[autodev1]

BS? Based on what experience of yours?

I spoke with a US Civil Engineer who worked in Honduras in the 1980's, clearing paths in forests for electrical transmission lines.

He initially paid workers significantly higher than local wages-- US-level wages.

The result:

--> He was threatened with harm by bosses of local companies.

Why? He took all their workers.

The local companies couldn't compete-- they lost all their labor to his company which paid relatively (relative to Honduras) exorbitant wages.

His US company literally destabilized the local labor economy.

So, I wouldn't be so quick to jump to "that is BS", as in my opinion it exemplifies naivete & ignorance.

[henryfjordan]

Who got hurt by "destabilizing the labor economy"? The bosses who were perfectly fine resorting to threats and extortion? It certainly wasn't the workers.

It is fine to recognize that people who wield economic power might be upset when a new economic power arrives in town, but to describe the new guy who is trying to do the right thing as somehow immoral is classist nonsense.

[colechristensen]

The entire rest of the local economy. If you eat up a significant portion of the local labor poor with very high wages, who is left to do all of the normal local jobs? Working in retail, food production, sanitation, construction, education, etc.

What happens to prices when a significant portion of the workforce suddenly has tons more money? What happens to the people not lucky enough to have the new high paying job? What happens to the local economy when you leave?

When you pay locally crazy high wages you seriously distort the economy for everyone, it doesn’t just magically snap to a new normal where everyone is happy and free, you can very easily create huge wealth disparities that make situations for many people way worse off, and the people who “win” that you don’t employ were generally already winning.

Just pouring money into a highly impoverished place can be very harmful. “Above average” is good, “ridiculously above average” and you have to start considering your effects across the economy.

[carom]

It is like when you give away mosquito nets and put all the local makers out of business. It is worse in the long run if you tank the job market then leave.

[henryfjordan]

If you plan to continue to give out mosquito nets for 30 years then it's fine to put the locals out of business, better that they spend their time building a comparative advantage in some other industry.

If you are doing a 1-and-done kind of project, maybe you have a point. You would have to weigh the cost of the disruption of the local industry against the benefit to the workers though. If you pay what would normally be 5 years worth of wages for a year of work, it's fine to set the local industry back 3 years. The workers still come out ahead and can invest their wages into rebuilding industry.

[snapplebobapple]

Your argument tells me never invest in any business you create because you will likely crater it. Everyone is hurt by overpaying for labor because you distort the labor market in the exact same way monopolies distort markets above marginal cost, causing dead weight loss for society. A small subset of the harms:The company doing the hiring earns less and so can compensate shareholders less, other companies in that labor market are harmed by being artificially priced out of labor,all labor in said labor market is harmed by the price distortions the overpaid labor often causes, if the demand for labor at the artificially high price isn't durable and long lasting everyone is harmed when it goes away (and it's not durable if it isn't driven by fundamentals and is instead driven by fads for overpaying for labor and virtue signalling about it in the first world because fads change and more rational heads will eventually prevail).

[bick_nyers]

Right but businesses famously operate on 3-month intervals, not 30-year intervals. No business can actually make a 30-year promise like that.

I also don't think the calculus is as simple as "setting it back 3 years", all you would be doing is creating power vacuums (instability), whereas you ideally need constant upwards pressure. It would be like injecting cash via lotteries, it won't actually help in the long run, just create further instability and wealth inequality.

[Aunche]

At least in the case of Honduras, more people clearing paths for transmission lines accelerates the development of infrastructure that the locals can use. On the other hand, OpenAI moderation doesn't do anything for Kenyans. You can see the effect of this is countries that heavily rely on tourism like Thailand and Bali. The smartest and hardest working people end up serving foreigners rather than their domestic population. Places that aren't catered towards tourists are completely neglected.

[autodev1]

"On the other hand, OpenAI moderation doesn't do anything for Kenyans."

Have you worked at OpenAI in Kenya?

Because you're speaking in absolutes-- as though you're an authority on the topic.

Let's use basic logic: Working at a technology company by its nature provides:

- Increased experience with Computers

- Increased experience with Data

- Increased experience with Business Processes

- Increased experience with AI Technology & AI Business

- Increased experience with Potential business ideas for startups due to exposure to the business processes of the company and the potential therein for improvement

- Pay

[betterpayforken]

Have you worked at a technology company in Kenya?

Because you're speaking in absolutes-- as though you're an authority on the topic.

