Wednesday, November 4, 2015

Prosperity and Politics

   Political candidates promise to bring jobs back to America from other countries,  but they don't specify what kind of jobs they would bring back, even as they imply they would do it single-handedly.
   Landscaping and construction jobs, for example, cannot be exported, much less brought back, since they are by definition local.
   Manufacturing jobs can be relocated, but bringing them back to America would require paying higher, U.S.-level wages. In many cases, that's why the manufacturers left in the first place. Meanwhile, higher wages is what attracts many newcomers, and always has. If jobs were available at home, along with safety, security and opportunity, there would be little reason to leave. That's why America has long been called the Land of Opportunity.
   So for those with a gut-level fear of newcomers, the best way to resolve that fear is to help other nations achieve peace and prosperity through good jobs, healthy trade and political stability.
   Competition is a wonderful thing, but if the goal is to win, even by reducing other competitors to beggary, both sides lose. Political candidates sometimes spout the rhetoric of win, win, win, and accuse all others of being low-energy losers. This is counterproductive at best and destructive at worst.
   There's nothing really new here. The danger of such behavior was well established by Adam Smith in the first and most important book on modern economics, "The Wealth of Nations," published in 1776.
   As for creating jobs, skill levels, prevailing wages and the cost of living must also be considered, as well as location.
   Construction jobs, which are often touted as nearly magical cures by politicians seeking votes, are by nature temporary and local. When a construction project is complete, the jobs go away. In a flourishing economy, construction workers move on to a new project. Without new projects, however, unemployment rises, income falls, sales and purchases decline and the downward economic spiral continues.
   The question, then, becomes one of how to stop the downward spiral of economic recession.
   The most effective answer -- a basic principle of Economics 101 and well known to any practical thinker -- is to spend money, which is the lifeblood of any modern economy. That's easy to say as long as workers have jobs, and wages to support their families. In times of mass unemployment, however, consumers cannot make purchases with money they don't have. This is where government steps in, sponsoring construction projects that hire workers and give them wages for food, clothing, shelter and other necessities, as well as a few luxuries.
  To claim that austerity is the solution defies logic.
   
   Meanwhile, the claim that the American economy is tottering is demonstrably untrue, and political candidates who obsess on that claim ignore reality.
   On an international level, the U.S. trade deficit continues to decline as the trade gap closes. The dollar is strong relative to other currencies, which is good news for tourists. The employment level is slowly growing as the unemployment rate subsides. Overall, the American economy continues to recover, albeit it slowly and despite rantings by opposition candidates.
  On a wider level, economic conditions throughout the Western Hemisphere continue to slow down, according to the International Monetary Fund, even as the U.S. economy "regained momentum after a slow start" earlier this year.
   So why bring back jobs from other nations, if that means fewer jobs in other countries, leading to less money and worsening conditions for workers there, who would be unable to buy American products? And if the jobs do come back, what will be the wages? Will they be lower than they had been, which would hurt the American workers, or will they match other U.S. pay levels, which would result in higher consumer prices?
   Better to encourage job growth in other countries, especially in lower-wage countries, so they could buy more stuff made in America by skilled workers who deservedly earn higher wages.
  This way, both sides win, and there are no losers.
   
   Maybe it's time the candidates read up on Economics 101, and Adam Smith's principle of comparative advantage.

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