Tuesday, November 15, 2005

Adam Smith’s Theory of Labor and Wages at Work

For those that don’t believe free markets work and that if it wasn’t for minimum wage the bottom half would never get a pay raise (Ted Kennedy) they should take a look at the phenomenon that is taking place in India and China.

It has just been announced that average pay rates in India have risen 11.5% and in China by 7.5%. Could it be that as more companies have moved into these countries they have been forced to raise their wages in order to attract workers?

This isn’t the first time we have seen this take place, it was only a little over a decade ago that people were crying about the exploitation of Hong Gong, Taiwan and South Korea. We don’t hear it anymore because those countries have moved on and are now considered developed nations thanks to free market capitalism.

It will only be a matter of time before India and China will become like South Korea and companies will be on the move for another destination to setup shop and make cheap goods leaving India and China richer and a new member of the developed club.

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