The Occasional Observer

Look around your house. What portion of the products you own was made it China? If you're like me (I'm ashamed to say), it's a large percentage, especially electronics. America's growth was once fueled by our amazing manufacturing capacity. Our endurance through two world wars was in part due to our ability to produce just about everything we needed ourselves. We now have a huge trade deficit, especially with China. We import $100 billion more worth of goods from China than we export to them. We don't know and don't care where the products we buy are made. There is no thought about where that money will end up. There is no thought about who will have a job making the things we use and who won't. There is no concern that we will be unable to produce the goods we might need should we get involved in another war like WWI or WWII.

Why did this happen? Some will try to tell you that we've evolved and we are now a nation of knowledge workers - that we produce ideas. I have a different opinion. I contend that much of this came about because of institutional intervention in free market. Labor unions once played an important role in opposing abuses in industry and improving safety. They have devolved into organizations that artificially raise the price of labor through extortion and promote mediocrity. Minimum wage is another example of instituitional meddling in the free market. Our frien(D)s will tell you it will give the people who earn the least a higher income, when in fact it just leads to more unemployment. It's effect is to artificially raise the price of labor, which causes businesses to employ fewer people because of the expense. I recently read an article (that I can't find to properly cite) that cited the unemployment statistics in France as evidence of this. France has a high minimum wage and a much higher unemployment rate than we do. Furthermore, the unemployent rate among those who typically earn minimum wage (workers from 18-25 years old) was something like 23%! This article added evidence of this in our own country. Some time after the minimum wage was instituted, the market price for labor was well above the established minimum. Miraculously, during this same period, unemployment was at record lows! When will people figure out that regulations on a free market often have the opposite effect than was intended?