Question for Resident Libertarians

Alright, so I’ve been looking over Libertarianism, and I have one question that I would like answered.

With no immigration, free trade or minimum wage restrictions, what’s to stop companies from moving all of their methods of productions overseas, or foreign (mainly Mexican) workers coming to the US willing to work for a fraction of the price? This could drive millions into poverty. How can this be explained? As I see it, this is good for business and bad for the working and middle classes.

Note: I am a democrat (incredibly pro-all types of personal freedom, I’m grappling with the concept of utter economic freedom).

First and foremost, this will end up in GD. Or closed here, with a mod telling us all to take it to GD.

Now, what makes you so sure that, in the absence of artificial restrictions, Mexican workers would never be able to achieve American-level expectations of salary and standard of living? In other words, how can they always remain the mere puppets of American industry if they have jobs and their own economy?

Plus, the American consumer isn’t completely passive, either. If you lose your job to Mexico, you could boycott your old company and even help start a new one. On a larger scale, companies can score PR coups by not dealing with foreign companies. Or they could, you know, move.

Those are the only things I can think of right now. In short form, capitalism has a tendancy to spread wealth when not fettered by artificial laws.

I’m no Libertarian, but this was how my professor explained it to me in a microeconomics course I took.

First off, it would not be the insane joblessness you think it is. American laborers would just have to adjust their wages to be competitive with the foreign laborers. “But couldn’t that lead to poverty?” you ask.

As you probably know, the price of any good is based on supply and demand. The demand for labor is primarily based on the productivity of that laborer (there are other factors, but it’s simplest to ignore them). So, economists like to say that wages come about from productivity. The higher the laborer’s productivity, the higher the demand for that laborer, and the higher the price of that laborer.

The reason why a laborer in Mexico is not making as much money as a laborer in the U.S. is theoretically due a difference in productivity. This difference in productivity is probably a result of differences in resources (for example, the U.S. companies that hire the laborers have better machinery than the Mexican companies, and can therefore get higher productivity per worker). The reason why a laborer would be replaced with cheaper labor in a free trade situation would only be if he was making more money than his productivity warranted.

Allow me to illustrate this with an example:
We have an American shoe maker, who can make 5 shoes per hour, and he is payed $10 per hour. Meanwhile, a foreign shoe maker can make 2 shoes per hour, and is payed $4 per hour. As you can see, these wages are in balance. Now if the foreign country instituted a minimum wage law and said that that the foreign shoe maker had to be paid $5 per hour for 2 shoes per hour, the shoe making companies would probably move their businesses to America, since the wages in America are lower for the laborer’s productivity.

Any changes in domestic wages in the case of free trade would therefore be the monopolistic part of the wage. In other words, it is the part of the wage that is undefended by productivity which is vunerable. If Americans are making more money than their productivity warrants, their wages would drop in a free trade situation, but it wouldn’t be absolutely terrible for the American economy, since consumers would probably be paying less for the produced goods.

Does that help?

You know, as an afterthought, I should point out that there are plenty of other reasons to be sceptical about complete free trade. I’ve never been truly satisfied with the explanation for how free trade gets around the problem of “dumping”. That is, in an America that embraces complete free trade, if a foreign government subsidizes a particular industry so that their companies can sell below the domestic market clearing price abroad, what prevents them from driving American competitors in that industry out of business?

Also, there is always the national security concern. It may be a good idea to keep industries vital to our military protected, so if we go to war with the foreign suppliers of the vital good, we still have something to fall back on. We also don’t want to go around selling missile guidance chips like crazy.

Then there are non-economic issues, like placing embargoes on countries ruled by a cruel dictator for humanitarian reasons.

I’d be very happy to hear what libertarians can say about these issues.

What’s to stop them from doing that now? The difference in import/export duties between the current US system and “Libertaria” is pretty insignificant.

A possibility, but don’t forget that in “Libertaria” you don’t get ANY welfare or state assistance. None, zero, nada, zip. Unemployable workers wouldn’t find “Libertaria” very attractive. The ones who are employable would make it a win-win situation.

Well, the original Libertarian ideals of unlimited populist freedom have become replaced in the last decade or so by rabid degregulation capitalists who have latched on to Libertarianism as a moral position from which to proclaim the virtues of unlimited corporate freedom, and who have maneuvered the populists into the fringes.

That has a lot to do with it.

Another point is that it’s not as important to maintain jobs as it is to pass on good savings to the buyers. Some will say that coorporations won’t do this and keep all their cash, but if not they’ll be undercut by those who will, and if no one does then they’re violating one of the main laws of free markets - horizontal price fixing - and the government will step in. Though I’m sure it’s more complicated than that and I admittedly am not an economist or a laywer. I do know though that it is better for millions to be able to buy clothes for half price from overseas than paying double here by subsidizing overpaid workers here in America. But I admit I’m skeptical on the idea as well since I’ve never seen it in action, who knows how things would turn out in the long run.

In that case, we should buy up all the product of that overseas company that we can get our hands on. If a store across town is selling refrigerators at below their cost, subsidizing my purchase with their dollars, in order to keep their workers happy, then I’m going to buy my refrigerators from them. To hell with the local store on the corner.

That is what I was wondering now. The OP seems to be asking about something in theory when it is largely a reality right now. Can anyone say NAFTA?
Thank You!

Perhaps the example of outsourcing jobs wasn’t a good one, forget that.

My main question was actually the one regarding foreign workers coming into the country willing to work for less.

So what I’m getting is that while wages would indeed drop, the prices of goods would also drop to meet the adjusted wages. That the gist of it?

/Never taken an economics course.

Here is a blog entry which illustrates the libertarian position pretty well, I think:

Sounds pretty reasonable.

I think I’m going to read Wealth of Nations.

