What's your opinion on the hyperwage theory?

[al1974]

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email taka bro, whats ur email address?

[al1974]

Part 1 -- Hyperwage Theory: The Strategy of Poverty

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A PDF copy of the entire book on Hyperwage Theory is available currently for free.

Send an email to streetstrategist@gmail.com for the latest edition.

Hyperwage Theory Part 01

In which the Street Strategist unveils the state’s secret strategy of poverty

Published: BusinessWorld May 2, 2002

Chapter 1: The Strategy of Poverty

(Hyperwage Theory Part 1)

Of the state policies of poor nations perhaps none is more paradoxical than the strategy of poverty. The irony is that unless someone such as the Street Strategist points it out, even the government itself is unaware it is actually pursuing such a strategy.

Since we had just celebrated Labor Day, I find it relevant to reveal the secret labor strategy of the government.

When the country welcomes foreign investors with the promise of low labor cost, unconsciously it is prostituting the great talents of our highly educated workforce at decadent low wages. In promising so, the state sells out the souls of the country’s labor workforce by perpetuating low wages. The state effectively says, come to us because it is our policy to keep the people poor by maintaining low wages.

That, my friend, is the strategy of poverty.

Don’t tell me we are luring foreign investors with our infrastructure because there aren’t any. Don’t tell me we are luring them with our efficient and corruption-free government because it isn’t. And don’t tell me we are luring them with our English-speaking workforce because it is almost irrelevant – the Asian headquarters of American and European companies prefer Hong Kong or Singapore.

If the government is not the unwitting agent of this strategy of poverty, then worse, it is the unwitting originator and perpetrator of this offense against labor. The operative word is “unwitting.”

The greatest problem with the unwitting perpetrator is that it thinks it is doing something good for the country. This is the tyranny of well-meaning intentions using wrong analysis.

Allow me to sketch my economic theory first. In future articles, I will belabor them in detail, including addressing the loopholes that you may find in this simplified sketch.

Under this strategy of poverty, the man in the street directly suffers the effects of keeping the people poor as a matter of state policy. And since this is a state-sponsored strategy there is no hope in sight for him during his generation, and the generation of his children.

Thus, he escapes from the regime and seeks better chances in countries with higher wages such as the Middle East, Hong Kong, Singapore, and the most treasured paradise called the United States. The rich ones left in the country are the politicians, wherever their wealth came from.

What happens when the best brains of the country seek refuge in a high paying country? The poor country becomes poorer because its economy is drained of the best talents; while the rich country becomes richer because it is overflowing with the best talents in the world.

Due to the dearth of productive talents, the poor nation heads for a downward spiral; on the other hand due to an oversupply of productive talents, the rich nation heads for an upward spiral. The gap between the rich and the poor nations widens.

How can the rich nation be certain that the emigrating talent improves the productivity of its economy? Simple test. If he does not produce more revenue than his salary, he will be fired.

While reserving details for future articles, allow me to sketch the high wage scenario.

The world’s best talents – mathematicians, physicists, bankers, doctors, and nurses gravitate towards the highest paying center of the labor universe. They are paid high, but they must produce higher than their income, which means the business must grow or else it is shut down. Since the best minds are competing in one market, they produce the best science, the best computers, the best medical equipments and the best weapons of mass destruction.

When wages are high, the corporate structure tends to be labor-efficient. Instead of three staffers, supermarket check-out stands will have to make do with one. The same labor-efficient principle applies to the government as well. Bureaucrats will find it hard to justify hiring 20 casual employees each receiving a monthly salary equivalent to five TV sets.

Because automation saves labor cost, it is second nature to these corporations. The companies acquire the latest, fastest equipment, and in cases of agriculture, adopt the best yielding techniques. Thus it may happen a rich nation with all its expensive labor can produce rice cheaper than a Third World country.

When the wages are high, basic commodities are high. But since income outstrips the cost of basic commodities, there is still some savings left. The typical worker is still above the poverty line. Food prices go up, but how much rice and vegetables can you really consume? There will be funds left over for savings, or future investment.

