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Source link: http://archive.mises.org/15886/feeling-down-outsource/

Feeling Down? Outsource!

March 3, 2011 by

Whenever I’m feeling blue about domestic politics – there is plenty about which to despair – something great happens that reminds me of the long-term case for optimism, which is all about the astonishing expansion of the division of labor globally and in ways that weren’t even possible just a few years ago.

The world has changed to permit ever more people in all corners of the globe to cooperate to their mutual betterment. The very prospect is inspiring people to claim their freedom and use it to make their lives better. By comparison to this activity, the disgusting behavior of nation states appear like a ridiculous anachronism that will be streamrolled by the forces of history.

And when these examples hit home, it is all the better.

So, for example, I was preparing dinner two night ago, and the skype plugin on my iPhone rang – in video mode like the Jetsons – and it was a young man from some far-flung rural area of Australia. He had a charming accent that I could barely understand but he was full of smiles and exuberance. I showed him around my house and he showed me his rather barren room, full of computer stuff.

After pleasantries, we got down to business. I was contracting with him to fix one small module on our Academy software, the one that generates certificates of completion. He he already answered an email requesting an expert. He was the last person I would have expected to be on this job.

Just ten minutes ago, he delivered his repaired module, and it is beautifully done with elegant code, along with an invoice for his work. I never would have imagined this possible, and the truth is that it would not have been possible even a few years ago. But with communication technology dramatically improving, the possibilities for international collaboration, in surprising ways, are more readily at hand. I don’t have to move there and he doesn’t have to move there. We found each other through a tiny mention on a social networking site. And like magic, he had an opportunity for exchange. Everyone is better off. The world is a more beautiful place.

The same happened with some developers in India, who are now doing our eBooks at a very low price and with great expertise. This would have been unthinkable only a few years ago. But technology is making happen.

Never underestimate the implications of global economic relationships. This is the stuff that makes the world go round. It is the engine of progress, and the producer of peace and understanding. Together we can cooperate to make the world a better place. Expand this model 100 fold, 1,000 fold, a million fold, and we create a glorious force for the betterment of the whole human race. It is mankind’s method of peaceful resistance.

How can some stupid government program or regulation compare to this? All the activities of the nation state pale by comparison to the significance of the globalization of communication and commerce. In the digital age, we are discovering that all people of the world have more in common with each other than any of us has in common with the states that rule us. That’s why revolution in one country is a revolution in all countries. The cries for freedom by one man are the cries for freedom of us all.

These advances are taking place right under our noses. They are the most significant since the industrial revolution, and our grandchildren will look back in history books on these times as the turning point. We are truly blessed to be living in them and experiencing them.

{ 58 comments }

Mike March 3, 2011 at 7:01 pm

I totally agree with the theme of this article.

While I don’t have an iPhone I do have a small computer network at home. Like all computer users I need to have an anti-virus program or in my case an Internet Security Software. My choice of ISS is designed and marketed by a company in Prague, The Czech Republic.

It is considered one of the best ISS packages in the market.

The world has many brilliant people willing to take the risks involved in starting and running their own business. It behooves all of us to look globally when it comes to doing business.

Jim Fedako March 3, 2011 at 10:17 pm

That’s right. Years ago I outsourced my Ohio orange production to some folks in Florida.

o.jeff March 3, 2011 at 11:04 pm

The millions of Americans who have lost jobs due to off-shoring of manufacturing, customer service, technical support, engineering, scientific research, product development, legal support, software development, advertising, graphics arts, accounting, IT, HR functions, radiology, etc, would likely disagree with the rosy picture you paint here.

Opinions polls show support for free trade is falling fast in this country, and for good reason — it does not work as promised, and it is does not serve the interests of the American people. It might serve corporate interests, but fewer and fewer Americans see their interests aligned with corporate elites.

BioTube March 3, 2011 at 11:47 pm

Bastiat would say you’re merely looking at what is seen and not looking for what is not seen. Others on this site would say that it’s a good thing the less efficient are being displaced so that resources(in this case, labor) can be released back to the economy to be used in better ways. I’m going to say you completely ignored everything on this site because you’re a left-wing shill.

Winniethepooh March 3, 2011 at 11:56 pm

I agree with BioTube, and I would like to know why o.jeff thinks that “corporate elites” support free trade. If anything most domestic companies want foreign companies who make the same products as the domestic companies to be taxed heavily on imports so that their competition is lessened. It appears to me that you’re trying to justify your ideas by saying that the hated corporate elites approve of them, but that is no justification for an idea, especially when it isn’t for the most part true.

