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Here’s a letter to a new correspondent:
Mr. Schinkel:
Thanks very much for your e-mail. You write, in response to my latest column at AIER [2], the following:
I am not sure how you would incorporate the globalization play in terms of China salaries and wages versus cost of living in the U.S. It seems to have resulted in a lot of cheap stuff but no labor security or sufficiency in terms of cost of survival. Perhaps a more community focused form of free enterprise would be helpful?
Two points.
First. Chinese workers’ relatively low wages reflect Chinese workers’ relatively low productivity. (When countries are ranked according to worker productivity, U.S. workers are the world’s fourth-most-productive. Chinese workers aren’t even in the top fifteen [3].) Just as the low price of a handsaw does not give sellers of that tool an unfair or inefficient advantage over sellers of higher-priced electric saws, the low wages of less-productive workers does not give those workers an unfair or inefficient advantage over higher-paid more-productive workers.
Second. How would “a more community focused form of free enterprise” work in practice? If history offers guidance, the answer’s clear: Politically powerful producer groups – unwilling personally to pay the costs, by taking lower incomes, of keeping the businesses and jobs that they profess to cherish – will use government to foist these costs onto fellow citizens. Fellow citizens will be compelled to pay these costs directly in the form of subsidies and indirectly in the form of the higher prices that result from tariffs.
I’m all in favor of letting people work at whatever jobs they wish. But it strikes me as decidedly unneighborly – as an affront to the true spirit of community – for workers and business owners to use government to force fellow citizens to pay for these workers and business owners to indulge preferences that these workers and business owners aren’t themselves willing to pay to indulge.
Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030