Cheap Labour Everywhere
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To put things in perspective, you can look up putative prices for McDonald's in India at mcdonadsprices.com, claimed to be current as of January 8, 2024. The McSaver Chicken Kebab Burger Meal with Whole Wheat Bun is listed at 214.30 rupees, or $2.44. For a person with a monthly income of 5,000 rupees, this meal costs about 4% of their monthly salary.
For me, a PhD student, 4% of my monthly salary is about $143. So eating at McDonald's is essentially the equivalent of fine, upscale dining for the average person, and it makes sense that it would be nice inside since only the relative rich can afford to eat there.
Hey, I live in India. Some basic observations:
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Average wages in the city are close to Rs 15000 - Rs 25000, not Rs 5000 (also mentioned in the post, Rs 5000 is probably what they get from one house, not their monthly income)
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You're directionally correct about McDonald's being more upscale/premium than it is considered in the West, but it is very much a mid-market option. An average meal in local eatery would be around Rs 60 - 80, and in McDonalds it would be about Rs 200 - 250. So the difference isn't as stark as a $150 meal.
I am about 2/3 median income for a full time year round worker in the USA, though I assume median for reasonable definitions of “the west” is lower than for the USA.
Also interesting are further downstream effects of cheap labor. A fun example I once saw on Twitter: open-plan kitchens are rare in poorer countries (like India) relative to countries where labor is more expensive. Cooking being a thing that medium or high-income families did on their own as labor became more expensive meant kitchens became higher status and less necessary to hide from the rest of the house (as did practical benefits like being able to watch your kids). America before the mid-20th century almost universally had closed-off kitchens, since labor was cheaper then too.
America before the mid-20th century almost universally had closed-off kitchens, since labor was cheaper then too.
Not exclusively, though. For instance, colonial Pennsylvania German houses often put the kitchen centrally, reflecting a social structure where cooking was more convivial. (It also helps with efficient heating.)
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1I've heard a theory that cheap labor is also why Japan is so nice. Not that Japan is a low income country, but rather that for complex structural reasons Japanese workers are underutilized, so everyone in low productivity jobs is overqualified, and it makes everything nice.
Or in short, Japan has isolated itself from The Sort.
Relevant quote from C.P. Snow's lecture The Two Cultures: fn 25
...The amount of talent one requires for the primary tasks is greater than any country can comfortably produce, and this will become increasingly obvious. The consequence is that are no people left, clever, competent and resigned to a humble job, to keep the wheels of social amenities going smoothly round. Postal services, railway services, are likely slowly to deteriorate just because the people who once ran them are now being educated for different things. This is already clear in the United States, is becoming clear in England.
Published 1959. Find here for the ur-text on the humanities/sciences split.
And some personal anecdota:
1. The man who handles cardboard at my local dump is highly intelligent and very knowledgable about waste management. Given his age, this 'poor allocation of human resource' is likely due to the class system. Would it better if he were a consultant?
2. Many of my smartest friends became corporate lawyers. They spend most of their time doing repetitive, low-complexity work for large salaries. Would it be better for society if we had mediocrities in those positions and my friends working as welders, craftsmen, local business owners &c?
[Other point of interest: "The Sort" sounds like a twitter derivation of the "Big Sort" c. 2000.]
Would it be better for society if we had mediocrities in those positions and my friends working as welders, craftsmen, local business owners &c?
I think of this often when it comes to teaching--many women who are now doctors would have been teachers (or similar) a hundred years ago, and so now very smart children don't come into contact with many very smart adults until they themselves are adults (or at magnet programs or events or so on).
But whenever I try to actually put numbers to it, it's pretty clear that the sort is in fact helping. Yes, education is worse, but the other fields are better, and the prices are actually conveying information about the desirability, here.
My theory is that, in the US, The Sort really took hold in the early 1980s when the highest marginal tax rates were radically reduced, thus making income a more efficient means of rewarding employees. The places where The Sort has the least hold are those where income taxes serve the place a soft ceiling on upper middle class incomes and cultural and political forces make either emigration to more lucrative states hard or otherwise limit economic mobility.
Cheap labour everywhere is fantastic... as long as you're the employer and not the employee. Basically, what you're describing is Europe in the 19th century. The question is : how long could such a system hold before the poor majority revolts ? But perhaps that idea is a Western idiosyncrasy and alien to many Indians.
I think there're a few reasons for this from my time being born and brought up here:
First, India is very much a hierarchical society. People don't vote for politicians if they appear too "cheap" , a sense of overarching status convinces a lot of people to vote for them. Anecdotal evidence but Ex-Delhi's chief minister got slapped twice(some people threw ink on him) because he came in as a common man—evidently a bunch of people didn't respect his power— now he started being aloof and wielding his power , and the slaps stopped happening, although he did get arrested and lost the election afterwards but that's a different story.