Daniel March 3, 2011 at 11:59 pm

Yes, but you didn’t exactly help him dispell the boogie-man which caused* him to write that tripe in the first place

* Reification fallacy?

Ken March 4, 2011 at 3:12 am

I contract with manufacturers all over the globe in my trade. I’d rather run production domestically and often do but there are certain technologies, processes and services performed better in other nations. Protectionism for the sake of preserving local employment artificially forces up wages, diminishes efficiency and promotes slothfulness.

@o.jeff: In my endeavors abroad, the workers in factories, offices and beyond have the same basic desires, hopes and dreams as Americans do. They are getting the work because we have failed to compete and innovate in many trades. We have allowed our government to quash our industry with compliance regs, labor laws, payroll taxes, health care mandates, etc., ect, ect. We permit unions to extort our enterprises, forcing manufacturers to flee or shut down.

The market is consistent with human nature in that by and large everyone wants the best product or service for the best bargain. Those who deliver said bargains in the new global marketplace will prosper, those who do nothing to change their plight will not.

Feeling Down? Outsource! Music to my ears Jeffrey

Shay March 4, 2011 at 4:01 am

The millions of Americans who have lost jobs due to off-shoring of manufacturing, customer service, technical support, engineering, scientific research, product development, legal support, software development, advertising, graphics arts, accounting, IT, HR functions, radiology, etc, would likely disagree with the rosy picture you paint here.

You forgot to mention candle makers and hose-and-buggy dealers. I, for one, am glad we forced them to adapt to progress rather than curtail progress so that they could keep their jobs.

David March 4, 2011 at 2:28 am

I’ve actually been having political conversations with someone in Great Britain for quite a while now, one of my Facebook friends is from Japan (he was a foreign exchange student), and someone from Australia drew a picture for me. It seems the role of government in international relations is destined to shrink, and I’m glad of that.

newson March 4, 2011 at 5:16 am

gerard jackson points out the how the world’s paper-money regimes can distort the international division of labour.
http://www.brookesnews.com/102806usmanufacturing_print.html

pravin March 4, 2011 at 10:07 am

monetary authorities do distort the playing field.however these monetary authorities are not aliens.they are from the same developed country.plus,with the dollar reserve, the other states are in anycase vassals paying seigniorage to usa

newson March 4, 2011 at 6:35 pm

bottom line is still the same. prices are the guideposts used by entrepreneurs in deciding whether to invest locally or offshore. if the former are unreliable, then investments are also not necessarily beneficial over the longer time frame. (short or medium term, no one disputes that fortunes can be made in distorted price-regimes – hello us construction industry 2001/07).

o.jeff March 4, 2011 at 7:43 am

Ken,

I would like to impose a 20% tax on all outbound foreign payments or a 20% tariff wall on imported goods. What effect would these two taxes have in your global sourcing? The tax, by the the way, would be revenue neutral in the sense that income taxes would be reduced by the amount raised by the foreign trade tax.

I used to be a “free trade” supporter, and I used to think Paul Craig Roberts had gone crazy. Now I see that he actually was correct in his views on trade. See last section of this interview:
http://www.dailypaul.com/140297/paul-craig-roberts-on-glass-steagall-free-trade-and-the-dangers-of-an-evolving-oligarchy-of-private-interests

newson — Exactly right. Hugo Salinas Price also make this point in “The gold standard: generator and protector of jobs” http://www.financialsensearchive.com/editorials/salinasprice/2010/0616.html

J. Murray March 4, 2011 at 7:57 am

There is no such thing as “revenue neutral” as it always assumes all activity will remain static.

And why do you think we should punish domestic consumers for the express purpose of protecting inefficient local producers.

Here’s a little data for you. I’m a former auditor and here is the breakdown of the price tag of each $1 of Made in America:

$0.40 – Business activies
$0.27 – Taxes (including pass-throughs from suppliers)
$0.10 – Cost associated with calculating and paying taxes
$0.23 – Regulatory compliance

This is an average over roughly three dozen companies ranging from multi-billion dollar corporations to mom and pop outfits. And even then, it doesn’t generate a full picture as the $0.40 is riddled with regulatory and legal burden I was unable to properly segregate, such as the impact of wage law, the impact of the health care regulatory system, and other costs. If you really care about the American business sector, it’s a good idea to start with the obvious 60% portion of the price of US goods first and kill the taxes and regulations.

