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The Misadventures of the Street Strategist Vol 1 to 13
Hyperwage Theory Part 10
Hyperwage Theory Part 10
Chapter 10: The Perfect
The Hyperwage Theory is probably the most revolutionary economic thought in recent history. Not only that, it is the only economic theory that directly enforces the principle enunciated in the American Declaration of Independence: “We hold these truths as self-evident: That all men are created equal.”
Why not equal pay for an equal amount of work? Or better stated, equal working hours to buy the same amount of goods?
Obviously, the Hyperwage Theory does not seek mathematical equality among nations, rather, only a workable ratio between a poor and rich country. A ratio of 1:263 in our previous discussion on electricity tariff is too much.
In Part 9 (The Myth of Cheap Countries), I have once more illustrated that contrary to economic myths, Third World countries are actually more expensive than First World countries, using a very basic and very comparable commodity – electricity.
In this part, we shall conduct the same international comparison this time using probably the most comparable of all economic goods in our energy-driven economy – oil. For the moment, let us focus on super gasoline. Nevertheless, the case for automotive diesel leads us to the same conclusion.
Normative vs. Descriptive
A descriptive approach is one that merely describes but does not prescribe. On the other hand, a normative approach proposes a norm or prescribes a norm of action.
In the past few years, I have scanned many papers on anti-poverty and wealth improvement of nations but I soon discovered that most of these studies are descriptive not normative.
Why are the papers descriptive? I think it is because they never really set out to solve the poverty of nations, as if the experts accept the fact that Third World will always be Third World with small incremental steps towards poverty alleviation.
We have a national commission on poverty, what is it doing? Handing out micro-finance loans? Wake up and smell the Hyperwage roses, guys.
Anyway, let’s proceed. Our modern world runs on energy, undeniably oil-based. Given this, is there a more perfect good to use as basis of labor valuation across nations?
Move over Big Mac, Coke, electricity tariff. Oil is the perfect commodity of comparison.
A caveat before we move on. Oil pricing is tricky. Subsidies, taxes, price stabilization funds, rebates, et cetera. All these are attached to the pricing of oil in various forms and combinations. After all, oil is not only an economic good but a political good as well.
The purpose of using oil as our point of comparison is not to mathematically and politically arrive at a perfect comparison.
Rather, our purpose is to prove the purchasing power-centric philosophy of Hyperwage Theory.
With that in mind, let’s analyze the data gathered by your one-man thinking machine with limited talents and unlimited chutzpah.
The most expensive nation on earth in terms of retail pump prices of oil is Hong Kong. Gasoline costs US$1.63 as of June 30, 2005 (Exhibit 8) . Whew! It must be a tough territory to live in. Can you imagine that it will take a domestic helper 47.77 minutes of work to pay for a liter super/premium gasoline. That’s because it has the most expensive gasoline in the world.
On the other hand, the Philippines, being a very cheap country, where a British chap told me he had a girl for US$10, should fare infinitely better. That’s a matter of course, right? Let’s see, hmm, it would take a minimum wage worker 49.70 minutes.
Arrgh. The Philippines lost by two minutes. Should our government be worried? Wait, if we use the domestic helper’s wage in the Philippines of about P2,000, then the new time would be 283 minutes or 4.7 hours. Maid vs. maid, the ratio is 47.77:283 or 1:6.
But why do we have strikes and rallies in the Philippines but none in Hong Kong? One possible explanation is that in Hong Kong, mass transport is by electric trains or public buses. Private cars are minimal. Hence, the average worker rides in a cheaper bus (economies of scale) or a cheaper train (no oil) or in an environment-friendly taxi run on cheap LPG.
Of course, the main reason is that their wages are high compared to the other commodities as shown in our Big Mac, and Electricity Index. In short, the people in Hong Kong have purchasing power, courtesy of their government.
Exhibit 6 shows the most expensive countries in the world in terms of retail pump prices of super gasoline. The data were obtained in 2002 and published by World Bank in 2004. (It takes them two years to encode data?)
Next to Hong Kong are Ecuador and Guatemala from Latin America. The Europeans come in next led by Norway, UK, Iceland, Finland. Netherlands, and Denmark.
