East/West divide

[Xenia]

In today's Times - one of the best articles I have read on the subject (about why the West is finding it hard to compete with China and what we will need to do to improve things).

www.thetimes.co.uk/tto/opinion/columnists/article3507936.ece

There is no entitlement about our wages. No company is doing us a favour by paying us. We are working for them and they earn a profit from our labour. Also, the government is not doing us a favour by spending on health. We have paid our taxes for that. Governments come and go, but the NHS remains, because it is the people's NHS, owned by the whole nation and paid for by the whole nation. There is no entitlement about it. We have paid for it.

There was some entitlement about MPs' expenses, but that has now ended. But there is no entitlement about our salaries or our health service.

'It?s a bleak view, but it contains the truth that all of us know: to recover, you have to retrench. To grow, you have to invest. To avoid the fate of Greece, you must shrink government expenditure. Capitalism works by creating surpluses and investing them productively not by borrowing money and squandering it on consumption.'

Not a word about the banks and their role in the crisis. All about our consumption and government expenditure, and it seems that the solution is to cut both of them back. But no root and branch restructuring of the banks.

'It would be better to choose to restructure our national spending priorities rather than have it forced upon us in more brutal fashion by the markets. Yet we cannot expect politicians to stand up and say this to us unless we are prepared to accept facts and admit it ourselves.'

But the public may not agree with these 'facts'. The clever people with their sliderules may wish to cut the 22% of health spending that goes on the last year of life. They may think there are more important things to spend it on. Some politicians may want to spend it on the Millenium Dome or the Olympics or subsidies to rich landowners to erect windmills that help "save the planet". But it is not their money, it is the people's money. They have to tell us what they want to do with it and then the public decides if it agrees.

'Yet 22 per cent of healthcare spending is said to go on the final year of life. Which is more important: the last year of life or the first 20?'

More important to whom? To someone who is ill, now is important, not what happened 30 years ago.

Many people never set foot in a doctor's surgery for years until the last year of life. That's when they expect their tax money to be spent on them, not when they were fine and dandy. Maybe 22% is isn't enough?

Read the newspapers to see how people are denied life-saving drugs due to a postcode lottery. There was no postcode lottery when they paid their tax.

I haven't been to my docotr in 6 years and I remember because it's when they moved to their marvellous new building open 365 days a year, must be best NHS care in the UK and I never need it and of course as you say I might do.

I suspect we have very different viewpoints. The NHS and all state services have always been rationed, always. Doctors used to make most of the decisions about that which perhaps worked better. Now we of course have more treatments too and more information about them. There will always be rationing so I don't think this writer is wrong to talk about how money is to be spent.

Labour prooposed 20% cuts and the Tories 25% so there is really little between the two parties despite what the left likes to say. There is not much money left and we are hugely in debt. We cannot easily spend more than we have although we are doing so. The article though was not about this crisis - it was an interesting comparison about China and here. In the country where my island is on the islands labour cost 8 dollars a day. A fellow island owever thought that's very low and started paying 10 dollars a day. Others were up in arms with her for upsetting the local systems.

I bid for work on some sites where plenty of those bidding are all over the planet. It is nice global market. We certainly want no new barriers to trade. Free trade must prevail.

'There is not much money left and we are hugely in debt.'

But we found hundreds of billions for quantitative easing and billions for the Olympics.

'A fellow island owever thought that's very low and started paying 10 dollars a day. Others were up in arms with her for upsetting the local systems.'

The fellow islander wanted to pay more. But we hear lots of arguments that say we need to be paid less because Chinese workers are paid less and 1.3 billion rural workers earn 100 times less than us. But that is comparing apples and oranges. We all have different costs of living, different council taxes, different fuel tax etc. And some arguments say that we should cut back on our health spending too, as well as our salary demands.

And all the while, the rich get richer, there are tax cuts for millionaires and their pensions and bonuses go through the roof. Some cats are getting fatter and the rest of teh population is told to cut back and stop their feeling of entitlement.

Single mothers being offered zero hour contracts. The mother on Newsnight said she thinks they should be stopped and how do they expect people to pay their bills. It's like something out of Orwell. What newspeak will they come up with next - negative pay contracts?

If happiness does not relate to money why on earth does it matter if one person has more money than another?

I suspect we are politically so far apart it is too difficult to debate all this.

The bottom line is people are much much better off even than when I was a little girl when most of us did not even have central heating. People forget that. It is absolute not relative poverty that matters.

