Wage rates are lower in Indonesia than in the United States because workers in Indonesia are willing to accept less; they are willing to accept less because their alternative opportunities are so much poorer;
their alternatives are poorer than the alternative opportunities available to American workers because the marginal productivity of workers in the United States is far higher than the corresponding productivity of Indonesian workers; and the differences in productivity at the relevant margins reflect the much greater productivity of the economic system in the United States.
-Pay Heyne (The Morality of Labor Unions)
Translation: we do far more, make more things, with far less “inputs.” It is what gives us our standard of living. A richer economy has many more choices and paths to follow than does a poor economy. It is the reason why a troop of ditch diggers equipped only with shovels and donkey pulled carts earn far less than two Americans do with a backhoe and a dump truck.
And what makes that available? Capital. Regardless of what the Socialists/Communists want you to believe, it is Capital with Labor that makes the difference.
Without Capital, we’d all be ditch diggers with donkeys as helpers.
(H/T: Cafe Hayek)
