Internatinal Trade and World Squalor

Today's topic in my list of areas where I expect a Democratic administration and legislature to fail us during the next 4 years is the area of international trade.

The term, in this case, sounds boring – ripe for a reader to shrug and say, "Nothing going on here" then clicking off to some other site. Yet, what I am talking about here is a policy that demands that half of the population live in squalor – a state of extreme poverty and disease with few options and even less hope.

While many Democrats complain about the Republican policy of refusing to teach family planning and promoting the use of condoms and other forms of birth control in the developing world, they are simultaneously putting just as much effort into making sure that nobody hands out jobs in those same parts of the world.

Companies are exporting American jobs overseas. Gasp! Horrors! Next thing you know they will be buying food! Obtaining medical care! Building an infrastructure to provide clean water and sanitation!

Of course, the policies that I am referring to are wrapped in a prettier package than I am presenting them here. “For the sake of the poor exploited people of the world, you must provide them with $10 per hour plus medical benefits, or you must give them nothing at all!” This would be great if people then got the $10 per hour plus medical benefits. However, the vast majority of the people end up with nothing at all. As I said, it is a policy that condemns the bulk of the Earth’s population to squalor.

And it does so for a reason. It does so for the sake of eliminating competition, so that those who do have access to jobs can charge something closer to a monopoly rate for their labor. The more people that we can condemn to poverty and disease, the more those of us who are available to be hired can charge for our services.

Of course, it is not the intention of those who complain about companies ‘exporting jobs overseas’ to have the rest of the world live in squalor. It is simply a known side effect – known in the sense that a person would have to be mentally incompetent not to at least ask the question, “If those people are not doing these jobs, then what are they doing?”

However, in this case, the benefits are an illusionary. In fact, these types of protectionist policies make American workers worse off. To somebody who merely glances at the surface of this issue, it appears that a company that closes a call center in the United States to open one in India is enriching Indians at a cost to Americans. This on-the-surface illusion is what Democratic leaders who complain about these policies are counting on – that they can generate a powerful enough impression that these policies do harm that they can get people to vote for Democrats.

Some times some Republicans attempt to point out that American workers benefit from these policies, but the boos and hisses of shallow-thinking individuals give the political points to the Democrats whenever Republicans speak the truth on this issue.

However, let us assume that you have a store. You manufacture widgets and you offer them for sale. So, tell me, are you better off trying to sell widgets to a population living in poverty and disease, or are you better off trying to sell widgets to a population that has money to spend?

Of course it is the latter.

Increased prosperity in other parts of the world does not harm America. It gives American business more markets that they can sell to. It increases the ability in other countries for them to purchase American goods.

Another benefit that comes from these policies is that the price of goods is cheaper. Americans who purchase these less-expensive goods and services then have money left over to buy other things as well, and in purchasing those other things generates the demand for job in those other industries.

A third benefit is that the bulk of the stockholders in these companies – to the degree that the move actually turns out profitable – are Americans. Much of the profits themselves flow back to America – flow back to the American economy.

A Republican is not socially permitted to say these things without being booed off of the stage. However, a boo is not an argument.

I want to provide you with another illustration of how we benefit from trade. I want you to become self-sufficient. You are going to grow your own food and process it. You will manufacture your own clothes after growing your own cotton or raising and sheering your own sheep. You are going to build your own house, which includes mining and smelting the copper to make the wiring for the electrical outlets. Of course, you will also build your own generator – from raw materials. If you want a computer, you will have to build that, too.

You are going to have a lot of work to do. In fact, I think it is quite fair to say that you have no hope of maintaining the standard of living that you enjoy today.

The smart thing for you to do is to start shipping some of those jobs ‘overseas’ as it were. You should ship the food-growing job to the farmer, and the cloth-making job to somebody who does textiles. You should ship the copper mining and smelting jobs over to people who do copper mining and smelting, and the generator manufacturing jobs over to the generator manufacturers.

Your prosperity actually depends on shipping huge amount of the labor that you would otherwise do over to other people to do the work for you. And you trade with them, doing for them (or, at least, some of them) some of the things that they cannot do for themselves.

See, in the same way that it pays you to ship some of your work over to them, it also pays them to shift some of their work over to you. They cannot prosper by doing all of their work themselves any more than you can.

It does not matter whether some of those people are on the other side of some arbitrary border. That is an irrelevant variable.

Let’s say that you are in a state of self-sufficiency (a fairly wretched state, I might add), and you have one more person to trade with. The two of you can be better off than either one of you by yourself.

Now, let’s increase this community to four people. Again, this will give all four of you the opportunity to be better off than you would be in a community of two people.

It would be absolutely absurd, in a community of two people, for you to say that you going to draw an arbitrary line in this community and say that you are going to limit your trade to only one other person – and he is going to trade only with you. If you take your community of four people, and turn it into two communities of two people each who do not interact with each other, all four people are going to suffer for it. The smart thing to do is to open up trade with the people on the other side of these artificial boundaries, to increase as much as possible the number of people in the trade community.

However, the policy that many Democrats are advancing is actually a policy of dividing the trade community into subgroups and blocking trade between members of different subgroups. It is advancing this proposal as if it has a chance of making our subgroup better off than it would otherwise have been.

In fact, reality is much different. It is a policy that promotes squalor in other parts of the world – that condemns billions of people to poverty, disease, and hopelessness. At the same time, it does harm to America on the whole as well, and American workers in particular. To see this, just imagine yourself all alone, with nobody to trade with, having to do everything yourself. Imagine what these Democrats are arguing for taken to their logical conclusion.