Zeev's Turnips Patch-No Politics (ZEEV)

[brightness]

It's sad to see a nominal advocate of small government not understanding the inevitable mushrooming of government bureacracy associated with any coercive measures. Buying low and selling high is what people naturally want to do (and through that, resource allocation is optimized); how can free trade be stopped except for introducing more government coercion telling people at the point of a gun "stop doing that or else!"

Government coercion to preserve jobs that have less expensive replacements just makes no sense. There is fundamentally no difference whether the labor is rendered by Japanese in Japan, or Chinese in China or Indians in India, or magic machines in the US Virgin Islands that consumes only electricity without the need to be paid at all even at Indian wages! The laborious job is gone as soon as that magic machine is hooked up. Is anyone seriously suggesting banning such a machine? Then let's ban these:

http://video.google.com/videoplay?docid=-3043829711888168428

Just imagine how many jobs would be preserved if people have to do all that work with nothing more than a sharp knife! It's called Ludditism. BTW, machines like that second one is the reason why so much cheap labor is available around the world: the high productivity of modern farming, especially in the American Midwest, has liberated vast cross sections of the world population from back-breaking farm labor: by driving food commodities to such a low price level that many ex-farmers around the world have become jobless . . . just like the Erie Canal brought both food from midwest and farm girls from New England to the textile and other industries in the big northeast cities 100+ years ago.

The problem we have is not free trade, but managed trade and fiat money. Fiat money gives the market place the wrong signals regarding what new industry is worth pursuing when old jobs are creatively destroyed by improving technology. When the financial industry gets to keep big gambling wins and transfer losses to the rest of the society, employers in the rest of the economy simply can not compete against the financial industry. That's why college students in recent years have abandoned even high productivity industries like high tech and biotech in pursuit of finance. That's exhibit A for resource misallocation. When government jobs guaratee employment, healthcare and pension, unlike all private sectors jobs that have to cope with the competition and the risk of obsolescence, once again resources get misallocated to those heads you win and tail other people lose industries.

Managed trade is another big factor in why companies farm out jobs overseas. If big companies have to deal with foreign tinpot dictators on dictators' terms, instead of being backed up by taxpayer funded US military, the companies would think much harder before going overseas. That's the reality of empire building. Despite the jingoist fervor among the poor, empire building actually is a process of ripping off the average citizens and the poor to subsidize the rich. Fiat money and bloody-minded simpletons are what makes this possible. Without fiat money, and without a world-spanning imperial military, businesses would have to take their own chances with corrupt foreign dictatorial regimes. Then they'd be much less eager to ship jobs overseas.