Until recently, few workers in America, Europe or Japan spent much time worrying about why they earned 10, 20 or even 30 times what a Chinese worker did. What was it that allowed, say, someone stacking boxes in a US factory to earn multiples of the wage earned by a Vietnamese or Mexican worker?
Some may have fondly imagined that they worked harder or, put another way, that Mexican or Chinese workers were lazy or incompetent. Others, much closer to the mark, may have put their higher wages and productivity down to their country’s institutional advantages: its legal and education system, and its infrastructure and technology. Some, perhaps subconsciously, may simply have considered their superior living standards a god-given right.
Not any more. As hundreds of millions of workers in the emerging economies, especially within Asia, have entered the global workforce, they have begun the slow process of levelling the playing field. Developing countries are improving their standards of education, infrastructure and technology, even if their legal and political institutions still lag. Incomes are narrowing. In 1990, at purchasing power parity, gross domestic product per capita in China was $800 against $23,000 in the US, a differential of 29. By last year that had shrunk to 6.2, according to figures from Royal Bank of Scotland. By 2015 it is expected to narrow to 4.3.