When basic commodities are high, the worker rethinks the size of his family. Thus, in Japan, Korea, Singapore or in Europe, the population growth is very low compared to that a poor country.
When wages are high, inflation is high. Inflation is a sign of growth, growth is good. Inflation therefore is a leading indicator of economic optimism. Inflation means higher prices. In which country is Nokia cheaper?

In the Philippines or in Singapore? How about TV sets, designer clothes, and hamburgers?

Do you really think that inflation in a poor country will skyrocket so high that cars, stereos, cellphones, will be more expensive than the price in the world market? There is a limit to inflation and in most instances, today, the country is already at these upper limits. The poor nation is currently paying First World prices using Third World salaries.

High wages create a larger middle class, with the ability to save and to create their own business using these savings.

Higher wages reduce the profits of the shareholders but this doesn’t mean they will go bankrupt. Thus higher wages reduce the gap between the middle class and the rich without corrupt government fingers dipping into the bowl.

High wages cause unemployment but which rich country has higher unemployment figures than poor countries?

When wages are high, the rich country’s citizens need not go to foreign lands. Instead they develop their own businesses, both service and manufacturing, and export their products to the world, profitably. At a later stage, they exploit the low labor cost in some poor country for even greater profit.

I am sure the economists are hot and raring to shoot down these sketchy ideas. Let’s hear them out now because in my future articles, I will be spending time on the implications of the above observations. At least, I could address your anxieties in the coming articles. As you have seen, I raised several issues, all of which cannot be covered in a single article. This article serves a mental guideline of the direction of my economic theory.

But before you do so, just try to answer in your mind: Why is it that millions of patriotic citizens leave the country each year to prostitute their talents to the highest bidding country? Why are these professionals and workers building other countries instead of their own?

And, before becoming rich, a country must have been poor. What did it do?

By the way, have you noticed that the rich countries are those with expensive labor, while the poor countries are those that have very cheap labor? Why?

Is high minimum wage the result of being a rich country? Or is being a rich country a result of high minimum wage?

These questions and their answers are central to the Street Strategist’s economic theory.
(Thads Bentulan, May 2, 2002)

posted by Street Strategist | 5:40 PM

[Tin_Tin]

wa pa ko kabasa about ani, but if you say its a good read then i'll take your word for it. . .

[al1974]

Saturday, May 06, 2006
Part 2 - Hyperwage Theory: Hyperwage Theory Revealed

Hyperwage Theory Part 02

Published: BusinessWorld May 12, 2005

Hyperwage Theory Part 2 (three years after Part 1 was published)

Chapter 2: Hyperwage Theory Revealed


“The difficulty lies, not in the new ideas, but in escaping from the old ones, which ramify into every corner of our minds.”
John Maynard Keynes
General Theory of Employment, Interest and Money
December 13, 1935

This is the portrait of the Street Strategist as an economist. I have the honor to declare that the World Bank whose vision is a world free of poverty is a complete failure. I have to honor to declare that the Asian Development Bank whose vision is an Asia free of poverty is a complete failure. Now is the time for the Street Strategist.

How do you solve population control? How do you tackle businesses who under-declare income? How do you address Filipino time? How do you eradicate corruption? How do you prevent doctors from working as nurses abroad?

We have a hundred different solutions for each of the problems above. But if tell you that there’s only one solution that will solve all of the above, like my friends you will exclaim: “I don’t see the connection.”

If you don’t even see the connection after I told that there is, how could you have thought of the connection in the first place?

Ideal audience
Economics is hard enough as it is because it is very mathematical and quite rightly dubbed as the queen of social sciences. Econometrics and quantitative analysis in economics are multi-variate such that partial differential equations (PDEs) are the norm at the level at high-end economic theory. In contrast, engineering and physics usually have only three or four variables.

Another thing that makes economics difficult is that our everyday sense of what is economical or not, is sometimes opposite to what is theoretically correct. For example, is high personal savings good for the entire economy or not? Is high personal spending good or bad?

