The Detroit News ran a special section about job losses due to outsourcing. It described how jobs were being moved from one low income nation to another as companies searched for labor rates as close to zero as possible.
There is a certain Fellini quality to this storyline. People at subsistence levels of income were being displaced by people at slavery levels of income... 45-cents per hour! All in the name of "competition". The articles highlighted one Chinese girl who was thrilled with her 45-cents per hour.
Yet, there was something surreal about the pictures that went along with the stories. The Latin American people who were displaced were living in squalor; the Chinese girl was nicely dressed and riding on her motor scooter. The people who were making "too much" money had virtually nothing; the girl with "slave wages" was apparently just fine.
I'm not a currency expert, but I'm beginning to think that there is something slightly irrational about the way money operates within a nation and on the international scene. A nice apartment in India may cost $100 per month; a similar apartment in a U.S. city may run $1,000 per month... where you can't even get in the door for $100.
The point is that if the currency does not reflect comparable value, then one must ask what the currency is reflecting. There is no way that a girl earning 45-cents per hour should be able to afford food, clothing, housing and a motorscooter unless the internal currency valuation is completely disconnected from the external currency valuation.
The question then becomes: if the currency is not valued correctly, why is that the case? Is the dollar valuation incorrect or is the social order of another country creating this disconnect or what...? Somewhere, the valuation system is askew.
Economists argue that there may be some undervaluation of third-world currencies, but that in the case of China, for example, the Yuan has actually risen versus the dollar (despite the official exchange rate being held constant since 1995???).
I guess the issue is too complex for mere common sense.
