Animal, I want to make one thing clear.
If some people or an organisation is engaged in violence, coercion and illegal acts, I would never condone it.
That being said, let's consider a situation:
I have saved some money with my labor and thrift. There is an undeveloped country where people live in squalor. I am not responcible for them living in such conditions.
I may decide to take my money and invest it into a factory in their country. I would have to offer someone a price for a piece of land and a building that would be better than any other offer he has so he sells it to me.
Then I would offer jobs to the workers on conditions attractive enough so that they would be willing to drop whatever else they are doing and come working for me. If I guess correctly, I would offer exactly as high (or as low) salary so that just enough barely qualified workers show up as I have places. Let's say I get a 100 grade C workers for 100 peso each.
After that I will offer to sell that product domestically at lower price than such products are sold here in order to underprice the established brands but if I guess it correctly, at as high a price as I can to sell all my products.
If I guess correctly, both myself and my workers would be better off because we voluntarily acted on our preferences and exchnanged our previous situation for more satisfactory one. That means an 11-year old does not have to work 18-hour days doing hard physical labor in the fields with no guarantee that the harvest will result from his efforts, but will have an assured 16-hour a day indor job with much less physical exertion and moskito screens on the windows for more money paid weekly guaranteed.
Now, I may have profits left from my operation. Or some other entrepreneur may learn about my profits and decide to invest - it makes no difference. Those profits I would invest into the building of a second shop in the same country. Since at the price I offered previously I could only get 100 grade C workers, I would have to offer higher wage to all my workers - old one as well as new, otherwise the experienced workers from my old factory would just switch to my (or competitor's) new factory. So I now offer pay 105 peso and 100 grade B workers show up. Grade B is better than grade C, by the way, because now I will get workers at 105 peso that would not be willing to work for 100 peso for me.
Obviously I will have to sell all my products at lower price than before so that I sell all of them. I get smaller profit per unit of capital invested
If I had been somehow forced to hire workers at 105, my initial capital would have been sufficient to hire only 95 workers. At that salary, 200 people would have shown up - 100 grade C and 100 grade B, but I would obviously hire only 95 of grade B, thus leaving the most desperate people unemployed and improving the lot of those who were better off enyway. Which is exactly how the wage laws benefit people who are better off at the expense of those who are more desperate and will not gain employment.
We repeat this process over an over again, lowering the prices domesically - which means raising real wages of US consumers - and raisig the wages abroad.
Some domestic workers displaced by my priducts will find better jobs that woudl open because I raised the real wages of the domestic workers. Some of those jobs will be producing goods for my foreign workers.
At some poing the grade A workers will be getting paid so much that they will have investable savings just like I did in the beginning of this scenario. For instance they could stop sending their children (grade C) to work but would rather invest into their education.
As the salaries raise, every peso earned by them will have lower marginal utility than the previous one, while every hour of leisure lost will have higher marginal utility than the prevous one. Once those two become equal, the worker will take one hour off his job rather than extra money - completely voluntarily. And I would have no choice but to accomodate him since otherwise he would go work for my competitor.
Labor is a resource just like any other and if the price is not kept artificially high, there cannot be surplus of it. There will be competition for labor exactly like for any other factor of production.
All in all, we have more total production between our two countries. Our domestic real wages and consumption would be growing while theirs would be growing even faster and unless the government puts a stop to it with mercantilist policies, we will all benefit and eventually the incomes gap would close.
How is that scenario?
miko