Again, economics is hard at it is. Yet, what I’m going to discuss in this series is a new economic theory. This means that I’m going to turn on its head the current economic theories. And if you don’t understand current theory, how ready are you for another contrarian theory?

Therefore, I have decided to limit my audience. If you have no degree in business and finance forget it. Read the other columns. If you have a degree in economics but you only reached a BA or MA level, I reluctantly would welcome you.

If you have a PhD in economics, ah, there you are. My ideal audience. Why? Because by this time, with your PhD you have shall been brainwashed by the theories of economics. And I consider it a good challenge to turn your entire education head over heels.

If you hear me out, and afterwards, you still say I’m an economic idiot, I always was.

On the other hand, if you do agree with me, then I shall have convinced you I’m an economic genius. I don’t have to convince the man in the street, after all he does not have your economic IQ.

As for the rest of readers, well, you can be intellectual voyeurs. Who knows you will understand economics the way the Street Strategist does.

But if you try to argue with me and you don’t have a PhD, don’t. I don’t have time to give you a tutorial in economics.

Contrarian
Actually, this is part 2 of this series. I wrote Part 1 on May 2, 2002 in an essay called Strategy of Poverty.

Yes, that was a few years ago but then you know me, I have one of the must unstructured thoughts around.

While I was writing my 7-part series on ADHD, my 5-part series on traffic, my 10-part series on the bar exams, my 10-part series on certiorari conundrum, my 12-part series on commodities trading, I was also busy reading economics from the basic to the advanced theories in order to secure my footing. Most of all, I wanted to clearly define which principles or theories of economics I would have to violate with my own new theory.

I have to be a contrarian. And you know that contrarians must be wizards on the standard theory first.
I researched on economics so hard that I ought to be given a PhD. Of course, you don’t really believe that, but somehow, I have a feeling that you would believe it.

And even if you don’t have a PhD in economics, if you care to hop on to this journey, I assure you, with the guarantee of the expository mastery of the Street Strategist, that you will never look at economics the same way again. I shall liberate your minds and that’s a promise.

Street Strategist as economist
I have been with you for more than five years. I have revealed so much, although in weekly trickles, almost anything about my love life, my failures, my success and what I think about everything including the sizes of bond papers.

Therefore, my educational background is an open book. Yes, you know that my expertise happens to be in economics. Surprised?

Oh, you can call it aborted expertise because I never got to get my diploma in MA in Economics.

I actually went over my transcript of records a few days ago, and my record on economics is dismal.

In my Econ 1, I got a grade of only 1.5. Yes, I know that’s a high grade but my classmates got 1.0 (flat one or candle). In my Econ 51 I got a grade of 1.3. That’s an improvement but that was supposed to be easier than integral calculus. Still dismal.

While taking up my masters, in graduate school, for Econ 203, Quantitative Economic Analysis, the teacher had the misfortune of having the young man who was to be the Street Strategist as a student. Never mind if she was working on her PhD. But she was no match.

So, she asked her husband who had a masters in mathematics to teach the hard topics to us. When the husband couldn’t answer my questions, he said, “Hey, I know you.”

Of course, he knew me. I beat him in a physic quiz bowl a few years before. Eventually, I got grade of 1.1. Yes, that’s an extremely excellent grade. But I deserved the perfect grade of flat one. I knew more than the teacher and she had to request help. Well, I probably misplaced a comma somewhere in my bluebook. But then if the imperfect judge over the perfect, why would you expect perfection?

At any rate, it was my performance in Econ 204 that spelled the end of my career. I got a very dismal grade of 1.6. If you are taking a master’s degree in Economics, and you get only 1.6 in a simple subject such as Managerial Economics, that’s a disaster. There is no hope for you.

But it was the teacher’s comment that sent a broken arrow direct to my heart and my brain. Towards the end of the term, he inquired why he hadn’t met me in the econ undergrad classes and what I was doing while not taking summer classes. When I revealed to him my unstructured activities he said: “My God. You’re crazy.

