Wednesday, November 16, 2011

you be the judge

Every time I get interviewed about Stealth of Nations and the global growth of System D, I get asked a variation of this question: "Aren't workers in the informal economy being exploited?

For all those who think the formal economy is so great for workers, check out this cringe-inducing article from The Guardian. The British paper discovered that the government is sending young unemployed people in the UK to work for major businesses, in what the government calls a work experience program. The catch: they have to work for free. If the unemployed people refuse to work for no pay, they risk losing their $80 per week unemployment stipends.

James Rayburn, a 21-year-old job-seeker, told the Guardian that, with his unpaid job at the supermarket chain Tesco, which earned a $6 billion profit last year, "it [was] as if I walked into the store and said, 'Look I'll help.'" Even if you want to consider his unemployment benefit a salary, if Rayburn worked 30 hours a week, his effective wage was $2.66 an hour.

So you be the judge. Which is more exploitative: System D--which actually pays its employees--or this scheme cooked up by the government and some supremely profitable businesses--which doesn't?

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