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Tuesday, December 05, 2006
Thomas Sowell :: Townhall.com Columnist
Hollywood economics
by Thomas Sowell
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If those who claim to be concerned about the Ethiopians' poverty really are, why is not relieving that poverty just as much something for them to do with their own money as for Starbucks to do using money invested by other people -- including nurses, mechanics, teachers, and others who are paying into pension funds to provide for their own old age?

The tragic fact is that productivity is far lower in poor countries. That is the fundamental reason why they are poor in the first place. You cannot pay American wages to workers whose average productivity is a fraction of that of American workers, without driving up the cost of production to the point where businesses will take their jobs to some other country.

The real comparison is not between what people are paid in Third World countries compared to what people are paid in the United States. The comparison that affects outcomes is what Third World people are paid by multinational corporations compared to what they can earn otherwise. By and large, multinational corporations pay about double the local pay in Third World countries.

Third World workers line up for these jobs and even bribe insiders to get them such jobs. If economically illiterate Hollywood busybodies and other mindless crusaders succeed in establishing more costly pay scales without regard to productivity, that will undoubtedly lead to fewer jobs, just as similar policies do in other countries. There is no free lunch in the Third World, any more than there is elsewhere.

The net result will be people feeling good about themselves in Hollywood, in academia and in the media, while leaving havoc in their wake among the Third World people they claim to care about.

What the Third World needs are more multinational corporations, not less.

As more multinational corporations move into a poorer country, the people there not only get additional economic opportunities, they acquire skills and job experience that raise their productivity and earnings potential, even if that outrages the economically illiterate in Hollywood.

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About The Author
Thomas Sowell is a senior fellow at the Hoover Institute and author of The Housing Boom and Bust.
 
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Mike R's Delusions
Mike R spends his days commenting about other's views, usually contradictorily. HE belongs on some other web site (perhaps ABC News.com). Once again, Mike stages a sneak ambush after the other commentators have left the stage. Mike relishes having "THE LAST WORD", once again. What do you say, Mike?

Fact Check, Just Asking.
"By and large, multinational corporations pay about double the local pay in Third World countries."

Can we get a source on this one?

I am with the idea of the article, I would just like to see this study.
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