Equality, the International Interactions

Most of this site is from a United States point of view (though many of the ideas can be adapted for elsewhere). But to really be progressive, we need to consider the rest of the world, since that is where the truly poor live.

Two of the major interactions between the U.S. and the poorer countries of the world are trade and immigration. It is in these areas that we have left-wing groups advocating extremely regressive policies—mercantilists in tie-dye. At least, they are regressive if we take an international perspective vs. a purely U.S. perspective.

Investment and Trade

Consider international investment and trade. There are many complaints about big corporations taking their capital and building plants in poor countries where the labor is cheaper. Those complaining claim that such actions make the corporations richer and the U.S. workers poorer. They are right. But they are also regressive.

When U.S. capital “leaks out” to other parts of the world, the result is less capital chasing the same amount of labor – in the U.S. The result within the U.S. is indeed regressive. However, in the poor countries that receive the U.S. investments, the results are extremely progressive. The poor countries receive more capital to mix with their vast labor pools. The result of the movement of capital is on the whole progressive; free markets tend to even out the disparities of wealth between nations.

However, the accusation that corporations are making windfall profits by investing overseas is also true. If a country is labor rich and capital poor, the return on investment by capitalists will be huge by First World standards. If a country goes from communist or fascist to capitalist, the first to take advantage of the changes can make unreal fortunes. But note that these fortunes are in part rewards for taking risks.

It is also true that the benefits received in the poor countries may seem small compared to the windfall profits made by foreign corporations. Foreign companies can freely attract labor simply by offering pay and working conditions that are marginally better than that offered by the local slavers and loan sharks. The results may appear unpleasant, but they are a small boost to local laborers, else they wouldn’t take the jobs.

To get these countries past the sweatshop stage requires sending more investment, not less. More capital will drive up labor rates and demands for better working conditions. It will also drive down the windfall profits. How to have more capital? Consider the ideas in the early parts of this chapter. If the U.S. federal government were to pay down its huge debt, and if workers were to save for their retirement, the result would be trillions of dollars available for both domestic and foreign investment. We can be a blessing to the rest of the world and get rich at the same time.

Immigration and Foreign Guest Workers

Many labor activists complain about immigrants driving down their wages. They are right. Letting in poor immigrants means more Labor chasing the same supply of Capital. It also means more Labor chasing the same amount of Land. The results are doubly regressive at home. Massive immigration has been a major factor in maintaining wealth disparities in the U.S. despite its huge supply of land and natural resources, and its massive accumulation of capital. However, this increase in wealth disparity is purely from a local perspective.

From a global perspective, letting in immigrants and foreign temporary laborers is very progressive. The process allows extremely poor people in poor countries a chance at becoming well off by local standards. And many of the foreign workers and immigrants send money home providing capital to those left behind.

But there are some disturbing problems with the idea of fully opening the gates to immigration. Consider the environmentalist goal of stabilizing the world population. If immigration is free, then those cultures that practice birth control will be overwhelmed by those who continue to multiply at high rates. On the other hand, if such cultures are contained within their borders, they will experience local overpopulation problems while “learning their lesson.” And some overpopulated countries will opt for conquest if legal emigration is not allowed.

So what is the answer? I don’t know. I would like to “unask the question” by making the poor countries richer, so that immigration is driven more by choice of climate and lifestyle, rather than severe economic necessity. But I do not know if it is entirely feasible.

But by releasing several trillions of new investment dollars to the world, it might be.

About Those SUVs

There are some who bemoan the wealth of the First World nations, saying it is at the expense of the poorer nations. They say we ought to live with less so that the needy can have more. For the most part, this view is incorrect; the poverty of much of the world is due to lack of capital and corrupt governments, not due to First World consumption.

But there is one area where this view has merit: natural resource consumption, especially petroleum. By buying up such a huge portion of the world’s oil production, the U.S. is driving up the price for other, poorer countries. And unlike wealth in general, natural resource consumption is a zero sum game. More for us means less for them.

So should we outlaw SUVs? No, that is too simplistic, and too complicated. There is actually a more elegant approach that reduces net government interference in our society. I will cover it in a later chapter. Stay tuned.