I’ve had some questions about Libertopia that I haven’t really known where to post. I guess this thread is as good as any.

The way I understand it, in Libertopia everything is privately owned. Stop me if I’m wrong on this or any other point. What does this mean for things like public restrooms, parks and the like? Would a person or corporation own public restrooms and charge money for their usage? Would every park have fences and an entrance fee at the gate, that paid for upkeep of the park, feed for the ducks, and so on? What about beaches, same thing?

Answered by special request:

There would be no such thing as public restrooms or public parks. It is conceivable that such a thing as a restroom business could be developed by entrepreneurs, but generally it would behoove people in business to allow customers to use their restrooms anyway. I don’t suppose that it would be necessary always to fence in parks. It is conceivable that a park might be a philanthropic enterprise. Beaches, same thing.

All that said, it is important to understand that, from the libertarian point of view, the principle that there is no such thing as public property applies generally — that is, it is true in the actual world already. Property is owned by those with the most political clout. If you doubt this, try to build a house in a public park.

I should have mentioned, for a general introduction to the classical liberal view on property, see Liberalism in the Classical Tradition, 1927, by Ludwig von Mises. The entire text is available free online. Here is one quote:

“The program of liberalism, therefore, if condensed into a single word, would have to read: property, that is, private ownership of the means of production… All the other demands of liberalism result from his fundamental demand.”

Note that liberalism (or libertarianism) is basically the opposite of communism.

“In this sense, the theory of the Communists may be summed up in the single sentence: Abolition of private property.” — Manifesto of the Communist Party, 1848, Karl Marx and Frederick Engels

I feel the need to comment here.

Libertarianism is always the opposite of communism on an economic/social level. It is also the opposite of communism at a governmental level in terms of how communism has usually been implemented on a national level (that is, it’s the exact polar opposite of state communism as practiced by Mao, Stalin, et al). But, since communism can also be implemented in terms of communes with little or no formal government (such as certain religious orders and other social experiments through history), it cannot be typecast quite so easily.

Anyway, corporations can be created for more-or-less charitable purposes, or by groups of citizens interested in creating and maintaining a level of public service in a local area. Each corporation has a right to a profit, but profits can be given away to worthy (in the eyes of the shareholders) causes or given back to those who have paid the most into the entity.

In other words, corporations aren’t always `corporate’. :wink:

I agree with Derleth. It is perhaps ironic that even a communist society can be libertarian — so long as all are volunteers. Part of having rights (property) is having the right to waive them.

The problem with libertarianism as I see it is that it is based on a far simpler technology than we have today, and includes a hefty dose of what might be called brutal optimism.

Libertarianism is based on the concept that people will purchase (whether it be goods or services) on the basis of enlightened self-interest. This is all very well when the technology we’re talking about is at a level where the average consumer is capable of making enlightened choices. Unfortunately, this is not true of contemporary technology.

Company A may be destroying the local environment such that, twenty-five years from now, the area will not be livable. Love Canal, for example. The problem is, very few people have the expertise to judge that for themselves. If none of the few people who do have that expertise live in the area, how will the citizens ever know?

Similarly, Company B may have labor practices that seriously endanger the health or safety of its employees. But often this is not in any way obvious. The employees may be inhaling substances that will cause cancer 10 years down the road. How will they know?

The regulation of business practices to protect the citizens is, in my opinion, a perfectly valid function of government. The libertarian does not agree.

As far as brutal optimism goes, the libertarian believes that each person is responsible for their own welfare and performance. As do I. However, the libertarian manages to live in a world in which all people start with a level playing field, and have an equal chance of success based entirely on their own abilities. I think that’s a joke.

I’m not even talking the obvious difference between those who inherit large sums and those who do not. I’m talking about the fact that my parents, although financially lower middle class, raised me with a respect and desire for education. I never encountered anyone who thought school was stupid and good students were jerks until I went to school myself, and by then my values were set well enough (and these students were sufficiently in the minority) that I never succumbed to the notion that doing poorly in school was “cool.”

I know people who were “raised” on the streets. They bend over backwards to do the best they can for their kids, but the fact is, their own ignorance prevents them from ever doing well enough to do anything but live from crisis to crisis. Their children attend inner-city schools, and the parents lack the education themselves to help their children realistically aspire to something better.

I know libertarians believe that people should take responsibility for their own choices. But how long does someone have to suffer for a poor decision made at the age of 14? How many generations have to suffer because someone was a lousy drunk and left her kids to essentially raise themselves?

I believe that the government should help the poor, particularly in ways that help them (and more importantly, their children) break the cycle of poverty and ignorance. And, btw, tax breaks aren’t much use to someone living on the margin, who struggles to make their rent and utilities, and falls completely behind if (as often happens) a child gets sick and requires treatment.

The optimism I refer to is two-fold - the idea that the playing field starts off level enough that a normal (rather than truly exceptional) child born to a ghetto family can readily achieve a mainstream, middle-class existence by working hard, and the idea that private charity will cover those who have the misfortune to slip. The brutality is the the idea that not only the people who don’t succeed should suffer the consequences of their decisions (even if those decisions were made in childhood), but that their children should automatically suffer too.

It often strikes me that while libertarians *talk * about individual rights, when push comes to shove they will suffer the curtailment of almost any right they have, as long as they can pay a little less tax. Thus, we see many self-described libertarians who will vote for the current administration this fall, despite John Ashcroft’s apparent mission from God to gut the Bill of Rights.

Oy! brings up some really good points, especially the hazards that could be created and disguised by unregulated businesses.

I won’t respond to Oy’s rant because this is not the forum for rants or debates. However, it is factually incorrect that libertarianism advocates unregulated businesses. In fact, it advocates the strictest possible regulation of “coercion” — which it defines as initial force or deception.