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Old 06-09-2014, 11:48 AM   #81
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Originally Posted by Gumby View Post
"The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread."
Anatole France, The Red Lily, 1894, chapter 7 (1844)
How many of the so called poor that you are worrying about are sleeping anywhere but in their own warm beds?

Most of the people inhabiting doorways want nothing to do with so called help, thought they would undoubtedly accept cash donations without any rules accompanying them.

Unlike most middle class citizens, I actually talk to these street people.

Ha
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Old 06-09-2014, 11:49 AM   #82
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I wasn't suggesting anyone was pushing for Communism...just an observation that there seemed to be a certain level of resentment toward the super-rich...a cultural move from aspiration to envy. A few here have commented on feeling guilty for receiving the rewards of hard work and sacrifice.

While revisionists may cite wealth inequality as a cause of the Great Depression, most historians will claim that one of the main factors was the average American (blindly) diving into the stock market on margin during the 20's, coupled to poor regulation of bank covers; among a whole slew of other things.

It wasn't just the rich who were partying during the "Roaring 20's"! Right alongside Gatsby was a huge and growing middle class...until it all fell apart (see 2008)
I don't think anyone has claimed wealth inequality as a singular cause for the great depression, but surely 85 people now having the same wealth equal to the bottom 3.5 billion can't make for a healthy world economy.

It is not wealth inequality that is the issue. It is the extreme degree of wealth inequality, which is trending to even greater degrees, and we haven't seen the same degree of inequality since the pre-great depression days.
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Old 06-09-2014, 12:00 PM   #83
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I don't think anyone has claimed wealth inequality as a singular cause for the great depression, but surely 85 people now having the same wealth equal to the bottom 3.5 billion can't make for a healthy world economy.

It is not wealth inequality that is the issue. It is the extreme degree of wealth inequality, which is trending to even greater degrees, and we haven't seen the same degree of inequality since the pre-great depression days.
OK. That's fine. But you can't lump the 85/3.5B into the same bucket.

Bill Gates was born into an entirely different planet than some poor guy in rural Africa/India. If you want to compare Gates against the 300M (or bottom 100M) in the US, that's one thing, but the ratio changes considerably. The rural African fellow and the average American are in completely different economies. Using that perspective, the poorest of Americans are 'ultra rich' compared to the 3.5B

Its' like the old saw that "85% of the world has never made a phone call". An interesting stat, but it doesn't tell me much.
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Old 06-09-2014, 12:11 PM   #84
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A general comment: If we (as a society) believe that a growing income (or wealth) gap is a bad thing and should be addressed, it appears there are two ways to do it:
1) Have the government take money and resources from the rich and give them to the poor.
2) Change the structure of game so that there is more opportunity for a larger number of the less-well-off to earn more money.

Option 1 is simple (simplistic?) and would address the stated problem most directly. But it ignores human nature and the reality of politics: To the degree the government is directly controlling who gets what, people will (rationally) turn to the political process to get what they want.

Option 2 is a more roundabout way to accomplish the goal. But, the focus would be on opportunity for individuals (rich and poor) to advance their own interests by producing things and services of value to others.

And, if it matters, only Option 2 results in a net increase in wealth.
#2 sounds good. How do we do that?

We (through governments) have tried some things. Public k-12 schools. Subsidized college (including Pell grants for poor people).

The structure that seemed to work post-WWII included strong private sector unions, limits on unskilled immigrants, and a certain "made in America" consumer preference. I don't know if any of those increased total wealth, but they did direct more of it to ordinary workers.

We could have slowed the trend back in the 1990's with a weak dollar policy and effective limits on certain types of immigration, but those opportunities are gone.

I don't know what we do today.
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Old 06-09-2014, 12:26 PM   #85
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OK. That's fine. But you can't lump the 85/3.5B into the same bucket.

Bill Gates was born into an entirely different planet than some poor guy in rural Africa/India. If you want to compare Gates against the 300M (or bottom 100M) in the US, that's one thing, but the ratio changes considerably. The rural African fellow and the average American are in completely different economies. Using that perspective, the poorest of Americans are 'ultra rich' compared to the 3.5B

Its' like the old saw that "85% of the world has never made a phone call". An interesting stat, but it doesn't tell me much.
In the U.S. the top 1% own 30% of the nations wealth. Even that is not so much the problem. The problem is that the inequality ratio is growing at an ever increasing rate, r > g.

