Sunday, June 08, 2008

Some interesting reader responses

From friend and reader, JB

Trickle down economics

I am somewhat familiar with the economics of Vietnam having lived there for a number of years. After 1986 when Vietnam changed its policies at the 6th party Congress, foreign companies were allowed to invest and set up factories. It took a while but by the mid 1990s there were many corporations that took advantage of low wages and generous government tax laws.

The 4th generation phenomenon occurred. Companies that invested in Japan first, moved to Taiwan and South Korea when wages in Japan rose. They then fled to Thailand, Indonesia, and Malaysia. Now that wages are too high there to make a maximum profit, Nike and dozens of other companies have moved to Vietnam. I have visited factories in the south of Vietnam. Poor villagers prefer the Nike jobs because the conditions and wages are much higher than in locally owned companies. This may sound strange but this is what people told me. Are there unfair practices? Of course. Are people dismissed when they complain? Yes. Even so, there is no problem getting people to work.

So does trickle down work? Probably yes and no in Vietnam? The people benefit and have disposable income. While that is happening lax environmental laws allow companies to dump untreated wastes into rivers and streams. Short term gain at a long term expense. This phenomenon repeats itself everywhere



From friend and reader, JY

response to your blog question , especially 3rd and 4th points - I read
this issue of Wired on way home from Ontario, intrigued by perspective

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