52 pages 1 hour read

Ha-Joon Chang

23 Things they don't tell you about Capitalism

Nonfiction | Book | Adult | Published in 2010

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Thing 3

Chapter Summaries & Analyses

Thing 3 Summary: “Most People in Rich Countries Are Paid More Than They Should Be”

According to free-market economists, the market automatically rewards people according to their productivity. Questioning this notion, Chang suggests that differences in wages between rich and poor countries are mostly due to immigration restrictions. For example, although a bus driver in Sweden may make 50 times as much as a bus driver in India, the Swedish driver is not 50 times as productive; instead, immigration controls prevent workers from India from competing for jobs in Sweden.

The real reason why wages are higher in rich countries like Sweden is that the richest people in such countries are more productive than the richest people in poor countries, which makes general labor scarcer and thus more expensive in the rich countries. However, the gap between the productivity of these countries’ richest workers arises from differences in infrastructure and institutions, not from differences in individual capabilities. To build a just society, Chang suggests, requires abandoning the notion that a free market rewards everyone fairly.

Thing 3 Analysis

In this essay, Chang questions the market’s viability as an indicator of worth, value, or merit, characteristics that are typically reflected through price signals. While Chang amply demonstrates the reasons for price and wage differences between countries, an opponent might argue that immigration restrictions actually violate the principles of a