When the 13th Amendment was ratified, it went beyond outlawing outright slavery. It also outlawed indentured servitude. From an economic standpoint, indentured servitude is just as bad as ownership slavery.

I use the term slavery to include bonded labor, debt slavery, "company store" rackets that keep their workers in hock, and even socialist state labor, as with China. Economically, it's all the same thing. There can be no chance of one being paid the full value of his labor. Rather, one is barely paid enough to provide bare minimum subsistence. None of the above have any bargaining power as to their compensation.

India has bonded labor and debt inheritance. One can be held liable for the debts of their grandparents. The laborers are bonded to their masters until their "debt" is paid off (which is never), and if they die before its paid, then their children bear the burden. This is both legal and commonplace in India. To say that this combination does not constitute slavery is a distinction without a difference.

There are dynamics that amount to similiar phenomenon in Mexico, China, Indonesia, Niger, and a number of countries in the South Pacific.

The thing one has to ask is WHY India has such a surplus of labor, and WHY the PPP in India is so much different. Saying that it's just a poor country doesn't really stand up to inspection, since India was the world economic superpower in the 15th century.

India has nearly 100 million bonded workers who earn less than a dollar a day. India's illiteracy rate is higher today than it was when it was a British protectorate. India now has more people who can't read than the continent of North America has people. These things combine to make the value of Indian labor low, and the upper caste Indians like to keep it that way because it makes them rich.

One can say that there is a surplus of labor, but it's really a relative statement. A surplus means that supply is higher than the demand will support. If India has a surplus of labor, then that means that they have little demand.

Slavery, in all its forms (not just the Antibellum South kind), tends to concentrate all of the wealth into the hands of the few on top, and remove it from the hands of everyone else. It's not coincidental that out of the top ten richest people in the world, half of them are Indians. On the one hand, Indians rank among the lowest paid workers of the civilized world, but on the other hand, half of the richest people in the world are Indians. That doesn't speak to a poor country. Rather, that speaks to a country that pays lip service to supporting the people, but oppresses the people when nobody is looking.

But no matter how wealthy any small group is, the group only has so much need for certain things such as food. The the market demand created by a small group of super-rich, where the rest of the people are dirt-poor, can never replace the market demand of an entire population that is well-to-do (such as the United States). The wealthiest person in the world is only capable of driving one car, can only eat so much, can only use one bed at a time, etc.

So, the reason that the PPP is so low in India is because their base labor price is derived from a kind of slavery, whereas in the United States it is the Federal Minimum Wage. But before there was such a thing, demand-side competition for labor was already well underway in the U.S. Demand side competition is what forces employers to increase the pay of workers in order to compete for quality labor in a market where labor is a scarce resource.

In 1914, Henry Ford announced that Ford Motor Company planned to double the salary of most of its workers, and cut the work-week down to 48 hours. The Wall Street Journal called him a socialist. Ford's competitors accused him of trying to destroy the industry. But really, Ford was merely competing for what had become a scarce resource: Quality labor. After implementing these measures, Ford's productivity shot through the roof, and employee turnover dropped nearly to zero. Ford more than recouped the added expense of the increased labor cost in terms of efficiency. The competitors were forced to follow suit. This happened long before the UAW existed. The 40 hour work week and healthy wages were created by the laws of supply and demand, not by unions or government edict.

Scarcity is the only thing that gives value to anything. To any human being, the two most precious substances are air and water. Yet, the value of these substances is zero, because there is no scarcity of either air or water. Gold, on the other hand, is only marginally important to human society, and has virtually no utility to the individual. Yet it is considered highly valuable, precisely because it is scarce.

So long as American labor is scarce by being strictly limited to its citizenship, then its value rises to being a fair share of the profit generated by the end product that the labor produces. This serves as the ultimate means of a reasonable distribution of wealth, and is what gave Americans the highest standard of living in the 20th century (but not the 21st).

In the last decade of the 20th century, America changed all that with the adoption of a number of free trade agreements, a massive expansion of guest worker visas, and non-enforcement of the Mexican border. These things combined to greatly reduce the scarcity of labor available to the U.S. market by tapping into countries that condone various forms of slavery as I have described above. So long as the kind of oppression that these countries employ continues, they will be economic bottomless pits in terms of sources of labor arbitrage. There will never be an equilibrium until the average U.S. worker has been dragged down to the level of the average Chinese or Indian worker. As Karl Marx put it, "Forced down to the level of Helotry."

It is my opinion that our economic woes of 2010 relate directly to those policy changes. They include Europe because Europe has engaged in similar practices.

Why is it that India, with such a massive labor supply, has not harnessed that supply for its own benefit? Why must India send its workforce out all over the world to undercut domestic labor? And when this happens, does the benefit of remittances to India from these expatriated workers improve the standard of living for all in India? Or does it merely more greatly enrich the aleady rich? I think we know the answers to these questions.

TD

"Child labor, agricultural debt bondage, and bonded migrant labor are persistent forms of modern slavery that fall under the Indian constitutional definition of forced labor."

Source: http://www.du.edu/korbel/hrhw/digest/slavery/india.pdf