If the bottom 30% all had medical care, safe housing in crime free neighborhoods, enough food to eat and access to affordable higher education then it still may not be an issue. But they don't -

Hunger Statistics, Hunger Facts & Poverty Facts | Feeding America
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Old 06-09-2014, 01:04 PM   #86
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...

If the bottom 30% all had medical care, safe housing in crime free neighborhoods, enough food to eat and access to affordable higher education then it still may not be an issue. But they don't -

Hunger Statistics, Hunger Facts & Poverty Facts | Feeding America
I don't have time for a detailed response now, but that link is an example, IMO, of various groups trying to sensationalize some very real issues, and blowing them out of proportion to the point that they lose credibility, and maybe doing more harm than good (crying 'wolf').

But in the meantime, if you are interested, just try peeling back the onion a bit on that claim that "One in Six Americans Face Hunger". Their references say nothing of the sort, at least not what most of us would consider 'facing hunger'.

I'd need to see more specifics on how this survey was conducted (devil is in the details), but, of those 1 in 6:

USDA ERS - Food Security in the U.S.: Definitions of Food Security

Quote:
95 percent of respondents reported that they had eaten less than they felt they should because there was not enough money for food.
That seems vague. I'm trying to lose a little weight, sometimes I feel I ate less than I felt I should (wanted?). And what else are they spending their money on?

I think these answers mean any time in a 3 month period, but I need to check.

Quote:
68 percent of respondents reported that they had been hungry but did not eat because they could not afford enough food.
So of those 'facing hunger', ~ one third were not hungry in the past three months?

Quote:
47 percent of respondents reported having lost weight because they did not have enough money for food.
And over half have not lost weight (yes, I know, they eat crappy food that causes them to gain weight - but is that really the same as 'facing hunger'?)?


Quote:
29 percent reported that an adult did not eat for a whole day because there was not enough money for food.
23 percent reported that this had occurred in 3 or more months.
OK, going for a whole day fits as 'hunger', but the 2/3rds of the 1 in 6 'facing hunger' have not experienced this?

Again, like the top 1%, these people may not be the same group over time.

I'm not trying to downplay the real issues some people face, but I have a real problem with distorting the view, it serves no one (I'm not calling out the poster on that one, but the sources of phrases like "1 in 6 face hunger").

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Old 06-09-2014, 01:14 PM   #87
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Originally Posted by ERD50 View Post
I'm not trying to downplay the real issues some people face, but I have a real problem with distorting the view, it serves no one (I'm not calling out the poster on that one, but the sources of phrases like "1 in 6 face hunger").

-ERD50
It was one link out of millions of sites and articles on poverty issues in the U.S. Here is another -

4 in 5 in USA face near-poverty, no work

If you think poverty in the U.S. is not an issue, then thousands of links from think tanks, journals, charities and media articles probably would not change your mind.
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Old 06-09-2014, 01:20 PM   #88
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....
If you think poverty in the U.S. is not an issue, then thousands of links from think tanks, journals, charities and media articles probably would not change your mind.
Please re-read my post, I think I was clear in saying these are real issues that concern me. I just don't think that articles that distort the view are doing anyone any favors.

We end up in a situation where the group with the best 'PR' gets the support, rather than those who need it most, or the 'sexy solutions' get attention, even if they are actually detrimental in the long run, over and above real solutions that might not sound as exciting.

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Old 06-09-2014, 01:32 PM   #89
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Seems like more squishy stats int at last article too:

> Four out of 5 U.S. adults struggle with joblessness, near-poverty or reliance on welfare for at least parts of their lives, a sign of deteriorating economic security and an elusive American dream.

Heck, I'll bet most of the 1% "struggled with joblessness" during part of their lives. Certainly Steve Jobs did. The Apple board fired him.

Personally I "struggled with joblessness" too - I got laid off during the dot com bust. No job for a year and a half. In hind sight, it was the best thing that ever happened to me. Seriously, I taught myself some new skills during the down time and landed a job that allowed me to retire at 49.

