I've been thinking a lot about "emerging markets" lately. At least that's what we call it at work. At church, we use other, less capitalist-minded terms. But I've been thinking about it as it relates to both my work and my faith.
On the work side, one of the interesting things that I have been thinking about started with conversations from our dear Kenyan friends Kyama and Wambui, who lived here with us for a year in 2004-05. I learned much from them, but one of the lessons which came early on related to our disposition in America to do things ourselves. This is partially due to our strongly-ingrained independence, but is also a matter of economics; its very expensive to hire someone to do many things that you can do yourself (even if, in my case, it often means doing it twice!) In Kenya (and, I've learned, in many other parts of the developing world), there is plentiful cheap labor, so it doesn't make sense for most middle-class folks to do home maintenance themself.
This has gotten me to thinking about a driving force in a lot of the innovation we have here - much of it is about saving labor. People are expensive, so we do lots of things to cut down on the amount of time we have to pay someone to do something. For example, taking a phone call on a toll-free help line is expensive - averaging $25-50 a pop, for even a short call. Hence, many organizations try to drive as much as possible to the web. The guy changing the lightbulbs in your office building is much more expensive than the florescent tubes, so rather than wait for each light to burn out to fix them, they go through and replace all the bulbs in a given area at the same time. Self-checkout lanes - ugh! There are many more examples.
But what happens when labor is cheap and plentiful? How does that impact the macro-economics of a country? What drives innovation there? I've also wondered how economies structure themselves when labor is cheap but materials cost nearly as much as they do here. I suppose some non-trival amount of the cost of many items we purchase is related to the cost of transportation and the associated labor selling it to me, but how does that ripple thru an economy and what's the impact of this on buying power... and selling power.
Maybe I need to go get a PhD in Economics. Or not. Like my house needs another degree.
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Exactly!
Like the "replace all the bulbs at once" approach, I've heard of another large corporation buying cellphones for every employee. Why? Well, they originally let employees keep the same phone number on the land lines, but that meant labor to switch the lines around every time someone changed offices (which happened quite a bit with 30,000+ employees). Then, they said no more switching the numbers, you get the number for the desk you're sitting at. Well, that meant updating databases and phone lists everytime someone moved to a different desk, let alone a different department or building.
But on a grander scale: Often manufacturing companies look at moving their processes over seas and come to the conclusion "There's no savings to do that!" Then, they are taken by complete surprise when their customers inform them that they now have a foreign supplier with a 20%-30% lower price and won't be needing the domestic manufacturers services to nearly the same volume. They cry "foul" and "currency manipulation" and "government subsidies" (--sure, that is true). What these domestic manufacturers fail to see is that: sure, there isn't any benefit to relocating their capital-intensive (i.e., expensive equipment and power usage), highly-automated (i.e., low labor content) manufacturing processes to low-cost labor countries; BUT, if they were to design the process from a completely different perspective where labor is bountiful and the cheapest element of the process, there may be ways to deliver the same product for less capital, less energy, etc.
It's just another case of seeing the world through red-, white-, and blue-colored glasses.
The Paperclip
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