Additionally, you tend to forget that when a tariff is placed on imports all it does is generate a retaliatory tariff. Don’t forget that the United States exports just as much as China does. What do you think will happen to the $1.5 trillion we send overseas each year if we start charging everyone else 20% to do business here? The nations buying our products won’t sit idly by while we try to ruin their economies, they’ll just place an equal 20% tax on our stuff. You’ll end up destroying more jobs than you’ll ever hope to save.

newson March 4, 2011 at 10:42 am

tariffs – more intervention – are the wrong answer to the monetary intervention foisted on the suffering public everywhere. some offshoring has no doubt occurred purely on account of monetary distortion and may not be benign.

Amanojack March 4, 2011 at 10:25 am

Someone sorely needs to read Economics in One Lesson.

o.jeff March 4, 2011 at 11:32 am

Amanojack, “Someone sorely needs to read Economics in One Lesson.”

Hazlett could never have imagined the fiat explosion we have in the world economy today and its distortion of world trade, or the impact of dissimilar environmental and labor standards. If Hazlett were alive today, he would sound a lot more like me and a lot less like you.

Wandering Cynic March 4, 2011 at 12:22 pm

Returning the US paper dollar to its true value (next to nothing) would go a very long way in reversing the giant sucking sound. Which is why it will never happen in the short term. Imagine the horde of angry CEOs who offshored their factories that would storm DC if that was ever allowed to happen.

(Not to mention the economist who said that if the world ever stopped taking the dollar as payment the last resort of the US should be its stockpile of 1,500 nuclear warheads.)

I’ve never read Hazlett, but I do know one thing he never could have imagined. Just how stupid Americans really are. Here’s a few choice quotes I’ve heard in my life:

Late 1990′s: “I got laid off today. How awesome is that! Now I have all the time in the world to day trade at home at get rich!”

Mid 2000s: “Semi-conductors? Aerospace tech? Heavy industry? That’s all horse and buggy whip technology! It’s a dead end. Let some brown skin in a 3rd world hell hole do that stuff for $1 a day. House flipping and the stock market is where the future is. Only a fool would bet against this economy.”

America can not feed, heat, or clothe itself, yet it bounces around the world thumping its chest about how strong it is. We fought a revolution partly because the English suppressed industrial growth in the colonies. 230 years later we gave it all away with a smile on our faces. I can only define it as insanity.

I do know one thing. The day the dollar dies is going to be a very ugly one.

newson March 4, 2011 at 6:25 pm

yeah, i think ricardo would have been putting out disclaimers had he been alive today.

first fix the rigged international pricing regime that (mis)coordinates much investment, then when monetary soundness is restored, rejoice at salutary offshoring. otherwise, laissez-faire gets blamed for much of the poxy stuff that wandering cynic mentions.

The Fresh Prince of Darkness March 4, 2011 at 9:29 pm

Mises makes an important observation:

“If we do not want to deal with the law of comparative cost under the simplified assumptions applied by Ricardo, we must openly employ money calculation. We must not fall prey to the illusion that a comparison between the expenditure of factors of production of various kinds and of the output of products of various kinds can be achieved without the aid of money calculation. ”

http://mises.org/humanaction/chap8sec4.asp

Ken March 4, 2011 at 7:02 pm

Hazlett and all the misesian minded classicists understood plenty about debased currency. They certainly never promoted increased intervention as a solution that I have read.

newson March 4, 2011 at 9:58 pm

i don’t agree with jeff o‘s policy recommendation, but i can’t imagine hazlitt penning a panegyric on offshoring (as it occurs today) either.

The Fresh Prince of Darkness March 5, 2011 at 8:41 am

Agreed. Just as I would strongly doubt that Mises would be an enthusiastic supporter of mass, non-white immigration to the West, as those who run his eponymous website are. (We know Rothbard was no such enthusiast.)

newson March 5, 2011 at 11:42 pm

margit von mises’ memories of the couple’s time in mexico are interesting. it’s clear they saw the profound differences, even though they only fraternized with criollos.
https://mises.org/media/3208

Bruce Koerber March 4, 2011 at 12:08 pm

What about the foreigners living on the street down the road a bit – we need to impose tariffs on them if they want to provide services in our neighborhood!!!

