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Thing 3

Most people in rich countries are paid more than they should be

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Chang, H. (2011). Thing 3. In Chang, H. 23 Things They Don't Tell You About Capitalism. Bloomsbury Press, pp. 23-30

23

The wage gaps between rich and poor countries exist not mainly because of differences in individual productivity but mainly because of immigration control. If there were free migration, most workers in rich countries could be, and would be, replaced by workers from poor countries. In other words, wages are largely politically determined. The other side of the coin is that poor countries are poor not because of their poor people, many of whom can out-compete their counterparts in rich countries, but because of their rich people, most of whom cannot do the same. This does not, however, mean that the rich in the rich countries can pat their own backs for their individual brilliance. Their high productivities are possible only because of the historically inherited collective institutions on which they stand. We should reject the myth that we all get paid according to our individual worth, if we are to build a truly just society.

it's true, but he could go deeper into what it means for some countries to be rich or poor if it has nothing to do with individual productivity

—p.23 by Ha-Joon Chang 1 year, 11 months ago

The wage gaps between rich and poor countries exist not mainly because of differences in individual productivity but mainly because of immigration control. If there were free migration, most workers in rich countries could be, and would be, replaced by workers from poor countries. In other words, wages are largely politically determined. The other side of the coin is that poor countries are poor not because of their poor people, many of whom can out-compete their counterparts in rich countries, but because of their rich people, most of whom cannot do the same. This does not, however, mean that the rich in the rich countries can pat their own backs for their individual brilliance. Their high productivities are possible only because of the historically inherited collective institutions on which they stand. We should reject the myth that we all get paid according to our individual worth, if we are to build a truly just society.

it's true, but he could go deeper into what it means for some countries to be rich or poor if it has nothing to do with individual productivity

—p.23 by Ha-Joon Chang 1 year, 11 months ago
27

While they complain about minimum wage legislation, regulations on working hours, and various 'artificial' entry barriers into the labour market imposed by trade unions, few economists even mention immigration control as one of those nasty regulations hampering the workings of the free labour market. [...]

[...] I am not arguing that immigration control should be abolished [...]

Countries have the right to decide how many immigrants they accept and in which parts of the labour market. All societies have limited capabilities to absorb immigrants [...] Too rapid an inflow of immigrants will not only lead to a sudden increase in competition for jobs but also stretch the physical and social infrastructures, such as housing and healthcare, and create tensions with the resident population. As important, if not as easily quantifiable, is the issue of national identity. It is a myth--a necessary myth, but a myth nonetheless--that nations have immutable national identities that cannot be, and should not be, changed. However, if there are too many immigrants coming in at the same time, the receiving society will have problems creating a new national identity, without which it may find it difficult to maintain social cohesion. This means that the speed and the scale of immigration need to be controlled.

other points: investor visas that contribute to capital drain from poor countries; highly skilled people from poorer countries getting visas more easily which results in brain drain & prevents them from contributing more to their own country

—p.27 by Ha-Joon Chang 1 year, 11 months ago

While they complain about minimum wage legislation, regulations on working hours, and various 'artificial' entry barriers into the labour market imposed by trade unions, few economists even mention immigration control as one of those nasty regulations hampering the workings of the free labour market. [...]

[...] I am not arguing that immigration control should be abolished [...]

Countries have the right to decide how many immigrants they accept and in which parts of the labour market. All societies have limited capabilities to absorb immigrants [...] Too rapid an inflow of immigrants will not only lead to a sudden increase in competition for jobs but also stretch the physical and social infrastructures, such as housing and healthcare, and create tensions with the resident population. As important, if not as easily quantifiable, is the issue of national identity. It is a myth--a necessary myth, but a myth nonetheless--that nations have immutable national identities that cannot be, and should not be, changed. However, if there are too many immigrants coming in at the same time, the receiving society will have problems creating a new national identity, without which it may find it difficult to maintain social cohesion. This means that the speed and the scale of immigration need to be controlled.

other points: investor visas that contribute to capital drain from poor countries; highly skilled people from poorer countries getting visas more easily which results in brain drain & prevents them from contributing more to their own country

—p.27 by Ha-Joon Chang 1 year, 11 months ago