Thursday, December 29, 2016

The Cost to Drive a Nail by Allen Laudenslager

Why is the cost to drive a nail in sub-Saharan Africa so much cheaper than in North America? After all the physical effort and knowledge is exactly the same in both places. The stock answer is that the nail driver in Africa is willing to accept less than the nail driver in the U.S. This begs the question: is the buyer taking advantage of the seller’s situation and/or ignorance and if so is that an honest transaction or a form of coercion? 

The nail driver in Africa is only willing to accept that lower wage because there are so few nails to drive. If the foreign company building their products in Africa paid the same wages as they would pay at home, how long would it take for that country to pull itself up from poverty? Most of the price difference between making that product in the U.S. and those in developing countries is not in the cost to the consumer, it is in percentage of profit to the corporation. The fundamental question remains, is putting profit in your pocket at someone else’s expense a form of theft?

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