Monday, April 17, 2006

Dobbs's Disciples

Excellent essay at TCS Daily BY Donald Boudreaux :

Economist Paul Craig Roberts has joined recently with the likes of Lou Dobbs and Sen. Charles Schumer to denounce so-called "outsourcing" -- that is, the importation of services.

Roberts is aware that, throughout history, free trade has raised the living standards of ordinary people. But, he says, this historical record is irrelevant to today's world. He explained the reasons in a January 6, 2004, New York Times op-ed written with Sen. Schumer and entitled "Second Thoughts on Free Trade":

"First, new political stability is allowing capital and technology to flow far more freely around the world. Second, strong educational systems are producing tens of millions of intelligent, motivated workers in the developing world, particularly in India and China, who are as capable as the most highly educated workers in the developed world but available to work at a tiny fraction of the cost. Last, inexpensive, high-bandwidth communications make it feasible for large work forces to be located and effectively managed anywhere."

In short, Roberts alleges that the American standard of living is threatened by the world's growing prosperity, improved education, better governance, and greater fluidity of capital and resources to move in search of higher returns.

Roberts' argument is deeply flawed. Its most fundamental defect is his implicit assumption that the world's stock of non-human capital is fixed. READ IT ALL

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