A GPE perspective: World’s richest woman makes case for $2-a-day pay

The top 10 most competitive economies in the world. By: The World Economic Forum’s Global Competitiveness Report 2012-2013

Reaction to article: Lazarus, David. 2012. She’s back: World’s richest woman makes case for $2-a-day pay. Los Angeles Times, 5. September, sec. Money.

A month ago the world’s richest woman made a comment that got everyone’s attention.  Major sensationalist papers in the globe elaborated different arguments on Gina Rinehart case for a $2-a-day pay.  But putting emotions aside, what was she really talking about?  Well, she was explaining in very rough terms what globalization is about and what is the role of competition in the global political economy.

In order to understand what Ms. Rinehart referred to, it is necessary first to briefly evaluate the history of the word competitiveness. The term is historically rooted in the writings of classical economics. Its core is the theory of comparative advantage expressed by David Ricardo in 1819, in which he underlined how countries should/do compete.  Later on, the term was used by Marxist economists starting with Marx’s “Capital: A Critique of Political Economy” where he emphasized the impact of the sociopolitical environment on economic development in a global perspective, and therefore the communist idea that changing the political context should precede economic performance. Later, in 1942 the term was integrated to the role played by capitalists and entrepreneurs in the writings of Joseph Schumpeter, who stressed their creative and economic (“economic” here refers to capital as a mean of production) role as a factor of competitiveness by underlining that progress is the result of disequilibrium, which favors innovation and technological improvement.  Further, Israel Kirzner’s emphasis on the redefinition of entrepreneurship by highlighting how global competitiveness is more about the capitalist’s innovative abilities rather than just the capital accumulated and how he/she invests it.

Ms. Rinehart’s comment reflects both the impact she plays as an actor in the global sociopolitical environment and her role as a capitalist and entrepreneur capable of generating innovation and of inciting creative destruction.

A $2-a-day pay in Africa means that many capitalists and entrepreneurs as Gina Rinehart are considering the possibility of moving their investments from less competitive continents to places in which competitiveness allow them to produce at lower costs.

Unfortunately, the region Ms. Rinehart was referring to has disincentives to competitiveness and innovation.  Competitiveness is more than just lower wages and a cheap offer of labor.  By following Ricardo, Marx, Schumpeter and Kirzner in order for Africa to become competitive in global terms the regions will require also to achieve what Stéphane Garelli in the “IMD World Competitiveness Yearbook 2012” explains as the need to also A.) Create a stable and predictable legislative and administrative environment. B.) Ensure speed, transparency and accountability in the administration, as well as the ease of doing business. C.) Invest continually in developing and maintaining infrastructure both economic (road, air, telecom, etc.) and social (health, education, pension, etc.). And finally, D.) Strengthen the middle class: a key source of prosperity and long-term stability.

Ms. Rinehart’s comments were not a call for Australians to lower their wages to a $2-a-day pay since they have already achieved other of Garelli’s requirements for competitiveness. Her comments are a very clear example on how global economy works.  If African governments manage to improve the rule of law in their territories, develop infrastructure and allow for a stronger middle class then the chances that investment will move to Africa are going to be higher.  As such, economies as Australia’s should continue producing at the same efficiency rates or improve and innovate in order to avoid losing investors. Ms. Rinehart’s comment on how “her country’s mining industry couldn’t compete with nations that are willing to pay workers less than $2 a day for their sweat and labor” is as such partially truth. Australia’s economy has many other competitive assets to offer and as such do not require to compete by offering lower wages.  The country has many other competitive assets to offer for investors.  However, as time has passed since Australia’s boom in the last decades many other countries are also trying to spur competitiveness.

There is much more to be said about this topic and on how global competitiveness allows for rising standards of life and prosperity. Also there is much more to be said on how competitiveness in other regions of the world can destroy (remember Schumpeter’s work) the not-so efficient economies of other countries that have not managed to cope with a changing global economy.

