A fair price?

A fair price of any goods or services in any economy is down to the difference between wages and cost. The reason we in the west have such a high standard of living is that we rely on our goods to be cheap compared to our average wages. This can only be achieved by sourcing them in a low wage country.

If a pair of trainers (sneakers to you US surfers) are made in China, or Bangladesh in effectively slave waged conditions, where it costs the manufacturers $1 (60p) a day per employee, they can put their own profit percentage and the retailers profits onto the price and sell to us, the consumer a product at £50. What would happen if these workers were paid by UK minimum wage standards and around £5.35 per hour, an 8 hour shift would cost £42.80. Wage costs of 60p sell for £50, what do wage costs of £42.80 make the selling price? You can bet your bottom dollar its not £50, more like £500. If the selling price is £500, how affordable does that make the product for the average wage earner in the UK, who has around £170 per week to live on?

That is only one example, imagine if that “fair pay” culture spread round the world, where all our goods were made with a decent wage, the average wage in the UK would barely make the food and utility bills, along with rent. What does this do to everyone in industries not essential to survival, like cinemas, DVD retailers, games manufacturers etc? If there is no disposable income to spend on extras, those industries collapse. The result of this is the loss of many, many jobs around the country, which puts a hefty strain on the unemployment benefit system and an almighty long term resentment of the party in government who allowed it to happen.

We take for granted in the UK the ability to visit our supermarket and choose food we may never eat, just on the “oh, we could try this; if we don’t like it we bin it” philosophy. We take for granted the ability to buy extra food not essential to survival, like crisps, sweets; or to buy party food and drink. This is only an option because most of our goods come from low wage countries.

It’s understandable when companies move their labour force to these low wage countries, after all the priority of the board is to make the right level of profits to show the shareholders they’re doing a good job. For the board members luxury yachts, sports cars and holiday homes in tax havens don’t come free, and without a good company profit performance they struggle to get their multi-million dollar bonuses past the shareholders.

Those shareholders need to see those results to continue to keep faith with the company, and not shift their money elsewhere. In it’s simplest terms this means cut costs, increase profits on sales wherever possible; so with that in mind why wouldn’t they jump at the chance to make the same product much cheaper and let them cut prices at the till while still making an increased profit?

We’ve seen companies with a presence in the UK do just this, and the workforce striking in complaint that they are being made redundant, they try to get the UK population and politicians onside to change the companies mind while forgetting one major thing; it’s a GLOBAL economy, you can’t take parts of it, while staying immune to others. The reality is that it’s costing the companies much more to employ in the UK than it needs to be. The labour costs alone do this, not counting all the extra things like corporate taxes, electricity, gas, telephone and all the various costs involved in meeting a legally safe working environment for their employees. The low wage countries have little in the way of safeguards or rights for employees, which is great for the companies, but not a good place to work.

Western governments talk the talk about tackling poverty and inequality but the action is almost invisible on the whole. The odd occasion it slips through it is piecemeal. This is due to politicians knowing that it’s their voters who will be negatively affected if equality hits. We in the west have long gotten used to a standard of living way beyond our fair share of the worlds resources, and are loathe to give it up; but you can’t equalize this long term effect without us losing out, it’s just not possible.

This results in them protecting their own at all costs, regardless of the inequality involved. Subsidies for industries to make sure that they can undercut any imported competition and still make a living wage according to the host country while limiting access of the developing countries to their own markets are rife. Letting countries trade their way out of poverty on the same rules as the rest of us is the only way to allow them to develop. Until this changes wave after wave of immigrants will flood into the rich countries seeking the possibility of a better life for themselves and their families; in short, they seek hope; hope they don’t have at home under an unfair system designed by the rich to keep them rich at the expense of everyone else.

While western governments rightly condemn the human rights abuses and terrible working conditions in some developing countries in public while propping their governments up in private they continue the cycle. While companies continue to use regimes who treat their citizens like slaves they are part of the problem. Stopping this would allow other companies in to exploit who they don’t however, so it needs to be governments who suit action to words; in short, what’s unacceptable at home for your own people should be unacceptable abroad for EVERY person regardless of race, colour or religion.

