The wrong assumption is that our trade imbalance is a result of unfair trade practices by foreign countries. Free traders argue that protectionist measures will spur only more protectionist measures in foreign countries. Those arguing for protection, such as Sen. Lloyd Bentsen, argue that the threat of protectionist measures will cause the foreign countries to reduce their barriers to our goods.
While some trade barriers exist, they are not the primary reason for our trade imbalance. The real reason involves the unmentioned fact in this debate: cheap foreign labor.
A person in Hong Kong who makes Atari game sets for a $1 an hour can make a set cheaper than it can be made in California. But a person who makes $1 an hour can’t afford to buy anything except food and shelter. So whether Hong Kong has trade barriers or not, most of the people in Hong Kong cannot afford to buy American products.
We have a trade imbalance because most of the world is broke. What is a Bolivian peasant in a position to buy? Things are so bad in Mexico that nearly 70 percent of the people do not get the proper nutrition. What can they buy from the United States?
As for oil sheiks, there are about 5,000 people in Saudi Arabia who have all the money. They have bought just about everything they can think of and now are buying countries. This is called investment, and http://www.cheapjerseys11.com/ doesn’t count in computing trade balances.
Another unmentioned fact in this debate is that the American people are the world’s No. 1 market. The real question is, do we wish to reserve most of this big market for American manufacturers and workers or do we wish to open it up to imports, some of which are foreign and owned by Americans who shifted jobs overseas in order to pay cheap wages and few benefits?
Because we are talking about public policy, we should be clear about the difference between private benefits and public benefits. It is economically efficient for Atari to pay Chinese $l an hour rather than pay Californians $9 an hour for the same work. It is not efficient for the government to allow Atari to do that because Californians do not vanish along with their jobs. They still must eat. They must draw welfare and unemployment, take up crime or find another job. The first two options cost the public, so Atari’s private gain is at the public’s expense. market for American workers. Wages and markets are tied together. If we drive down American living standards, then we drive down the ability of Americans to buy. cheap jerseys Cheap labor countries are economically efficient producers but bad markets.
You should understand, of course, that with the major money center banks overextended in loans to foreign countries, it is in those banks’ self interest for those foreign countries to sell as much as possible to the United States and to buy as little as possible. It is only by selling to the United States that they can earn the money to pay their bank loans.
You should understand that the major money center banks have a great deal more political influence in Washington than unemployed Americans. Money talks louder than consciences along the Potomac.
When you hear someone yap about free trade and not mention cheap labor, you are hearing the sound of an ax grinding, not honest debate.
The labor is cheap in foreign countries for the same reason it used to be cheap here. There are more people than jobs and no safety net. No work, no eat, no choice. When someone suggests that American workers are not competitive, the person talking deserves a punch in the face. How can an American compete with people who have no choice but to submit to subsistence wages.