I’m perplexed by this statement. So if this argument is pushed to the extreme, a truly free market would eliminate division of labor? Every country/town/village/family would be producing everything they need right there in their own backyards?
Transportation is costly. Unless someone can grow food and transport it to you at a lower cost* than you can grow the food yourself, why yes, you will grow the food yourself. How can this possibly be controversial?
*Note that “at a lower cost” includes the other activities you would have to forsake in order to grow food… that is, the costs of forsaking more productive activities you might have to do, so division-of-labor remains intact.
Clayton -
So would you or would you not outsource food production in a free market? Would there or would there not be “shipping of jobs overseas”? If division of labor were to “remain intact”, one must answer “yes” to both questions. A “no” answer is logically irreconcilable with the existence of division of labor.
No one has claimed in this thread there would be no outsourcing of jobs in a freer market. I’m sure there would be increased outsourcing of some jobs and decreased outsourcing of others. The whole concept of “outsourcing” is relative to political boundaries, anyway. But the specific character of outsourcing we see occurring between China and the US is not an organic outgrowth of market factors. The easy way to see this is to look at China’s holdings of US debt. Something is amiss.
There was no sane reason for China to accumulate such massive holdings of US debt… unless both the US and Chinese economies are being influenced by an alien power that wants to integrate them. It is my view that that is precisely what is happening. In the short-run, this will mean a continued hemmorhaging of jobs and capital into Asia and out of the US. In the long-run, it will mean lower real productivity of US workers and a lower standard of living in the US, with a concomitant rise in productivity of Chinese workers and a higher standard of living in China.
This “zero sum” shift in the balance of wealth between these nations is, to me, an obvious sign of political manipulation. There is no reason the US worker should become less absolutely productive as his peers in China become more productive. There is no reason that the US standard of living has to fall in order for the Chinese standard of living to rise… unless somebody is playing geopolitical games with the world economic order.
Clayton -
OK, we’re on the same page. For some reason, I thought JJ and you were claiming that outsourcing (“shipping of jobs”) would disappear in a free market. I agree with the rest of your post.