You’re wasting the economic resources of this country. Whether you spend your own money or you enjoy a scholarship, that will still be a waste for the entire economy as a whole. There are so many people out there who don’t even have high school education because the economy cannot afford it, and now you are wasting the economic resources to educate yourself about economics? That’s a waste. You’re crazy.”

He was right. I quit economics. They were not able to brainwash me yet. Therefore, I am in the best position to challenge the economists.

New ideas
John Maynard Keynes expressed it perfectly: “The difficulty lies, not in the new ideas, but in escaping from the old ones.”

He wrote this in his controversial book General Theory of Employment, Interest and Money. The General Theory threw away the then existing theory which has since became known as the classical theory.

Thus, Keynesian economics has become synonymous with modern economics. Don’t worry, later on, I’ll discuss what makes the classical theory classical and what makes Keynesian economics modern.
Before we proceed. I’m going to quote Keynes against himself. In other words, I’m going to present a hypermodern economic theory that will violate certain - but not all – fundamental Keynesian principles.

Therefore, I’m going to say this to all economists, classical and Keynesians:“The difficulty lies, not in the new ideas, but in escaping from the old ones.”

First casualty
What is the first thing that happens when I propose that the salary of the domestic helpers, currently, P2,000 shall be increased to P20,000?
Or that the salary of a fresh college graduate should be P70,000?

What is the first casualty of the Hyperwage Theory? The moment we hear of the P20,000 minimum wage, we stop thinking.

Our minds are the first casualty of the Hyperwage Theory. Our brains stop working. Closed minds; hopeless country

The Hyperwage Theory of Economics
The minimum wage shall be set to a level that shall give purchasing power to the minimum wage earners, including domestic helpers, unlike current levels wherein the domestic helpers have almost zero purchasing power.

A hyperwage resulting in real purchasing power will stimulate domestic demand which in turn will stimulate production which in turn will stimulate employment.

This domestic demand, under the power of the economic multiplier will result in increased production of goods or services which in turn will result in more employment in a positive upward spiral.

The theory rests on the proposition that hyperwage does not automatically result in the same amount of hyperinflation in a Third World country. The logic for this is that many goods and services in Third World countries are already being sold at First World prices.

This theory is applicable only to Third World countries, not to First World countries.

Under the current economic theory, the discussion on minimum wage is limited to whether or not moderate increases in minimum wage will result in inflation or unemployment.

Furthermore, under the current theory, all economists agree that if the minimum wage is raised to a very high level (not merely moderate increase), there will be massive unemployment.

On the other hand, under the Hyperwage Theory, the minimum wage is considered as the central factor of the Third World economy. Thus, this is the only theory available that places the primary responsibility of redeeming the country’s economy in the hands of the minimum wage.

The Hyperwage Theory is the only theory that addresses, by way of proximate causes, many externalities and non-economic problems such as population control, inefficiency, corruption, brain drain, underdevelopment of intellectual capital, separated families due to overseas work migration, underdeclaration of business income taxes, and the slow justice system.

In short, the Hyperwage Theory purports to be the panacea with an actionable plan to solve the economic problems of a Third World country.

For discussion purposes, the minimum wage shall be set to be P20,000 per month for domestic helpers; about P70,000 for fresh college graduates. This is deliberately set comparable to Hong Kong and Singapore to avoid the labor wage arbitrage that is causing our school principals to work in Hong Kong as domestic helpers.
(Thads Bentulan, May 12, 2005)

posted by Street Strategist | 5:46 PM

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[al1974]

hey istoryans. if you are interested with this Hyperwage Theory, please email me at alsmith.ricana@yahoo.com and I will email you the full file.

[al1974]

How To Analyze Hyperwage Theory

If you want to intelligently analyze Hyperwage Theory, here are some tips to streamline your efforts:

1. Do not jump into the discussion feeling "more intelligent" than the proponents and students of Hyperwage Theory waving your knowledge in basic economics gathered in Econ 101 and Econ 102.

2. You must assume that the Hyperwage theorists have read and understood Econ 101 and Econ 102, and probably more intelligently than you did.

