Free Republic

"You've got to pay when you take away somebody's private property. That is what we have to do," Pombo told House colleagues. "The only way this is going to work is if we bring in property owners to be part of the solution and to be part of recovering those species."

This simple common-sense assertion is a sight to behold in a Congress infamous for irresponsible thinking and ridiculous reasoning.

The Democrat with a stupid statement about seat belts that isn't worth repeating just does not get it. He think he has the power and moral authority to arbitrarily dictate my behavior, especially in regards to my property. Of course you have to compensate me for preventing me from the use of my property, you imbecile! He is an ugly and evil person.

I doubt that this is large handouts in disguise to property owners. The monetary compensation is the reasonable result of emminent domain protection. It provides a significant disincentive to the government for barring me from the use of my land.

This is an attractive model for zoning law reforms.

Not necessarily. If you have 5 extremely qualified and productive guys for 1 position the salary might get very low, at or below the subsistence level.

That's right. Did you miss the part of that same post where I said the price of labor is determined by supply and demand? My point is that demand is in large part affected by the productivity of a given person's labor. The four least productive of those guys are going to transfer their qualifications to another job. They're quite unlikely to remain unemployed just so they can spite their guy who did get hired into accepting below subsistence wages.

The number of jobs for a particular product or service is limited by the demand of the market for the product or service. However, jobs as a whole are not a scarce resource. Human demands for things are unlimited; jobs as a whole are only limited by productivity in high demand production allowing excess labor to be profitably diverted to other products.

It's not always a lack of productivity that causes a worker to be laid-off...sometimes it's just that they are in the wrong place, at the wrong time.

That's called supply and demand? There isn't an infinite demand for shoes specifically. That's why the market will only bear so many shoe-makers before the rest have to find other demands to meet.

price of LABOR

Cheap labor is unproductive labor. If a person's labor is productive it is worth more. If I owned a farm, I would pay more for one skilled tractor and machine operator than a hundred unskilled laborers. As the owner of this farm, I would be utterly unconcerned with how cheaply foreigners hired labor because my American workers are more productive, by virtue of their greater skill and capital invested in their tools.

His individual labor is more productive, it earns me more money, so I pay more for him (because the market reality is likely that other farm owners also want the services of my skilled tractor operator). The PRICE of labor is set by supply and demand, and demand is influenced in a very large part in how productive the labor is.

Labor prices are, for various reasons that I won't go into, very, very rigid.

They're rigid because the market isn't allowed to operate freely to set the price of labor. If it's otherwise, then please enlighten me (I am ignorant).

So, explain to me, if you could, how does this create a net benefit to the United States of America?

I explained more than once how unfettered trade results in net gain due to efficiency in my first several posts in this thread. There is a chapter of Economics in One Lesson by Henry Hazlitt devoted to that very subject. The entire .pdf for the book is linked to in my about page.

Other than healthcare, what field should I tell my children to get into so that they can enjoy at least a middle-class existance? What industry or career field is growing, looking for more people to fill it's ranks? Massage therapy?

I would advise them to suck you dry for every bit of education you can afford. =) In addition, to gain practical experience and real world work experience at every single opportunity they can get it, even trading higher pay for the experience, in every useful field they can get their hand in. It is *really* nice to have the security and support of your family while you learn and gain all this useful experience. Not everyone has or had that. Then they should persue their specific field of interest. Some fields can be entered in just with higher education and common sense, while others you might have to persue on the side and support yourself with the best you can get. Once they're doing the work they love they should expand and innovate in their field. That's the American way.

I definitely would NOT advise getting a rudimentary technical education and doing the same set of mechanical motions for the next 40 years, hoping their pensions aren't allowed to lapse like has recently happened, and praying a glut of equally unskilled foreigners doesn't displace them and their high wages. That's no better than being a human robot in a factory. Why not be the one in charge of building or maintaining various robotic systems instead?

I'll give you a hint, we're not going back to the days where nailery workers cut nails by hand anytime soon, no matter how cheap Mexicans are willing to work. Specializing in a 6th grade education and a set of repetitive motions to work in the same textile mill for 40 years is just plain stupid. It shouldn't be protected by tariffs and the union bosses won't make it less stupid by pouting.

