Those who advocate pro-free trade often justify their position by stating a desire to uplift the poor in foreign countries. Not only do I oppose that position on nationalistic grounds, I question the benefits to 3rd world countries. Lack of benefit to 3rd-world countries is a point I’d like to make mainly with “liberals.”

Outsourcing does NOT raise aggregate global wages. In fact, outsourcing labor costs to a low-wage country REDUCES global labor wages and income. If a $90/day American laborer is substituted for by $2/day foreign laborer, it reduces aggregate global labor income. Global labor income is what buys production and creates demand. Outsourcing reduces aggregate global labor income, thus reducing total consumer spending world wide. American workers lose income and buying power with outsourcing. That loss is NOT made up for by increase in foreign wages. This is just plain common sense. It’s impossible for cost reductions to make up for wage losses.

If American workers can’t buy America’s production, then foreign workers need to pick up the slack. Does anyone really think that’s possible? Can $2/day foreign workers make up for the buying power lost by $90/day American workers? That’s $88/day/worker in lost labor income per worker. It would take the labor income of 45 $2/day workers to make up that labor income loss. Does anyone really think that’ll happen? Of course not. The only benefit to anyone is the short-term cost reduction to American outsourcers, and a slight price decrease for American consumers. The numbers just don’t add up. Global labor competition causes aggregate global labor income to drop. It increases the labor supply available to American corporations, and decreases worker bargaining power. This is simple supply and demand. If the supply of labor increases 100-fold, it will drive the “price” of labor down. Labor “price” reduction means labor wage reduction. Thus, the end result will be a dramatic reduction in American labor income, as well as a lesser reduction in global wages.

Outsourcing and globalization don’t “raise” anybody up. It drags all workers down. Jobs will go to the most impoverished workers, and employers won’t pay them a penny more than they have to. We cannot enforce minimum wage laws, or other worker protections in foreign countries. Even more important, however, is that Corporate America doesn’t want to. Why would they? It would increase the price of their exploited foreign labor. The poorer the worker, the more willingly they accept poverty-level wages. Their impoverishment is Corporate America’s gain.

Let’s not forget that someone needs to buy the goods produced. Who will buy them if American wages drop to the level of their enslaved foreign counterparts? People can’t purchase goods without income. And very low income means very few goods purchased. Demand cannnot be created out of thin air. Consumers must have sufficient income to create that demand. Without demand, there is no need for production, and no need to hire workers.

The entire world economy would collapse without the Demand created by American consumers. That demand is created by American income and borrowing. We’re almost maxed out on borrowing at present. In addition, inflation-adjusted American wages are declining. They’ve declined 1% over the last year, and 0.5% over the last 3 months. The last thing the US and the world need is a further decline in American wages. American wage decline hurts the US, as well as the major exporting countries. If aggregate American labor & consumer income declines, so does our ability to buy foreign imports. Increasing American labor competition with enslaved foreign workers is worsening this wage decline. It’s not only in our best interests to keep jobs in the US, it’s to the advantage of all countries that export to us. We need income to buy their goods.

“Opening up markets” sounds like a good idea. But it’s a smokescreen. It’s not the real motivation behind “free” trade agreements. The real motivation is “opening up” the American labor market to competion with slave-labor. Bush and his neocon supporters know this. They hope we won’t see it. Many of us do, however. Hopefully we can make others see this as well.

unlawflcombatnt

EconomicPopulistCommentary
http://www.unlawflcombatnt.blogspot.com

__________________________
Investment does NOT create jobs. It only “allows” for their creation. Increased Demand for goods creates jobs, because it necessitates hiring of workers to produce more goods. Investment “permits” job growth. Demand necessitates it.

Building a factory does NOT create jobs. Demand for production DOES create jobs. Goods are not produced if there is no demand for them. Without demand for goods, there is no demand for workers to produce them. Without demand, no amount of investment creates jobs.

Until recently, American corporations had been unable to destroy their own consumer market, because they were forced to maintain wages at a certain level. This was due to the limited supply of workers in their native country. The labor force supply-and-demand effect created upward pressure on wages. This prevented American industry from reducing wages below a certain level. In turn, this maintained aggregate labor/consumer income at a high enough level to purchase American products. With global labor competition, wages can be reduced drastically. With this reduction, however, comes reduction in the consumer income that purchases American products. This drastic reduction in aggregate consumer income will lead to a drastic reduction in consumer demand. If the average American worker is making $4/day, due to glogal labor competition, who will buy American products? CEOs? Congress? Bill Gates? Martians? Can the super rich really buy enough computers and SUVs to maintain American consumer spending and demand? If not, then where will the profits come from with drastically reduced sales? Can profits be made without selling any goods? Can labor costs be reduced enough to make profits without any sales?

