Reply to Ted W. Stoddard’s Response to Final Thoughts of the WTO Protesters
Use
of Voice
Let me first start by addressing the concerns over my use of voice. It was said that some of my comments were inflammatory and of a “knee jerk” persuasion. While I admit that the language in my original post was somewhat strong, it was far from inflammatory. Furthermore, the comments were not “knee jerk” at all, but rather thought out. For example, when I said that radical fringes of the Animal Rights and Environmental groups were partly responsible for the damage that was done in Seattle, I meant precisely that. Some branches of these groups such as the ALF (Animal Liberation Front, a group that has been on the FBI’s top ten terrorist organizations list) and Earth First! (A group that engages in Eco-sabotage by ramming rail road ties into trees and disabling logging equipment) are indeed radical to the extreme. In fact, any organization that has members willing to destroy private property to promote their cause has radical fringes.
When I used the terms “quasi-socialism” and “isolationism” to describe Pat Buchanan, that is precisely what I meant. Buchanan allied himself with a very influential socialist element when he invited Susan Fuladi into his camp. Furthermore, his proposed policies are isolationist in nature.
Finally, I used the woman (whom I assumed to be of Asian decent only because she looked Asian to me. My recognition of racial decent is not infallible however, and she could just as easily been of Hispanic decent) as a point to support my opinion. If she was indeed an American citizen, her family had to have immigrated here at some point in history, just like the rest of us. If she was not an American citizen, she was taking advantage of our freedoms. The purpose of stating this is simple: People choose to immigrate to the United States because it is a great place to live. This is true only because of the economic and political freedoms we enjoy here. Had we engaged in restricted trade these past two centuries (like this young lady wanted), I would suspect that this country would not be a haven for those wishing to exploit those freedoms. I didn’t ask that woman what here fears were, I didn’t have to. Her actions spoke clearly enough for her. If this woman were to have it her way, we would have restrictive trade policies. That is a policy that I disagree with. It is a policy that I believe, if allowed to continue or is acted upon with more vigor, will result in more poverty, racism, and human suffering. That is what I meant when I said, “You’re killing yourself”. These policies can lead to nothing better than statism. Statism is not a system under which I wish to live.
To be fair, I asked Eric (Eric D. Dixon, the other Shrubwalker) if my language was too strong in the post. He expressed to me that it could be perceived that way. He went on to say that it is easier to catch flies with honey than vinegar. He is correct of course, but that presupposes that my intention is to win people over to my cause. That is not the primary reason why I make my opinions known. I am more interested in learning the flaws in my argument, researching them, and correcting them. However, Eric may be onto something and I shall endeavor to at least think about the implications of the use of my voice.
It was stated that if it had not been for labor unions, most of the workforce in America would still be stuck in the “poverty and brutality of the early industrial revolution”. Today only one in four people belong to a labor union, however, 75% of the workers in this country are not subjected to such brutality. The fact of the matter is, that with rising prosperity and advancing technology, working conditions will also rise. When the market advances, it is well within businesses best interest to raise wages. Higher wages mean heightened production, better moral, and company loyalty. When wages are raised, it leaves the worker with more disposable income. That income could be used to invest in the company, buy company goods, or any number of other consumer goods.
However, when wages are artificially high, like the example of Ford I gave earlier, production suffers. The company must divert funds from Research and Development, Sales, Engineering, and Production and give it to the workers in the form of wages. Not only does production suffer, but Ford is more likely not to hire new employees. You may argue that the money diverted to the workers will ultimately turn a profit for Ford (since its employees now have more disposable income), but this is unlikely. More realistically, Ford will become stagnant, always fighting just to break even.
A common argument I hear form labor union bosses is “The gap income between labor and management is astronomical”. For example, the top executive a Ford may make 10 million dollars a year while an assembly line worker makes $30 dollars an hour. I frankly don’t understand the intent of this statement. Is their problem one of fairness? Even if Ford cut the CEO’s salary by 5 million dollars and redistributed it to the workers, it would be of very little consequence. 5 million dollars distributed to 10,000 employees is a net profit of $500 dollars a year. That’s about 23 cents an hour (not including paid vacation). Employees may be richer by 23 cents an hour, but I guarantee they will be a CEO poorer. If you continue to pay the CEO of Ford 5 million dollars a year when the going rate is ten million, you will either have no CEO or one of very low quality.
Big Labor wouldn’t allow a short order cook to be paid $3 and hour (about half of what is normal), why would they advocate the same for CEOs?
My intention is not to argue in favor of the WTO. Even though I believe, for the most part, that they are on the right track. However, they do not go far enough. I (and other Libertarians) would like to see all trade barriers broken down, an end to all government subsidy to corporations, and the complete opening of all borders with respect to immigration.
