Solving Asia’s Poverty Problem – Part 4

This is the last part of my essay on Solving Asia’s Poverty problem my official entry to the Time Magazine essay writing contest. For the other parts, click here for Part 1, Part2 and Part 3. Now we continue with part 4 of this essay.

Now the solution might sound crazy for being too obvious but empowering people by giving them real purchasing power such that their consumption will place them above the poverty line seems to be the only variable in the multidimensional problem wherein we can really make a big difference.

Consider this, the one thing that first world countries have as compared to third world countries is bigger domestic consumption. This is made possible because of a larger middle class. First world countries have a large middle class because they have higher wages, in contrast third world countries have a little or no middle class because wages are low.

The question then is this, is high wages a result of being a rich first world country or is a rich, first world country a result of having high wages?

The answer seems to be the latter rather than the former. High wages results to being a rich first world country because first world countries puts a proper price to labor enabling its workers to purchase good and services sufficient for their needs and wants placing their level of consumption above the poverty line.

In contrast in third world countries labor is very much under priced. How do we measure if labor is under priced? I believe the best way to measure this is not through the World Bank’s Purchasing Power Parity, but rather through a better unit of measure called “Labor-minutes” or “Labor Hours.”

The concept of Labor hours is introduced by Filipino Strategist, Thad’s Bentulan, proponent of the Hyperwage theory and author of the highly controversial book “Hyperwage theory – Misadventures of the Street Strategist Volume 10.” 15 (Bentulan beautifully explains how hyperwage is the solution to the poverty problem in the Philippines in this book)

According to Bentulan, Labor minutes or Labor hours is computed as “the number of minutes it takes for the minimum wage worker to work in order to buy goods and services in the country.” The use of Labor Minutes/hours makes sense as “it removes the problem of currency exchange rate. It also reflects the hardship of the greater number of the population who are the low wage workers. It also removes problem of the so-called purchasing power of a foreign currency in a local setting. Why should we compare how far can a U.S. dollar go in Indonesia or Angola? Who cares about the U.S. dollar if you are not earning in U.S. dollars? The proper comparison is how many minutes will it take for an ordinary worker to buy goods and services in his own country.”

To appreciate this further let us take for example the case of electricity. For First world countries it takes about an hour to 7 hours of work in order for a minimum wage worker to pay 100 KWH worth of electricity. (France ranks number 1, wherein minimum wage workers only work for 1 hour to pay for 100 KWH of electricity, while Hong Kong minimum wage earners works 7 hours to pay for 100 KW of electricity. Take note that Hong Kong does not have a minimum wage except for foreign domestic helpers which have a minimum wage. This study is based on that rate)

In contrast, a minimum wage worker in countries like the Philippines has to work for more than 16 hours to pay for 100 KWH of electricity. Laos is the worst as a minimum wage worker in Laos will have to work for more than 263 hours to pay for 100 KWH of electricity.

Another good example is the global commodity, gasoline. A 2005 study made by the same author reveals that it takes only an average of 5 minutes to 10 minutes of work (Labor minutes) done for a minimum wage earner in first world countries like Australia, the U.S, France, the United Kingdom and Germany etc. to buy 1 liter of gasoline. Whereas minimum wage earners in countries like the Philippines has to work for more than 49 minutes while in Thailand, minimum wage earners has to work for more than 55 minutes to buy the same 1 liter of Gasoline.

If only wages are properly priced this inequality and injustice would not have perpetuated. Take note that the all things being equal, labor done in third world countries are very much the same as that done in first world countries. This is very much true if you consider the large number of factories and manufacturing plants being transferred from first world countries to China and the outsourcing of customer service and support from first world countries to third world countries like the Philippines and India.

So then, the proper solution to the poverty problem is to properly prices wages so that workers will be able to tea tree oil acne and in order to properly price wages an increase in wages is a must in third world Asian countries. The solution to the poverty problem is indeed staring right at our faces all along.

Sources:

15. “Hyper Wage Theory – Misadventures of the Street Strategist Volume 10” By Thad’s Bentulan, ISBN 978-988-17536-9-4, http://streetstrategist.weblogs.us/hyperwage-theory/hyper-theory-part-1/

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