Thursday, July 07, 2011

Tim Worstall on Trade

In his Forbes column, I think Worstall makes two important points in rejecting some of the arguments for encroaching protectionism:

1. "There are, for example, only 30 production jobs inside the US associated with the iPod manufacture. [...] the majority of the wages paid as a result of the iPod are inside the US. Even while a minority of the jobs aren’t the US, the majority of the wages are: meaning that whatever is being done in the US is obviously and clearly higher paid than the manufacturing which isn’t being done in the US. It is true that in the past manufacturing jobs in the US were highly paid. But now manufacturing jobs are low paid, as we can see from these figures. So the call to bring back those “high wage manufacturing jobs” to the US doesn’t work: there aren’t any high wage manufacturing jobs to take anywhere."

2. "We shouldn’t be worrying about the jobs of the producers, their wages nor profits, in fact, anything else about the producers at all. We’re talking economics here, the allocation of scarce resources so as to satisfy the maximum amount possible of human desires and wants. Which means attending to the consumer, the ability of the consumer to consume, nothing else."
More on the debate here (Economist).


The Value Major said...

I would argue that there are higher wage jobs in Germany.

Clement Wan said...

To which I would question:
(a) how sustainable are they?
(b) how reliant on subsidies and regulatory limits are they?
(c) and how well do they pay relative to the engineering and design jobs?

Invest Mexico said...

Hi Clement,

This is such an interesting issue with many aspects to debate. Regarding to the comment above, given German politics, I would say that they are probably more reliant on subsidies than we know. This is such an interesting discussion. I blog about international economy, especially in Mexico, too: I hope you'll check it out and leave me your feedback. Best, Daniel