How would truly free trade effect American's wages?
I've heard it claimed that American's 'real wages' might be as little as half of what they currently are, as they're being propped up by trade barriers. If we simply got rid of all trade barriers is it possible that American's wages would drop drastically as they had to compete more directly with people living in countries where workers are paid mere dollars a day?
In addition to just explaining these issues on here, could you guys recommend any books, chapters, articles, blog posts, etc. that explain the Austrian position on this stuff?
Thanks!
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No one knows. As for what American's real wages are, no one knows. All we do know is that various policies, from monetary policy to laws favoring unions to minimum wage to trade barriers to taxes that disincentivize production, affect them and have turned wage prices into a cluster fuck. If all trade barriers dropped there'd likely be a tumultuous time during which we and every other nation discovered what our most productive uses for our labor was again, and then when things settled down real wages would start to rise as people made more 'stuff' per head of labor as investment started increasing productivity. Some people would be better off than they are now, other not.
All we can really know now is that some people make more than their productive contribution and some less, some groups are protected while others are screwed either directly or merely as a consequence of another group having an advantage. For example to the extent that unions and union labor are protected and entry into their fields restricted, other fields see a larger labor pool than they otherwise would and so get lower wages than they otherwise would. Which fields? Who knows? I sure as hell don't. It'd be easier to examine if there were just one simple policy screwing things up, but there isn't. There's a morass of policies and laws and regulations that affect wages, the sum total effect of which is things are very screwed up and not as they'd be otherwise.
Anything beyond that is really guess work.
Real wages would rise. Extending the division of labor further and further so that each can produce according to his comparative advantage will raise the standard of living.
http://mises.org/rothbard/protectionism.asp
The basic Austrian position is that free trade makes everyone wealthier, as in the whole country. Mises in Human Action has a long poetic chapter how basically the only reason we are not still living in caves with 99% of us dead is from division of labor, and free trade is exactly the same thing as division of labor.
Trade barriers are a way of one small group leeching off the whole country, taking away their wealth.
My humble blog
It's easy to refute an argument if you first misrepresent it. William Keizer
Here is the question one needs to ask himself.
If each of us declares ourselves to be sovereign entities, would we benefit by restricting trade among ourselves?
There is nothing unique about free trade between nations with artificial borders. It is not different from free trade between cities, towns, streets, and finally individuals. If free trade between nations can be detrimental, then free trade between individuals must also be detrimental.
Consumer prices would fall, and real wages would rise in the long term.