'If happiness does not relate to money why on earth does it matter if one person has more money than another?'

It doesn't matter. But we believe in fair play, not in one rule for some and another rule for others. It's about practice what you preach. If corporate high-fliers think Western workers are paid too much if they earn 100 times more than 1.3 billion rural workers, then let them take the first step in reducing their wages to even the level of the national minimum wage.

'The bottom line is people are much much better off even than when I was a little girl when most of us did not even have central heating.'

Yes, but we are better off than in the times of the caveman. We now have
anaesthetic. That is progress. We would hope that things continue to get better. We don't want a rich elite to turn the clock back and cut our rights and give us zero hour contracts just because we earn more than other workers in the world in order to be able to pay our higher council tax.

"And I agree that longer term our wages will drop but then China's will rise. At some point there will be an equilibrium"

and at that point no one will have any purchasing power. We will either have not enough money to buy each others commodities or there will be too many commodities and no buyers, a race to the bottom with declining values, declining wages and shrinking workforces.

Eh? That's a strange logic Mini? We have a rough equilibrium with other western countries yet we have bought each others commodities for some time.

Claig, on your earlier point about education. Denying there is not a big difference between our educational standards and the chinese is like denying the elephant in the room.

Those inner city Shanghai kids are graduating in their thousands with degrees in engineering, software development etc. The rural kids who have less education either stay in rural communities farming or move to work making iphones or widgets in factory cities.

Either way China has the population, education and political will. And the key KEY difference which not many people ever appreciate is that because of their political system, they are not tempted to make short term popular decisions. They can make decisions which bear fruit in ten to twenty years time. Our politician's can't do that because they have to get re-elected every five years.

What do changes in the level of wages have to do with the prices of commodities?

The price of all commodities expresses labour value plus surplus value. The labour value in a loaf of bread is somewhat less than that expressed in the sales price of a car as an example. If the chinese bake bread they will bake a lot of bread in order to afford our car. Actually what happens is that the worker expends more labour hours in baking bread to afford the car and actaully has less money to buy bread if he buys a car. Marx said that this would create a surplus of commodities.

But won?t the rise in the purchasing power of the working class drive up the prices of the necessities that enter into the consumption of the working class? Maybe the price of food and other necessities would rise. If the labour value is expressed as wages then the prices rise in accordance, if the demand is constant this is sustainable but of course that can't happen. If your wages rise by 50% and food costs 50% more than workers actually have less money to spend on other commodities.

If workers have more purchasing power Capital will therefore start to flow out of industries that produce commodities that are consumed by the capitalists into industries that produce commodities for the workers. As this process unfolds, prices of necessities will fall while the prices of commodities such as Gulf Streams will rise. Soon the rate of profit will be more less equal once again. However, the new average rate of profit will be lower than it was before the rise in wages.

Second, more of the total labor time of society will be devoted than before to producing commodities for the workers and less to producing commodities such as Gulf Streams for the capitalists. There will be a greater chance that a given worker will be producing commodities for her fellow workers and less chance that a given worker will be producing commodities for her capitalist exploiters.

This doesn?t mean that prices will necessarily be exactly the same as before. This is because commodities tend to sell at prices that don?t exactly express their value but rather at prices that equalize the rate of profit among the various branches of industry. In more labor-intensive branches of production, or, to use Marxist terminology, in those branches of industry that have a lower than average organic composition of capital, prices will rise as wages rise and fall as wages fall, because these branches of industry spend more on their ?labor costs? than the average for industry as a whole.

It isn't possible to have an average rate of labour time or wages over all methods of production and all commodities, therefore labour intensive commodities have a higher price which means workers who work in less labour intensive industries actually end up with less purchasing power.

Capitalism on a level playing field will fail dismally, it actually thrives on the inequalities unless it reaches a tipping point.

So no I don't think my comment was strange!

"But this right is now broken because, starting in 1990, developing nations ditched the failed socialist and Marxist policies that kept them poor. Since 2000 China?s economy has quintupled ? while jobs, wages and GDP growth over the cycle for Western economies was, with few exceptions, negative"

I have just had time to read the whole thing,a fine fairy story, fallen off my chair laughing.

All this actually proves is that capital exploits cheap labour to create a greater surplus when it sells to the consumer.......in the west. The other thing that it proves is that capitalism thrives on inequality not equilibrium.

China and Russia have ditched economic policy but little has changed socially unless of course their students are now being saddled with huge debt from tuition fees.

