the economist and the engineer, part two
I’ve been thinking more about my post on the economist and the engineer, and I’d like to add to it a bit. In that post, while I was discussing the efficiency of the two companies’ operations, I included labour as an input to the production process as if North American labour were the same as Chinese labour or African labour. The fact is, labour isn’t the same around the world, and its price is based on the local cost of living. So this time, instead of comparing two companies, lets compare two families.
Say we have two families, A and B, who both manufacture widgets. Family A lives in North America, while family B lives in China. Both A and B consist of a husband, wife, and two kids, but family A has much higher expenses because:
- Family A has a detached 3 bedroom home with heating, water, and electricity. Family B only has a small apartment in a large complex; but it fulfills their needs
- Family A has two cars to travel from their suburb to work, the grocery store, etc. Family B uses only bicycles and public transportation to get around in the dense city where they live.
- Family A pays taxes to maintain local infrastructure like roads, community centers, schools, scholarships, etc. Family B still pays taxes, but they are lower since their government doesn’t provide as much support for the community
There are many other differences, but I think you get the idea: the cost of living in North America is much higher. The reasons for our higher costs vary from our cities’ designs to our mandated education, but the reasons aren’t really the point. The point is that North American labour is expensive because North American life is inefficient. We simply cannot compete against the lean lifestyles of Asia.
In the long run, I think we’ll be forced to downsize our lifestyles to stay competitive in a global economy. It’s analogous to a large company restructuring its operations to stay competitive in changing market conditions. Ultimately, I think it will be a good change; but it won’t be easy.
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…Ouch! When you said you couldn’t always be optimistic…you didn’t have to kidney punch! Seriously, terrific post. #1 problem ecologically is overpopulation; and every big economist is saying China will be driving the global economy over the next century. Can we adjust our culture? Gonna have to whether we like it or not.