Saturday 20 December 2014

How Much Do Santa's Helpers Get Paid?

A large proportion of the world's industrial employment is in poorer countries. In 2012, the International Labour Organisation estimates that total world employment was some 715 million, but only 106 million jobs were in developed economies and the European Union. The biggest number of industrial jobs among the richer countries was in the US, with 26 million, but this figure fell from 31 million in 1991. The striking contrast is with the poorer countries. China employed 234 million in 2012, up from around 135 million in 1991. India's industrial employment more than doubled over the same period to 113 million, and similar developments have occurred elsewhere. Indonesia now employs 24 million and Brazil 21 million industrial workers. As many people are aware, the growth of the industrial labour force in poor countries and the shrinkage in rich countries has been a factor in so-called globalisation. The economics behind this shift of employment, and production, is the relative cost of hiring workers. While there may be other factors impacting business decisions, from tax breaks to sources of cheap energy, labour costs are the main influence over the location of production.

The next chart gives the latest picture for the hourly 'labour compensation' in different countries for the year 2013. Compensation refers to the sum of both wages paid and various benefits available to the worker. In general, the amount of non-wage compensation is very low in poor countries. These data are taken from the US Conference Board's publication a few days ago.

I have included both China and India in the chart, although the Conference Board lists their data separately because their labour cost numbers are not seen as being comparable with the data for other countries. In addition, the Conference Board data is for 2011 (India) and 2012 (China), so I have made adjustments to produce a figure for 2013 based on reported wage increases and on the moves of India's and China's currency exchange rates against the US dollar.

Each country in the chart is indicated by its two-letter ISO code (CH is Switzerland, CN is China, BR is Brazil, IN is India, PH is the Philippines, etc). The chart also mainly shows richer countries. Partly I have to do this because there is no comparable data available for some of the poorest countries, eg none for Bangladesh or Indonesia. Also, I do this to make a point: in the current 'festive season' for the richer countries, many of the presents Santa Claus will bring have been produced by workers enduring oppressive conditions and earning a wage (and not much else adding to 'compensation') that is a small fraction of the wages available to workers in countries receiving the presents.

Hourly Compensation Costs in Manufacturing, 2013
(Index based on US = 100, for a cost of US$ 36.34)

Notably, although the US is the base country for the compensation index shown, the US figure is well below that seen for several European countries and also Australia. Switzerland, Belgium and Sweden stand out here, with numbers more than 40% higher than in the US. South Korea (SK) is at 61% of the US figure, then there is a big drop down to the compensation number for Brazil (BR) at 29%, then Taiwan, Poland and Mexico. China, the Philippines and India come last, with the Conference Board data (and my estimates) putting China's workers at an average of just below 10% of the US number, and India at just below 5%.

A final comment on the statistics: how far do the wonders of the global market work to lessen wage inequalities over time? Surely, if workers are expensive in the richer countries, there will be a shift of production to countries where workers are cheaper, and eventually this will reduce the wage gaps. The Conference Board's data show something like this in the case of China. But the hourly compensation costs in China rose from a minuscule 2.2% of the US number in 2002 to just 8.6% in 2012. These data are for a 10-year period long after the influx of foreign capital and the expansion of Chinese production began and the result remains that Chinese workers are on less than 10% of US worker compensation. The most significant example of catching up is seen in South Korea, where the ratio rose from 40% to 60% between 1997 and 2013. Other Conference Board data comparing 1997 with 2013 show far less catching up with the US: the Philippines ratio rose from just 5% to 6%. In Brazil, the ratio fell from 31% to 29%; in Taiwan from 31% to 26%. This is a neat indication of the way in which the stratification of the imperialist world economy is not overcome by market forces.

Tony Norfield, 20 December 2014

Sunday 14 December 2014

Bush and the Brazilians

This being December, I have been reading more about mathematics. However, this was in the context of the excellent Simpsons cartoon, on which the science writer Simon Singh has produced an illuminating book: The Simpsons and their Mathematical Secrets (Bloomsbury, London, 2013).

The book is too good to summarise in a brief note, but I just wanted to share one of the jokes he presents as an aside from the interesting analysis:

'During a security briefing at the White House, Defense Secretary Donald Rumsfeld breaks some tragic news: "Mr President, three Brazilian soldiers were killed yesterday while supporting US

'My God!' shrieks President George W Bush, and he buries his head in his hands. He remains stunned and silent for a full minute. Eventually, he looks up, takes a deep breath, and asks Rumsfeld: 'How many is a brazillion?'

