Cheap Labor

It's no secret that one of the effects of the wealth disparities between the developed and developing world is the readily available cheap labor in the latter. This can have various manisfestations depending upon the particular region of the world, and in SE Asia, Malaysia in particular, DIY stores (eg, Home Depot, Lowes, etc) don't exist. When I want something fixed in my apartment, I simply call a local handy-man, pay a few ringgit (divide by 3.5 to convert to USD), and the problem's solved. And yes, the prices are still much cheaper than in the US after normalizing the exchange rate.

Another anecdotal example is laundry. We recently had someone do our laundry and what we received back still amazes me:



...everything in that bag was ironed, even my underwear (I'll spare the details) and I spent less than $15. It's too bad that in the US we rely on this type of cheap labor by exploiting immigrants and don't provide them some sort of work-for-citizenship avenue. Or that prices for some American goods are so high that incentives are created for us to buy cheaper, like-quality, foreign goods.

This climb to meet/exceed our manufacturer's level of qualtiy has a lot of history, btw. After WWII, most of the world's economies were destroyed, except America's. During the war, the US's productivity capacity was geared toward defeating the enemy, and at the end of the war, that capacity was ready to be transferred to the commercial market. This produced a seller's market, where producers could sell anything without worrying about quality, cost or delivery of these products. By the '80, though, most the economies of the rest of the world recovered and wanted to grow. Given that most economies had large marketshares in each of their respective regions of the world, they targeted the American market, and by this time, their quality, among other things, was better than ours (think the US auto industry).

Maybe high-priced labor is a good thing after all. In any given year the US has an upper threshold of productivity for all goods it can produce throughout the entire economy. Should we as the world's premier economy be concentrating on creating widgets with manual labor? Or should we be more focused on driving advancements in scientific research, continually innovating to improve products, processes, etc.? Hmm.