A little struggle in life is good for a person.
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Old 06-09-2014, 01:33 PM   #90
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Similar experience here and agree 100% with Gumby.
Same in many ways here. Gumby's post sums many of my own feelings up so much better than my personal "There but for the grace of God go I" mantra that I try mightily and often fail to remember in daily life.
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Old 06-09-2014, 01:37 PM   #91
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The structure that seemed to work post-WWII included strong private sector unions, limits on unskilled immigrants, and a certain "made in America" consumer preference. I don't know if any of those increased total wealth, but they did direct more of it to ordinary workers.
I think market forces had a >lot< more to do with the better pay of US blue collar workers after WW-II than the factors you cite. We were the only industrial economy left standing after the war, there was a world of pent-up demand for products, and a finite number of US workers available. So, these workers could demand historically high wages. And that same market force enabled them to have powerful unions. It was a momentary aberration brought about by WW II, and it ain't coming back. US workers are now (properly) facing competition from foreign workers, and it is driving US wages down, but on the whole there is more "good" being done because the wages going to foreign workers are making a >huge< difference in the quality of their lives. A hundred dollars paid to a poor guy in Cambodia buys food for his family for months, the same amount paid to a worker in a developed country buys one nice family dinner at a restaurant. Where is the best marginal utility/happiness-per-dollar?

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#2 sounds good. How do we do that?

We (through governments) have tried some things. Public k-12 schools. Subsidized college (including Pell grants for poor people).
Improvements on some of these things could be a start: U.S. public schools, especially in poor neighborhoods, are not very inspiring (though the sums spent on them are). I'd say a 21st century equivalent to public libraries would be government programs to enhance internet access (though there will be 1 million cat videos and porn clips for every instance of someone downloading a copy of "Tale of Two Cities").
When we talk about helping the poor, I think we march off in the wrong direction (and implement some bad "solutions") if we don't ask hard questions first about the causes of poverty in the US. We have cultural issues that need to be talked about, and we need government policies that at least don't exacerbate the cultural factors that lead to poverty.

From the LA Times:
Quote:
And it's still possible for families to move up to the middle class, despite the factory closings of the last few decades. Ron Haskins of the Pew Center on the States' Economic Mobility Project puts it this way: "If young people do three things — graduate from high school, get a job, and get married and wait until they're 21 before having a baby — they have an almost 75% chance of making it into the middle class." Those are pretty impressive odds.
Now, even if more people avoid poverty or get into the middle class, that doesn't necessarily address the issue of income inequality (because "middle income" is a relative term). But if US workers bring skills and a conscientious attitude toward their jobs, I think they can be more productive than workers anywhere. And productivity is a necessary (but not sufficient) condition for increased pay.
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Old 06-09-2014, 01:38 PM   #92
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Seems like more squishy stats int at last article too:

> Four out of 5 U.S. adults struggle with joblessness, near-poverty or reliance on welfare for at least parts of their lives, a sign of deteriorating economic security and an elusive American dream.

Heck, I'll bet most of the 1% "struggled with joblessness" during part of their lives. Certainly Steve Jobs did. The Apple board fired him.

Personally I "struggled with joblessness" too - I got laid off during the dot com bust. No job for a year and a half. In hind sight, it was the best thing that ever happened to me. Seriously, I taught myself some new skills during the down time and landed a job that allowed me to retire at 49.

A little struggle in life is good for a person.
There is so much flaw in the bolded sentence that I didn't read the article any further. How it was published in USA Today says a lot about the media.
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Old 06-09-2014, 01:50 PM   #93
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Now we are getting to common ground, and again it touches on my issue (unless someone can clarify this), that many of these discussions, including Piketty's book, isn't looking at the big picture - it looks at inequality within industrialized nations. I am far,far more concerned with those w/o clean water and other basics than I m about our definition of 'poor' in the US (cell phones, medicaid, clean water, plenty of food, A/C and central heat, cable, game boxes, etc).

And I'm fine with a lowering of US standard of living if it means we can lift those people up.
Of course, the "US standard of living" isn't the same for everyone.

Let's suppose that one important factor has been moving unskilled work to China.
1. Maybe there's somebody with capital (say, Sam Walton) who saw a way to make money on that shift, and made a lot (and then left it to children who weren't part of that decision).
2. Then, there are some upper income workers whose jobs aren't outsourceable, but who benefited from lower prices.
3. Next, we have the unskilled workers who lost jobs, saw their wages drop by half, and didn't begin to buy enough Chinese stuff to offset their loss.
4. And, the Chinese workers who earn somewhat more now than they had before.
5. Finally, the Chinese factory owner, who has the political "contacts" to get the appropriate permits, who makes a lot of money by connecting those workers with American buyers.

