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Quotation of the Day…

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… is from page 244 of my great teacher Leland Yeager’s, and his co-author David Tuerck’s, superb and still-relevant 1966 volume, Trade Policy and the Price System [2]:

Professor Yale Brozen once made an illuminating comment on a plea for a tariff to compensate for wage differentials and protect certain labor mills located in isolated small towns where people would be stranded if the mills were to close.  Why, he asks, are wage rates so burdensomely high and would they remain so high if paper prices were to fall?  If the answer is competition from employers in other industries, the people are not really stranded.  If other jobs are not available locally, yet workers want to stay where they are, a sufficient drop in wages could let the mills stay in business.  Paper workers who value staying where they are despite a lack of job alternatives can stay, provided they themselves pay for this valued privilege by accepting low enough wages.  Why should other Americans subsidize them, any more than they should have subsidized shipyard workers to keep on building unwanted ships after the end of World War II?

As the late Yale Brozen’s question reveals, the truly good economist excels, above all, at asking probing questions.

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