Beemer B773ER

I agree with that sentiment whole-heartedly. The media - and more importantly, the tree-hugging hippies of the western world - continue to criticise corporations for 'exploiting' cheap labour in developing countries, but working in a factory where you're earning a constant stream of income is definately preferred over working in the farming industry (as 450SEL6.9 stated). These multinational organisations are being portrayed as the route of all evil when it comes to the rise of globalisation, when in fact they are helping these developing countries by setting up factories which employ thousands of workers. Ofcourse these corporations are not doing this out of the kindness of their own heart, but regardless of the motives which led these firms to set up factories in poorer countries, it cannot be argued that the workers are not benefit from actually having a job to feed their families.


This I also agree with. These business operate in a highly competitive environment -- pretty much a dog eat dog world where the weakest will not survive. As a business student myself, I can tell you that many of the business models and theories developed have stemmed from the military. For businesses, it's all about trying to create profits and become more competitive in the market. There should be no expectation or no duty for these organisations to try and achieve equality in a nation. If the company performs better the economy performs better.. and if the economy performs better, the workers gain the benefits.


How many everyday goods/services have price inelasticity? Maybe alcohol, tobacco.. and even gas/fuel, but the vast majority of products we buy as consumers are price elastic, and therefore follow the demand & supply curve. If prices go too high then demand drops, companies realise 'oh sh*t, sales dropping, profits decreasing', so then prices come down to a more sensible level and demand moves right back up. If the company is not willing to lower prices, well then they'll get undercut by a competitor who will take market share from them, thereby leaving them in an even more vulnerable position. Pricing is the quickest way to control fluctuations in demand. More medium-term strategies such a product differentiation to charge price premiums, or moving to a cost-based structure take time and a lot of effort. Reduce the dollar-figure, make the demand bigger. Ofcourse reducing prices should only be a temporary strategy, otherwise profits margins will begin to erode.


Actually Australia has a social security and public health system that is nationwide, and I can tell you the Government has announced tax cuts (only minor, but cuts nonetheless), and has been able to very effectively control the issue of inflation within the 2-3% margin while actually being able to lower unemployment to record lows. It has also been able to string together a few federal budget surplus', which is a reflection of the country's strong economy.
But going back to your theory of higher taxes -> higher prices.... well the fact that consumers are being taxes more means they have less disposable income -> an inclination to save rather than spend -> decrease in demand -> decrease in price until demand picks up again.

Also, as more people start saving instead of spending -> lower interest rates -> increase in disposable incomes (since less spent on paying interest on mortgage and other loans) -> increase spending.


The world has continually been moving to more expensive living costs, but standards of living have also been increasing, even for the poorest people of society... so I don't accept your thinking that standards of living will drop.


Obviously not all these 2.5 billion people will move up to the middle-class. There still needs to be a significant number of people in the lower-class to do the jobs that current lower-class people do (no disrespect to them though). Some of that 2.5 billion will strike it rich, others will adjust into the middle class but many will still be in the lower class as Western nations continue to improve their class standards (that is: the standard of living of middle class China in 5 years might equate to a middle-class standard of living that Western countries have now). Also, as these countries/economies continue to grow, their level of growth will begin to level out and become more reasonable (as opposed to the double digit growth their experiencing at the moment).. and these economies will be subject to the same fluctuations and cycles that balance out Western economies. Because not all of the 2.5 billion people in the China-India region will instantly become part of the middle-class there won't be an explosion in demand like you suggest there will be. These people may have the potential to become part of the middle-class, but that's not going to happen over night or within a handful of years.. it is going to take time. Also, the companies investing in China and India are foreign companies (Western companies), so profits they make go back to their home market, which then improves the economy of Western countries, thereby increasing our standards of living. Ofcourse there are certain resources which are have a finite supply, and therefore any increase in demand will see an increase in price.. but I doubt we'll see an explosion in demand, but rather just the continual gradual increase in demands we're seeing at present time. .. Then ofcourse a global recession hits, things go from flower to sour (ie: good to bad), these 'booming' economies slow down, and eventually things get back to normal and lessons are learnt by these high-growth economies about managing a sustainable level of growth.

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Come on Rob, let loose with your opinions. I'd sure like to read what your take on the issue is