Second, the media is very much pro establishment, due to various financial factors the government has outsized indirect control over the media, via ED (law enforcement raids) , funding political adverts to preferential news outlets, only giving interviews to sycophants or scripted pundits(it has been exposed live before on accident). Dissent is heavily suppressed, corruption is quite normalized or outside of overton window of "major issues".
Third, India has a huge welfare state, Modi (and his surviving competitors) can be seen as one of the great welfarist in Indian history, despite being alleged "neoliberal" , around 800 million Indians get free food grains from the government, millions of woman get free effectively preferential UBI directly to their bank accounts. (Although the amount is small it's often enough to get by, but there're many woman only schemes) Ayushman bharat cover 500k rupees(direct conversion would be 6k$, PPP would be higher) per year-family for healthcare (although implementation is questionable).
Fourth, people have seen worse and the rate of growth is quite enchanting for the ones who have lived long enough. People went from having no TVs to smartphones(50-60% penetrations at the moment) in span of 2 generations (or equivalently having no electricity to being electrified). Although the growth is disparate , having a blooming private sector which works is better than dysfunctional government services for the people who can afford it. Corruption runs rampant in government.
A lot of opposition politicians now want to change that by having 60% reservation based on caste in private sector. Effectively getting more of the bureaucracy (if it wasn't too much already due to historical laws and socialist past) into the private sector. I mean it's controversial, hopefully merit based systems remain in private sector (Obviously I would be on the losing end of it, if it ever happens so take it with a grain of salt).
Fifth, majority of workforce is still in agriculture, I remember bringing this up, if there's an economic crash, the small Indian farmers who're self sustaining on agriculture may not be that effected by it. Wages mean less if you don't have any to begin with. It's how in early europe they had a flood of people from rural areas despite the urban graveyards and lower life expectancy caused by higher population density. (and India has it better with modern healthcare)
Gandhi championed self sustenance, he spinned his own clothes that became a political symbol against outsourcing of labour from for then comparatively much more manual industries to Britain. Although opinions vary many people saw(still see) this as a form of colonialisation, the act of buying our raw produce, making expensive products and selling it back.
There might be more reasons which don't come to my mind but it's 5:30 AM IST , so it's probable that I have covered most of them. (Also writing this comment was a bad decision on my time)
If the overall economy remains dominated by underdeveloped subsistence agriculture, and wages for cheap labor in cities still far exceed those of serfs, then people will not harbor significant discontent over low urban wages.
Should wages rise, enterprises would incur losses by being unable to afford their employees, ultimately leading to worker unemployment. Therefore, during such periods demanding higher rates of accumulation for industrial development, neither the government, the bourgeoisie, nor the laborers have any reason to pursue reforms.
The "Gen-Z Riots" have hit a slew of countries, successfully overthrowing governments in Bangladesh and Sti Lanka, which are culturally linked to India having been joined to it in the "recent"™️ past.
In fact, except for Madagascar, the most successful revolts have been on India's borders.
I agree that cheap labour isn't great for the majority. Another thing I kept thinking to myself is how labor is too cheap in India. For example when I saw people farming without a tractor using a cow instead. Why revolt instead of asking for a higher salary or quit? Conditions in India seem to be improving pretty rapidly.
The phenomenon you observed as far more to do with the tiny plot sizes in most of rural India than it had to do with the cost of labor.
Many/most farmers have farms sized such that they are, if not as bad as mere subsistence, unable to justify the efficiency gains of mechanization. This is not true in other parts of India, like the western states of Punjab and Haryana, where farms are larger and just about every farmer has a tractor. There are some cooperatives where multiple smallholders coordinate to share larger machines like combine harvesters which none but the very largest farmers can justify purchasing for personal use.
Optimal economic policy (in terms of total yield and efficiency) is heavily in favor of consolidating plots to allow economies of scale. This is politically untenable in much of India, hence your observation. However, it isn't a universal state of affairs, and many other fruits of industrialization are better adopted.
