juust ~ php oddities

I heard a remark the Obama adminstration want to raise minimum wage, that has it’s upsides, it helps increase spend capacity which could increase business turn-over and create some jobs. The major downside, it drives wage-price level up, production becomes more expensive.

With only the american system in mind, it is a sound measure, if you take a global view with emerging industrial powerhouses like China and India on the market with a far lower price-wage level and far bigger inner market, it could seriously backfire.

An oversimplification :

We live in neighboring houses, I make 1000 a month, my neighbor 100. My house costs 100.000 and his house 10.000. My mortgage is 600, his mortgage is 60.

We work for two different companies that make chairs. We both make a chair, and spend 160 hours. My boss has to pay 600, so the chair has to yield 600, and my neighbors chair  60.

We sell our chairs on the  global village market place, our sales our slow and our neighbor is selling like insane.

Mister Obama decides my wage has to be 5 bucks in stead of 4 bucks an hour, that means  I make 160 per month more, and can buy some new clothes, music, food. That should get the local economy going a bit better.

Of course that does mean my boss pays 800 so my chair has to yield 800 whilst my neighbor is still selling for 60 bucks.

We make 12 chairs this year, but do not sell anything on the global village market place. Everyone buys the 60 bucks chair of the neighbor that just keeps getting more popular because our chair is only getting more expensive. We do not sell anything, so my boss goes bankrupt and I become jobless. That sucks.

Of course that is an oversimplification.

Recent data indicates that america and china both are on 3500bln trade volume, however china have a 300bln 10% trade surplus and america an 800bln 20% trade deficit. Driving up the price-wage level will increase that gap.