WAGES NOT UNIFORM — NON-COMPETING GROUPS 47
of labor, Germany has a comparative disadvantage in producing
wheat. But this is offset, so far as the supply price of wheat is
concerned, by the specially lower wages. In the market it is all
one whether there be higher effectiveness of labor or lower rate of
wages. Wheat would sell at a lower price ($0.663) if the labor
were as effective as German labor is in linen; it sells at that same
lower price if the labor is obtainable at the lower rate of pay.
International trade, to repeat, is governed proximately by prices;
and the ruling prices, under this supposition of a non-competing
group, are such that wheat is not sent from the United States to
Germany even tho the United States has unmistakably a com-
parative advantage for producing it.
Now make a further supposition. Suppose that not only in
Germany, but in the United States as well, the wheat laborers are
in a low-lying group; that these Americans, like their German
fellows, receive lower wages than obtain in other occupations, and
therefore lower wages than the linen workers. Suppose that while
wages In the United States are in general $1.50 a day, the wheat
workers get no more than $1.00 a day. The German wheat
workers, in their turn, receive only $0.66% a day, as against a ruling
German rate of $1.00 a day. Then our figures must be modified
as follows:
In the U. S. 10 days’ labor
» ” TU, S. 10 » »
” Germany 10 ” P
” Germany 10 ” 1H
WAGES
PER DAY
NY
1.50)
20.66%
21.00
ToraL
WAGES
10)
6.¢
Domestic
PRODUCE QuppLy Price
20 wheat
20 linen
10 wheat
15 linen
$0.50
$0.75
$0.663
30.66%
Prices are now such that commodities move both ways. The
American supply price of wheat ($0.50) is now lower than the
German supply price (30.662). Similarly German linen at $0.662
is lower in supply price than American linen (80.75). Trade
between the two countries takes place as it would if the differences
in wages within each of them did not exist — as if there were
uniformity of wages in each and no non-competing groups at all.
The general conclusion thus indicated is that the existence of
non-competing groups within a country affects international trade