A corrupt dictatorship is much easier to deal with for governments and companies seeking to exploit the workforce than a democracy with a civil service and laws to fit within. When you can pay an installment to a leader who cares only for his own power and wealth to give you land, and free reign within it it’s a quicker process than applying for permits, licenses etc and having to follow regulations on workers rights which may change with a change in governing party. In a dictatorship dissent against a companies practices can be easily silenced for a little extra bonus, and lawsuits are non existent. In a democracy this is much more difficult, and more costly. In short; the western governments continue to support these regimes because it’s in their commercial interests.

One answer they have is quotas dictating the total number of goods in any given industry allowed to be imported into our marketplace in a financial quarter; which protects our own manufacturers from a flooding of the market by cheap imported competition. China are already producing way in excess of their quotas we’ve allowed them, which results in goods we want to buy being blocked at ports until the next date comes round.

The western governments also insist in tying the “opening of their markets” to any aid deals they receive. This is simply a euphemism for saying “allowing western business to buy and control their companies”, which allows foreign influence in their political decisions on the world stage. They want access to parts of the market while denying access to others.

By “foreign” or “western” in this case it’s mostly to be read as “US”. They seek and Empire by modern methods; why install a phony leader and prop him up when they can control the economy and discipline him for daring to speak his mind when it’s not in line with Washington’s plans with the stroke of the pen in Washington. This way they can show an illusion to their own people who are justifiably proud in their history as having won their freedom from the British Empire that they are not an Empire themselves, merely a country looking out for it’s own interests like every other.

This has gotten the international “stamp of approval” on many occasions for Washington, and to a lesser degree according to the financial clout they carry the other major economies like the UK, France, China etc. This allows these governments the opportunity to claim that their plans are supported by other countries, when in reality the plans are rarely supported but the votes have been bought, bribed or bullied out of them.

A major part of this problem is down to the public in the west, we need to accept that we are being subsidized heavily, and that we need to pay a LOT more for our goods. One retailer started a “Fair Trade” label for their chocolate bars which meant that farmers in Africa in their farms got a fair price for their cocoa beans. This meant a range of chocolate bars on sale here much more expensive than the rest. The farmers who spent their entire lives working dawn to dusk to sell cocoa beans know their crop is popular in the west, but had no clue as to what it was being used for; they had never tasted chocolate until a representative from this company gave them a chocolate bar.

In our culture we are tuned more to what new movie is being released, or what new video game we can buy, or what brand label of sweater is in fashion right now to the fact that we are living in a false economy We do see the odd story here and there on the news if we watch it, but it feels distant and unrelated to our daily lives. It allows us to have our lives as we do, but out of sight is out of mind; giving us a clear shopping conscience. If you worked dawn to dusk and earned barely enough to survive how would you feel? All the things we take for granted would vanish in a puff of smoke, no more new mobile phones every six months just because the one we have is now out of fashion etc.

It’s not surprising that our governments want to ignore and marginalize the protesters who see this reality and are trying to help their brothers and sisters around the world by making the system more equal. They don’t want it to be an issue; that would mean they’d be held more to account on their actions, not just their words; and they can’t afford to act without a drop in living standards for their own supporters. With a 24hr news culture and instant reporting via mobile phones and the internet people now know the results of those words.

The longer this inequality exists the more resentment grows towards the west, by people who have nothing, and have nothing to gain. Religion teaches you that hardship in life is rewarded by wealth when you die, this is a fertile ground for those who want to corrupt people who have nothing to attack the west. They have the means, the opportunity and the motivation. In the west we are used to being able to ignore the political and social realities around us because we have distractions of a reasonable life with holidays planned, car to buy, nights out to have, games to play etc. This luxury of lifestyle is not shared by most of the people on the planet. We have been bought, but everything has it’s price.

The motto of the capitalist west seems to be “double standards and hypocrisy are to be proud of as long as we are the beneficiaries“. This is a major bone of contention as to why the love / hate relationship many people outside the west have with us; on one hand they hate us for forcing poverty upon them, and giving them no hope of getting out of it and on the other they seek to be part of the west by immigration (legal or illegal) as an answer to the lack of hope. I genuinely believe that if the system was much fairer it would allow people in developing countries to take their own countries back from the dictators and give them a reason to stay where they love and build a future for themselves and their families. That is dependent on the discarding of the double standards code of practice the west has gotten rich on, and introducing the same rules for all.

This is a problem we can solve collectively but not without a drop in our living standard. The next time you’re shopping and see goods you consider “good value for money” think beyond the price and ask yourself why.

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