I happen to be in group 2.
Note that group 4 was the only one that lost, everyone else gained, some of them owe their gains to group 4's loss.
So, if I applied your statement to myself, I'd have to say "I'm fine with lowering some other American's living standard so that I can live better, and some other people (including some very poor Chinese) can also live better."
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Old 06-09-2014, 01:51 PM   #94
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I partially agree with your position mpeirce. Struggle can be good as in motivating people to develop new skills like you did. Unfortunately too many people in todays USA face conditions more akin to a mouse stuck in the middle of a glue trap than an obstacle that hard work or greater motivation would allow them to overcome.
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Old 06-09-2014, 02:12 PM   #95
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1) I think market forces had a >lot< more to do with the better pay of US blue collar workers after WW-II than the factors you cite. We were the only industrial economy left standing after the war, there was a world of pent-up demand for products, and a finite number of US workers available. So, these workers could demand historically high wages. And that same market force enabled them to have powerful unions. It was a momentary aberration brought about by WW II, and it ain't coming back.

2) US workers are now (properly) facing competition from foreign workers, and it is driving US wages down, but on the whole there is more "good" being done because the wages going to foreign workers are making a >huge< difference in the quality of their lives. A hundred dollars paid to a poor guy in Cambodia buys food for his family for months, the same amount paid to a worker in a developed country buys one nice family dinner at a restaurant. Where is the best marginal utility/happiness-per-dollar?


3) Improvements on some of these things could be a start: U.S. public schools, especially in poor neighborhoods, are not very inspiring (though the sums spent on them are). I'd say a 21st century equivalent to public libraries would be government programs to enhance internet access (though there will be 1 million cat videos and porn clips for every instance of someone downloading a copy of "Tale of Two Cities").

4) When we talk about helping the poor, I think we march off in the wrong direction (and implement some bad "solutions") if we don't ask hard questions first about the causes of poverty in the US. We have cultural issues that need to be talked about, and we need government policies that at least don't exacerbate the cultural factors that lead to poverty.

From the LA Times:
Now, even if more people avoid poverty or get into the middle class, that doesn't necessarily address the issue of income inequality (because "middle income" is a relative term).

5) But if US workers bring skills and a conscientious attitude toward their jobs, I think they can be more productive than workers anywhere.
6) And productivity is a necessary (but not sufficient) condition for increased pay.
1) I'm skeptical of the "only economy left standing" => high profits/wages. But I won't get into that today.

I'll just say that it's not clear to me that the "market" assured that workers got a big slice of the growing revenue for US firms. I think it was gov't and culture that protected the worker's share.

2) Okay. But that suggests the overriding "structural" issue makes growing inequality inevitable.

3) If you've got a way to improve schools, I hope you get to try it somewhere. There have been tons of experiments. My public library already has free, fast internet. I assume most do.

4) I was thinking more about the median worker staying even with economic growth. Poor people are a related issue. I expect that the causation arrow for the 3 things (at least 2 of them) points in the other direction.

5) I don't know why I'd believe the "more" in this statement.

5) Google "wages vs. productivity graph". To me, the apparent divergence is the issue.
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Old 06-09-2014, 02:15 PM   #96
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In the U.S. the top 1% own 30% of the nations wealth. Even that is not so much the problem. The problem is that the inequality ratio is growing at an ever increasing rate, r > g.

If the bottom 30% all had medical care, safe housing in crime free neighborhoods, enough food to eat and access to affordable higher education then it still may not be an issue. But they don't -

Hunger Statistics, Hunger Facts & Poverty Facts | Feeding America
Well, you got me struggling here. Again it's an interesting statistic but...

But is this about some "number"? So what if the 1% owns 30% of the wealth? Is this just about it being fair? Is this about jealousy?

To me, there is some inherent 'regulator' that prevents the 1% from owning above a certain level of wealth because their personal economy would run out of gas.

If the 1% own 30% of the wealth, and, I'm doing just fine (thank you) making a yoy 12-14% run rate on my own portfolio, I"m having a hard time losing sleep over it.

I think the Fed have shown a fair amount of competence in combating a full blown depression and should the economy sputter because the wealth ownership goes to, say, 60%, I'd expect them to figure out a fix.

Now, don't jump on me...yes, I care about the poor and would love a more fair world but I just don't see a fairer world in our future.

