What’s Really Going On

by Don Boudreaux on November 27, 2009

Here’s a letter that I sent earlier today to the Wall Street Journal:

A headline in today’s edition reads “Dollar Falls Against Yen; Japan Hints at Action.” A more revealing headline would read “U.S. Goods Become Less Costly for Japanese People; Japanese Government Hints at Preventing Its Citizens from Enjoying this Bounty.”

Sincerely,
Donald J. Boudreaux

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hylarides

Oh man, if you could please post more articles/ideas on this very topic. As a Canadian, we've been enjoying a higher standard of living because of our soaring dollar, but politicians continue to talk about how "bad" it is for the Canadian economy that (unproductive) jobs leave and how we need to devalue.

WE know that we'll be forced to create new and more productive jobs, which will only further increase our standard of living. This is extremely hard to explain, though.

johndewey

I agree with your comment, hylarides. I would add to it by amending this statement:

"WE know that we'll be forced to create new and more productive jobs"

to read:

"WE know that we'll be forced to create new, more productive jobs and increase the productivity of our existing jobs"

If North American firms find ways to increase the productivity of their skilled workers - by automating labor-intensive tasks, for instance - then the lower priced unskilled labor in the third world becomes irrelevant.

hylarides

I agree with your edit.

But I don't agree with the statement "lower priced unskilled labor in the third world becomes irrelevant".

If the labour and shipping costs of making products wherever else is cheaper than even making it in a highly automated fashion here, then by all means those jobs just shouldn't exist here. Those poor people will get jobs and have more than they otherwise would have, we get cheaper goods. It's the best form of foreign aid around.