Milton Friedman has rolled over a few times in his grave in the past year as our government marches down the path of intervention. I think a few more of our country’s top economists need to go back and review the writings of Adam Smith and Friedman. For some reason, I keep hearing John Maynard Keynes name brought up on television to defend the current stimulus package. Like offering bleeding as a cure to disease, Keynesian theories have hence become believed to be in the wrong. I digress, however, read Friedman and your eyes will open to this man’s wisdom that tells us more about the current crisis than anything you will hear coming out of Washington.
The idea, and cries for, increasing the value of Chinese currency relative to the dollar, as has been popular for some time now is of little consequence to America’s imbalance of trade. We are not going to start manufacturing for WalMart, however expect WalMart to shift its source of supply to a different LDC in the event of this devaluation. Americans, jobless as we are, consistently turn to illegal immigrants to build our houses and roads (ironically the jobs we expect to fill with stimulus). This country is in need of service jobs - not jobs that pay a bowl of rice a day! The lack of rudimentary economic education that persists in both media and, worse yet, Congress, is enormously disconcerting.
Photo Credit: UN.org
Keyword: management cadre, global economy, international business, exchange rates, economic incentive, foreign investment
Posts
Although I'm not familiar with the writings of Milton Friedman (or I've forgotten his main points)...your point about our need for "service" jobs is intriguing. Is this to imply that the days of "American-Made" are over. Could we somehow fix the immigration system to make "new citizens" of lower classes more likely to fill American Manufacturing ranks, along with teaching our children that competition is a good thing?? The Jihadists of the world believe that America's lack of durable goods production and over-reliance on financial sector and service sector jobs is an inherent weakness that they can exploit--I tend to agree. However, I know it is impossible to compete with either the manufacturing machine of China (endless cheap labor) or the technical outsourcing machines of India and Indonesia (endless cheap smart labor)...would like to see more details on how more service jobs can help us. Thanks!
ReplyDeleteYou pretty much answered it. We do not need to compete for lower paying jobs in third-world countries. As Adam Smith would have seen this, we have an advantage in some areas (capital markets and innovation) and we benefit from those products we can import at rates less costly than we could produce.
ReplyDeleteTake, for instance, an attorney; the attorney can type 75 wpm. If his secretary can only type 50 wpm should the attorney type the letters? The answer is that the greatest utility for the attorney is in doing what can return the greatest value to his organization. The natural tendency of market forces to operate most efficiently without government intervention is a principle that is undeniable.
I defer to Adam Smith:
“Two greyhounds, in running down the same hare, have sometimes the appearance of acting in some sort of concert. Each turns her towards his companion, or endeavours to intercept her when his companion turns her toward himself. This, however, is not the effect of any contract, but of the accidental concurrence of their passions in the same object at that particular time.”