Re: In Praise of Cheap Labor RE: WTO the rampage! (fwd)

John Regehr (
Tue, 7 Dec 1999 22:57:15 -0500 (EST)

On Tue, 7 Dec 1999, Robert S. Thau wrote:

> I'm a bit hesitant to challenge someone with a more personal stake in
> this issue than I'm ever likely to have. But in the West, at least,
> this turned out in the long run to be a false dichotomy --- when wages
> went up, the factories *didn't* shut down. People sometimes forget
> that one of Henry Ford's most significant innovations was paying his
> workers enough to afford a car. And Nike would not have gone broke if
> they paid the workers in their Indonesian shoe factories (all of them,
> put together) as much as they paid Michael Jordan in 1992.

Just because the factories didn't shut down doesn't mean that raising
wages above the market rate doesn't hurt efficiency - there's room for a
lot of inefficiency before making cars actually becomes unprofitable. I
recently read the wonderful (and unabashedly free-market) _Economics in
One Lesson_ by Hazlitt - he makes this point over and over.

On the other hand, I'm bothered by the willingness of free-market
economists (Hazlitt and Landsburg, at least) to judge a policy entirely or
almost entirely on its free-marketness. It sometimes seems like their
normal senses of morality and aesthetics have been completely subsumed by
this one criterion.