How American Workers Compete
27 December 2007
The Editor, New York Times
229 West 43rd St.
New York, NY 10036
To the Editor:
Opposed to free trade, David Raines asks "How can it be good for workers to be subjected to competition from low-wage countries?" (Letters, December 27). This question reveals a common misunderstanding.
Worker compensation in America is high because American workers are made highly productive by the great amounts of capital they work with. (And by the way, America is rich in capital, in part, because she consistently runs capital-account surpluses - i.e., "trade deficits.") Where wages are low, it is because workers in those places have little capital to work with and, therefore, are not very productive.
G.M. and Toyota continue to sell cars even though bicycles - a competing means of transportation, but one far less productive than cars - fetch much lower prices. For the same reason, with free trade American workers will continue to sell their labor for high wages even though many workers abroad fetch much lower wages.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
The Editor, New York Times
229 West 43rd St.
New York, NY 10036
To the Editor:
Opposed to free trade, David Raines asks "How can it be good for workers to be subjected to competition from low-wage countries?" (Letters, December 27). This question reveals a common misunderstanding.
Worker compensation in America is high because American workers are made highly productive by the great amounts of capital they work with. (And by the way, America is rich in capital, in part, because she consistently runs capital-account surpluses - i.e., "trade deficits.") Where wages are low, it is because workers in those places have little capital to work with and, therefore, are not very productive.
G.M. and Toyota continue to sell cars even though bicycles - a competing means of transportation, but one far less productive than cars - fetch much lower prices. For the same reason, with free trade American workers will continue to sell their labor for high wages even though many workers abroad fetch much lower wages.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Posted by Don Boudreaux on
Monday May 26, 2008 at 2:17pm