Dr Rock March 4, 2011 at 9:18 pm

test

o.jeff March 5, 2011 at 10:38 am

newsome,

The article you referenced, http://www.brookesnews.com/102806usmanufacturing_print.html , was a good one. I think you would also enjoy the article from Hugo Salinas Price. It covers much of the same territory — how the prevailing system of floating fiat currencies has caused de-industrialization of the West — but it has more detail and examples:
http://www.financialsensearchive.com/editorials/salinasprice/2010/0616.html

After reading these articles again, I guess I would modify my stance: we need an immediate flat tariff (or a foreign payment tax) — *unless* we can force the world to adopt a decent monetary and banking system.

newson March 5, 2011 at 6:47 pm

tariffs only further impoverish. trading partners respond in kind, and the consumer loses out without any guarantee of any of the lost jobs coming back. (in fact the opposite as the state eats up resources otherwise available to investors). my personal guess is that no return to sound money will occur before total systemic collapse, maybe years away.

good article by hsp, i did read it. ditto for the paul craig roberts’ piece.

newson March 5, 2011 at 8:18 pm

http://mises.org/daily/1420/Clarifications-on-the-Case-for-Free-Trade
unfortunately the salerno link doesn’t work.

Ken March 5, 2011 at 7:54 pm

o.jeff: There was a tariff put on some product that a paper merchant was importing that basically halted the import of a competitive product that was allowing me to pass on finished goods about 15-20% less than I deliver it now.

Tariffs get passed on to the end user or remove products from the marketplace.

newson March 5, 2011 at 8:34 pm

rothbard wrote a good article making the very same point.
http://mises.org/rothbard/myth.pdf

o.jeff March 5, 2011 at 10:56 pm

@newson — That was an excellent Paul Craig Roberts piece that attacks free trade theory at its heart and on its own terms. And this paragraph is what really concerns me, from a practical standpoint:

“So many people forget that the reason that highly paid US workers could compete against lowly paid Asian workers is that the US workers were much more productive due to the immobility of capital and technology. The international mobility of factors of production has stripped away the productivity advantage of first world labor. Try to imagine the political instability in store for the US as the ladders of upward mobility collapse. The reality toward which we head is not a libertarian paradise.”

So, newson, are you having second thoughts on the the idea of free trade? I noticed that Paul Craig Roberts himself had no solution for the problem he identified.

newson March 6, 2011 at 2:44 am

i don’t agree with roberts in the article in his analysis of ricardo. i do, however, see enormous (and destructively sudden) moves in currency that have nothing to do with trade flows and everything to do with monetary policy and currency punting.

The Fresh Prince of Darkness March 6, 2011 at 8:13 am

Roberts is heroic, but unfortunately he is not well-versed in Austrian economics. But let us stress: to point out the fact that Ricardo’s argument entails certain assumptions (as Mises himself points out) which might limit the unconditional application of his recommendations is NOT to advocate protectionism or other such nonsense. Sadly, I’ve seen some prominent contributors to this site make that accusation.

newson March 6, 2011 at 8:28 am

as regards ricardo and his stipulations on which roberts’ arguments are based, check out this hülsmann’s article:
http://mises.org/daily/1433

newson March 6, 2011 at 7:34 pm

as hülsmann points out, mises saw that the law of association in no way required ricardo’s stipulations to be universally valid.

The Fresh Prince of Darkness March 6, 2011 at 8:34 pm

This is true. But ultimately, Ricardo’s argument about comparative advanatage states that, given the *relative* productivities of some goods between two trading partners, there exists some *exchange* rate between the goods in question such that specialization and exchange is preferrable to production and consumption in isolation. (As opposed to absolute advantage which simply states the fact of increased physical production in specialization between two partners each of which has a superiority in different lines of production.) What is left out of this of course is just what exactly this exchange rate is, hence the points here in this thread about the distortions of the international price system due to the prevailing fiat money regimes (e.g. one can reasonably inquire as to just how miraculous the China “miracle” really is, and what benefits Western consumers really reap [as opposed to Western insiders], never mind the protectionist pleadings of US politicians and their kept economists). But a larger point: for an exchange rate to exist *presumes* the existence of a social setting where preferrances can be effectively aggregated (as was a reasonable assumption for the white West until the early 20th century). Here is where socio-biology may have some interesting intersections with Austrian economics.

The Fresh Prince of Darkness March 6, 2011 at 8:40 pm

For example,

http://www.crusader.net/texts/ygg/y01.html

See in particular his comments on James Baldwin. Who really doubts that blacks evaluate race before engaging in an exchange?

