[Assam] high wages/realty => bad economy: Bangalore or Detroit

[umesh sharma]

Hi,

In a recent video on youtube Dr Patrik Dixon (Cambridge alum and  fellow at World Economic Forum)  was predicting that since India and China are rapidly becoming uneconomical due to wage inflation jobs will start coming back to the developed nations (and that they have already begun to).  That seems logical. 

Now the question arises why such jobs cannot migrate to Assam or Bihar (if the quality is th same -or similar and people are ready to work for less). Many Indians are gong back to India since now they can earn similar pay there - and for the same reason US/UK employers are prefering to pay their country-based workers than to those abroad (they have to pay the same amount anyway - why pay same/more thousands of miles away -where controlling is difficult. Just like my cousins stopped going
 to Delhi for wedding shopping when stores back home started selling same garments at same prices.)  

As Harvard's Murnane noted in 2004 only a few jobs can actually be sent abroad (manufacturing, Info/data related) - people  related jobs (govt, teaching, law and order, farming) cannot be shunted out. However, developed nations rely on data and trade related jobs more.  Tomorrow, due to online trading there may no longer be NY or London or Tokyo or Mumbai stock exchanges  ---everyone might be sitting in cheapest place on earth - hi-techTimbaktu or Bihar to decide the fate of world's MNCs/economy.

Now, those jobs in developed nations which cannot be shifted abroad have seen massive increases in wages -- such as those of nurses (who are paid as much as IT guys - stil there is shortage of 100,000 nurses ), plumbers, auto mechanics, Auto workers a Ford/GM etc. Insome placeswages cannot be reduced indefinitely- for less than
 $500/month one cannot get a room in New York City (that too in Queens - where many Indians stay). For the same amount one can get a 3 bedroom mansion in Cleveland, Ohio. A cousin of mine stay in Queeens, NYC -1 bedroom (+) house now worth $200,000 --1 crore; his sis stays in Cleveland,Ohio) . But a nurse does not need to be paid $60,000 (Rs30 lacs) as starting salary  same as IT guy - an MIT bachelor's degree holder might be starting at $30,000 in some hi-tech naval research co. --as was a friend's girlfriend. Auto workers need not be paid $50 per hour average ($100,000 - 50 lacs) when same guy would get one-fourth of that amount if he had to find another outside auto industry - most auto-workers are not highly specialized - they are not MIT graduates --many are not even college graduates I believe.

But nurses, auto-workers in US etc cannot be paid less -- since prevaiing wage in their profession is high - as per US Law one has to pay the
 high wage rate -- in India I believe,one needs to pay only the minimum wage rate (survival rate $2 per day)--whatever profession one might be in. US is bound by its ancient laws , which , if wikipedia  is to be believed were set up to prevent "colored" workers from taking away jobs by working for less. To survive the companies should perhaps, by mutal consent keep the employees but pay them less - as Infosys is planning in India 

In some places staff and society have become  used to a lifestyle -- so will not work for less -such as Bangalore with its pubs, hi-flying gentry etc. People in ordinary positions are getting US level salaries.  One cannot expect a prince or princess to get used to living like ordinary folks. THats why US companies shifted operations abroad to Bangalore. Now Banglore needs to shift to Bhopal, Chandigarh, Agartala or Dispur or Kathmandu or Colombo -to seek workers who are ready to live humanly - not materialistically.. Staff which derives thrill in the job, not in its perks or pay.


any comments?

(In defense of high wages http://query.nytimes.com/mem/archive-free/pdf?res=9A00EFD9123CE633A25756C0A96F9C946396D6CF  )




Umesh Sharma



Washington D.C. 



1-202-215-4328 [Cell]



Ed.M. - International Education Policy

Harvard Graduate School of Education,

Harvard University,

Class of 2005



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