Wrong Response to "Loss of Jobs"

In recent months I have penned a few missives on the topic of job security and 'job outsourcing,' and these have prompted quite a few readers to respond with a variety of their own inputs. Some have been very supportive and welcoming of the free market analysis I champion, but a rather large group has sent me anything from extremely nasty, vitriolic creeds to thoughtful objections. Now my policy is to begin to read all such posts but if the first line contains an insult'-name calling, nasty attribution of motives, or 'go back to your native country' kind of shameful outburst'-I do not read the rest and just send back a post saying so.

What I do consider especially worthy of a response on this topic is the consideration that much of the job outsourcing is due to wrongheaded domestic and foreign governmental policy. Those critics have tended to stress the point that often outsourcing'-in this context meaning going abroad so as to hire the services of people there rather than continuing to employ those in the home country'-is prompted by artificially low wages and other costs in the places where the work is now being preformed.

By 'artificially' is meant, of course, the fact that the wages and other costs aren't the function of free market dynamics but of, say, subsidies to firms (sometimes in the form of serious tax breaks) or even out and out slave or near-slave working populations who are legally prevented from engaging in bargaining for wages and have no lawful option other than to work for peanuts. Of course, the outsourcing can also be the natural consequence of Draconian government regulations in the home region, where firms and prospective employees are prohibited from calling their own terms of trade.

Sometimes the impetus to seek work from abroad comes from the fact that there are no legal obstacles to dumping costs on the population in the form of disposing waste into the atmosphere rather than operating at full cost of production. Many businesses have no compunction about taking advantage of such injustices, often to the detriment of prospective employees at home where environmental restrictions, some of them quite sensible'-such as bans on dumping, a form of aggression, clearly'-raise the cost, quite properly, of operating a plant. (This is no different from property rights raising the cost of building throughways that the violent policy of eminent domain allows some to circumvent.)

OK, what is one to say about job outsourcing with these considerations in mind? My own approach has been to never yield to the temptation to call upon government to play the tit for tat public policy game whereby some market distortion abroad is then answered with a market distortion at home or a domestic injustice is met with even more domestic injustice, via government regulations. Someone must begin with clearing the road to a free market place, and those of us discussing these matters in a certain region of the globe probably have a better'-albeit often merely minuscule'-chance of influencing politicians and bureaucrats within our reach than those operating elsewhere. It is a little like the case for honesty among people'-one can do something about one's own honesty, and the fact that there is a lot of prevarication going around is no excuse to join the stampede to lie.

That people around the globe are being treated badly by their governments and that this is sometimes taken advantage of by companies simply does not suffice as grounds for continuing to treat people badly in one's own community and imposing bans on free competition from foreigners. Whatever remedy is required for injustices anywhere, including those having an adverse impact on those in one's own country, do not justify continuing and especially starting up market distortions at home. The remedies must come another way, that is the imperative of morality and justice. Tit for tat is unacceptable and, also, mostly ineffectual, leading everyone down the path to a less efficient, more unjust economic order.

Some might retort by accusing proponents of the free market alternative of lacking heart, of sticking their heads in the sand. But, in fact, free market champions are simply remaining loyal to a tried and true principle of sound political economy: implement freedom as far and wide as possible, and the results are going to be better and last longer, all things considered.

Or, to put it more succinctly, do not compromise on the principle of freedom of trade, no matter what. None of us is deserving of having to pay for the injustices perpetrated against others.

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Tibor R. Machan's picture
Columns on STR: 70

Tibor Machan is a professor of business ethics and Western Civilization at Chapman University in Orange, Calif., and recent author of Neither Left Nor Right: Selected Columns (Hoover Institution Press, 2004).  He is a research fellow at the Hoover Institution, Stanford University.