Journal ThosLives's Journal: Spatial Inflation 1
What I see as the true problem with "offshoring" is simply spatial inflation. This is the same thing that happens domestically (why the heck does it cost twice as much to live in CA as in SC?). Inflation is just "more monetary units required for the same product / service". Most people associate inflation with "over time" but I think it also applies "over space". Inflation always gives advantage to one group over another; temporally you have the advantage in the past. Spatially you have advantage if you're in a place where fewer monetary units buy what you want/need.
There's more to this, and I'm going to jot down my ideas...
What puzzles me is how inflation happens. Basically the only reason we have money is to buy stuff we want and need. I need sustenance and what I'll call "security" in which I will lump residence (protection from the elements), health care and some infrastructure like water systems / sewer (protection from disease), and such social systems as disaster protection (i.e., firefighters) and violence control (i.e., police, as well as people who keep "nasty animals" from wreaking havoc).
So, let's say that here in the good old US of A, these necessities cost $20,000. Let's say that in (ficticious) Spazland these things cost @20,000. Now, we have this weird thing called an international money market. Somehow the value of $ relative to @ is not based on what those units can buy, but on somethine else. So, let's say that the exchange rate is $1 = @2. So that means that a guy in Spazland only needs $10,000 to get the @20,000 to buy the same amount of sustenance & security as in the US. So if I'm a company in the US, I'd be an idiot not to use my $20,000 to pay for the services of two guys in Spazland instead of the services of one guy in the US.
This is simple math, folks, and I can't say I blame the US companies for doing this. After all, the name of the game (capitalism) is to line my pockets, not those of everyone else. So what's a solution?
Well, if our government was smart, they'd say, "Hey, look at that. Why the heck are we paying Spazland $1 for every @2 when $1 buys the same amount of stuff as @1? We should only be paying them $1 for @1!!!" I don't know how to make this happen, though - given the current world banking system. (Especially since it's not set up to gravitate toward equality - it is set up to move the money to where things are most wanted at a given time).
Another possible alternative is that the government imposes tariffs (or whatever you want to call them) based on exchange rate and buying power ratios rather than some arbitrary percentage. This would apply to all money flow across some border, regardless of product or service. This would make things on-par with each other, then only quality of product at given price would drive selection of source (i.e., US vs Spazland) rather than artificial price difference advantages. For instance: The Spazland company charges some US company $10,000 for services to cover the @20,000 it needs to pay some worker. The Government could step in and go "hey, US company, you have to pay us @/$ * ($STD/@STD) * $pricetag to do business with them. We'll pocket the difference to run our infrastructure services." Thus, the government would charge (@2/$1)*($20000/@20000)*($10000) = $20,000 to the US company, buy @20,000 (to pay the Spazland company) with $10,000 and pocket the other $10,000.
Now, this is always good for domestic groups. Imports will now always cost like they would cost if they were domestic, aside from inherent quality / process efficiency means. However, exporters would dislike it because they would actually have to provide better product/service to compete with domestic suppliers. Right now they can give same quality at much lower price, so people will take it. But this price difference is artificial because it's not based on buying power but on the market, which doesn't make any logical sense.
But what if the US company wants to sell to Spazland? Well, a US worker costs $20,000. A Spazland person would need @40,000 to buy $20,000 to pay for it. What should happen here is that the US govt *could* take the extra $10,000 they pocketed when the US bought from Spazland to pay the US company. The Spazland company would pay the US "one worker" amount of monetary units. In this case it would be @20,000 - enough to buy $10,000. Otherwise, the foreign country would never buy the US product because it would cost twice as much!
The burden of this lies with the governments though. For instance, Spazland couldn't do anything to help because their units are worth less than US units. They would not be able to charge a Spazland company extra money to import and hold it - they would actually have to loan out money for an import. Of course, they could then charge their Companies to export.
Ah, well, I must be off to other things for now, but I need to formulate my thoughts some more. Do some math, that sort of thing. Any comments are apprciated! I plan on continuing this topic later.
Other topics will also be my ideas on Intellecual Property - another common "hot topic" here on
It's more not less (Score:2)
Except the argument is that they should be paying them more, not less. So the argument is that when someone gives you @200, you should give them $200 not $100 which is what the going rate is (and what everyone else is trading in those things for). Anyone who tried this would be brankrupt pretty quickly. In theory Spazland could say ... hey we'll