What determines worth of labor?

The American economy can go either way according to most newspapers and television commentaries. The experts say that we have a 50% chance of going into a recession, while some say we have almost no chance. It’s possible that more malignant economic downturn in form of depression is upon the horizon. Trying to decipher their confusing messages can be difficult. That leaves most American businesses unsure of what the future holds for them. Are they still going to be able to compete or are they going to suffer a slow and painful decline downwards?

Success and failure is all about strengths and weaknesses. When we rationally see the strengths and compare them against the strengths or weaknesses of other countries we can better determine our chances of success. It is almost the same as when you bet on two boxers one of which has endurance and the other one quickness. The one you feel will win depends in part on how you see the situation. If you feel the quickness will take out the opponent in the first few rounds then he is the better bet but if you feel that the two boxers are going the distance then endurance counts.

Looking at the American business world and comparing it to the challengers you can also see better who is going to win in the end. We know that the world is a high-tech place where efficiency and cost matter. The one who produces the cheapest products is likely to win as long as their products have reasonable quality and don’t break down often. With Chinese cheap products and America’s high quality both countries will need to come closer to the middle.

Most American and European countries can’t compete with low wage labor of workers in countries like China, Mexico, Vietnam, Bangladesh, Africa and other low wage countries. It is believed that lower standard of living and weaker law enforcement in those countries compared to industrialized Western countries account for this wage disparity. However, who determines the worth of repetitive, semi-skilled or low-skilled work? A factory worker in China or Bangladesh doing same type of work that American or European worker did or does in their countries’ factory makes 1/10th the wages of their American or European counterpart. Would American and European companies open up manufacturing plants  in China, Vietnam, Africa, Indonesia, or other low-wage countries if they were forced to pay same wage rates (after currency conversions) and essential fringe benefits as they do their workers in home country?

Why the dramatic reduction in worth of labor for the Chinese or developing countries’ worker compared to American worker for same type and length of work time? Can you say capital exploiting cheap labor wherever it may found?