Personally, I find aerospace engineering and the future of private space exploration completely fascinating and very exciting. I will be steering my higher education in that direction while in the meantime I work, gain experience, and improve my life.

Fortunately you cannot find free market capitalism today, maybe with the exception of some African or Central American countries. You should move there.

Yes, that must be why those countries are all at the very bottom of the ranking in economic freedom, in an annual report whose name escapes me.

Even you must accept the ridiculousness of your statement.

Pure, extreme, unfettered capitalism is anarcho-capitalism. Zero government control of the economy. The capital of violence is owned by individuals. In a free market supported by the Rule of Law, the government has a de jure monopoly on violence and by extension, the courts, police, and military.

The ONLY thing that got us out of the Great Depression was the massive deficit spending that FDR initiated on behalf of World War II. Just about every economist of every political stripe credits GOVERNMENT intervention on ending the Great Depression.

. . . uh, if you say so. That is a whole can of worms in itself and I'm not going to comment further than saying I disagree.

Look, in very simple terms, I object to protective, selective taxes on any particular products that I may want to import. If I'm an aerospace manufacturer, it personally hurts me to have a 30% steel tariff. I do not want to support a domestic steel industry that is so outrageously inefficient that even the gargantuan American advantage in capital and technology cannot allow it to be competitive. The tariff arbitrarily increases my steel material costs by 30% than what I could otherwise get. All of the tax money raised is non-productive and most of it is wasted on illegitimate government programs.

An industry that requires a tariff is pathetic indeed. It's like a marathon runner asking for a headstart against a paraplegic. I don't care how cheap Mexicans work. Technology amplifies the productive potential of a skilled worker thousands of times. In order words, you can have a thousand or a million slave labor packing coal on their backs from place to place, but I couldn't care less, because I have a damn railroad, with an engineer, conductor, and mechanics. The skilled workers who aren't necessary to meet the profitable demand of a product are gainfully employed in the production of other, often new products.

This is why capitalism raises all boats and why the working poor of America live better than the nobility of Europe did 500 years. Capitalism allows, nay, demands the efficient and profitable deployment of technology and innovation. When people are economically free to trade and are protected by the Rule of Law, this we call capitalism and population numbers multiply until people just don't even care to have any more kids. When a select and powerful group of men have a monopoly on force and use it to control the economic liberty of people, this we call socialism, and populations shrink from famine and mass murder.

It is outright absurd that I am defending free markets on Free Republic! Back to your regularly scheduled program of tariffs illegitimately protecting favored workers.

America, through her history as a free and prosperous nation, has gained the lead, by an unbelievable margin, in capital accumulation and technological know-how. This know-how means the skill, education, and innovation to maximize the production of the individual American worker.

We have here an illiterate, uneducated, and unskilled foreigner who does not even speak English, and who works in a factory in a foreign country with a sub-standard infrastructure and legal system. If he is able to outproduce an American manufacturer, than that slothful manufacturer does not deserve to stay in business because he is not competitive -- wasteful and inefficient and worse, unproductive -- and he sure has hell does not deserve a subsidy in the form of a tax on my trade with his better competition. Hell no!

I for one recognize the gigantic advantage I gain simply by living in America and having access to enormous capital, knowledge, and the world's finest legal system. This is available to every single penniless American with nothing going for him but a sound mind and good health. If you're born into privilege of any sort you have that much more of a headstart. If you're so pathetic that you cannot use this to make something of yourself in America of all places than you merit no more or less than to be replaced by the foreigner who is productive despite his inferior circumstances. I view idleness as a sin and stupidity as a worse sin. I will strive with all of my might to succeed and the worst failure which is possible for me is to wind up with merely providing adequately for me and mine. You only impede my success by obstacles to free trade, and prolong your own failure.

As Americans, our rightful place is at the forefront of production, but only because we have earned it by being first and being most successful. As the rest of the world catches on, we continue improving. It's a race to the top, and we have a 200-year headstart that has made some folks complacent.

