Norm Geras - normally a highly rational soul - has a post about the iniquity of half the worlds 2.8Billion workers living on low wages which is economically plain wrong:
Half the world's 2.8bn workers are trapped in jobs that leave them and their families struggling to survive on less than $2 a day, with little prospect of escape from grinding poverty, the International Labour Organisation said yesterday.
In its latest world employment report, the ILO says an estimated 1.4bn workers - a record number - live on less than $2 a day, while 550m live on less than $1 a day.
Unfortunately he utterly fails to grasp the key point that the $2 goes a lot further in some places than others:
Two dollars is an approximate equivalent of what I paid for the copy of the Financial Times in which I first read this. We are the world...
Imagine trying to explain to visitors from a future world - or just people from another world - in which such facts about our world do not obtain, how so many of the people of our world manage to persuade themselves that this is a tolerable state of affairs.
$2 may not buy you more than a couple of tins of baked beans in the UK, the rest of the EU or other developed nations but it will go a lot further elsewhere. This is true for other major currencies too. Otherwise either Americans would all be 30% poorer than they were 2-3 years ago when €1=$0.80 or Europeans have all had a 50% payrise. In fact despite the wild fluctuations (and fluc you americans too as the joke goes), in local currency terms neiother Europeans nor Americans have noticed much difference in relative cost of living despite the massive recent appreciation of the Euro compared to the Dollar.
There are of course many iniquities in developing nations but the fact that the average worker in those nations couldn't afford a holiday in New York (or London or Tokyo) if he saved up his salary for years is not one of them.
The important question is not the wage in dollars it is the purchasing power of that wage, and the amenities that are available for purchase. The big problem with shanty towns is that often electrical power, fresh water and sewerage are, like cucumber sandwiches in Oscar Wilde's play, unobtainable "even for ready money". Likewise the main problem with wages is how many hours mus be worked to provide the worker (and dependant family) with food, clothing and housing. Once we have got to the point where the average worked has a significant proportion of his wage available for luxuries we can worry about where he can spend them.
(link via Harry's Place)