Clutching at straws?

I'm no economist but something seem pretty obvious to me:


Countries that look after the welfare of their workers - ie pay them decent wages and attend to their OSH needs - can't produce goods and services for the same cost as countries that don't.

And that means manufacturing and services move offshore. The American car industry is an example* and the Detroit ghost-city phenomenon is the result. Bad for the American economy, bad for the American people.

So along comes the Don and says "we'll put a 45% tariff on everything from China" thinking that this will encourage local production again.

But will it?

Or will it just make the American people even poorer as they now have to pay a lot more for pretty much everything** (there's not much they consume that isn't made in China!)

What if we took this thinking to it's logical conclusion and stopped all international trade entirely? That is, countries have to make-do with what they can produce themselves. The resource-rich countries might do OK but what about the others?

Besides, is it all too late? The world is a pretty small place now and free trade has become part of the furniture. I doubt you can put the genie back in the bottle***.

So what's the answer?

Ideally all countries would look after the welfare of their workers and no one would buy goods from countries that didn't, thus levelling out the playing field.

Are either of those likely to happen?

No.

So what's the answer?

I don't know. Perhaps no one does.

But one thing has become abundantly clear:

If you claim confidently enough that you do have the answer, the drowning punters will clutch your proffered straw and hope against hope.

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* To be honest, there was probably more at play than wages in this instance. Like manufacturing systems efficiency for example - especially when all their cars were being sourced from Japan.

** ie American manufacturing doesn't re-commence and people just end up paying 45% more for Chinese-made goods.

*** It's actually been out of the bottle for an awfully long time. International trade goes back to biblical times. Solomon built his temple in Jerusalem around 1,000 BC using timber floated down the coast from Lebanon.


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