A worker in Bangladesh can earn $0.13 per hour . In the USA the Minimum wage is at least $7.25. Lets say for arguments sake that both jobs are unskilled. Why is the USA worker worth 55x more money to do a job with the same skill level?
It is due to a higher standard of living. "Standard of living is generally measured by standards such as real (i.e. inflation adjusted) income per person and poverty rate. Other measures such as access and quality of health care, income growth inequality and educational standards are also used. Examples are access to certain goods (such as number of refrigerators per 1000 people), or measures of health such as life expectancy. It is the ease by which people living in a time or place are able to satisfy their needs and/or wants.[citation needed] The idea of a 'standard' may be contrasted with the quality of life, which takes into account not only the material standard of living, but also other more intangible aspects that make up human life, such as leisure, safety, cultural resources, social life, physical health, environmental quality issues etc. More complex means of measuring well-being must be employed to make such judgments, and these are very often political, thus controversial. Even between two nations or societies that have similar material standards of living, quality of life factors may in fact make one of these places more attractive to a given individual or group. Likewise Country A, a perfectly socialist country with a planned economy with very low average per capita income would receive a higher score for having lower income inequality than Country B with a higher income inequality, even if the bottom of Country B's population distribution had a higher per capita income than Country A. Real examples of this include former East Germany compared to former West Germany or North Korea compared to South Korea. In each case, the socialist country has a low income discrepancy (and therefore would score high in that regard), but lower per capita incomes than a large majority of their neighboring counterpart. This can be avoided by using the measure of income at various percentiles of the population rather than a highly relative and controversial overall income inequality measure. http://en.wikipedia.org/wiki/Standard_of_living
A less misleading question might be how the Bangladesh guy was beaten down until he had to take starvation wages to get any work at all.
That Bangladeshi could come to America and use his skill and make $7.25 an hour, but that will not make him any richer. HOWEVER, if you pay people in Bangladesh 26 cents an hour to make something they export to the US, we might have a good arrangement.
Because people are not paid for some abstract assessment of their skill. They are paid for the value of their contribution to their nation's economy. Their skill is only one factor in what they produce. Another factor is the technology deployed in their nation to leverage their skill and labor. This is what the Industrial Revolution was all about. In the Middle Ages, the only important source of energy was human labor, augmented by the labor of other animals such as horses and oxen. The amount of work any animal can do is limited by the conversion of the chemical energy in his food into the kinetic energy in his muscles. In physics, work and energy are two different words for the same thing, and that model adapts very well to economics. A horse can produce one horsepower of energy output--that's where the term comes from. A strong human can produce less than a fourth of that. This is all the energy there was to run the world for thousands of years, plus a few mills driven by waterwheels and peat- and vegetable oil-fueled fires for heating. The Industrial Revolution was comprised of two complementary technologies. One was mass production, which made labor more efficient. But the other was the conversion of the chemical energy stored in fossil fuels into heat energy, which could then be used as fuel for engines, which could then be used to power machines. The machines made it possible for a total amount of work to be done that is many orders of magnitude greater than the energy humans and other animals can produce from the calories they eat. This resulted in the leveraging of human labor, greatly increasing their productivity, even without any remarkable increase in skill. For example, a steamship captain may not be any more skillful at his job than the captain of a galley rowed by slaves, but his ship sails faster. A steam-powered mill produces much more flour than one powered by a water wheel or four oxen turning a vertical axle. So one of the reasons that the Bengali worker is paid less than his American counterpart is that his country's technology infrastructure is not as elaborate as ours. His work is not leveraged as highly as our unskilled workers' labor. He can't contribute as much value to his country's economy as our blue-collar laborers can. Or course issues of exploitation and bargaining power also come into play. Bangladesh probably doesn't have labor unions, minimum wage laws, an army of bureaucrats to enforce them and a legal system to prosecute violators. Nonetheless, the root of the problem is that he simply cannot contribute as much to the economy as a comparable American worker. This is why the libertarian movement insists that the most effective strategy for ending world poverty is to simply encourage all the poor people to immigrate to the wealthy countries. Without needing a quantum improvement in education, the work they do in the more technologically advanced nations would be worth more than the work they do at home, because it is leveraged better. Of course the libertarian movement is a little weak on second-order effects. There are roughly three-fourths of a billion people living in poverty on this planet--defined as less than one dollar a day, not the fourteen dollars that defines "poverty" in the USA (numerical sleight-of-hand that allows the USA to claim to have any "poor people" at all). All of the First World economies in aggregate could not absorb quite that many unskilled immigrants.
