workers they can find more money."

This is pitched to us, of course, as horrific news, namely because underneath all their rhetoric about wanting to help bring prosperity to the world, corporate executives were banking on "China's vast population supply[ing] a nearly bottomless pool of workers" which they hoped would mean "so many people would be seeking jobs at any given time that wages in this country would be stuck just above subsistence levels." Unfortunately for the profiteers, the basic free market laws of supply and demand are kicking in (though let's be clear: China still has a way to go - the worker in the article now makes just $263 a month, and the country's lax labor/wage laws will continue to exert downward pressure on wages there).

Now, I know - if you are an American, you might find this connection between supply of labor and wages strange and unfathomably hard to believe - like a conspiracy theory or something out of a sci-fi movie. That's natural. You live in a country where The Great Labor Shortage Lie is regarded as an unquestioned economic axiom. This is a place where corporate CEOs and their right-wing toadies in Washington bemoan a supposedly tight labor market here as an excuse to outsource jobs and to pass immigration laws designed to create new classes of low-wage indentured servants. These same CEOs and politicians, of course, have no explanation for why wages continue to stagnate - even though domestic worker productivity steadily rises. All we know is that labor is supposedly tight, wages stagnate - but CEO salaries continues to skyrocket to 364 times the average worker's paycheck.

There's a few things going on here in America that explain this seemingly incongruent trifecta of a tight labor market, high productivity and nonetheless stagnating wages.

First, - the labor market isn't all that tight. As the Center for Economic and Policy Research shows, official government statistics purporting to show a super-low unemployment rate do not count all sorts of people who are unemployed. So the labor market still has a lot of cushion in it.

Second, thanks to a raft of Clinton and Bush-backed trade deals that include no enforceable labor, wage, human rights or environmental protections, we have an economic system that actually rewards employers for shipping American jobs to other countries where labor/wage/human rights/environmental exploitation is a viable way to cut costs. Workers who are lucky enough to have decent jobs here in America know that companies can now credibly threaten to just pick up and leave - and that reality has hurt workers' bargaining power. Its harder to demand a raise if you know it means you'll probably get canned.

Finally, this same threat-aiding trade policies and a politically connected professional union busting industry has helped crush the labor movement. And as the data shows, workers who are organized to bargain collectively not only secure better wages for themselves, but lift up all wages - union and non-union - in their industries.

Thus, we have now arrived at a seemingly absurd and quite pathetically sad point in our history. On the front page of the New York Times business section - the publication of record for America's free market fundamentalists - Chinese communists are teaching us American capitalists a lesson about how the free market is supposed to work.

Cross-posted from Working Assets

Comments

[altohone]

David- how about a breakdown of how much wages would have to rise in China in order to put upward pressure on wages here?

[maddogbitesback]

One thing you forgot to mention - Malthus. Remember- the growing population will always exceed the production of food and insure cheap labor. Well it is a long time since the Chinese said - whoa - too many children and we will never ever get ahead. This thinking led to the incredibly intelligent and humane one child policy. China's population will begin to shrink. They will have a large population of educated, fed, and housed people. America with its growing population since God doesn't like abortion but he doesn't mind ignorance, hunger and so on has a growing population will always have a pool of cheap desperate workers. Soon the corporations will come back to America for cheap labor. Its a question of priorities don't you know.

[RadCenter]

"The incredibly intelligent and humane one child policy"?

Surely you can see the connection between the current labor shortage and the fact that the one-child policy led many couples in China to bear their (presumably more valuable) sons to full term and abort their daughters. Some tasks--sewing sequins on wedding gowns, for example--require the smaller fingers and greater manual dexterity of females. These females are in short supply due to Chinese "humaneness."

Also, the bulk of U.S. population growth is coming from immigration, not reproduction.

[StopThePlanet]

And this is a byproduct of US immigration policy, the renaissance of slavery. I suppose it won't be long before there is a lobby to repeal the 13th admendment.

http://commonsense.ourfuture.org/katrina_slavery_returns_mississippi_and_alabama?tx=3
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[GreedyOldPsychopaths]

David,

So what happens to an economy that is comprised of 2/3rds consumerism when those same consumers experience declining incomes? It's not rocket science folks!

Again David, another lucid and honest blog on our economy and the manipulation of the "free market" by corporafacists.

[rmreddicks]

Well, what's to be done? Working people in this country have at least two strikes against them when they step to the plate. Government and business. The only answer is to unionize if possible (including the unemployed) or start the killing of rich people. I'm kinda' hacked off, so I'm more in line with the latter.