2 March 2011
Mr. Ian Fletcher
Crusading against competition and consumer choice – that is, crusading against free trade – you today claim that low-wage foreign workers pose a “threat” to higher-wage American workers (“Dreamy Thinking on Free Trade ,” sent to me, from you, via e-mail). You further suggest that the only response that free-trade proponents offer to this claim is to point out that the wages of foreign workers will rise over time.
As my 13-year-old son, Thomas, would say about your ‘argument’: “epic fail!”
The chief response that economically informed free-traders offer to calm the fears of those who worry that high-wage Americans can’t compete against low-wage foreigners is not to point out that foreign wages will eventually rise but, rather, to point out that the reason foreign wages today are lower than those of American workers is because the productivity of foreign workers today is lower than that of American workers. Therefore, foreign workers whose wages are, say, one-twentieth the wages of American workers are hardly a bargain for a producer if those foreign workers are only one-twentieth as productive as are American workers.
If you doubt that worker productivity matters – that is, if you really believe that employers seeking to hire workers look only, or even chiefly, at the wages workers request – I’ve an offer for you: the next time you need medical attention (Lasik surgery; a hip replacement; a coronary artery by-pass; whatever) give me a call. I’ll perform the procedure for you at a price that is a mere 1/20th of what you’ll pay should you patronize a skilled physician. Now I have absolutely no knowledge of medical science but, hey, my wage is really, really low! How can you resist?
Of course, if you would resist – if you’d actually choose to employ the higher-wage skilled physician – then you might want to rethink your suggestion that high-wage American workers can’t hope to compete against lower-wage foreign workers.
Donald J. Boudreaux
P.S. In case you missed it, Carpe Diem’s Mark Perry recently edited another of your essays attacking free trade .