Great Graphic: China's Unit Labor Costs
It is well appreciated that Chinese wages have risen markedly over the past few years. Inflation has also consistently run faster in China than in the US, Europe and Japan. Some have cited this as a factor behind China's slowdown.
From a competitive point of view, what really matters is unit labor costs: wages, benefits and productivity. As this Great Graphic, tweeted by George Dorgan shows, Chinese unit labor costs have fallen over the last couple of years. As quick as wages may have risen, productivity has risen more. By this measure China has become more, not less competitive.
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This is a good statistic and one that less sophisticated economically people don't realize. China's increased competitiveness is springing from the benefits of production just like the US benefitted as England and Europe rotted away on silly notions of holding all the gold rather than focusing on factors of production and its befits like Adam Smith wrote about.
China is increasing its patent library and moving towards capitalism while the US is moving away and destroying its capitalist structure with government intervention and central bank policies right out of the socialist playbook. We better wake up. It is fortunate for America that China still hasn't opened up its currency to the free market because they would be a threat to US dollar dominance and that it still is not open to free information or they would be even more competitive and be a real threat to American e-commerce and media.
Rather than complain about China's deficiencies we should be grateful for them and start minding ours like our socialized housing system under Fannie and Freddie, our socialized TBTF bank model, and our regulatory system structured for big business that pays lobbyists to regulate and get out of regulation. One may argue that this is capitalism because the rich connected win, but it's not. Distortions in the playing field whether its for wealthy or poor are socialistic and bad for the free market and the people saddled with them save for when that are created to prevent wrongs due to monopoly power where the free market can't work properly.