Friend of mine made this criticism of purely free market, how would you respond?:
"While I am generally in favor of a free market, I don't think I could possibly advocated for a totally free market, but I will present a hypothetical situation to try to clarify my understanding, and explore the subject a bit more. There's a theoretical company that manufactures all of it's goods in china for 50% cheaper than it would if it were to manufacture those goods in the united states. It is based in the united states, and used to have factories here, but the cost analysis drove those jobs overseas, because of national minimum wage laws, and lack there of in china. On average, the jobs that were shipped over are paid $5/hour as opposed to $10/hour. Are you saying that workers should accept lower wages to combat the exporting of jobs. Is your definition of "competition" a lower standard of living for our country? That's the problem in my eyes, is that we have raised our standard of living to the extent that people need a certain wage level to survive. If you have a way of clarifying this, or explaining how lower wages in our country would make our society and our economy a better place, I'd be glad to hear it, but from any angle I look at it, I would think that lowering our wages would decrease our standard of living, thus decreasing our society's economic freedom on a broad scale. Less money in the pockets of the people, less spending in general, less saving, investing by a fewer and few number of people, more social stratification between those with money and those without, etc. Again, I would be happy to hear a free market solution to this, but it seems that in order to remedy these ill effects of the free market, some intervention must be done. I do think there is a way for that intervention to be made in a widely accepted, grassroots way, such as developing bottom up independent commissions to set international trade standards rather than having those trade standards set from the top down, making government more accountable to the people in general, and other methods that I'm sure we could imagine to make our economic system work for the general public."
Freedom has always been the only route to progress.
z1235:I could be wrong but it seemed (to me) that you implied that a free market would be devoid of price discrepancies and of arbitrage (entrepereneurial) opportunities to take advantage of same (i.e. action). As if all price arbitrage and opportunities worth profiting from would already have been taken by a free (maximally efficient) market. As if no real $100 bills would be left laying on the pavement. It seemed (to me) that you implied that price (arbitrage) opportunities as they exist today are mostly caused by differing levels of government intervention/regulation. Pls correct me if I was wrong.
It seemed (to me) that you implied that price (arbitrage) opportunities as they exist today are mostly caused by differing levels of government intervention/regulation. Pls correct me if I was wrong.
You are wrong.
John James: You are wrong.
Then please explain what you meant by:
but this notion of a company seeing it more profitable to "ship jobs overseas" would largely be a myth.
z1235:Then please explain what you meant by: but this notion of a company seeing it more profitable to "ship jobs overseas" would largely be a myth.
I thought I did that in the rest of that post. I don't understand what your issue is. You just said "'Shipping jobs overseas' as a phrase is loaded and meaningless". I mean, literally, that's what you said. Word for word. Look. It's right here.
And now you're asking me to explain to you why a meaningless phrase refers to a "mythological" concept?
No, JJ is absolutely on point, here. His original claim, "in a truly free market, it would be almost impossible for it to be cheaper to manufacture goods halfway across the world and ship them over here" is absolutely true. In a truly free market, ideas can be copied and geographical location has no impact on costs imposed by State regulators. The only way something can be produced more cheaply in another place is if some cost greater than the cost of transportation can be cut in the process.
It is possible that people in poorer parts of the world will agree to work for less absolute pay but there's always some reason for this. It's usually the case that they're poor precisely because they are less productive. This modern corporatist narrative about "cheap, overseas labor" is a lot of poppycock invented by the Elites so they can move their mult-trillion dollar, gold-backed slush funds from one major geopolitical center to another and get "sure thing profits" in the process. (JJ probably doesn't have this in mind since he's a bit less paranoid than I am). They were probably buying land in China back in the 1980's. The gutting of the US economy is sabotage, in my view. They're not just making cheap Chinese knockoffs of Nike shoes... the entire Chinese economy is a cheap knockoff of the once-great (because once-free!) US economy.
Clayton -
JJ, nevermind. There must have been some misunderstanding.
Clayton: No, JJ is absolutely on point, here. His original claim, "in a truly free market, it would be almost impossible for it to be cheaper to manufacture goods halfway across the world and ship them over here" is absolutely true. In a truly free market, ideas can be copied and geographical location has no impact on costs imposed by State regulators. The only way something can be produced more cheaply in another place is if some cost greater than the cost of transportation can be cut in the process.
I'm perplexed by this statement. So if this argument is pushed to the extreme, a truly free market would eliminate division of labor? Every country/town/village/family would be producing everything they need right there in their own backyards?
Transportation is costly. Unless someone can grow food and transport it to you at a lower cost* than you can grow the food yourself, why yes, you will grow the food yourself. How can this possibly be controversial?
*Note that "at a lower cost" includes the other activities you would have to forsake in order to grow food... that is, the costs of forsaking more productive activities you might have to do, so division-of-labor remains intact.
Clayton: Transportation is costly. Unless someone can grow food and transport it to you at a lower cost* than you can grow the food yourself, why yes, you will grow the food yourself. How can this possibly be controversial? *Note that "at a lower cost" includes the other activities you would have to forsake in order to grow food... that is, the costs of forsaking more productive activities you might have to do, so division-of-labor remains intact.
So would you or would you not outsource food production in a free market? Would there or would there not be "shipping of jobs overseas"? If division of labor were to "remain intact", one must answer "yes" to both questions. A "no" answer is logically irreconcilable with the existence of division of labor.
No one has claimed in this thread there would be no outsourcing of jobs in a freer market. I'm sure there would be increased outsourcing of some jobs and decreased outsourcing of others. The whole concept of "outsourcing" is relative to political boundaries, anyway. But the specific character of outsourcing we see occurring between China and the US is not an organic outgrowth of market factors. The easy way to see this is to look at China's holdings of US debt. Something is amiss.
There was no sane reason for China to accumulate such massive holdings of US debt... unless both the US and Chinese economies are being influenced by an alien power that wants to integrate them. It is my view that that is precisely what is happening. In the short-run, this will mean a continued hemmorhaging of jobs and capital into Asia and out of the US. In the long-run, it will mean lower real productivity of US workers and a lower standard of living in the US, with a concomitant rise in productivity of Chinese workers and a higher standard of living in China.
This "zero sum" shift in the balance of wealth between these nations is, to me, an obvious sign of political manipulation. There is no reason the US worker should become less absolutely productive as his peers in China become more productive. There is no reason that the US standard of living has to fall in order for the Chinese standard of living to rise... unless somebody is playing geopolitical games with the world economic order.
Clayton: No one has claimed in this thread there would be no outsourcing of jobs in a freer market. I'm sure there would be increased outsourcing of some jobs and decreased outsourcing of others.
No one has claimed in this thread there would be no outsourcing of jobs in a freer market. I'm sure there would be increased outsourcing of some jobs and decreased outsourcing of others.
OK, we're on the same page. For some reason, I thought JJ and you were claiming that outsourcing ("shipping of jobs") would disappear in a free market. I agree with the rest of your post.