3. Read the book. The book is still free by download from Streetstrategist - The Misadventures of the Street Strategist Volumes 1 to 13* by Thads Bentulan(streetstrategist@gmail . Though the Hyperwage Theory was serialized in BusinessWorld business newspaper in 2005, it has been edited for typos, and the latest version is uploaded when available.

4. As you read the book, try to find out what principles or ideas in the book are incompatible with your Econ 101 and Econ 102. Do not assume immediately that the "incompatibility" makes the Hyperwage Theory wrong. Reserve you judgment after you have read the entire book, word for word.

5. While reading the book, take down notes and write down you questions. It is probable that your questions will be answered in the later parts of the book.

6. After reading the book, and after noting the "incompatibilities" you can then post your questions or reactions in this web forum.

7. Again, assume that the proponents of the Hyperwage Theory are endowed with a certain level of knowledge and intelligence, and therefore be careful in coming up with your own violent "intelligent" reactions that may make you appear ignorant or idiotic.

8. If you are not prepared to follow these tips on how to analyze Hyperwage Theory, then it is better if you do not waste your valuable time in this forum.

9. As always, in any decent conversation, avoid hate, personal. disparaging remarks. Look at the idea, not the person.

10. If you don't believe in Hyperwage Theory, it is better to create your own theory on how to make poverty history in Africa, Asia and other Third World countries.

[al1974]

How To Analyze Hyperwage Theory

If you want to intelligently analyze Hyperwage Theory, here are some tips to streamline your efforts:

1. Do not jump into the discussion feeling "more intelligent" than the proponents and students of Hyperwage Theory waving your knowledge in basic economics gathered in Econ 101 and Econ 102.

2. You must assume that the Hyperwage theorists have read and understood Econ 101 and Econ 102, and probably more intelligently than you did.

3. Read the book. The book is still free by download from Streetstrategist - The Misadventures of the Street Strategist Volumes 1 to 13* by Thads Bentulan(streetstrategist@gmail . Though the Hyperwage Theory was serialized in BusinessWorld business newspaper in 2005, it has been edited for typos, and the latest version is uploaded when available.

4. As you read the book, try to find out what principles or ideas in the book are incompatible with your Econ 101 and Econ 102. Do not assume immediately that the "incompatibility" makes the Hyperwage Theory wrong. Reserve you judgment after you have read the entire book, word for word.

5. While reading the book, take down notes and write down you questions. It is probable that your questions will be answered in the later parts of the book.

6. After reading the book, and after noting the "incompatibilities" you can then post your questions or reactions in this web forum.

7. Again, assume that the proponents of the Hyperwage Theory are endowed with a certain level of knowledge and intelligence, and therefore be careful in coming up with your own violent "intelligent" reactions that may make you appear ignorant or idiotic.

8. If you are not prepared to follow these tips on how to analyze Hyperwage Theory, then it is better if you do not waste your valuable time in this forum.

9. As always, in any decent conversation, avoid hate, personal. disparaging remarks. Look at the idea, not the person.

10. If you don't believe in Hyperwage Theory, it is better to create your own theory on how to make poverty history in Africa, Asia and other Third World countries.

[madredrive]

lisud i implement ni xa... kay gamay rag ma kuha ang company ani gud nya dagko sweldo..

[MisterSuave]

lisud i implement ni xa... kay gamay rag ma kuha ang company ani gud nya dagko sweldo..

dili man gamay bro.. example nalang nato ang TV manufacturers.. kung dagko sweldo mga workers, sila ra sad mo unay ug palit sa ilang products kay naa na man silay purchasing power.. mo palit gyud sila kay kabalo gud sila sa quality sa ilang kaugalingong hinimo..

[rodsky]

Catchy...but unfortunately flawed. But then I'm no economics expert...so some of the proponents of this idea would be yappin' "Hey you're in no position to criticize something that you're not equipped to criticize, scrutinize and dissect!" Yet that's the thing--you really don't need a degree in economics to know that sometimes, when certain extremes are implemented, something (and that *something* is usually within the realm of *bad*) has to give, which leads to an even more miserable condition than the previous status.

-RODION