Let's use basic logic

No one in this thread knows a damn thing

[autodev1]

"No one in this thread knows a damn thing"

Hahahaa. Well, I can't argue with that. I concur.

[boeingUH60]

The civil engineer’s experience rings true from what I’ve seen, but there’s some exception for developers and people of other high skilled professions because they are few relative to the population…paying local developers the same as foreign won’t destabilize but it may for manual labor almost everyone can do.

[hex4def6]

Sure, but doesn't that mean their absence will have a disproportionate effect on the industries that rely on them? If you're a small 15-person dev company, and now there's a multinational company that's gobbling up developers at 4x the going rate, you're not going to be able to compete.

This is one of those things in which it's better to sudden upsets (even if they're "positive"), might have negative consequences.

If you're paying +25% over the going rate, you're going to attract a range of people. Someone that designs software for reactor controls might not care (or be compensated enough anyway).

However, if you're offering 200% over, you're guaranteed to hoover up the top talent from strategic industries, and that might end up being a net negative in terms of the damage caused.

[btilly]

Your small local company does not own your workers. If the multinational values your workers more than you do, then it is good for everyone except you that they work for the multinational.

But, conversely, the multinational values your workers because it knows how to use them for business opportunities elsewhere to make money. But you're in a position to find many of those same opportunities. Which now means that your local economy is not just getting the profit of having the workers do so well, but of the fact that you're keeping the profit margin that otherwise would have gone to the multi-national!

Free trade on average makes everyone richer. (Observation originally due to Ricardo.) That means that it brings both opportunities and risks. And the opportunities usually exceed the risks.

[ElevenLathe]

Seems pretty clear to me (pretty much an identity) that labor paying more is good for laborers but bad for their employers. Not sure how to argue with that.

[anigbrowl]

BS? Based on what experience of yours?

The GP told you: they've been to Kenya themselves and worked with Kenyan developers for years. Please read the whole comment before you fly off the handle at someone. This is unfortunately increasingly common on HN.

[autodev1]

Have some consistency.

If me questioning someone using the term "BS" = flying off the handle.

Does the original poster using the term "BS" != flying off the handle ...?

[anigbrowl]

I am being consistent. You were demanding information that you had already been given. Try putting yourself in the shoes of the person you replied to.

[yawboakye]

i wonder if they would have ever hit saturation here. you can only hire so many people. i would compare it to the discomfort that is felt by private transport operators in the wake of a public transport scheme. when the government of ghana introduced public buses that charged less than half the regular fare, they shook the market. but the public buses could only carry so much--many, due to their circumstances, were served by the private operators. it remains so to this day. in fact, private operators have flourished.

likewise, mining companies launching in ghana have usually paid higher than the incumbent. it could be strategic as it allows them to hire highly skilled workers without the cost of pre-training. here too, a saturation is reached, and things stabilize, with people doing the same job but receiving different compensations. we at devcongress (https://devcongress.org) have worked hard to ensure that local companies pay top-dollar for tech talent. we enforce this through our job boards. still, there are companies out there paying $500/mo and they receive a flood of applicants. but these are my experiences. makes me believe that after the market has been excited, it will definitely dissipate the energy, and return to previous equilibrium (or achieve equilibrium at a higher orbit). i honestly believe that an equilibrium will be reached.

[mensetmanusman]

This. Money distorts markets. Try to distort less unless you know exactly what the consequences will be.

[Dylan16807]

If you have enough job openings to hire everyone, that's going to cause issues even if you just pay a competitive local rate.

[6510]

could create a single pool of workers on a fixed salary and rotate them.

that is, if you are stubborn about paying more

[NickC25]

>BS? Based on what experience of yours?

In addition to having lived (for a short time) in Kenya, worked for a company based out of Nairobi for nearly 5 years, and worked with Kenyans that whole time (in other words, I've seen this stuff firsthand in Kenya, which is the whole point of the article, and my comment)...I have also lived in, worked in, and studied in other developing countries, and seen firsthand what happens when high-paying companies swoop in and change the economic landscape.

You know what actually happens? Positive economic change. Isn't the whole point of HN (and YCombinator) to disrupt the status quo, and promote growth? Destabilizing a corrupted, top heavy, status quo where more people now have a chance to grow in life rather than live in abject poverty is a good thing. Nobody cried for the Taxi companies when Uber & Lyft came along, because they destroyed a parasitic, rent-seeking system (Taxi medallions) and the experience for the end-user (both driver and rider) was significantly improved. Same logic applies here.

>The result:

--> He was threatened with harm by bosses of local companies.

