Cheap Labour Everywhere
I recently visited my girlfriend’s parents in India. Here is what that experience taught me:
Eliezer Yudkowsky has this facebook post where he makes some inferences about the economy after noticing two taxis stayed in the same place while he got his groceries. I had a few similar experiences while I was in India, though sadly I don’t remember them in enough detail to illustrate them in as much detail as that post. Most of the thoughts relating to economics revolved around how labour in India is extremely cheap.
I knew in the abstract that India is not as rich as countries I had been in before, but it was very different seeing that in person. From the perspective of getting an intuitive feel for economics, it was very interesting to be thrown into a very different economy and seeing a lot of surprising facts and noticing how all of them end up being downstream of CHEAP LABOUR. CHEAP LABOUR everywhere.
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.
In principle, my girlfriend’s parents have a dishwasher, but they don’t use it, since the house help can clean everything and more properly and then she also has something to do in the time she is being paid for. Since the house help was sweeping and mopping every day, it was always extremely clean.
Each house help visits perhaps 4 different houses like this, if they have the capacity, which is ~200 USD. That is not far above the global poverty line. If you are 16 and this is your first job, you are perhaps not even doing that badly comparatively. But if you are 24 and are likely in the demographic to already have two children and your husband makes about the same amount of money, then you would be poor by global standards.
My girlfriend’s father has strong opinions 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. It is not like Europe’s economy is imploding; it is just growing slowly. Being in person in India (more specifically, in a big tech city that is rapidly growing), I feel like I could understand my girlfriend’s father better. When I look through the city, I can see large housing complexes being built everywhere. There are children everywhere. Things are clearly “alive”. I can see how Europe would appear dying in comparison (and perhaps on a larger demographic trend is even kind of right).
Even when I was stepping into a McDonalds, I would see CHEAP LABOUR being screamed at me, but not in the way I would have expected. The tables in the McDonalds were wooden tables with inlaid green tiles and some type of natural, artistically designed resin was holding everything together. It looked really beautiful, but also like something that would take a huge amount of manual labour. Not the type of thing you see in IKEA. So, not the type of thing my brain would predict to see in a McDonalds either. Also, the food is extremely good (or at least the places my foodie girlfriend took me to).
I’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.
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.
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.
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.
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.)
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.