Gentlemen, this is the important point I want you to take away from all this: 50 and 100 years ago, American factory workers sure as hell did not have the opportunity for massage therapy. Today they do, because they are individually more productive. The marginal ones lobby for tariffs. The real wages of productive individuals (not a stagnant industry refusing to change) rise in proportion to their productivity. This is eminently obvious when you think of labor as a commodity in a market. They rise because each individual's labor is more valuable as he becomes more productive. The marginal workers, the ones who aren't as productive, are laid off and they persue other productive employment.

Angel Mills decided to persue massage therapy. Good on her. Shame on you for suggesting that instead the price of leather should increase 30% and the leather industry should stagnate until it's incompetent even at a 30% advantage.

Oops....doen't look like a free market (or, in China's case, a "free-er" market) guarentees an end to these things, does it????

The Chinese people today are struggling with having to use code words to discuss democracy on their Yahoo blogs. It's not really a free society yet, but personal liberty has increased with economic liberty there. The two go hand in hand, just as limiting economic freedom means limiting personal freedom. The state of liberty in China today doesn't even compare to that in North Korea or what it was 50 years ago. Your argument is asinine.

I continue to be utterly astonished at the statists crawling out of the woodwork. How can you actually say life in a "pure" free market is worse than under communism? That is ridiculous.

Let's start with some basics: A free society is predicated upon individual freedom. And individual freedom starts with a basic property: the right of self-ownership. Self-ownership means we are entitled to the fruits of our own labor, i.e. that they do not belong to the government. This leads to the right to own property.

What a wonderfully simple progression, when put this way! I am going to shamelessly steal this formula to use on the next "social democrat" I encounter, to explain how his ideals are contradictory and that he is advocating a road to slavery.

I had previously struggled with saying the same thing in a more wordy and complicated way. Thank you. =)

Communism and Freemarketeerism have much in common, starting with materialism.

You are insane.

Bravo. You have stated the basic premise exactly. It is evil to alienate human beings from their labor, and it is equally evil to commodify human beings. Any system that does these things turns human beings into disposable "human resources", and thus insults the One Who created human beings.

I give up. You think protectionist tariffs "to protect workers" are the Will of God now? They're special favors given to big contributors - the unions and manufacturing interests. They become an utter blight to the rest of the economy as an extra tax. It's a indirect redistribution of wealth from the importer to the producer - from a productive individual to a less productive one. Not to mention that the revenue raised by the government is wasted just as much.

The secular socialists in this country are egging you on as you advocate ever more destructive taxes and tariffs to prop up decayed special interest producers.

You deserve all the commensurate misery those destructive economic policies will reap.

You left out this one. They can also buy our american companies.

Buying the same product at a higher price is an opportunity cost, and results in potential wealth not being created. (I've already explained more than once exactly how and why) Nonetheless, in a free market you're free to waste your money and be poorer for it.

As they used to be through the most of US history.

I'm not a historian, but I'll think of some off the top of my head. Sugar; steel; lumber; beef; cotton? Lets say you impose a tariff on all of these products. The people who profit are the producers of those goods in this country. The people who pay extra for it are every manufacturer who uses these items in their production, and indirectly every single consumer who buys such a product.

It's a tax by another name, and it ultimately results in the net destruction of wealth through opportunity cost.

You cannot separate people from their labor and people should not be treated as commodity. The system that treats working people as commodity is evil.

The American economy treats a person's labor as a commodity. That's why a doctor is paid more than a painter. A doctor's time and labor is considered more valuable than a painter's equivalent time and labor, because there are fewer doctors available and more people want their services.

The alternative is a socialist economy -- where doctors and painters are paid the same (according to their need) yet are coerced to work by the state (according to their ability). Is that what you want?

That's the reality. You're inadvertantly calling the American economy evil, and the Cuban economy noble. I'm giving you the benefit of the doubt by saying it's inadvertant.

and wages are evil.

As a capitalist, I can tell you that a wage is simply the name for the price of labor on the market.

What are the "traditional tariffs" you're talking about, specifically?

The minimum wage should be set above the subsistence level - the difference being large enough to allow workers to better their lives and society to prosper. Workers should have their fair share in the profits in addition the subsistence.

