Reply To: West rich because Third World poor?


One element missing in Jeff’s analysis is the impact of minimum wage laws and unions

Wages in a free market are determined by the productivity of that labor
Wages in a controlled economy are determined by minimum wage laws and unions.

Unions can exist in a free market and can perhaps facilitate in the price discovery of the cost of labor. HOWEVER if there are pro union laws on the books that give labor an advantage -ie such as in non right to work states, or regulations that prohibit a company from taking advantage of lower wages in right to work states,the true price of labor is distorted.

The US/Vietnam example assumes free markets in both countries.

Minimum wage laws and pro union laws prevent a true valuation of labor in the united states