Free trade. (Letters to the Editor).(Letter to the Editor)

I am writing about William F. Jasper's articles "Your Job May Be Next!" and "Why the Race to the Bottom?" (March 10, 2003 issue). I agree with Mr. Jasper that we need to abolish socialist world government institutions such as the IMF, World Bank, NAFTA, WTO, and the UN, but I think his articles promote some protectionist fallacies.

First, we do not trade with foreign countries to "create jobs"; we trade with foreign countries so American consumers can get cheaper and higher quality goods. Mr. Jasper makes numerous mistakes by focusing on who is hurt by free trade, for example domestic steel producers, and ignoring those who benefit from free trade, for example Americans who can now buy cheaper foreign steel. If American steel consumers can now buy cheaper steel, they will have money left over to buy other products, to save, or to invest. If the American steel mill is shut down, then that labor, capital, and raw materials are free to flow to more productive sectors of the economy. It is not accurate to say free trade "creates jobs," but it does shift the economy to "more productive jobs."

Second, Mr. Jasper's articles promote the "High-wage Fallacy." This fallacy contends that American workers can't compete with workers in lower wage countries and that American businesses will leave to the lower wage countries. The flaw in this argument is that it confuses wage rates with labor costs. When workers in a prosperous country receive twice the wage rate as workers in a poorer country and produce three times the output per man-hour, then it is the high-wage country which has the lower labor costs. That is, it is cheaper to get a given amount of work done in the more prosperous country simply because it takes less labor, even though the individual workers are paid more. The higher paid workers may be more efficiently organized and managed, or have more or better machinery to work with. After all, there are reasons one country is more prosperous than others and often that reason is that they are more efficient producers.

We should support free trade and lower taxes (including tariffs), repeal government regulations, and return to a sound monetary system based on gold or silver if we want to remain prosperous.

ADAM SPIVEY

Lakewood, Ohio

Mr. Jasper responds: Mr. Spivey brings up some very important points. The problem I see with his line of argument, however is that it assumes that economic theory should trump all other considerations. Should the "right" of American consumers to get the best deals on cell phones, CD players, widgets, and wagons be considered the summum bonum to which all policy must be directed? Is this "prosperity" the only thing that counts? As Professor Hans-Herman Hoppe, a prominent libertarian economist, has noted: "To libertarians of the Austrian school, it should be clear that what constitutes 'wealth' and 'well-being' is subjective. Material wealth is not the only thing that counts." Indeed not; and without conceding even the economic issue, I would suggest that moral, constitutional, and national security concerns also have claims in this matter.