FACTOR PRICE EQUALIZATION DOES NOT EQUAL A RACE TO THE BOTTOM. Captain Ed headlines a post "Era Of Cheap Chinese Labor Coming To A Close." It links to a Washington Post story (registration required) about the old class struggle.

Stella International Ltd., a Taiwanese-owned shoe manufacturer employing 42,000 people in and around Dongguan, faced strikes this spring that turned violent. At one point, more than 500 rampaging workers sacked company facilities and severely injured a Stella executive, leading hundreds of police to enter the factory and round up ringleaders.

"We never had anything like that before," said Jack Chiang, Stella's chief executive.

Chiang suggested that several factors have contributed to the shift in attitude. On the one hand, he acknowledged, assembly-line wages have not risen in recent years nearly as fast as the cost of living. On the other, image-conscious U.S. retailers who buy Dongguan's shoes have demanded better treatment and human rights counseling for the workers, encouraging them to step up and make demands for change.

Finally, Chiang added, broader general freedoms in the country have reduced the Chinese people's traditional fear of authority, and not just among factory workers. Protests by farmers and others, many of them violent, have broken out with increasing frequency across the country in recent months.

The growing assertiveness of factory workers has posed a particular political problem for the governing Communist Party, which ideologically should champion poor laborers struggling against capitalist managers. But local governments have become shareholders in many of the factories, steering officials toward the management side of labor relations.

That looks like an Orwell moment. But read on.

Although recruits are still abundant for most areas, they said, the most sought-after workers -- young women with high school educations -- have become scarce in recent months, particularly in Dongguan's low-paying shoe industry.

As Captain Ed notes,

The maintenance of free trade with China has the scales falling from the eyes of Chinese workers. While free trade may have hurt the US in the short run, we have mostly recovered from the blow, while the Chinese have just started to discover that a little freedom is an impossible measure: it either grows exponentially or dies altogether. Now that they have built the economy that communism could never deliver, neither option will be compatible with their autocratic rule. Either the government has to allow more freedom and individual choice to its people, or crack down and face the loss of overseas investment and a wide-scale worker revolt which could wipe out the government.

Indeed.