wouldn't the logical solution be is for those poor countries to develop their infrastructure or at least the countries with the know-how teach them to? that way people can stay in their countries and contribute to the world instead of all piling into one boat overflooding it. that makes no sense at all considering then who is going to work the nation they left. of course some countries don't need to be heavily industralized anyways and their cost of living may be lower as long as it is comensurate with being able to afford a living.
It would be silly to build an industrial infrastructure now that the Industrial Era is giving way to the Information Age. It's quite possible that they'll leapfrog right over the Industrial Revolution and build an electronic information-based infrastructure instead. The advantage of the post-industrial economy is that the massive concentrations of capital needed to build steel mills and transcontinental railroads are no longer necessary, and therefore poorer countries might very well be able to pull themselves up by their bootstraps. A friend's son and his wife emigrated to Estonia with nothing more than their life savings and founded a software house. They are now quite prosperous, and Estonia is becoming a software hub. I think the unstated point is that if those countries are so dysfunctional that the majority of their people are living in poverty, perhaps they should be emptied and their despotic leaders allowed to fend for themselves.
"The information age" was a pipe dream sold to the American people so they would be docile as factories were shut down and high paying jobs were shipped overseas in exchange for slave labor. People are just now waking up to that fact as unemployment has become endemic and the US deficit spending is coming to a head. But it is too late to undo the damage so the government has beefed up security under the guise of homeland security. You don't really think a dozen men with box cutters are the reason the US revamped its military/police forces, do you?
? But the much-more-massive concentrations of capital needed to build microchip foundries, battery factories and power plants are all the more necessary. And then there's the cost of educating the populace to the level that they can enable all of this. Which is why we still observe a strong correlation (causation, even) between the availability and deployment of such capital, and the success of information economies in said countries. To the point where such is a major focus of explicit development policy. On the back of extensive, capital-intensive sets of policies designed to foster such an outcome, specifically by attracting large flows of FDI (Estonia exhibited the highest per-capita inflows of FDI anywhere in Central or Eastern Europe for many years). On the other hand, their economy has tanked the past few years, basically cancelling out all the real growth since 2005 or so and resulting in a hige spike in unemployment.
Because the price of everything is based on Supply & Demand, and that does include wages. There's no denying that. They don't need to be taught. In order for a country to develop it's infrastructure, it must have money. In order to have money, it must export something to the world market, or at least a regional market. It isn't slave labor, and you can't prove it. What rule or law says that if there are 200 Million people age 18-67 then all 200 Million MUST be employed? Let's time warp back to 1955. How many households in the US had two wage-earners? 6%. Let's time warp to 1976. How many households in the US had two wage-earners? 13% Let's time warp to 2008. How many households in the US had two wage-earners? 67% According to you, life in 1955 must have been absolutely horrid for Americans.
I think there is no rule that says everyone must be employed, but imo, the US standard of living will decline and continue to decline while that of other nations (particularly in Asia) continue to increase. All "200 Million" people don't need to be employed, but if they all want cars, houses, Flat Screen TVs, High speed Internet, cable television, etc. then there's a price to be paid for these Luxury Items. As you said, they are going to have to make something of value for the world market.
Of that you can be absolutely certain, but that is something that will occur gradually over the next several decades. Yes, and the problem is you can't have 70+% of the economy wrapped around government, health care and hospitality (restaurants, the cinema show, entertainment and other services --- like colonic irrigation and massage therapy).