Why? He took all their workers.

Yet there's a flipside here that you're completely missing. Those same workers had a significant improvement in their lives, most likely able to accumulate what for them was generational wealth, or enough to give their kids a shot at a real chance in life. Those people had enough to stimulate their local economy much more than anyone beforehand. THAT is what drives positive change in 3rd world or developing countries. Keeping things the way they are economically with no disruption in the 3rd world keeps people poor and unable to grow which leads to bigger problems down the road. Giving them a real chance in life by paying them more gives them and their families a larger ability to make real change in their countries and communities. That should be celebrated.

Put yourself in the worker's shoes - if someone offered to 10x your wages, what would you do with the extra wealth that you now posses?

Having also lived in that part of the world (Mexico, which isn't the quite same as Honduras but analogous enough) , I understand how things sometimes play out in cases like this. The local bosses in your example were probably doing quite well for themselves and keeping a fat cut of the output of their laborers who were paid pennies, and not happy that their game was now being played by a bigger fish than they could fry. So, they acted like a cartel and tried to threaten the new king in town. Did some of the local companies in your example die? Yeah, probably. But nobody is entitled to stay in business....that's sort of the whole point of globalized capitalism - you compete, and you can win or lose, sometimes through your own fault, or sometimes through no fault of your own. Sometimes someone will steal your lunch, and there's not a damn thing you can do about it. That's the reality of it.

[nostrebored]

Your assumption is so short sighted that it's hard to explain how wrong you are.

Let's not think about the noble but the practical: did the man whose life was threatened continue to stay in the country and pay those workers, or did he leave or drop wages? Did people make decisions about where to work based on the idea of long-term compensation? What amount of people left an otherwise stable job to take this high-paying gig that disappeared? What is the net impact on these people _especially_ if the distortion was prolonged and did put other companies out of business?

This is not a 'compassionate' thing to do, it's short-termism that messes with other people's lives. Moreso depending on the function of how large the distortion was and the relative purchasing power of the job. An example of how this works is AWS jobs in other regions -- they pay significantly higher than base rate in many developing countries, but it is both a pedigree and leaves people in a position to get another white collar job that's fine later on. However, the same is not true for something like a gig-work cleaning agency paying 3 times market rate. I have the feeling based on the source that your experience might be closer to the former, which might leave you with a different take than what's happening here.

[NickC25]

My assumption may or may not be short sighted, but is a reflection of the fact that I've spent a while in developing countries and understand that people want nothing more than to provide for their families - yet their opportunities to do so are significantly limited, more than anyone in the developed world could understand....and there are both internal and external forces in these countries that want nothing more than to preserve the status quo, which is that they get a huge cut and the workers get jack-fucking-shit to the point where $2-3 USD an hour is a massive windfall.

Maybe the guy in the example did leave the country, maybe he didn't. But either way, those workers were given a massive windfall for a short time, and I'm willing to bet that some of those workers took that money, invested in their families to the point where their children were able to get some form of education, and those children didn't have to lead the same impoverished lives their parents did. They were able to use that money as a stimulus for real growth. That counts.

[nostrebored]

I've lived in the developing world too. There's a reason why locals who actually want their country to succeed generally hate this. Nobody says "paying well" is a bad thing, but you have to realize that well is relative.

As someone who has been poor, the idea that the massive windfall is better is so frustrating. It's not. At least where I lived, people could not explain to you how a bank worked. People often did not save money, and if someone found out you had money, you were immediately asked for 'loans'. Beyond that you have to think about _lifetime earnings_. If you hire all of the lumberjacks for your slick handmade-in-africa table business, what happens to the SYSTEM of these people when other businesses go out of business and liquidate their assets then you leave? It's not as simple as some new business popping up and employing people.

[ninjagoo]

Ah yes, the timeless principle of I have not, therefore others must have not. Is that the basic crux of the argument you are making? Or did I misunderstand?

If I may point out, the argument (upholding the system) appears to be structured around justifying why others must have not by saying that all non-high-paying lumberjack-employing businesses will go out of business, and then this high-paying business will leave. Is there any reason why this high-paying business would leave? It sounds from your statement that this is guaranteed, for whatever reason. And if it does leave (because obviously no business is guaranteed for all time) is there reason to believe another external business would not step in to fulfill that demand for handmade-in-africa table business? Or that the newly unemployed lumberjacks (but flush with cash relative to local conditions from their high-paying salaries) will sit around and twiddle their thumbs for all time instead of starting their own lumberjack-related business?