What the Fraser Institute fails to consider is the workers money available for discretionary spending. In other words how much money people have left over after life necessities, such as food, basic housing, essential transportation, essential clothing, essential telecommunications, medical expenses, education expenses and taxes. It doesn't mater how much money you make if you have nothing left to buy the extras you want, such as a TV, games, holidays, toys, entertainment and etc. Some more affluent people may wish to spending their discretionary money on non-essential medical or education, luxury car, luxury housing, expensive restaurant meals.
Wages can be lowered while discretionary spending increases, if the cost of necessities decreases through greater efficiencies. Great efficiencies in food production are achieved through the competitive farming industry. Retail is currently very competitive due to ready access to quick convenience comparison shopping through the internet. This keeps many essentials goods, clothing, personal hygiene, etc at cost effective prices.
Greater housing efficiencies can be achieved through less speculation cost in the housing market, greater land usage efficiency, and preferential construction of basic housing upgradable to luxury by the purchaser. Land usage rather than property value taxes are fairer and take into consideration the social cost and benefits of various types of land usage. Also land usage taxes prevent speculators from holding property within 0.5km of a transit terminal, station as low rise or other low value property. Zone density based on building density rather than building height far better reflects people's needs for privacy and green space for relaxation. Public housing corporations should build unfinished units, near transit with, but with finished public space, such as lobby, park, etc. This allows a low income family or wealthy family to live in the same complex. The wealthy family finishes their unit in luxury, while the low income family does not.
Through the reduction of land speculation cost, the cost of redevelopment is also reduced. The reduced cost of redevelopment enables higher density construction near transit, with the effect of increasing access to transit and reducing transportation cost. Also ready access to transit allows students who cannot drive the ability to choose from a number of schools. This competition for school openings through exam or competition scores, ensures cost effective quality education. Quality education provides industry a ready supply of required skilled workers.
Higher density housing does result in lower telecommunications home wiring cost, but there is much room for improvement beyond this. Third party bandwidth or content providers can sell data bandwidth, such as optical fibre, transmission tower access or media content to telecommunication companies providing access to user services. Vertical integration of telecommunication companies providing access to user services into data bandwidth in particular transmission towers prevents other companies entering the market place. Vertically integrated telecommunication companies gain a greater return by preventing further competition than they do from improving cost efficiency of their services provided.
Denying essential medical and education service to those who cannot afford results in greatly increase living cost and a shortage of skilled labour. By denying essential medical service causes families to suffer through loss of employment or reduced opportunities. This is particularly costly when opportunities of young people are reduced. For these reason basic medical and education services should be provided universally. People should be given the opportunity to upgrading their hospital rooms and other optional services.
Workers in countries with high cost of living due inefficiencies require higher wages, which in turn results in higher manufacturing cost. Over time manufacturing industry will relocate to achieve most the cost effective manufacturing. This move is not intimidate because of the high capital cost in manufacturing and time required to construct related transportation and infrastructure. Also non-manufacturing resource based industries cannot relocate, ill regardless of high wage cost, or other high cost. If the only industry that remains in a country is resource based then the country is not competitive just resource blessed. High wages also may be a result of lack of available workers, due to inadequate education, dangerous employment or living environment, and low prestige putting families at a disadvantage.
