I kind of canât believe that Iâm seeing âcost of livingâ appealed to as a primary cause for international wage differences in the year 2018, but I am so here goes:
Prices of goods do differ between global North and South but the difference in wages dwarfs the difference in apparent âcost of living.â Typically, the wage difference is at least an order of magnitude greater. For instance, according to the World Bank, average price levels in Bangladesh tend to be around 2.5 times lower than in the United States. However, the lowest paid workers in Bangladesh make about 70 times less than minimum wage workers in the u.s. Even textile workers, who have comparatively âhighâ wages and employment protections, make around 10 times less than u.s. minimum wage workers. The ostensibly âlower cost of livingâ makes little difference. In other words if the poorest Bangladeshiâs $0.10 per hour is really more like $0.25 per hour, thereâs almost no difference to the analysis of wage differentials.
Someone mentioned the relative price of the Big Mac. Itâs not a bad measure because the Big Mac is nearly the same commodity everywhere, so noting price differences is a decent yardpost for how average price levels are affected by region.
However, looking at price levels separately from wages is actually a poor measure of âcost of living,â at least from a communist perspective.
The price of a Big Mac in South Asia tends to be around $2.50 whereas on average itâs about $5 in the u.s. But going back to Bangladeshi textile workers, if they make $0.40 per hour, they must work for 300 minutes to afford a Big Mac. A u.s. worker making $7.50 an hour can buy a Big Mac in 40 minutes. Bangladeshi textile workers, again among the comparatively âprivilegedâ workers in the country, must work about 10 times longer than *minimum wage* workers in the u.s. to acquire the same purchasing power. What takes the poorest in the u.s. a year to attain takes Bangladeshi workers 10 years or more.
So when looking at it from the perspective of how much of their lives workers have to expend to attain basic necessities, the cost of living for Southern laborers is actually *higher*, again by an order of magnitude at least. Then, when you take into account the fact that certain commodities like oil have the same price everywhere, and that electronics (increasingly a necessary component of day to day life) actually have higher prices in the Third World (not just relative to wages but in absolute terms) thereâs really no argument to be made that wage differences are explicable or justifiable based on âcost of living.â In fact to say otherwise is to repeat the propaganda of imperialist development theorists that the Southern workers âreally donât have it that bad.â
On that point, when supposed leftists lay no particular significance to the greatly higher purchasing power of amerikans and other First World workers, they imply that capitalism is actually capable of providing the kind of lifestyle that First Worlders expect (e.g. enough food to live, clean water in large supply, personal vehicles, etc.) to most people. And although the First World mode of life does not preclude the possibility of suffering, for workers who are literally starving and wasting away due to extreme stress, the relative niceties enjoyed by workers in the North would be quite an improvement, even worth dying for. But the reality is that capitalism actually canât provide the First World lifestyle to everyone or even most people, and the only reason some people can have the kind of access to resources that amerikans do is because most of the rest of the world doesnât. The massive disparities in income and wealth between North and South are a product of imperialist parasitism and all other causes are tiny footnotes in comparison. When the white left attributes this gulf to other factors like âcost of livingâ or âproductivity,â not only are they just factually incorrect but they tacitly normalize the relations of imperialism. These notions are poisonous both at home, where they justify social chauvinism and narrowly nationalistic politics, and also abroad where they create immense confusion about the nature of the imperialist system.