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by henryfjordan 1253 days ago
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.
2 comments
snapplebobapple 1252 days ago
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).
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bick_nyers 1253 days ago
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.

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