tag:blogger.com,1999:blog-4111165561799493295.post5957833956129645477..comments2011-05-16T12:58:24.708+08:00Comments on Economy.my: My biggest economic peeve in Malaysiaeconomy.myhttp://www.blogger.com/profile/00267932650897052489noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-4111165561799493295.post-8502825414546938682011-04-15T19:22:59.902+08:002011-04-15T19:22:59.902+08:00The grey-ish line in the diagram is actually adjus...The grey-ish line in the diagram is actually adjusted for inflation (measure of cost of living), so in effect the quality of consumption has stagnated for that year.<br /><br />But anyway, to look at it from a cross-country perspective as well,<br /><br />If your cost of living is low compared to your regional neighbours...<br /><br />your nominal wage tends to be lower than their's as well because employers are supposed to respond to prices no matter where they are. (i.e. your employer will pay you less, because they know you can survive on less thanks to the subsidies)<br /><br />So when you compare savings - after consuming and paying taxes - across countries and you adjust for exchange rates...<br /><br />A subsidized economy with an undervalued currency will give less comparative adjusted savings...which I think is an obvious turn-off for talented labour.economy.myhttps://www.blogger.com/profile/00267932650897052489noreply@blogger.comtag:blogger.com,1999:blog-4111165561799493295.post-10807630817784738022011-04-14T13:58:46.764+08:002011-04-14T13:58:46.764+08:00but if my cost of living is low...what's the p...but if my cost of living is low...what's the problem? <br /><br />...a matter of perspective...?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4111165561799493295.post-86098462758475874172011-04-13T18:48:08.998+08:002011-04-13T18:48:08.998+08:00Well, it's a matter of perspective.
In the sh...Well, it's a matter of perspective.<br /><br />In the short-term, firms do profit from setting depressed wages.<br /><br />Over the long-term however, if and when firms do start investing in capital, the required skilled labour will start to cost them. It's going to be quite hard attracting talent when your wages - which, when compared across countries, are affected by subsidies and the exchange rate regime - are depressed. <br /><br />***Exhibit A: Malaysia's 1998-2005 fixed exchange rate regime***<br /><br />And yes, i'm predicting the same dilemma for China sooner or latereconomy.myhttps://www.blogger.com/profile/00267932650897052489noreply@blogger.comtag:blogger.com,1999:blog-4111165561799493295.post-46735014161853236752011-04-13T11:50:03.564+08:002011-04-13T11:50:03.564+08:00hi... :)
how do wages affect private investments?...hi... :)<br /><br />how do wages affect private investments? if anything, I would think that depressed wages would give firms more scope to invest?Anonymousnoreply@blogger.com