Also see

http://www.crusader.net/texts/ygg/y27.html

Of course, the work of Hoppe and Rothbard should refute the notion that libertarians are unquestionably open borders advocates, but recently we see here that this is essentially the offical position of the Mises Institute, no different from Cato really (remember Cato is also anti-war, btw, the distinguishing features are rapidly shrinking). Quite sad, really.

newson March 6, 2011 at 11:58 pm

that people may sacrifice economic well-being to indulge personal/ethnic/racial animosities seems perfectly with the misesian weltanschauung. i think it was pat buchanan (?) that said ethnicity always trumps ideology.

newson March 7, 2011 at 2:11 am

whilst on division of labour, hülsmann has an interesting slant about its prevalence in the west.
http://findarticles.com/p/articles/mi_m0254/is_4_58/ai_58496756/?tag=content;col1

i prefer the macdonald argument, however. if one subscribes to this thesis, then unbrooked immigration is a worry for the preservation of the individualistic order.

http://www.toqonline.com/archives/v2n2/TOQv2n2MacDonald.pdf

The Fresh Prince of Darkness March 7, 2011 at 1:40 pm

That’s always been one of my favorite articles by Huelsmann; a pity more people aren’t aware of it.

A larger point about human rationality: it’s one thing to say that all humans possess a common rationality, it’s quite another to say that this common rationality is sufficient for the kinds of advanced capitalist markets that exist(ed) in the West to arise on a global scale. The most we can say, I think, is that the overall global structure should sociologically be one of non-aggression, eg, all peoples should refrain from war, slavery, etc against one another. Beyond that, however, it’s a stretch to claim that there is one, world-wide market encompassing all people and all goods (capital and consumer), as such a market presupposes a social setting where the members of that setting view each other as fellow members (such that we can meaningfully speak of exchange and a fortiori media of exchange, without which you don’t have capitalism). In other words, there must be some kind of reciprocity between trading partners, otherwise you really don’t have a market (at least not the kind that most libertarians seem to believe exists but for the depradations of the State; they often speak of “market” in the same way left-liberals speak of “society”, so much for methodological individualism I guess). In the West right now, you have a societal illusion of such reciprocity (ie, whites view exchanges with non-whites as taking place in purely economic terms, whereas in reality non-whites view such transactions racially), akin to the illusion at the heart of ABCT. The end result will likely be as unpleasant as the one in ABCT. This is not to say that transactions should only be occur under conditions of reciprocity (hence protectionism should be opposed), only that people who mindlessly celebrate “free trade” should try to view things non-ideologically for a change.

newson March 7, 2011 at 8:41 pm

time for the pagan/viking/folk metal-inspired revival of the west? i don’t agree with all of kurtagic’s ideas, but as far as marketing goes, i think he’s quite a good strategist.
http://www.theoccidentalobserver.net/2009/08/what-will-it-take/

newson March 7, 2011 at 9:10 pm

on socio-biology, here’s an interesting piece. the decline of tradition in lockstep with a population-wide fall in serum testosterone.
http://is.gd/IwZlsW

The Fresh Prince of Darkness March 7, 2011 at 9:29 pm

Yes, I’ve seen Kurtagic’s advocacy of black metal (not black as in race, btw); not a big fan, more into GWAR, but he definitely has some interesting ideas, no doubt. Still, I’d prefer to see a liberated West modern and capitalist, as opposed to pre-modern (and hence poor).

newson March 7, 2011 at 9:42 pm

paul craig roberts doesn’t appear often here probably on account of views like this:
http://www.vdare.com/roberts/harvard_genocide.htm

newson March 8, 2011 at 5:46 am

hülsmann’s paper should be read alongside this:
http://is.gd/UxT52o

The Fresh Prince of Darkness March 8, 2011 at 9:55 am

PCR is also verboten in the LRC-LvMI-antiwar.com circle because of his views on 9-11. I guess it’s ok to say the State is evil, monstrous, whatever, but it’s out of line to say it might conduct black ops against its own subjects.

newson March 8, 2011 at 9:04 pm

i guess because many of the players in 9-11 are still occupying the commanding heights.

The Fresh Prince of Darkness March 8, 2011 at 10:33 pm

Re. race and Christianity, here are some interesting comments by the late, great Sam Francis (I like to think of him as the Rothbard of paleoconservatism, primarily because like paleolibertarianism, the movement unfortunately died with the master’s death):

http://toqonline.com/archives/v1n1/TOQv1n1Francis.pdf

Ken March 6, 2011 at 10:03 am

Great article Newson:

“The stark fact is that the only logical alternative, government obstruction of international trade, would impoverish the population even more”

Therein is the reality. In the real world of in the trenches transacting, theory can only apply general outcomes. Just as Mises points out that it is impossible to predict and control the market because of the number of decisions that are made any given hour, day, week, and so on.

