Sunday, August 19, 2007

The Club For Growth And The Continuing Discussion Of Three Concepts

Big thanks to Andrew Roth of the Club For Growth for linking to us regarding JG&AH's Top Three Economic Concepts. Its a discussion that I enjoy thoroughly. I've said before, what makes life in the Western World so - what's the word to use - pleasant, gratifying, and comfortable to use three - is vibrant capitalism and its necessary precursor, free trade. A lot of the discussion in Andrew's links below centers around Free Trade and Comparative Advantage. For those who hated economics classes is college, those of you who slept through it, or both, Comparative Advantage simply means that one nation/entity has a natural advantage in producing products over another. Its utterly foolish to think that the US producers can grow coffee (if its even botanically possible) and distribute it to US consumers in a more cost effective fashion than can producers and distributors in Columbia. I had a great Economics prof in college that used the example, "Lets say we wanted to be the ultimate Pat Buchanan. We wanted to produce everything here in the US, import nothing - would consumers pay more, or less?" The obvious answer is, "more". Coffee is more abundant and easier to produce and distribute from South America, and the imported coffee from there will be much more economical for consumers. That's why "trade deficits" are arguably a protectionist straw man.

But aside from Free Trade's benefit by comparative advantage, there is a reciprocating benefit to the world community be engaging in free trade. Below is a rant that I went on back in June to further illustrate my point:

Its a paradox to me - the Left around the world decry the First World for the plight of the Third World. Sally Struthers et al love to put on the puppy dog eyes and lament the plight of Little Raul in Backwardistan. If you'll just fork over 30 cents a day he'll get a fresh bottle of Aquafina and another bowl of mush. And the Left feels good that it is doing something for Raul and the citizens of Backwardistan. But you announce to these same Leftists that Nike is moving a factory to Backwardistan and the starting salary for the locals working there will be a full dollar an hour more than what they are making currently and they come unhinged. Not much to you and I, but in Backwardistan, that's a significant improvement to their quality of life. Eventually, the nation attracts more such business and the quality of life for all there grows. But the Left is outraged, you're taking that work away from Americans and Americanizing a pristine culture. And they are working for $4 an hour. Slave wages! (Never mind that the average salary in Backwardistan - for those who do have jobs - is $2 a day US). So the Left harrumphs, and goes back to asking you for 30 cents a day for Raul to have a subsistence lifestyle. I'm not trying to knock those of you who do charitable work in the Third World. What I am asking is that all of the hysterical Outsourcing Haters to 1, stop and consider the insourcing statistic mentioned above and quell the fearmongering and, 2, consider the benefit that outsourcing brings to the plight of these living in the Third World. Bringing developing nations into Free Trade is the first step toward real reform in the the developing world. Not 30 cents a day's worth of compassion.....

I want to again, be clear that I am in no way trying to belittle those who perform honest, heartfelt charitable work in the Third World and with the Poor Worldwide. I think the Bible makes it very clear that God rewards people for this compassion, because He rewards based on the heart.

My intention is to challenge those of you who think the plight of the poor can be rectified for the long term by pure wealth transfer. This is one of the reasons Power Whores on the Left who hold office enrage me with their incessant Class Envy. To the Left, the problem of poverty is always because someone else has too much. Vote for me, he says, and I'll "make him pay his fair share." Hillary Chavez wants to take Big Oil's profits - as if she has the right to do so, morally speaking - and put them toward some pet project of her own, in this case alternative fuels. Other Power Whores in office want to exploit your ignorance of supply and demand with a Windfall Profits Tax. Again, the problem for the Left is that one person has a lot, another person has too little, so it has to be that the guy with too much is either cheating, hoarding or both.

This works well for the Power Whores who prey on ignorant Populism. Problem is, it just is not true. Wealth is not a Zero Sum game. The problem of one person's poverty is NOT another person's prosperity. In fact, when one person has more disposable income (i.e., he doesn't have to turn it over to the government in the form of taxes, earmarked for redistribution), he benefits the economy as a whole - including the poor. He spends on products and services that employ the poor. He invests and grows his business with that additional money, creating jobs for the poor. And hallelujah, some of these poor are in the Poorer, developing nations.

Poverty is rampant throughout many parts of the world, yes. The cause? Lack of Capitalism. Lack of Open Society. Tyranny and corrupt government. Not the prosperity of the First World, or selfishness. But don't bother trying to explain that to Hillary Clinton.

So, folks, when the guys on the streets of a big city near you approach you like a Jehovah's Witness and want you to contribute to a (worthwhile, no doubt) program that "feeds the starving children of the world," ask him if he supports the Bush Doctrine. Ask him if he supports the mission to establish a vibrant open government in Iraq. Ask him if he supports the spread of Market Capitalism and Free Trade around the world.

If he says no, then ask him if he really does care about their plight. Because if he did, he'd support a long term solution that can only come through the spread of Freedom and Capitalism. Hopefully it'll get him thinking.