October 30, 2006

Get hold of the right boogeyman!

Sir Larry Summers is correct when he says that “The global middle cries out for reassurance”, October 30, and one of the first things that has to be done is to make it very clear to that middle that it is not the 500 dollar per month worker in a poor country willing to do the same job that someone in a richer country aspires 3.000 for, who is the boogeyman. In fact globalization has produced extraordinary benefits to the middle but the problem is that parallel to it, there are been many other things going on that are eating up the income of the middle and thereby their capacity to enjoy it, to its full extent. Let me give you a concrete example. I pay for a mobile phone monthly plan a fee of 70 dollars and which gives me a free allowance of one thousand minutes. When suddenly, because of unforeseen circumstances, one month I had to use my mobile for 2.000 minutes, then every single one of the additional minutes was charged at the mind-boggling rate of 40 cents each and which resulted in that I was presented with a total bill of 470 dollars, and this though my mobile phone company must have incurred in minimum marginal costs. Clearly some regulators are not working as they should, and this is one of the elements that is hiding the true net benefits of globalization.