"Nearly 80 per cent of maternity pay and more than 40 per cent of child benefit goes to middle-class households in the UK" So it would seem that the answer is to erode workers maternity pay and wages but what of the service sector jobs in the west, can Mrs Pregnant afford a hair cut? If she can't then the hairdresser will have to find some way of exporting hair cuts to the Chinese.

The rise of developing countries relies heavily on the cash in our pockets but of course we have a lot less to spend. The only way in which China can continue to grow is to create greater inequality here with the wealthiest consuming luxury goods and poorest eating garbage and that is exactly what this economist seems to be advocating.

You could argue if Mrs Pregnant gets no maternity rights (as I had none in my day) she is back to work full time in 2 weeks (as I was) and does really well for herself (as I did). In other words being to generous to people can keep them trapped in low earning poverty and encourage sexism at home as muggins Pregnant will be the one saddled with dull stuff at home by her sexist husband if she is the one having to stay home because she is being paid to stay at home.

What is interesting in China is that ilke Russia those in power appear to be secreting money away. It is all just a reun of Animal Farm, isn't it? Communism and socialism will always be a total failure. Long live capitalism.

Just one day you will of course meet someone who has an even greater ego. Housewife bashing is very passée. Many women have done very well under communism, if you want to unpick why so many western women over the last 60 years were consigned to the kitchen, you need look no further than the grand capitalist conspiracy of making women consumers to their male counterparts. Think 50's housewives and new build houses, food mixers and hoovers, that fuelled the capitalist monster after the war.

Who are these people then that are secreting money away? and in your view is this good or bad?

China and Russia have ditched economic policy but little has changed socially

Have you actually been to these countries and seem them first hand? I've not been to Russia but I can tell you for a fact that the China of twenty years ago looks nothing like the China of today. The standard of living has risen dramatically. Gone are the days where they struggled to feed their own population under communism, to the point where to be fat was considered to be a compliment and a statement of wealth. Pop into Shanghai now or Beijing and you will see a modern city full of hustle & bustle just like any western city.

Sure we still read stories of how bad the chinese government are and how corrupt things are. I'm sure things are not perfect in many ways but I can bet you that the Chinese government could easily find plenty of examples of how crap our country is too.

I believe in the rule of law so I would be against Russians and Chinese taking money when in theory their salary is £20k a year (the Chinese lady who supposedly murdered the Old Harrovian - her husband's income is £20k a year from the state and yet they sent their son to Harrow and supposedly ave £200m abroad and all the Russians in London - plenty of those seemed to have acquired state assets rather cheaply by paying for protection).

Women have not done well under communism. I was very very disappointed. If you read books like those ones by the Chinese lady about the Moa period, I forget her name, very thick good books - women did not get the power and rights they might have done. Russia remained much much more sexist than the UK dsepite the 1914 revolution. Communisam is a con which gives less fair power to those in power than the power of those voted in in the West which is not perfect but much better.

China now it has embraced many capitalist values is doing better. North Koreans are 4 inches shorter than South Koreans so wonderful is communism at feeding its peoples.

That is the most ludicrously bad economics article I've read in a long while. So many holes to pick in it - that we should be trying to compete with China's workers on 12$ a day, ignoring that their living costs are far cheaper, rather than trying to compete with any other country eg the US or Germany, where salaries are equivalent to ours. Ignoring that if we did indeed all earn $12 too, then the Chinese economy would collapse instantly, as they could not export largely unnecessary consumer tat to workers in richer countries as those workers could no longer afford the basics of food, roof over their head etc.

Salary differentials have aways existed between countries, even ones next door, but that has not always led inevitably to salaries or economies becoming identical; far from it.

The idea that all the savings must come from the 'pampered' middle classes, but with no equivalent call for restraint or 'investment' from those at the top...the whole article reads as a very sorry apologia for the policies of the present govt, and one written by a fool to boot.

One of the first things that chairman Mao did was tackle footbinding and encourage women into work, the fate of women before the revolution was terrible Xenia?

Lenin asserted that "the success of a revolution depends on the participation of women" and Mao said that women held up the Sky. The best Russian Sniper during WW2 was female, one of the leading pilots and trainers was female. Sorry Xenia I don't agree.

The fact that women's rights activists were and still are largely left leaning and came out of the human rights movement I think you'll find most feminists are anti-caps to greater or lesser degree.

But what of this equilibrium? No one wants to pick me up on my first post, is it easier to attack social and political thinking than economic reasoning?