More Meyerson Mythology

by Don Boudreaux on December 15, 2010

in Myths and Fallacies, Trade

Here’s a letter to the Washington Post:

Ever hostile to American consumers who stretch their dollars by buying imports, Harold Meyerson writes that “Defenders of corporate offshoring assert that we can’t compete with low-cost labor in China and other developing countries” (“Save the economy by keeping jobs at home,” Dec. 15).

Untrue.  No knowledgeable defender of free trade has ever uttered such nonsense.  The case for free trade is that foreigners can produce some products more efficiently than can Americans, but that Americans (despite our high wages) produce other products more efficiently than foreigners.

Low-wage labor is generally not low-cost labor.  The reason is that the productivity of low-wage workers in China and other developing countries is much lower than is the productivity of workers in America.  While low-wage foreigners outcompete high-wage Americans at many low-skill, routine, and repetitive tasks, high-wage Americans can (and do) outcompete low-wage foreigners in those tasks that can be performed efficiently only in advanced economies that are full of the machinery and intricate infrastructure – physical, legal, and cultural – that raise wages by raising worker productivity.

In short, high American wages aren’t a disadvantage; they are a happy reflection of the fact the typical American worker is a powerhouse of production.

Sincerely,
Donald J. Boudreaux

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