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Some nuances on Roberts' last reply

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01/20/2004

Some nuances to  Robert's last reply

 

a) Free movement of capital to third world countries to produce for its home markets should not necessarily benefit them at the expense of first world countries. On the contrary it is beneficial for first world countries.  Reisman  makes clear that "loss of capital" to third world countries is compensated by: (a) Lower import prices which make up for the loss of nominal wages; (b) Capital allocated where it is more productive cumulates at a higher rate in third world countries, which results in most of this capital being ploughed back into USA. This new capital invested in USA (be it "financial" or "real" assets) bids up productivity of USA labor. I refer to Reismans' "Capitalism" for a full account of this fact.

 

b) Even if USA workers were not better off, USA considered as a whole (capitalists and workers) would be much better off. The gains to be derived by capitalists resulting from free movement of capital are enormous.

 

c) What really happens (and this is what bothers "welfarists") is that migration of capital results in the erosion of the tax base. Such erosion jeopardises the welfare state. It might even happen that the less competent USA workers might actually see their purchasing power being reduced, since it may well occur that the losses of welfare benefits exceed the gains brought about by free movement of capitals. Therefore, irrespective of the gains or losses for workers arising out of globalisation, what really worries the "establishment" is the loss of a tight grip over the most productive citizens (the owners of capital). If Mr. Roberts contends that free movement of capitals jeopardises the whims of the State, he is right.

 

d) Mr. Robert's ideas are based on the premise that the "State" has the right to control the use of private property, that the individual should sacrifice himself to the State's interests. HERE IS THE CRUX of this debate: Whether the State has the right to have a group of enslaved milk cows and whether the cows' milk is for the benefit of the collective. Libertarians deny this right. Mainstream thinks otherwise. However, it seems quite "un-American" to maintain such views. USA was founded on the premises of individualism, the pursuit of one's own happiness and self reliance. Such three principles clearly contradict the view that the individual should sacrifice for the State (that is for others, be it fellow nationals or foreigners). If America falls prey to the collective ideas to be found in the rest of the world, the days of America as the leading power of the world are counted.

 

Posted by Jose Ferre

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