What happens when capital is moved from USA country to Malaysia? Less productivity in USA and more productivity in Malaysia. But given the new conditions, it is still better to trade than not to trade! The problem is actually capital mobility, not free trade. It seems that forbidding capitalists to move capital out of the country would solve the problem. But…wait…aren’t there other countries willing to invest into the same factory? If they do it, USA will face absolutely the same situation! There will be only one difference – the profit from the new factories will not flow into the USA.
Fears of capital mobility are really funny anyway. Here in Czech Republic I hear frequent complaints about foreign companies – that they suck their profit from our country and use us as poor servants, and that we are going to serve the rich. And now I hear complaints from the other side of ocean that they fear the mobility of capital!
Posted by Ondrej Palkovsky