Market Correction

22 November 2006

Editor, The Washington Post
1150 15th St., NW
Washington, DC 20071

Dear Editor:

Fearing that globalization sparks a race to the bottom, Harold Meyerson argues that American workers must be protected from the competition of firms in countries with wages and labor standards significantly lower than those in the U.S. ("The Democrats' Economy Wars," Nov. 22).

Yet in your Business section today we read that "Total U.S. investment in China last year was $1.6 billion, about a quarter of U.S. investment in Belgium. U.S. investment in Germany was about 4 1/2 times the U.S. investment in China last year" ("U.S. Firms Invest More in Europe than in Asia"). Such investment occurs despite China having much lower wages and labor standards than those of western Europe.

This pattern of investment is consistent with reams of evidence, nearly all of which thoroughly contradict the "race to the bottom" thesis.*

Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University

* For example, Nathan M. Jensen, Nation-States and the Multinational Corporation (Princeton University Press, 2006), pages 53-71.

21 November 2006

Editor, The New York Post

Dear Editor:

Rep. Charles Rangel believes that by forcing the children and grandchildren of high government officials into the military, the draft would reduce Uncle Sam's likelihood of going to war ("Rangel: Bring On the Draft," Nov. 21). In other words, Rep. Rangel recognizes that government makes irresponsible decisions whenever politicians have no large, personal stakes in the matters they decide.

Rep. Rangel's insight applies more broadly than he suspects. It means also, for example, that minimum-wage legislation is ill-advised, for very few politicians have family members who are likely to lose jobs as a result of raising the minimum wage.

Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University