Corporate America fails to understand that maintaining worker wages is to their advantage. It’s not only to their advantage, it’s a necessity. American labor “costs” actually provide the income to buy American products. (Labor costs = consumer income. Labor cost reduction = consumer income reduction. In reality, it’s worse than this. Consumer income reduction is > than labor cost reduction.) To restate this, as corporations lower labor costs, they lower consumer income as well. Corporations decrease the size of their own market by reducing aggregate consumer income. If they continue to increase profit margins by reducing labor income, they’ll eventually be unable to sell their products. There won’t be enough income to purchase America’s production. Remember slavery? Slaves never bought any products. They didn’t have any income. If we all become slaves, we won’t have any income either. And corporate America won’t be able to sell their products to anyone. Corporate America will have destroyed itself, due to its own greed.

Henry Ford said that he paid his workers well so they could buy his cars. Corporate America should take heed of this. The most productive economies we’ve ever had were when worker wages were at their highest inflation-adjusted level. There are 2 economic principles that are being ignored by Corporate America. Consumer spending is 2/3 of economic activity. They also ignore the fact that consumer spending is the biggest part of the GDP equation. (GDP=Consumer_spending+investment+government_spending+trade_balance) In reality, investment spending will be self-limited if consumer spending isn’t maintained. Production facilities will not be built if no one buys products. In addition, government spending is financed by taxes on consumer income. Thus, it is also very dependent on consumer income. Exports depend on foreign labor income, which creates foreign consumer markets. Since average foreign worker income is miniscule, this will never be a very large number. Imports will continue to subtract from GDP, as long as slave-labor wages are encouraged by “free” trade/slave labor agreements. Since consumer spending is strongly related to labor/consumer income, a reduction in consumer income will also reduce GDP. We’re not “growing” our economy by reducing labor costs. We’re shrinking it.

unlawflcombatnt

EconomicPopulistCommentary
http://www.unlawflcombatnt.blogspot.com/
________________
Investment does NOT create jobs. It only “allows” for their creation. Increased Demand for goods creates jobs, because it necessitates hiring of workers to produce more goods. Investment “permits” job growth. Demand necessitates it.

Building a factory does NOT create jobs. Demand for production DOES create jobs. Goods are not produced if there is no demand for them. Without demand for goods, there is no demand for workers to produce them. Without demand, no amount of investment creates jobs.

ECONOMY, n.
Purchasing the barrel of whiskey that you do not need for the price of the cow that you cannot afford.

LABOR, n.
One of the processes by which A acquires property for B.

LAND, n.
A part of the earth’s surface, considered as property. The theory that land is property subject to private ownership and control is the foundation of modern society, and is eminently worthy of the superstructure. Carried to its logical conclusion, it means that some have the right to prevent others from living; for the right to own implies the right exclusively to occupy; and in fact laws of trespass are enacted wherever property in land is recognized. It follows that if the whole area of terra firma is owned by A, B and C, there will be no place for D, E, F and G to be born, or, born as trespassers, to exist.

A life on the ocean wave,
A home on the rolling deep,
For the spark the nature gave
I have there the right to keep.

They give me the cat-o’-nine
Whenever I go ashore.
Then ho! for the flashing brine –
I’m a natural commodore!
Dodle

Greg Erwin

Former United Nations ambassador and Mayor of Atlanta Andrew
Young

The Marxism of the Right is a recent piece by Robert Locke. It’s in the American Conservative Magazine, really.

http://www.amconmag.com/2005_03_14/article1.html

People like Tony are hiding under every bed in this country and we need a Sen. McCarthy to find them and expose them and drive them from us. Silly, isn’t it?

1. Right now, the markets are being systematically restructured to benefit the few at the expense of the many. From energy to healthcare.

2. This rigging of the game, usually under the guise of “free-markets”, is being done legislatively by many of our elected representatives. Also executively, in terms of what does and not get investigated, enforced, etc.

3. In regard to 2., many large corporations are involved and footing the bill–re: K Street, etc.

4. When David and others call to our attention these abuses, David et al. are performing a valuable service.

This is what I think most–though not all–of us agree on.

Now, it seems to me we can have two responses:

(a) try to stop these people from further rigging the markets, and try to undo some of the past damage;

or (b) fantasize about failed alternatives to market economies.

The general corporate and business bashing seems to me closer to (b).

Likewise, I know several people in corporate America who share the belief that we more corporate oversight– and less of a rigged game.

They are also not fans of W, his war, or his vision for US. To put it mildly.

So why use rhetoric that seems to push all people concerned with business and corporate America into the “W” camp?

Let’s focus on the abusers and the abuses, please.

“or a company who dumps toxic waste on other people’s property”

It’s my damn property and I can dump toxic waste on it if I want!

Okay, this wins the most unintentionally absurd statement of the month competition.

Congrats, Tony. For your prize, you may work eighty hours next week for a penny an hour with no health benefits. You’ll also be required to pay $1000 for any item of food. Get back to us the week after and let us know whether living like this causes any harm to you and/or your family.

“I would argue that 99.99% of corporations are not evil, in that they do not harm life, liberty, or property. A few do and should be punished (like Enron stealing from employee’s 401k’s, or a company who dumps toxic waste on other people’s property).”

Tony like to argue with himself. I bet that’s not all that he does by himself.