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Recommended Articles: Business, Economic and Financial History

List of selected articles that I read last week that may be of your interest:

  1. Super-cycles of commodity prices since the mid-ninteenth century. Bilge Erten
  2. Against Liberty: Adorno, Levinas and the Pathologies of Freedom. Nelson, Eric S.
  3. Lords of Uhuru: the political economy of elite competition and institutional change in post-independence Kenya. Bedasso, Biniam
  4. The Euro crisis: a historical perspective. Mourlon-Druol, Emmanuel
  5. Economics and ethics: a historical approach. Ciani Scarnicci, Manuela

Earth in Detail. Fantastic high resolution photographies!

The Spanish blog “Pasa la vida” shared these wonderful pictures of Earth in high resolution (11500 x11500)  As mentioned by them, the pictures were taken by the satellite  Suomi NPP with the instrument Visible Infrared Imager Radiometer Suite (VIIRS).

Picture 1

Picture 2

by by NASA Goddard Photo and Video in Flickr.com

The Lord’s Resistance Army: End Game?

Ugandan districts affected by Lords Resistance...
Image via Wikipedia

Nairobi/Brussels, 17 November 2011 (via International Crisis Group): Insufficient political will has thwarted regional efforts to stop the murderous Lord’s Resistance Army (LRA) but vigorous diplomacy led by the African Union (AU), an immediate military push and complementary civilian initiatives could end the misery of thousands.

The Lord’s Resistance Army: End Game?, the latest report from the International Crisis Group, explains why Uganda’s half-hearted three-year offensive has failed to eliminate Joseph Kony‘s guerrilla band and why there is now a new window of opportunity. Since peace talks with the erstwhile northern Ugandan insurgency collapsed and a first assault on Kony’s camps was botched in late 2008, the Ugandan army has been trying to catch scattered groups of fighters along the borders of DR Congo (DRC), the Central African Republic (CAR) and South Sudan. In that period, the LRA, now only a small but deadly criminal and terror band, has killed some 2,400 civilians, abducted some 3,400 and caused 440,000 to flee homes.

“The reasons for the military failure are at root political; Ugandan President Museveni scaled down the anti-LRA mission to pursue other ventures that would win him greater political capital at home and abroad”, says Ned Dalby, Crisis Group’s Central Africa Analyst. “Since the LRA no longer poses a threat to northern Uganda, few opposition politicians or community leaders there demand Museveni finish it off”.

Uganda’s efforts to pursue combatants in DRC have been dogged by the host army’s refusal to cooperate and grant access to LRA-affected areas. Uganda invaded DRC in the late 1990s, plundered its natural resources and earned President Joseph Kabila‘s lasting mistrust. CAR President François Bozizé, equally suspicious, has insisted the Ugandans leave diamond mining areas in his country.

At the request of some members, the AU stepped forward and said it would authorise a counter-LRA mission. It plans to appoint a special envoy to smooth relations between Kinshasa and Kampala and create new military structures to improve coordination between the armies. However, planning has foundered due to political constraints and the African body’s limited capacity.

The Ugandan army, with its record of abuse and failure to protect civilians is an imperfect vehicle, distrusted in the area. Kampala’s commitment now that the LRA no longer directly endangers its interests is reason for scepticism it has the will to see the job through. But a military operation combined with civilian efforts to entice surrenders remains the most feasible solution, and the Ugandans are the only troops at hand for this. The U.S. is strengthening its political and military engagement, including by sending several score advisers to help them in the field on a short-term basis. Kony is believed to be in the CAR. Before he crosses back into DRC and while U.S. support is strong, the Ugandan army should make an urgent military push, prioritising civilian protection, humanitarian access, better coordination and strict accountability.