A minimum wage simply means that anyone whose labor is worth less than the minimum wage will be unemployed, and in a welfare society like ours, this means that we will be poorer both of the small value of his labor and the larger value of the relief given to him.

A minimum wage is as useless as a price control. It does more damage than welfare alone does by itself.

There are a helluvalotta Dutchmen who USED to be wealthy, until the tulips crashed.

Tulips really aren't worth that much - unless half your countrymen have temporarily gone insane and are buying all of them in sight. I personally cannot wait for the housing bubble to break. You know what the first thing I'm going to do in the event that housing prices radically go down? Well, buy a house. Me and everyone else. So I'm kind of skeptical that real estate and homes in particular are going to be selling for pennies an acre anywhere in my lifetime. Maybe speculators will get burnt for part of their investment if prices readjust to meet actual demand, but I suspect for most people a house is a good investment. 'Cause, you know, they plan to live in it?

We should include health care reform, tax reform, tort reform, etc in with these FT agreements. Otherwise the deck will be stacked against American's because of our onerous government burden.

This is insightful. As stated above, the three things hurting American manufacturing, production, and consumers are: 1.) Litigation, 2.) Regulation, 3.) and Taxation. They're all government derived. The last thing anyone needs (except the protected companies that stand to directly benefit at the cost of everyone else in America) is more government subsidies in the form of tariffs.

Its funny you should say this because the increases in the manufacturing sector in the last six months you "free traders" like to brag about are due in a large part to tariffs protecting various segements of the manufacturing sector.

Actually, what's funny is that you neglect to mention that all of the growth attributable to tariffs is subsidized by every American consumer as a form of hidden tax. The extra money that we are forced to spend for literally the exact same product is potential wealth that truly is destroyed, because were it not for the tariff imposed, that money would be used to fund our other wants and demands. That potential wealth that would have been created, was not created. But you can't see what never was. Opportunity cost is an intangible.

Instead you see the tangible of a subsidized steel industry, and collected tariffs that are mostly wasted anyway on welfare.

Very good, so in you OWN "optimistic" scenario the prodcution will shift from providing the working people with American life standard to making diamond necklaces for the rich women. This is the pattern of Latin America and most of the Third World.

To my knowledge, diamond-cutting is a skilled and well-paying profession -- at least as much if not much, much more so than working in a leather factory job that your average illiterate Mexican can replace. Diamond pendants and necklaces are hardly the domain of the super-rich anymore, either. This is all besides the point, anyway.

My point, which I used these examples to make, is that any money saved through manufacturing efficiency will ultimately be reinvested into the economy to create more wealth than would otherwise have existed, in the long run.

Yours is the fallacy Hazlitt wrote about: a shortsightedness in only seeing the immediate economic effect on a select group of people, instead of seeing the complete picture and the net result.

P.S. The predominant trend among the Third World is the well-connected powerful few using the government's monopoly on force to protect and enhance their position. Sounds like protectionism and regulation. Doesn't much sound like free markets and trade.

Or at least read Economics in One Lesson by Henry Hazlitt, so that they aren't just thoughtlessly parroting socialist talking points. I mean, it's less than 200 paperback-sized, large-font pages, and the complete .pdf is linked to in my about page.

You've got this pretty much backwards...The couch price didn't change...The manufacturer took the wages he paid to Americans and put it in his own pocket...He didn't drop the price of the couch...

In the short term, the manufacturer will either pocket the difference and spend it on a new Lexus or diamond necklace for his wife (employing more people); or he'll lower his price to undercut his competitors, increase his market share and make more profits anyway. In the end, the money doesn't disappear into a bourgeoise black hole. The manufacturer is human, therefore his wants are unlimited, therefore he will employ people in the process of meeting his wants.

By the way, if he doesn't drop the price of his couches, he's not very competitive; one of his competitors will wise up, make his own business more efficient in some way, and undercut his prices to increase his own market share and profits. If no one does this, or if they collude between themselves to keep prices higher than what they might be, than I, or someone just like me, will enter the market and take their market share by virtue of a better and more efficient business. That's what keeps the free market honest and efficient. In fact, the only thing that makes the system break down is when the interested parties collude with the government to protect them via things like tariffs on their products or new regulations to keep newcomers away (see the steel industry and the oil refineries).