But if this thread is just about 'fairness', I'll move on to another thread.
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Old 06-09-2014, 03:16 PM   #97
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To me, there is some inherent 'regulator' that prevents the 1% from owning above a certain level of wealth because their personal economy would run out of gas.
I think the interest in Piketty's work is that his data doesn't show any inherent regulator in a capitalist system, that as long as r > g, the inequality gap has risen and will continue to do so.

"A longer-term problem in the Piketty thesis of an inexorable rise in the richest 10% at the expense of the bottom 90% is, not surprisingly, the prospect of a backlash. Merrill Lynch warns of political polarization, strident nationalism and civil unrest, none of which are good for markets. It also adds, that in the longer term, absent any policy intervention, emerging market are also likely to become entrenched and egregious plutonomies."

Has the Piketty backlash begun in Hong Kong? - Craig Stephen's This Week in China - MarketWatch
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Old 06-09-2014, 03:25 PM   #98
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....
What ratio of wealth in the world is it okay for the top 1/10 of one percent okay to own? Is 100% okay? 50%? ....

What ratio is okay with you? If 100 people owned 100% of the wealth in the world is that okay with all of you? Would that be capitalism working as it should? Do you have any ratio where you think tax increases to distribute wealth more equally would be okay?
OK, I was out mowing the lawn, and had some time to think about this more fully...

and I need to stick with my initial response - there is no 'number' that I would view as right/wrong. As I pointed out earlier, Yemen has a 'better number' (GINI coefficient) than the US, but I doubt you'd find many takers among the middle of the lowest economic quintile in the US, if offered a median position in Yemen - especially if they were female (just look at some of the stats on education, etc for females in Yemen).

Now clearly, at some point an extreme GINI number is very likely to be accompanied by deep social issues and unrest. But I think it is far, far more helpful to focus on those issues, and their causes and solutions than to use any single number/statistic to tell us anything at all. So nope, not gonna pick a number.

I'd want to look at the lower deciles (finer resolution), and get a measure of their problems, and look for solutions. A more progressive tax system might be part of an answer, but I'm not willing to jump to that as the very first solution out of the box, as it has repercussions that must be considered. I've read some stats on lottery winners (but I'm not sure how rigorous the studies were), but something tells me that throwing money at people who don't know how to manage money isn't going to be a big help, and that money could probably be put to better use (education).

samclem pointed out some interesting points from the L.A. Times in post # 91. Unfortunately, it seems that any objective look into these issues and solutions results in cries of political incorrectness from some camps, and those avenues are shut/shouted down.

And they are probably too politically 'hot' for this forum as well, so I'll stop there.

-ERD50
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Old 06-09-2014, 04:03 PM   #99
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3) If you've got a way to improve schools, I hope you get to try it somewhere. There have been tons of experiments. My public library already has free, fast internet. I assume most do.
I'd say some of the factors that are cited as protecting worker pay (e.g. strong unions) might be an important factor in the abject failure of some public schools (and school systems).

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4) . . . I expect that the causation arrow for the 3 things (at least 2 of them) points in the other direction.
There's probably a lot of mingling of causation. It's very likely that attitudes and "poor life choices" are behind a lot of this.

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5) I don't know why I'd believe the "more" in this statement.
Because workers in the US still have many advantages gained by being here compared to being in most less developed nations. Political and social stability, efficient capital markets, reliable physical infrastructure, a functioning legal/court system, relatively low political corruption, a well funded social welfare system, etc. A business (and, consequently, its workers) gains a lot of productivity advantages from operating in the US.

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5) Google "wages vs. productivity graph". To me, the apparent divergence is the issue.
Thus the "but not sufficient" clause. Compensation won't go up if there's a surplus of available workers at the present wage.

The title of the thread is interesting. Warren Buffet is rich, but a lot of folks who make a lot less money have a bigger hand in "ruling the U.S." But, I guess it sells books.
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Old 06-10-2014, 09:05 AM   #100
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A hundred dollars paid to a poor guy in Cambodia buys food for his family for months, the same amount paid to a worker in a developed country buys one nice family dinner at a restaurant. Where is the best marginal utility/happiness-per-dollar?
I've had very similar discussion with colleagues who claim IT workers in India are "stealing" our jobs. I have trouble coming up with a reason that being born on this side of a geopolitical boundary made me own the job more than the person on the other side.
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