To ensure dividends, the AU must live up to its responsibilities as guarantor of continental security and oversee a multi-dimensional regional initiative, continuing after Kony’s death or capture. It should appoint quickly a special envoy to rally the political commitment of Uganda and the three affected states and introduce a common operational and legal framework for the military operation, keyed to civilian protection, thus giving continent-wide legitimacy. Uganda and the U.S. should fold their efforts into the initiative.

“The LRA issue illustrates the desperate need for African and international actors to fulfil their responsibility to protect”, says Thierry Vircoulon, Crisis Group’s Central Africa Project Director. “Ensuring complementarity between the political and military actions of all stakeholders is key to their success and to ending a 24-year-long history of violence”.

Executive Summary | Full PDF report |

In the Shadow of Slavery: Africa’s Botanical Legacy in the Atlantic World

rice
Image by tamaki via Flickr
map: United States, 1860, percentage of the sl...
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Today I finished reading the Kindle book In the Shadow of Slavery: Africa’s Botanical Legacy in the Atlantic World by Judith Carney and Richard Nicholas Rosomoff; and I have confirmed that the work of any historian cannot be done without the help of Geography and a Globalized view of the power behind migrations. In her book, the author made very clear the effects of this forced migration of black slaves to America and how they changed the botanical future of the whole American Continent.  Reading this also was a great way of remembering when I worked as Collection Developer of the Wilson Popenoe Library (2,300 items) at the Ludwig von Mises Library.  His was a fantastic bibliography and you could see in his books how he managed to be the first exporter of Avocados to The United States.

 

Now, I invite you to check the book review via Project MUSE® prepared by Brian Grabbatin,

Many geographers know Judith Carney from her award-winning book Black Rice: The African Origins of Rice Cultivation in the Americas (2001). There she explored the development of rice growing techniques in Africa and subsequent role of enslaved Africans in transferring those techniques to North American plantations, particularly in the South Carolina low-country. In the Shadow of Slavery, a new book coauthored by Carney and independent researcher Richard Nicholas Rosomoff, builds on these findings, examining how enslaved Africans participated in botanical exchanges that have shaped foodways in the Atlantic world. In contrast to Black Rice, this book focuses on a variety of subsistence crops instead of a single cash … Read More

Libyan Strongman Muammar Gaddafi Falls

Free Libya - Saturday Is Always A Day Of Prote...
Image by infomatique via Flickr

Dictatorship nations are outlaws. Any free nation had the right to invade Nazi Germany and, today, has the right to invade Soviet Russia, Cuba or any other slave pen. Whether a free nation chooses to do so or not is a matter of its own self-interest, not of respect for the non-existent “rights” of gang rulers. It is not a free nation’s duty to liberate other nations at the price of self-sacrifice, but a free nation has the right to do it, when and if it so chooses.

This right, however, is conditional. Just as the suppression of crimes does not give a policeman the right to engage in criminal activities, so the invasion and destruction of a dictratorship does not give the invader the right to establish another variant of a slave society in the conquered country.” Ayn RandThe Virtue of Selfishness, 104

Gaddafi came into power as an assassin and terrorist. He started out murdering, continued murdering and had been going out murdering until today.  His death is no panacea but it is surely a victory for the Libyan people and their 2011 Revolution.

Starting in February 15th, 2011 a series of peaceful protests asked for change in the country and they were met with military force by the Gaddafi regime.  Thousands were hurt and killed. Gaddafi proclaimed his despotic discourse that same night and said that the only way he was going to leave Libya was going to be in a cuffing.  Indeed, that’s how he will leave the history of the country.

The fight for Libyans has not finished; loyalists around the Algerian and Nigerian borders are still present and the opposition continues.

I celebrate the capture of this dictator and our attention needs to be focused now in the continues shipping of supplies of medicine, fuel and food were for Libya’s urban centres.  As the philosopher Ayn Rand mentioned in the quote with which I begun this post; it is necessary as well, that we keep a close attention to the outcome of this Libyan revolution in order to avoid that another variant of a slave society in the conquered country with national or international control.