In my experience over the past 25 years there has never been a government intervention in the market that has created a net ethical outcome for all involved parties. Furthermore, protectionism is how monopolies form. Almost every tariff is the result of the controlling players of an industry rushing to government and asking for protection so said players can force out competition.

Competition is what drives innovation. Case in point: We deliver custom manufacturing solutions to clients. Often We provide multiple options, usually domestic vs. foreign manufacturing. Foreign USUALLY but not always yields better price while domestic comes with shorter lead times. Lower cost of labor does NOT necessarily translate to lower price of goods — a common misunderstanding of global trade. When hand work is involved, competitive labor wins but most of what we produce is mechanized. Some markets have perfected their technologies better than others hence can deliver better product for lower price points.

We have clients who sometimes opt for the higher price solution because other factors meet their needs. We also have products that can not be made domestically, usually because of specialization and/or min. quantity restrictions.

We imported soccer uniforms from Pakistan for a local youth soccer league. The local league determined they could lower the price to players parents given the lower Pakastan pricing. Prior to delivery but after the deal was sealed a 38% tariff was placed on garment imports, initiated by the Obama admin. The result was no savings being passed on to the parents “end user”.

o.jeff March 6, 2011 at 1:25 pm

“Furthermore, protectionism is how monopolies form. Almost every tariff is the result of the controlling players of an industry rushing to government and asking for protection so said players can force out competition.”

I do agree with this, Ken. Historically, politically powerful groups have used tariffs for protectionism. That is why I think we need a single, simple, uniform tariff rate that applies to all things (including, for example, crude oil!). This is the proposal that Ian Fletcher advocates in his book “Free Trade Doesn’t Work”, and he agrees with you that different tariffs for different products or industries would be a politically uncontrollable disaster.

Also, our economy is large and competitive enough that a single level of tariff on imported goods would not cause monopolies to form.

Ken March 6, 2011 at 3:03 pm

Why have a tariff at all? We already pay Customs and Clearance fees so that our government can supposedly “protect” us from all ails the world over.

Why should we give a cut of the action to those acting as government? How will the 20% propose be re-invested? Is this done so American producers can charge 20% more than their global competitors? Do you really believe this would be carried out in an equitable manner? Everyone who exports/imports knows the ports are notoriously full of corrupted officials.

newson March 6, 2011 at 7:18 pm

tariffs don’t ameliorate international price distortions caused by monetary factors, they merely punish consumers.

o.jeff March 6, 2011 at 9:43 pm

“tariffs don’t ameliorate international price distortions caused by monetary factors, they merely punish consumers.”

I disagree. I think a tariff would be very helpful in reducing the distortions in international trade from monetary effects. A tariff would make far more industries competitive, which would retain more jobs for people that work in those industries in this country. It would also stem the flow of further job losses.

Yes, imported products may cost a little bit more, but those products are typically not that important– when it comes right down to it. If you made people choose between prices going up slightly at Wal-Mart or losing their job, I think you’ll find most people will opt to keep their jobs and pay a bit more for the stuff from China.

Also, because the tariff would reduce income taxes, it would mean that people would have more of their income to spend.

newson March 6, 2011 at 11:22 pm

the problem is that monetary effects are not quantifiable. tariff-imposition begets retaliation from trading partners (eg. smoot-hawley). but most importantly, the increased poverty resulting from the transfer of wealth from consumers to the state will cost domestic jobs overall (even if it saves some positions in privileged sectors).

here’s another good jackson article. without attacking the root problem, there is no solution.
http://brookesnews.com/?p=796#more-796

newson March 6, 2011 at 11:27 pm

although it’s not a law of nature, new taxes are mainly accretive not substitutional!

The Wobbly Guy March 7, 2011 at 10:49 am

Countries with heavy state intervention have a variety of tools and policies to make YOU believe they have comparative advantage… all the better to suck your industry away and leave you ripe for the taking. And many libertarians actually fall for that claptrap. Amazing.

Exhibit One: China.

Ken March 7, 2011 at 5:20 pm

While building a factory in China might pose more risk how does doing business with the Chinese or other worldly producers “suck industry” away? The industry goes away because it can no longer compete under the duress of government impositions. Example: The largest trade bindery (print media) house in the western U.S. picked up and moved from California to Nevada a few decades back. What they saved in workers comp ins. in year 1 paid for their move.

The name of the game in business is prosperity. Employing American’s at a loss is an unsustainable endeavor unless your and automaker or other favored industry for government bailouts.

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