Nobody but a few cronies win if an economy is walled off from competition. From Bill Bonner at bonnerandpartners.com:
The rich man’s wealth is his strong city, and as a high wall in his own conceit.
– Proverbs 18:11
We are following up on Friday’s discussion by connecting a few final dots. Then, we promise we will never mention “trade” again.
Talk about a “ball joint,” a “female end” or a “coupling” in Congress, and they are likely to get the wrong idea.
Half the members of Congress are professional, lifelong politicians. Most of the others are lawyers by trade. Then there is an assortment of dentists, psychiatrists, and car dealers. But not a single plumber.
And yet, some people think that Congress and the administration are, at least, in part responsible for our toilets. That is the assumption built into our Dear Reader Bradley J.’s challenge. He wrote:
The purpose of a nation is to defend the common interests of its citizens. Certainly the ability to earn a living at a standard of living higher than that of the Chinese worker with his family’s bathroom at the end of his block, shared with 50 other families, is part of what our nation exists to achieve.
There is no mention of improving standards of living or increasing wealth in either the Declaration of Independence or the Constitution.
And we know that, in the U.S., the private sector is responsible for toilets.
But the question presumes that the feds who run “our nation” can make you richer – by either offensive or defensive actions – than you would be on your own.
Is that true? How?
Can they somehow create or protect higher wage rates? And if they can, how come they don’t do it everywhere?
If you live in Nigeria, where the hourly wage is about $3, can the feds raise wages by setting the minimum wage at $10? Or by blocking the importation of foreign goods? Or by closing the border to immigrants? Is there something else they can do?
It seems pretty obvious that the answer is no. Nigerians make $3 an hour, grosso modo, because that’s what their labor is worth. They lack the training, capital, equipment, infrastructure, evolved financial and commercial institutions, knowhow, and markets that would make their labor more productive.
Locally, the Nigerian authorities could build a wall around the whole country and prevent anyone from getting in. Then, they could set a minimum wage of 100,000 kobos. Or a million kobos. But it would still only be worth $3 an hour.
To continue reading: Trump’s Trade Deals Are a Futile Conceit