Competing based on cheap inputs, which could be used with less productivity, was sufficient in a more insular, less global economy.
Clumsy efforts to protect some of them from foreign competition deprive others of the cheap inputs they need to thrive in world markets.The new trade strategy looks at both of these dilemmas, among others.
Further, agroecology requires extensive human labor coupled with place-specific knowledges - both of which are incompatible with the current system's need for vast, cheap inputs.
And a new paper by João Paulo Pessoa and John Van Reenen of the London School of Economics shows how flexible wages have made labour a cheaper input, allowing firms to substitute bargain-basement workers for costlier machines.Before the crash, pay rises of 3% or more came only when unemployment was around 5% (see chart).
Once the company does start to figure in cheaper input costs, it will want to ensure that it doesn't lag behind competitors like Danone and Kraft Foods in price cutting, losing out on sales as a consequence.
"finding cheaper inputs, retraining their workers to be more efficient and more productive" - why wouldn't the employer have already done those things?
A major reform of SACU tariffs would make particular sense for the BLNS countries, allowing these nations access to cheaper inputs and final products.
But Brown thinks that gas companies don't pass savings from cheaper inputs onto consumers, and in any case, insists that those low prices are ill-gotten gains.
"But it's only a competitive advantage if our companies know that someone else can't just steal that idea and duplicate it with cheaper inputs and labor".
This may seem odd, given how much the rich world has come to rely on cheap Chinese labour: by one estimate, trade with China has added $1,000 a year to the pockets of every American household, thanks to cheaper goods in the country's stores, cheaper inputs for its businesses and stiffer competition in its markets.
