Fikret Ceyhun wrote: > However, I disagre with Jerry's second point. By capital migration > I only mean FDI by MNCs. Productive investment decision by MNCs (or some > call TNCs) not only depend on the existing disparities in profit rates > between home and host countries, but also expected future profit > disparities. It is assumed that MNCs with superior technology and > organizational and marketing skills are able to produce at lower cost than > local (indigenous) firms. Hence, a reduction of the rate of profit at home > (due to rising minimum wage) does not necessarily eliminate existing and/or > future profit disparities. And therefore, no capital out-migration. I'm not sure what you mean above. Do you not think, now that we have NAFTA, that if the minimum wage was raised dramatically here, many firms (especially in manufacturing) will decide to re-locate to other countries (e.g. the manufacturing belt in the north of Mexico)? Granted, labor costs aren't the only reason for re-location (other factors would include transport costs, access to markets, trade policy, regulation policy, trade union militancy, etc.), but such a increase in capital flight would be highly likely (and the mere threat of such capital flight would probably ensure that the state doesn't pass such legislation in the first place). For this kind of dramatic wage increase, workers can not rely on the state and will have to rely on their own collective strength (e.g. a general strike) and be prepared for the political/social/economic consequences. Jerry
