I listen to Peter Boyles on KHOW some mornings and he frequently complains about jobs moving overseas. He objects to this practice, pointing out all sorts of negative consequences to America due to the loss of jobs. He admits that the jobs lost to foreign factories produce goods sold in American markets; that America is the primary source of demand for goods. According to Peter Boyles, lost jobs translate into fewer income earning opportunities so we go into debt to purchase the things we want. Of course we are also free to retrain ourselves, learn new skills for the jobs that remain, create new jobs, find new employment, and avoid debt financing. I expect more of this goes on than Peter Boyles would like to admit.
I part company from him strongly on the notion that American jobs exist as a matter of right or entitlement, and the corollary that our government should protect American jobs. We have no right to a job, though we may certainly enter into a contract and bargain for such a property interest. But we have no more intrinsic right to a job than does a worker in China or Mexico. If third world workers will do a job for a fraction of what an American will do the same job for, that is their option.
Today, Chinese workers are not slaves to the state. Everyone in China knows that communism failed, that property and equity interests are necessary to motivate people. Private ownership and private enterprise are both encouraged in China today. Still, it will take decades for the majority of Chinese who live outside of the cities in poor conditions to create their own modern economy and improve their own living conditions. They all know it, and they’re all working very hard to do it.
Poor people will work for less money than more wealthy people. Value is relative and less money motivates a poor person to do more than the same amount of money motivates a more wealthy person. This is neither good nor bad, neither right nor wrong. Scarcity is a fact of life and the more scarce something is the more value it has. Other things being equal, this applies to skill sets the same as it applies to commodities. In China, people are not scarce so their labor value is low. In America, labor is more scarce and, therefore, worth more. In addition, “other things” are not equal between third world labor markets and the American labor market. The American labor market is vastly more capitalized and educated, and this further separates the valuation between third world workers and American workers.
Over time, as the third world becomes more capitalized, more prosperous, better educated, and living conditions improve, economic differences between capitalist countries and third world countries will diminish. This will take a long time to stabilize. Meanwhile it is in everyone’s best interest for this process of modernization to go forward. Governments certainly have the capacity to create legal barriers to the free flow of jobs, goods and capital, but those barriers diminish the competitive capacities of parties on both sides of the barrier, and will slow modernization of the third world down.
Preventing a form of economic activity that would otherwise naturally occur is only defensible when a moral interest is at stake. While non-economic factors can change the moral equation between people, morality alone cannot support preferential economic barriers. Moreover, the domestic economic challenge presented to America by near-term relatively cheap third world labor is greatly preferable to the military challenge the third world might turn into if it cannot equitably participate in the modern economy through peaceful market exchanges.
I think Peter Boyles is mistaken to invoke protectionism and nationalism to save American jobs. These arguments lead to a polarizing victim mentality that does not represent reality and does not help anyone to constructively deal with real economic challenges. The third world just wants to work, and by all means, we should want them to work too.
A governing principle of contract law is the objective standard of “how a reasonable person in the shoes of the other party would interpret your action.” It doesn’t matter if you think you are right. What really matters is whether the other guy, within reason, agrees.