Trade Off

Trade is a two-way deal.

   When one party to a transaction benefits and the other side loses, not only is it a bad deal, but it's often accomplished through cheating.
   The so-called winner may think he got a good deal because he benefited more than the other guy, and that may be acceptable for a single transaction. But when the imbalance continues, and one side goes bankrupt or is reduced to poverty, it becomes a policy known in textbooks as "beggar thy neighbor."
   Just as this can happen at a retail level, where the grocer winds up with all the cash and a family can no longer afford to buy food, it can also happen in industry and even internationally.
  The rise of labor unions helped end abuses by employers, but such a short-sighted policy also happens on a national level. Historically, colonial powers did it to drain resources from their subject nations. Result: The "winner" collected all the wealth and soon found itself with no customers for what little it did produce, and no more resources at the victimized nation. Meanwhile, the subject people rebelled, and sought independence, since they had nothing and therefore nothing to lose in the attempt.
   Enter Adam Smith, who in his 1776 book, "The Wealth of Nations," pointed out that trade is good when both sides benefit, and one way to ensure that is for each nation to work at what it does best. Smith called this "comparative advantage."
   That principle still applies.
   Moreover, it applies not only to stuff, but to labor as well, whether the issue is the skill level of workers or the number of workers available. When the supply of workers is high and the demand low, wages will not be as high as in the opposite situation. When demand is high and supply low, wages will rise to attract more people to the available jobs.
   Put simply, that's why so many people come to America.
   Conversely, that's why some firms move to other countries, where wages are lower, there are more workers available and living costs are lower. Clearly, those same workers can't afford to come to America because of higher costs of living, so the jobs go to them.
   Here, then, is the bottom line, as an accountant might say: Any move by politicians to bring jobs back to America will inevitably clash with the economic Law of Supply and Demand.
   Even if the politicians succeed in forcing firms to return their operations to the U.S., the employers will have to pay higher wages to match living costs and, in many cases, labor union contracts. In turn, this will mean higher prices for consumers. Unless, of course, the firms can break the contract and the union.
  On balance, then, nobody wins.
   Except perhaps corporate management, who take the same percentage of the sales price, which means more income for them.
   Meanwhile, the politicians who arranged the deal can satisfy their egos for doing what they did, but the main beneficiaries are the corporate moguls who reap more profit, and maybe sharing some of that with their politician friends.
   Workers may indeed have more jobs, but higher prices eat up whatever higher wages they might have.
   In addition, those same higher wages, coupled with the lack of job opportunities at home, will attract yet more hopeful workers the politicians claimed they would keep out.
   The Golden Door does not close.