1You can revolt in a sort of Soviet Revolution, just as you can organize a strike asking for a salary raise. However, merely asking individually for a higher salary or threatening to quit is only effective if there is a labor shortage or if you possess specific expertise. If you can be replaced within a day, you're screwed. There is something Molochian about the low-wage trap. I can imagine a society with one god-emperor employer and the rest of the population collectively locked in a societal low-wage trap. Only cooperation can overcome this, but it is hard to do that in a soft way, not hurting anyone. A change can only appear net negative to the upper class. And also, maybe the god-emperor employer solution, or merely an oligarchy of god-emperors employers to keep competition in play, is the more effective model on a macro scale (thinkers close to the rationalist community, like Hanson, are highly critical of the Western liberal-democratic system and display some fascination with the macro-efficiency of more hierarchical and less egalitarian societies). There is probably a tradeof micro/macro. But micro scale definitely matters. There is no sense in a very effective and successful society where the vast majority individually suffers.
Sir, please don't leave us hanging, and tell us where your foodie girlfriend brought you to eat. Might visit India in the close future and don't have Indian friends who can recommend places.
India is a... large country. Without specifying which part you intend to visit, you might receive the equivalent of a recommendation to visit the best restaurant in Portugal while you're actually in Amsterdam! I used to live there, though by the eastern side where you're unlikely to visit. Nonetheless, I will happily vet or suggest places if you know your itinerary.
McDonald's of course!
Where precisely would you go in India? I can recommend some restaurants, but depending where you start, you may not consider them worth the drive.
Cheap labor, or rather their absence, may also partly be a reason for the declining birthrates: In Kenya, most people can afford cheap child care. Raising kids with a full-time house help is easy. Except for school fees, but that is a different aspect.
India's birth rates are falling rapidly, and already below replacement.
Also note the impossibility that over half the population has full time house help... cheap labour only helps the well off.
1My wife is from Kenya (as a single mom mid career government employee could afford a 24/7 household help last year) and even the poor have much better child care support than even middle class in eg Germany. That can take the form of communal or familial support and the quality may be lower, but it is definitely the case that it is in some sense easier or "normal" to care of esp. small children.
Also note the impossibility that over half the population has full time house help
It's not numerically impossible for over half the households to have full-time house help; by some combination of ① some housekeepers working two full-time shifts for different households, and ② some families having more than one member who works as a housekeeper (in someone else's house).
Ok, you are technically correct, but in practice even in cheap labour societies a lot less than half of households have full time help.
Can you explain more, could a lower income worker without family nearby afford child care and full time house help?
A lower-income worker without family nearby may still have communal support. Support networks are the bread and butter in Africa. You are not going to make it far if you do not know a lot of people to trade favours with. Loners will be regarded with deep suspicion. For example, if I had shown up to the bride price ceremony without family, my wife's family might not have agreed to the marriage.
That said, a lower-income worker without family nearby may not be able to "afford" child care and esp. not full-time house help. I'd expect that to be a relatively rare case, though.
Other than the issues raised below, I'd like to point out that the help doesn't need to be full time to make a massive difference. Just having a cleaner in once a week or someone to cook every evening helps!
One small thing I noticed when living in India is how the escalators would stop moving when people got off them, just to save a little power.
The other effect of extremely cheap and plentiful labour I have observed is the relative safety of Indian cities for the upper class. In cities like London or Baltimore crime is pervasive enough that the average person needs to be worried about people breaking into their houses at night.
In at least the big cities in India, every single big enough building (apartments, malls, libraries, theatres, schools) will have at least one warm body (security guard) sitting outside it. He's a security guard only in name since he looks too frail to fight a fly. We pay these people to sit around all day and watch Instagram reels while collecting Amazon packages and noting down visitor names into a register (purely security theatre, you can write whatever you want there, there is no verification) . There is a shift change every 12 hrs and the night guard sleeps at his post as well.
This dynamic pushes petty crime to other places where there aren't warm bodies who are bound to notice if you are trying to break in. It makes most places with security guards relatively safe from petty crime.
By Indian standards, my girlfriend's parents are very rich, so they have a house help for ~6 out of 7 days a week (not the same one every day). They are being paid 5000 rupees, which is the equivalent of 55 USD a month. This is pretty competitive with a dishwasher, which doesn't even clean everything.
This is exactly what I told my mom when she was convinced to buy a dishwasher she already pays 3k a month to the maid, which washes the dishes, mops the floors and cooks food on daily basis. Thankfully due to poor delivery she got time to make course correction on her impulse buying.
Like you will have to buy a subscription to the dish washer moreover it will cost more in EMI and electricity. Will only pay off after (optimistically) maybe years considering minor inconvenience caused by irregularity of humans during festive seasons.
My girlfriend's father has strong views on politics that I often disagree with. One of those was that "Europe is dying". Being a European I felt like I disagreed with this.
The Indian nationalist agenda is about deriding certain countries at cost of their own. I am not even sure whether he genuinely came to that conclusion after deliberation or did he buy into the narrative of India already being the "world leader" .
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