This statement signed by “leading economists” is just a disgrace, and it needs to be combated.
Source link: http://blog.mises.org/5806/we-the-undersigned-promote-unemployment-amongst-unskilled-workers/
The Ludwig von Mises Institute
Tu Ne Cede Malis
Advancing the Scholarship of Liberty in the Tradition of the Austrian School
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Economists Are Destroying America
October 25th, 2006 by JohnKonop
Economists, politicians, and executives from both parties have promised American families that “free†trade policies like NAFTA, CAFTA, and WTO/CHINA would accomplish three things:
• Increase wages
• Create trade surpluses (for the US)
• Reduce illegal immigration
Well, their trade policies have been in effect for about 15 years. Let’s review the results:
• Declining real wages for 80% of working Americans (while healthcare, education, and childcare costs skyrocket)
• A record-high 46 million Americans who don’t have health insurance (due in part to declining wages and benefits)
• Illegal immigration out of control
• Soaring trade deficits, much with countries that use slave and child labor
• Personal and national debt both out-of-control
• Global environments threatened by lax trade deal enforcement
Economists Keep Advocating Policies That Aren’t Working
Upon seeing incontrovertible evidence of these negative trade agreement results, economists continue with Pollyannish blather. Some say, “Cheer up! GDP is up and the stock market’s doing fine.†Others say, “Be patient. Stay the course. Free trade will raise all ships.â€
Even those economists who acknowledge problems with trade agreements offer us only half-measures—adjusting exchange rates, improving safety nets, and providing better job retraining. None of these will close the wage gap in America—and economists know it.
Why Aren’t American Economists Shouting From Street Corners?
America needs trade deals that support American families and businesses in terms of wage, environmental, and intellectual property abuses. Why aren’t economists demanding renegotiation of our trade deals? There are three primary reasons:
• Economists are too beholden to corporations and special interests that provide them with research grants.
• Economists believe—but refuse to admit—that sacrificing the American middle class is necessary and appropriate to generate gains in third world economies.
• Economists refuse to admit they make mistakes.
Economic Ambulance Chasers
Now more than ever, Americans need their economists to speak truth and stand up to their big business clients. Instead, economists sound like lawyers caught chasing ambulances: they claim they’re “doing it for our benefitâ€.
Russell Roberts is already brainstorming some ideas:
http://cafehayek.typepad.com/hayek/2006/10/the_society_of_.html
Free trade, means a strong USA, reliable jobs and high wages
This might sound untrue if you consider, for example, that workers at General Motors these days are pressured with job cuts and reductions in wages and all those sad, but necessarily actions to become healthy and strong again. Partly the cause for this is free trade. At the same time Dell, HP, IBM, Apple, Microsoft and so on are doing very well, this also, partly, because of the same phenomenon, free trade.
When free trade is propagated, certain businesses and companies are not considered but what matters is “the whole picture†or the nation. Free trade makes the nation, for example, the USA more competitive and stronger. The stronger companies will dominate the economy and expand and make use of all that capital, labour and land that are otherwise used by the inefficient companies. Productivity increases and therefore also wages. Jobs are more reliable because employments are offered in competitive businesses.
Generally, though, unemployment will not increase or decrease. If for instance, the USA imposes tariffs on Chinese textiles, the Dollar will appreciate against the Chinese Yuan (the value of the Dollar will increase relatively to the Chinese Yuan). This depreciation (decrease in value) of the Chinese Yuan against the Dollar, in this example, is caused by a smaller demand for Chinese textiles and therefore a smaller demand for Americans to buy the Chinese Yuan. Because of this change in exchange rates, prices of goods from the USA to China will be generally higher and prices of goods from China will be generally lower (apart from textiles). As you can imagine, this will increase employment in the American textile sector, but decrease employment in other sectors. At the whole, unemployment will not change but trade between the regions will be lower. Specialization, competition and living standards in the USA will be hampered. The tariffs will only serve special interest that is the textile manufacturers and their employees.
Above explanation about exchange rates is an explanation of a so called “floating exchange rate†(as the Dollar is).
If you want to know more about floating exchange rates, go to;
http://www.hooverdigest.org/974/friedman.html
the outcome is that Americans can buy cheap goods with high wages and that the USA will be stronger than ever*.
Björn Lundahl
Göteborg, Sweden
* Low income groups will, on the average, have higher incomes as well.
Productivity and trade will flourish more intensively with one currency* than with several different currencies, and even with one currency, market forces will smoothen out any imbalances between regions, cities or countries. We do not worry, for example, about the balance of payments between London and Manchester, Berlin and Munich, Paris and Bordeaux or Stockholm and Göteborg etc. If, for example, London exports more to Manchester than Manchester exports to London, the demand for goods and services will be greater in London relatively to their supply, and also relatively to the situation in Manchester. Because of this, prices will go up in London and therefore will exports from London to Manchester contract, as well as, imports from Manchester to London will expand. This happens all the time and we do not even know about it and therefore do not worry about it. Governments do create problems all the time.
Björn Lundahl
Göteborg, Sweden
* A gold standard. See also “What Has Government Done to Our Money?†by Murray N. Rothbard.
http://mises.org/money.asp
Very simple to argue against. On-the-job apprentices earn very low wages because they get as much value out of the job as the employer gets from them, thus minimum wages destroy apprenticeships, forcing young people to turn to the state’s education system in order to get degrees in economics.
Cui bono?
I say that because these 650 econmists are genius enough to have discovered a new law that defies the basic laws of supply and demand, by calling for a higher minimum wage, the least we can do is reward them by raising the minimum wage for these 650 to $1,000,000 per hour. Any employer who tries to pay them less should be shot.
As the 650 geniuses will now, most assuredly, one-by-one find themselves panhandlers, I suggest we ignore the cups in their hands, look at them in disgust for not understanding basic laws of economics and, instead, give to the deserving other panhandlers who find themselves on the street because of absurd minimum wage legislation such as that encouraged by the “650 geniuses.”
I think we can respond in kind by proposing an increase in the minimum wage to $100 an hour. Or, propose that we stop cutting into the wages of employees by raising the prices of all goods in industries that employ minimum wage workers. Let’s see what people have to say about that!
John,
Replace “Economists” with “Politicians”, and you’re almost there (apart from the “sacrificing the middle-class” standard zero-sum fallacy). We’ll be glad to offer you the solutions when you have a sharper perspective on the actual problems, as opposed to talking through your hat.
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