He didn't move to Mexico to be nice to Americans...

No, but it's funny how the system works to make it seem like everybody loves us, isn't it?

Over 300 people lose their jobs so that buying power is lost and the "cost" of unemployment and retraining programs is added to the unemployment cost creating a large negative to the economy. Is it really made up by the surplus money by being able to buy cheaper leather goods? I don't see it. Perhaps it's a wash but I don't see a gain.

You're right. Government unemployment paychecks and retraining programs probably eat up part or all of the efficiency gain here due to government's inefficiency. I noticed the federal government's "help" when I originally read the post but I decided not to mention it since it only complicates a picture that is difficult enough to comprehend for some folks.

Not to mention that a significant factor making American business costly and inefficient in the first place is excessive government regulation.

This all sounds like something for nothing to me.

Well, it is something for nothing. Sort of. The "secret" is that the difference is a result of either technology (advances like the cotton gin and the printing press) that is more efficient or productive, or a result of more intelligent organization (like Wal-Mart having a superior logistics chain). Instead of paying $2.00, and half of it is wasted on non-productive activity, you pay $1.00 for the same thing because it's done better. The difference is used to pay for what would otherwise have been an opportunity cost. It's a net gain.

Everyone who has saved a buck by buying a cheaper leather chair will spend that buck on something else. On the average, a few more cars would be bought, and the laid off worker would be hired at the car factory to meet the demand.

This is the reason the private sector and capitalism is vastly more efficient than government bureaucracy.

To preempt (once again) the argument that Mexico will now have the benefits of productive employment at the factory: yes, but that is only feasible as long as we Americans have our own cost-efficient exports to trade. The end result is that everyone and everything is automatically allocated to where it can meet its best use. In other words, a free market.

I think I've essentially repeated myself four times and it's frustrating.

Human beings will always maneuver for some advantage and render the "laissez-faire free market" a greedy farce. All human endeavors must be regulated because human beings are not incorruptible. The regulation, however, should be at a minimum and serve commerce and not government.

Actually, I agree, and I think you misunderstood me. Government's role in a laissez-faire free market is precisely a.) to prevent coercion through force and b.) to enforce contracts. Preventing coercion through force means that a punk with a gun can't coerce a shop-owner to empty the register and give the cash to him. Enforcing contracts means that when someone signs a contract to pay for the construction of a house, he must then actually pay the builders when the house is built. Here I think we agree completely despite a misunderstanding of defintions.

By American standards the wage is at subsistence. Hand to mouth. America cannot compete with countries that are willing to keep its own citizens pay at poverty level in order to sell cheap to America. In the case of Mexico, this policy only produces more illegal immigration than it reduces.

The wage might be at a subsistence level, but that's not the point. The next-best option for that worker may be starvation wages, which would be why he takes a job at subsistence wages in the first place. His lot has been improved as a result of a demand for his cheap labor.

In America, our labor is generally skilled and educated, which is why it's more productive, and therefore why our labor is paid much, much more. The advantageous position of Americans is not an accident. We are paid more because we produce more and our time is more valuable. As an example, the introduction of mechanization into manufacturing in America has vastly increased the value of labor because it makes each individual laborer more productive and hence more valuable, and the marginal producers are no longer profitable and find other lines of work (as in service, technology, and education). Automation in industry has resulted in the majority of real wage gains in America, not unions. (Unions were most useful as conduits of information, eventually they became a force of coercion against employers and held back real wage gains)

Regarding Mexican immigration. . . I think welfare is the largest contributor to it. In a free labor market, uneducated, unskilled Mexicans would be paid what they are worth (which would be less and less as they saturate the market) and the immigration would stop altogether. I'm personally in favor of immigration walls until the welfare state ends.

Free trade will only work when the rest of the world catches up, economically and socially to the United States. Not before.

I think it's the opposite. Trade will advance the third world far more rapidly than any amount of foreign aid money will.

As far as socially. . . I'll grant that trading with a hypothetical nation that uses slave labor is immoral as it would exploit the slave workers to own advantage. I don't think that's at issue though. Communist China is more capitalist every day, and at worst they use state coercion to exploit their workers.