Posts Tagged ‘International Competition for Jobs’

International Competition for Jobs

Sunday, January 23rd, 2011

Dear Friends,

It seems to me the fundamental misconception, that world leaders and the public at large have about jobs and the world economy, is that the various countries of the world are in competition for jobs, when nothing could be further from the truth. The reality of the situation is, as more people move to specialization within the market system and away from subsistence farming the more demand for jobs grows, around the world. The flow of labor is like water always seeking a low point. It is the actions of government’s in their futile attempt to marshal the forces of the market, to get jobs within their countries, at the expense of jobs in another, that government‘s effect competition.

Most all economic historians agree that the depression was in large part caused by the Smoot Hawley act and other similar laws and tariffs passed around the world at the beginning of the 1930’s. Those anti global trade laws resulted in the collapse of international trade. Jobs were lost in every country. The unemployment rate rose to staggering heights despite the willingness of people to work. International trade is empirically, historically, even if counter intuitively, proven to create jobs.

The demand for low skilled employment is supplied from a giant pool of uneducated people on the planet. However, as jobs flow into an area the work force inevitably becomes more educated. Even the lowest skill job is civilizing. The need to meet a schedule, the need to be dutiful in time, money and personal management, gives people the sense of what it is to be “self interested rightly understood.” As the workforce in a low educated area become more and more active in the market the level of education rises.

As all this happens the demand for what was formerly “luxury” items increases. This demand must be filled from abroad. The increased trade grows the need for workers to handle the logistics and so forth. The demand for labor not only rises but the demand for educated labor goes up as well. When employment has neared saturation, of those that want to be employed, the cost of labor rises. This drives the demand for new low skilled labor to the next lowest area.

The point is, that the jobs don’t move, they evolve. Low skilled low paid jobs, evolve into higher skilled higher paid jobs, that are better suited to increase the expectations of the people… thus aggregate demand. Even the evolved jobs are not in direct competition, in the international marketplace, unless government regulation drives them away.

Here is the crux of why the Elite have a problem with international trade and globalism… It gives people and businesses, the ability to leave onerous regulation, and go where government policies are more favorable to free enterprise. The Elite want to pass poorly thought out regulation along with insane legislation, that the Elite carve out exemptions for themselves, with impunity. They want there to be no consequences to their actions, legislatively, to reflect the lack of consequences to their personal actions. All of which would be corrected with a NUMA.

So it is not that countries are in competition for jobs within the international arena of demand but the Elite want impunity for their actions on the job markets in their countries. That is why Smoot Hawley was enacted, to give the progressives in America, at the time, the ability to grapple the markets under control, without people and business fleeing to other countries. The market turned out to be far more slippery than the progressive Elite thought it would be, and the Constitution kept getting in the way, forcing the Elite to go back to international trade.

The countries that reengaged with international trade in the 1940’s, after the war, did very well economically, those that didn’t became Brazil, Venezuela, Mexico, Argentina etc… Their countries government’s became more introverted and more focused on protecting what they had than in opening up to international trade. They have made the same mistakes over and over. Enacting legislation in the 1980’s to protect their fledgling computer startups hobbled the rest of the economy is only one example.

We see over and over, everywhere we look, that countries that open up to international trade become more wealthy. As a nation, as a people and individually, the wealth of a nation grows. The modern example of China shows us the advantage to opening up to international trade. The fact that China has huge subsidies and is running down the road to oligarchal capitalism, headlong into the brick wall that blocks that road, is not in any way confounding. It is not the subsidies, the tariffs or the currency manipulation that has brought so much new wealth into China, it is international trade.