High Wages Imply Intense Consumer Demands

by Don Boudreaux on January 11, 2018

in Myths and Fallacies, Trade

Here’s another letter to my regular, self-proclaimed “Proud Trump Man” correspondent, Nolan McKinney:

Mr. McKinney:

Unhappy with this blog post, you think me to be “insensitive to problems caused by being flooded with imports, especially when they destroy high paying jobs.”

First, we are never “flooded with imports.”  Unlike with genuine flood waters, every single import purchased in America is an import that an American buyer invites into his home, office, farm, or factory by choosing to buy it.

Second, behind every high-paying job is a high-intensity consumer need.  The higher the pay the more desperate or widespread (or both) is the consumer need that that job satisfies.  If Smith pays a high wage for Jones’s services, Smith does so only because the value to Smith of having this need satisfied is high.  Imports that destroy high-paying jobs are, therefore, imports that satisfy especially intense consumer desires at lower costs.  What reason in economics or ethics suggests that the state should obstruct Smith’s (the consumer’s) access to opportunities to better satisfy his especially intense needs?  Why should Jones’s (the producer’s) willingness to satisfy Smith’s intense needs in exchange for a high wage trump Smith’s wish to have his intense needs satisfied at lower costs?

Here’s a quiz.  Which of the following inventions would most increase Americans’ prosperity: an inexpensive pill that cures all heart disease and, therefore, destroys all jobs for high-wage cardiologists and heart surgeons, or an inexpensive electrical cleaning-and-tidying devise that destroys all jobs for low-wage hotel- and house-maids?  Only if you prefer the second invention to the first are you consistent when you bemoan imports that destroy existing high-wage jobs.

Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030


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