International Minimum Wage

[Platypus]

The harvester's strike, Basically, in the fields, doing sh**t work for practically nothing, whilst Australia was the third (?) richest country in the world per capita.

[bullmoose88]

Just Say No.

Otherwise, say hello to inflation and/or unemployment...lots of it.

[ag]

I support an international minimum wage, though it doesn't really make sense to index it to GDP.  Does the OP mean GDP per capita.  It should be indexed with cost of living, and should probably be around $1 USD/hour right now for the poorest countries.

This is simply neo-Nazi racist.

Such a minimal wage for those countries, if complied with, would mean a 90% unemployment rate and mass starvation among the poor. It would screw manufacturing and completely destroy all but subsistence agriculture.  Basically, the only jobs surviving would be in distributing emergency food supplies delivered from the rich countries. And this would become a permanent state of affairs, without any potential for improvement.

Of course, in practice it would mean universal non-compliance (and corresponding disintegration of the formal tax-paying economy). Such a minimal wage would be impossible to implement even in relatively well-off Latin American countries like Mexico (unless the objective is to push an extra 10 mln. people into the U.S. ASAP with many more to follow). $1 a day might be a reasonable thing for very poor countries, though not the poorest. In Mexico it is about $4 a day (varies by state and municipality), but imposing even that would be deadly in a place like Guatemala (forget about Africa, unless, of course, your objective is to exterminate the locals). Hey, there are countries with annual GDP per capita of just a couple of hundred dollars - you wouldn't be able to give that much even by equally sharing the national wealth!

The good news, the only way of having such an agreement signed by ANY middle income or poor countries is military occupation. No government is going to commit suicide voluntarily for no good reason.

In any case, this is, mercifully, is not going ever to happen - nobody in their right mind is going to even seriously propose this, unless, of course, to use this as a pretext for wrecking free trade.

[ag]

You realize that, even if passed, it would be impossible for the bobble-headed UN bureaucrats to enforce (assuming they wanted too - I can imagine some Chinese honcho paying them off...).

While I am opposed to anything like an internationally imposed minimal wage, you have a strange misconception of the UN. It is NEVER a job of UN staff to enforce anything like this - UN has never had neither the resources nor a mandate to enforce such agreements (or, for that matter, pretty much anything else). It has never done it, and is unlikely ever to do it.  Even if a specialized agency were to be created by the treaty (within the "UN system", though not part of the UN proper), administering such a policy would remain a responsibility of national governments.  Such an agency could, at most, collect information about the implementation or (if specifically provided by an agreement) issue judgements of (non-) compliance. Of course, the World Bank and the IMF could condition the line of credit on compliance (given the US strength in those organizations it could be done only if US would like to do it).

[Bono]

Of course, in practice it would mean universal non-compliance (and corresponding disintegration of the formal tax-paying economy).

So, it is a good idea.

[Gustaf]

I'm a bit disappointed that no one answered my question...I'm gonna put it again. If the minimum wage is relative to GDP per capita I believe poor countries would STILL have much, much lower wages than rich countries. A poor African country has something like a tenth of the US GDP AND they're ready to live much poorer too.

[??????????]

AG, great posts!

[© tweed]

I'm a bit disappointed that no one answered my question...I'm gonna put it again. If the minimum wage is relative to GDP per capita I believe poor countries would STILL have much, much lower wages than rich countries. A poor African country has something like a tenth of the US GDP AND they're ready to live much poorer too.

yes but the Chinese GDP is probably fairly high, enough to drive up the cost of manufacturing by American companies in China four or five times relative to what it is now.  That hurts the American consumer as most goods are made by Chinese making a very low wage, something that keeps the price of American goods manageable. 

[ag]

I'm a bit disappointed that no one answered my question...I'm gonna put it again. If the minimum wage is relative to GDP per capita I believe poor countries would STILL have much, much lower wages than rich countries. A poor African country has something like a tenth of the US GDP AND they're ready to live much poorer too.

In poor countries there is generally a much larger gap between the upper and middle class and the poor (e.g., a person with a graduate degree could be earning more in Mexico than in Canada in the same job). There is an oversupply of the uneducated low-productivity workers and lack of educated high-productivity types, so this is only natural. Imposing a single standard even relative to GDP/capita without taking into account country-specific things like this would either cause tremendous unemployment among the poor (OK, not 90%, only 75%) or require relocation of hundreds of millions of uneducated from the poor countries where there is an oversupply to the rich countries where there is a (relative) shortage.  In fact, why would I hire an illiterate repairman at 2 dollars an hour, when I could get a junior-high graduate who will be able to read my instructions for that much? Mind it, even a relatively wealthy and educated country like Mexico (it is substantially above world's average in things like that)  has a 10% adult illiteracy rate.  Do you want all of them just to starve? That's 10 million people (well, 7 million, since you shouldn't count children).

Of course, it could, perhaps, be avoided, if the benchmark U.S. wage were to be set at, say, 25 cents an hour or less, but then it would not be binding for all but the poorest countries (it wouldn't be binding for Mexico). You just can't come up with a single simple standard that would work for the entire world.

 

[KillerPollo]

N.O.

[MODU]

God no.

Ditto.  Unless of course you want to cause a global depression.

[Gustaf]

I'm a bit disappointed that no one answered my question...I'm gonna put it again. If the minimum wage is relative to GDP per capita I believe poor countries would STILL have much, much lower wages than rich countries. A poor African country has something like a tenth of the US GDP AND they're ready to live much poorer too.

In poor countries there is generally a much larger gap between the upper and middle class and the poor (e.g., a person with a graduate degree could be earning more in Mexico than in Canada in the same job). There is an oversupply of the uneducated low-productivity workers and lack of educated high-productivity types, so this is only natural. Imposing a single standard even relative to GDP/capita without taking into account country-specific things like this would either cause tremendous unemployment among the poor (OK, not 90%, only 75%) or require relocation of hundreds of millions of uneducated from the poor countries where there is an oversupply to the rich countries where there is a (relative) shortage.  In fact, why would I hire an illiterate repairman at 2 dollars an hour, when I could get a junior-high graduate who will be able to read my instructions for that much? Mind it, even a relatively wealthy and educated country like Mexico (it is substantially above world's average in things like that)  has a 10% adult illiteracy rate.  Do you want all of them just to starve? That's 10 million people (well, 7 million, since you shouldn't count children).

Of course, it could, perhaps, be avoided, if the benchmark U.S. wage were to be set at, say, 25 cents an hour or less, but then it would not be binding for all but the poorest countries (it wouldn't be binding for Mexico). You just can't come up with a single simple standard that would work for the entire world.

 

That last sentence was sort of what I was getting at...even if you make it relative to GDP I doubt that a single standard could both be high enough to have any meaning for rich countries and low enough to allow people in poor countries to survive.