Economic Activity Ultimately is for Consumers

by Don Boudreaux on February 6, 2009

in Trade

A headline at the Wall Street Journal's home page yesterday read

The WTO called a meeting to
discuss a fast-rising wave of barriers to commerce, as governments
scramble to safeguard key industries, often at their neighbors' expense

This is akin to saying that the chief victims of government restrictions on freedom of the press are suppliers of newsprint and ink.

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{ 13 comments }

Martin Brock February 6, 2009 at 9:21 am

Economic activity is for producers exchanging their produce with other producers.

muirgeo February 6, 2009 at 9:27 am

Yes I agree. The economy exist to serve the people and the people do not exist to serve the economy. The same can be said of country I believe and that is where the problems occur. Trade is obviously a good thing but when corporations are simply exploiting differentials in labor and environmental laws and pitting billions of poor workers against our own I think the main beneficiaries are the global multinational corporations. Yeah sure we have cheap stuff but no one has money to buy it.

We have cut taxes, we've opened trade, we've decreased union numbers and cut regulations (the ones that count) and look around… hows it working? This economy is NOT serving the people and I don't see doing more of the same as somehow being beneficial.

Don Boudreaux February 6, 2009 at 9:29 am

Martin,

We don't disagree. But the point is that each of us produces in order to consume. Production is the means; consumption is the end.

Don Boudreaux February 6, 2009 at 9:37 am

Muirgeo,

Have you ever bothered to look at the data on trade? The data on where U.S. (and, more generally, western) corporations overwhelmingly make foreign direct investments? (Hint: it's in advanced industrial economies, NOT principally in low-wage "developing" countries.) Have you ever looked at research on the "race-to-the-bottom" thesis (that is, the thesis underlying much of your comment)?

There's no evidence, my man, that you are remotely conversant with the facts.

Don Boudreaux February 6, 2009 at 9:40 am

P.S. to my most-recent response to Muirgeo: you can start your research into the facts with a data-rich book by Washington University's Nathan M. Jensen, "Nation-States and the Multinational Corporation" (Princeton University Press, 2006).

Facts organized by careful thinking are a wonderful antidote to shop-worn myths.

tw February 6, 2009 at 10:00 am

Don,

To paraphrase an all-too-true adage, I'm afraid that too many people don't let facts get in the way of their stories.

The Other Eric February 6, 2009 at 10:32 am

We have cut taxes, … and cut regulations (the ones that count) Posted by: muirgeo.

WHAT!? Come on, the evidence on regulation is just not true. There is more regulation, from more levels of government and non-governmental sources, than ever in history.

You can make a weak case that financial regulation doesn't matter as much as it should in the face of incompetent enforcement, but less regulation? That's a myth, or worse, a deliberate lie.

Martin Brock February 6, 2009 at 12:12 pm

Production is the means; consumption is the end.

Agreed.

LowcountryJoe February 7, 2009 at 9:39 am

Economic activity is for producers exchanging their produce with other producers.

You would think. But when governments confiscate and then handout the fruits of the producers to those that either don't produce (or produce little), economic activity is NOT exclusively for the producers.

And if you don't like that explanation there's always the producer who saved the fruits of his or her produce so that s/he could engage in economic activity at a later date — even long after their producing years.

vidyohs February 7, 2009 at 10:47 am

LCJ,

Sir, do you recognize that everything you say after the quote can be as right as rain and still not alter the wisdom and accuracy of the quote?

What motivates all of us, each individual, to get out of bed each day and go out to create (produce) is our own self interest in producing at least enough to consume in order to do it all again tomorrow. That is the minimum we all shoot for.

Some are satisfied with that subsistence level, others are motivated to do much more. It is as natural as breathing air.

From that bedrock, markets, capitialism, and economies are built.

vidyohs February 7, 2009 at 10:49 am

LCJ et.al.,

I could have also said that there are those who are unwilling to shoot for that minimum subsistence level as it is just too much effort, we call them socialists, thumbsuckers, takers, parasites, and/or simply bums. (But, damnit! They do vote.)

LowcountryJoe February 8, 2009 at 9:19 am

…we call them socialists, thumbsuckers, takers, parasites, and/or simply bums. (But, damnit! They do vote.)

Yes, they do vote. They also engage in economic activity through parasitic means.

vidyohs February 8, 2009 at 12:35 pm

:-) LCJ,

If I see a tick on my arm and let him be, is the tick engaging in economic activity or am I, by producing more blood, doing it on the tick's behalf?

How many angels can dance on the head of a pin?

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