Tony Norfield, 14 December 2014

Sunday 7 December 2014

Labour's Colonial Policy

This article is based on notes prompted by reading an interesting book, Imperialism and the British Labour Movement, 1914-1964, by Partha Sarathi Gupta, published in 1975. I find it particularly of interest because it presents some original material from a time when the Labour Party will claim to have been 'socialist' in some sense. So, this article can be seen as an anti-nostalgia exercise! Things never were any good with this pro-imperialist party.
Gupta has extensive documentation of debates in the House of Commons, Labour Party conference speeches and policy recommendations from such bodies as the Fabian Colonial Bureau and the Movement for Colonial Freedom. He also gives examples of the racism of many leaders of the 'labour movement', especially regarding Africa. More important for my current purpose is that he highlights how Britain's plans for colonial development were always presented as being mutually beneficial, but were always based upon Britain's needs and in directions determined by the colonial rulers, not by the local populations.
The book is a dry read, and with a number of questionable views, for example that by the early 1960s 'social imperialist sentiment had been eliminated' in the UK (p. 393). However, it offers some striking comments and statements that illustrate the 'socialism in words' and 'imperialism in deeds' perspective of the Labour Party in the 1940s and 1950s that I will set out below. A good summary of Labour politics is given in Gupta's conclusion to a chapter on 'Colonial reforms':
"A large body of opinion inside the [labour] movement was representative of 'little Englanders', who were preoccupied with social transformation at home and anxious to avoid military and political engagements abroad. In moments of crisis a social imperial syndrome became active. Though it was originally noticed mainly among those trade unionists who were least affected by socialist ideas, the imperialist bias displayed by Bevin in general [Ernest Bevin, Labour's staunch anti-communist Foreign Secretary, 1945-1951] and by John Strachey over the groundnuts affair [see below] showed that persons with a Marxist background could slide easily into a social-imperialist position once they became pre-occupied with building socialism in their own country only." (pp. 346-347)
Despite the little Englanders being 'anxious to avoid military and political engagements abroad', Gupta does not mention that there was no labour movement opposition to Britain's military efforts to re-establish its own and other European colonies after 1945, possibly because these used Indian and recently defeated Japanese troops against local nationalists in Asia, and hardly any British troops. But, I will turn attention to the more direct British dimension of colonial economic exploitation.
The first example is John Strachey. Named in House of Commons records as Evelyn Strachey, MP for Dundee, and with the more elaborate nomenclature on his birth certificate of Evelyn John St Loe Strachey, he was an outcome of Eton and Oxford and an itinerant politician (see his Wikipedia entry) with successive socialist, Mosley, Communist, anti- and pro-Keynesian views. He was also a Minister of Food and a Secretary of State for War. Despite these dizzying turns, throughout his life he remained a consistent British nationalist. In a January 1948 House of Commons debate on the Colonial Development Corporation bill, he concluded:
"I should like to end this discussion by striking this note, that by one means or another, by hook or by crook, the development of primary production of all sorts, in the Colonial areas, Colonial territories and dependent areas in the Commonwealth, as well as generally throughout the world, in far more abundant quantities than exist today is, it is hardly too much to say, a life and death matter for the economy of this country."
This perspective was behind his support for the infamous groundnut scheme in Tanzania, then called Tanganyika. Britain's plan to plant groundnuts in an unsuitable region with idiotic technology turned into a loss-making fiasco and was abandoned. However, while this is often seen as a dumb development project, the basic notion behind it receives less attention: it was to use cheap labour in the colonies to grow products that would feed the British back home, and so reduce the need to import from outside the Empire. This would avoid paying in US dollars for some food supplies when there was already a shortage of dollars in Britain's reserves. Instead, the producers of Tanzania would receive payment in terms of a devaluing sterling.
The groundnuts scheme was only one case of colonial exploitation, realised or planned. More importantly, Britain had a number of marketing boards that were monopoly buyers of the commodity output of its colonies, and limited the development of any processing operations so that they received at best, and usually below, the world market price for the raw commodity. House of Commons Parliamentary debates always argued that a 'fair price' was being set, and that the buying operation carried risks to Britain's finances. But the buying prices were always set at below what the market price turned out to be. Furthermore, the surpluses from selling these products on the market always ended up in sterling balances based in London banks! This was how the system worked.
In a May 1951 debate on the West African Marketing Boards, one Labour MP, the Rugby and Oxford educated barrister, Richard Acland, made the following comment as part of a longer apologia:
"Firstly, the prices in the long-term contracts made by our Government were perfectly fair prices, there being genuine arguments at the time of the contracts to suggest that world prices for the crops might have fallen. But in fact that has never happened and the opposite has always taken place. To give an example: We are purchasing West African palm oil at £94 a ton, when the same oil on the free market has been fluctuating from £134 to £210 per ton."
What a stroke of luck that no West Africans were listening! Just in case they were, he denied that the amounts concerned were of any significance.
This is not to say that Labour MPs were being too truthful, and not forward-looking enough. How forward-looking, to see the way in which British imperialism's economic stresses could be solved so that we could have a 'Jerusalem builded here', on the backs of the colonies, is shown in the next quotation. Harold Wilson, a future Labour Prime Minister, had this to say in the House of Commons when Labour was in opposition in February 1953:
"There are very many schemes that can earn and save dollars and we want to know about them. There is copper in Rhodesia and Uganda; zinc and lead in Nigeria and tin in Uganda and British Honduras. We have to face the working out of the tin reserves in Malaya, before many years are over. There is, too, bauxite in Jamaica, manganese in India and South Africa, tungsten in Uganda, beryllium in India and columbium in Uganda. I am sure that these things are being considered by the Foreign Secretary, and what we should like to know at some convenient time—I would not press him to answer in detail tonight—is what is being done to press on with these schemes.
"Perhaps the most important step in the Commonwealth development [sic!] would be for the Government to work out now a wide-ranging geological survey of Colonial Territories ... I do not think that anyone in the House would deny that the answer to all our dollar problems may well be found 200 or 1,000 feet below the soil in the Colonial areas, and a really imaginative geological survey might possibly solve a lot of our problems over rather a long time."
The economic policy in the colonies, now given the honeyed description of 'Commonwealth' rather than Empire, was to meet British imperialism's requirements. That is not a surprise for critics of imperialism, but let me leave you with a sickening Labour socialist conclusion. Recognising that the Empire, sorry, Commonwealth, may not persist on the same footing, noting the colonies' contribution to the Sterling Area balances and expressing a desire that colonial peoples have a better future, Jennie Lee, wife of Aneurin Bevan, the Labour left saint, had this to say at Labour's Annual Conference in October 1956:
"We have to work for the day when there will be a higher standard of living here, a higher standard of living in the colonies, and when as free and friendly nations they will want us to be their bankers." (p. 376)
She was ahead of her time. The City of London today is the biggest centre of global banking, despite Britain having a much worse current account deficit than when she was speaking. British imperialism found other ways of appropriating the value of what others produce.

Tony Norfield, 7 December 2014