Will businesses be lost because of this? Undoubtedly the answer is yes. However, I welcome this development. If a corporation cannot compete in a free market economy, they don’t deserve to exist. I resent that my tax dollars are being used to prop up these corporations. When businesses compete freely, consumers benefit.
Microsoft is a great example of this. For over 10 years they have engaged in fierce competition with companies like Netscape, Apple, OS2 Warp, Sun Microsystems, and Novell. The result has been an awesome explosion in innovation of computer technology and computer software. (Microsoft’s prophetic use of CD-ROMs led to a huge development in CD-ROM technology). Another benefit has been the drastic reduction of overall prices. You can buy a computer today that is vastly superior to the one that sent a man to the moon for a fraction of the price. (About $800 dollars compared to several million). Even now that Microsoft is the dominant player in the market, the prices of computers and computer software continue to fall. Many businesses have faltered and have gone under in Microsoft’s wake, but it has been to the benefit of society as a whole. I’m not saying that Microsoft is solely responsible for low prices, but I guarantee that without Microsoft out there, we would be nowhere near technological level we are today.
Another example would be the competition between American and Japanese electronics industries. Back in the mid Eighties, Japan flooded the American market with VCR’s, calculators, watches, and other electronic goods. Many American companies were unable to compete, and subsequently, went under. The prevailing fear was that once Japan dominated the market, they would raise prices to maximize profits. However, the trend shows that the price of these goods drop every year. A VCR that once cost over $1,000 can now be had for under $100. (I went to the store today and saw a nice one priced at $89). Not only are these goods less expensive, they are superior to their predecessors. Remember the clunky 30 pound VCR?
Prices fall, wages and quality rise. That is the nature of a free market.
There is a prevailing notion that paying workers in third world countries low wages, $1-$2 an hour, is a violation of those worker’s rights. Apparently most workers accepting these wages believe differently, otherwise they would choose not to work there. To these people, $1-$2 an hour is preferable to unemployment.
As more businesses move overseas, wages will rise. For example: Nike opens a factory in Thailand and pays $1.50 an hour. Converse moves in one year later and, in order to break the Nike monopoly, pays $2 an hour. This has several effects. First, it lures trained workers away from Nike, thus saving money on training, and secondly, it forces Nike to raise wages in order to compete in the market. Later, Adidas moves in and wants a piece of the action. They pay $2.50 an hour. Nike and Converse are forced to respond by raising wages. As oil, textile, furniture, electronics, paper, automobile, and computer companies start to open the market in Thailand, the wages of Nike, Converse, and Adidas’s employees raise even more. In a free market, Nike would not last long if it continued to pay its workers such miniscule wages.
Another notion is once trade is unrestricted; there will be an explosion of indentured servitude. That is, many people will be forced to work for certain companies. This is pure fantasy. Let me point out that slavery has nothing to do with free trade and a market economy. Reputable businesses will avoid this practice like the plague. In a world where CNN and the Internet are ever-present, it would be downright foolhardy for corporations to benefit from slave labor. Non-reputable companies that did engage in slave labor would quickly be found out, and any honest person would refuse to do business with them. No bank would loan money to them, no one would advertise for them, they would be shut off, and they would die.
Safety is another big concern for those opposed to free trade. Just as wages rise in a free economy, so does the condition of the workplace. Workers will probably choose to work at Nike if every 1 out of a 100 workers at Converse were dying on the assembly line. Converse would either shape up, pay even higher wages to those who are willing to take the risk, or go out of business.
The best way I can think of to preserve workers rights is to reduce their tax burden. If people were really concerned about workers rights in third world countries, they would be busy demonstrating against the oppressive governments that rule over them. That is a protest I would be happy to join.
As I stated in my original post, it can be assumed that citizens of third world countries would be willing to put up with a certain amount of pollution in order to reap the benefits of a free market economy. Personally, I can’t see how the environment of most third world countries would be worse of by industrialization than it already is. The environments of China, Russia, Poland, Yugoslavia, and dozens of other third world countries have continuously been raped for generations with no net benefit. This destruction has mainly been due to unproductive, unprofitable, government owned industry. For example, when Germany was reunited in 1989, it was found that East Germany’s environment was devastated. Compare that to the environment of West Germany where a relatively free market existed.
Corporations will have many incentives to act in a responsible manner with respect to their surrounding environments. The incentives would run from social conscience to making a profit (paper companies will always plant more trees), from fear of losing their good name, to fear of liability. There will always be those who skirt the system by engaging in practices that destroy human rights (dumping chemicals in a river, etc…). In this information driven world, they would soon be found out, and they would be deserving of our condemnation. The governments of these countries would have every right to exact a price for their crimes. After all, the protection of individual rights is a legitimate role of government. If said governments are unwilling or unable to act, I would have to say that the people of that country have much bigger problems on their hands.