France is No. 12, Germany is No. 15 and Japan is No. 21. Ireland, whose citizens have been complaining of very high prices comes in at No. 22.
Exhibit 6 Cost of Premium Gasoline Per Liter as of 2002
Gasoline in US$/Liter
Sao Tome & Principe
Source: World Development Indicators 2004, World Bank
The cheapest retail price of gasoline is in Turkmenistan, wherever that is. It costs only two US cents per liter.
Being an oil-rich country, its oil is probably cheaper than water but that’s almost as far as its advantage can it. The foreign direct investments (FDI) locate in the country and take its oil leaving its people with little benefits.
Actually, right now, I’m chaining myself to the wall to avoid lambasting the so-called Eclectic Paradigm of FDI. See you some other time E-P guys. I’m not in the mood now.
Anyway, Iraq comes in as a co-first placer. Venezuela is No. 3, Iran is No. 4 and Libya is No. 5.
Surprisingly Kuwait is only No. 9 while Saudi Arabia is No. 13. In Kuwait, gasoline is only US$0.20 compared to the US pump price of US$0.40, or half of the US price which is in the No. 39 position.
The Philippines is No. 28 at US$0.35. Yippee! Its prices are cheaper than France, Germany and all the expensive European communities. Should the Filipinos be happy?
Exhibit 7 Cheapest Premium Gasoline Per Liter in 2002
Gasoline in US$/Liter
Iran, Islamic Rep
Libyan Arab Jamahiriya
United Arab Emirates
Trinidad and Tobago
Source: World Development Indicators 2004, World Bank
Which is the more expensive country, USA or the Philippines?
Of course, the Philippines. It’s not a trick question anymore due to our Hyperwage paradigm.
Having read the first parts of this series, since the beginning of this chapter, you know already how this international comparison is going to end. Isn’t it amazing that I have already prepped up your minds into the possible outcomes of my discussion? I have already set you up for the Hyperwage Theory. How I wish every economist in the world will begin to use the purchasing power paradigm to correct the inequalities among nations.
After all, as I have said before, we are all created equal. A human being in Beijing should exert the same amount of labor as a human being in Norway. Yes, we admit there would always be differences but hey, if one has to work for 10 times as much for the same good, that’s injustice.
Exhibit 8 Selected Gasoline Prices Per Liter in Labor-Hours as of June 30, 2005
Gasoline in US$
Min Wage in US$
Minutes to Work
Gasoline in Pesos
Source: International Energy Agency, GasPriceWatch.com, Street Strategist Research
Pardon me if my list is short but I don’t have the resources to obtain the data I need. Exhibit 8 shows average retail prices in the listed countries as of June 30, 2005.
The resource-endowed Australia is a better protector of its poorest stratum of society than other big and small countries in the world (based only on this list, remember). It takes only 5.26 minutes of minimum wage work to buy a liter of premium gasoline.
Surprisingly, the supposedly expensive country of the United States comes in second with 6.74 minutes of work to buy its US$0.58 per liter gasoline.
Canada is No. 3 with 7.72 minutes, while France is No. 4 with 9.07 minutes.
Japan is No. 8 with 12.70 minutes which is cheaper than Singapore which is No. 11 at 25.6 minutes. Japan is half-price cheaper than Singapore? Incredible.
The Philippines with US$0.54 per liter requires 49.7 minutes of work while Germany requires only 10.86 minutes? Why is that?
I hereby challenge all government policy-makers: Now that I have exposed the human injustice of forcing our laborers to work for more hours than the First World workers pampered with their first class facilities, what is your next step? Burying your heads in the textbooks that you wrote?
To all citizens: Are you just going to stand there and laugh at my efforts to haul this country out of poverty?
To the World Bank: What in the world is your solution to Third World poverty?
To the Nobel Prize Committee: What in the world are you waiting for?
(Thads Bentulan, July 7, 2005)
* * * * * ∯ * * * * *
o Calculus of Boxing
o Famous Man
o Hyperwage Theory
+ Hyperwage Theory Part 01
+ Hyperwage Theory Part 02
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+ Hyperwage Theory Part 10
+ Hyperwage Theory Part 11
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+ Hyperwage Theory Part 15
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