America’s economic advantage? Risk, not God.
Cheap labor does not “undermine” technological innovation, it encourages it. Cheap labor produces CAPITAL, and capital will seek its highest rate of return, which is not in hiring more labor, but in innovation. It will therefore always drive innovation in any area, as soon as the gains of cheap labor have been maximised.
Automated technology never is implemented unless it is cheaper then the aggregate labor it replaces. Both automation and cheaper labor serve the same function in an economy, and that is to reduce the cost of a product. There is no difference in the motive which drives them; that motive is higher profits. And profits are re-invested as capital. And again, capital will seek the highest rate of return.
When the cost of labor goes down, consumers buy cheaper products. The consumer, viewed as an aggregate, wins. The cost of living goes down. For consumer A, whose wage is unaffected, capital is freed up. That capital will seek the highest rate of return. The highest rate of return will be from innovation. For this sector of consumers, cheap labor (the old economy) produced capital, which produces innovation, which produces new jobs, which did not exist before the cheap labor produced them. The tragedy is that the consumer is not an aggregate, and the jobs lost to cheap labor (“moved overseas”) are real people, who will not get the new jobs from innovation — UNLESS THEY ARE SMART ENOUGH TO RETRAIN. For them, this is the cruelest system — except for all other systems.
Globalization and St. John’s Apocalypse
It is men who drive history, not something outside us. Technology is just the storehouse of men’s tools. And men make tools to, first, survive, and then, to get the life they want. So when I say technology is driving globalization all I mean is that what men want is in the direction of globalization, and men will go through the dissolution of national borders to get what they want, no matter what.
The real interesting question is not “what entity is driving events?” but “what do men want?” This question is nothing more than Aristotle’s question of the final cause, or destiny.
The first, the root assertion of the New Testament happens also to be one with which we can empirically agree or disagree, using all the data of human culture. That first assertion is: men want things they shouldn’t want. The “heart”, which is the organ which WANTS, is broken.
Note: If you find the New Testament reliable in an area where you can look around you and either agree or disagree (is the wanting organ in man broken or not?) then you proceed to trust it in further areas where you cannot look around and test it (i.e. God sent His Son to deliver us).
So, what do men want? Answer: They want pleasure. After they have solved the problem of survival, from that moment on they start making tools to get pleasure. Money is a shorthand symbol of convenience for pleasure. A free-market economy is simply the most efficient means to allocate resources to produce maximum efficiency, and efficiency is defined by the end, the final cause, the destiny, which is itself chosen not by economics but by the heart of man: pleasure. So, economics is the system of efficient production of pleasure.
Outsourced jobs
People will “buy American” in the short run, but will not in any significant numbers, or continue to do so when the dollars reach a certain threshold. Small private companies will pay higher wages to loyal employees for awhile, till their profit margin drops to a certain threshold. Both employment and consumption decisions will allow some room for salving the patriotic conscience UNTIL THE NUMBERS GET BIG ENOUGH, then your loyalty to your own family’s budget supercedes your loyalty to what is relatively an abstraction.
Liberals build programs in their heads using denatured symbols of people, like pieces on a chessboard. Then, in practice, the symbols come to life like werewolves of self-interest. Protectionists build “solutions” in their heads using denatured symbols (“executives” “consumers”) then, in real life, the symbols stubbornly morph into selfish actors. Nothing is more fundamental to economics than the assumption that all actors will pursue their rational self-interest.
Any other value injected into the system, unless it is a vivid and dramatic moral prohibition, is a local and transient island, soon to be overwhelmed by the profit motive.
Labor will be moved offshore to cheap markets. An apple, released from the tree, will drop to the ground.
*************************************************************************************
