Outsourcing Is Good for What Ails You

by Bill Walker

We modern humans are not genetically smarter or stronger (yet) than our flint-chipping, grub-digging ancestors. What gives us our immeasurably greater potential is that we interact within a global market economy, where six billion people produce goods and services for each other. In the process, we both ship the products of our labor around and move our families to places where we can be more productive. We all “import workers and export jobs.” Insofar as Iron Curtains and trade barriers restrict our ability to do either, we are all worse off.  

Comparative Advantage: An Advantage For Rich And Poor Alike  

Trade is not war. Trade does not make one party poor and the other rich. The demonstrable fact is that on balance trade increases the wealth of all individuals, both the relatively high and the relatively low-skilled. This is due to the principle of comparative advantage. Even if one person somehow possessed more skill at every single occupation than another, both are made wealthier through trade. Let’s assume that a U.S. worker can make burlap twice as well as a Bangladeshi (unlikely), but can make computers a thousand times as well. Obviously it does not pay the U.S. worker to waste resources making burlap on her Simi Valley apartment balcony, or the Bangladeshi worker to try to make silicon chips out of jute. Both can do better by specializing where they have a relative (comparative) advantage. Both the Bangladeshi and the Californian benefit by “exporting jobs,” thus allowing greater specialization and an increase in overall productivity.  

Resources and Production Are Real, Borders Are Mental Constructs

Economic law does not change because someone draws lines on a map and says, “This is the United States , this is Mexico , this is Texas , this is California .” It makes no economic difference whether your trade partner is “outside” or “inside” your city, state, or nation.

If cutting off trade between nations could create wealth, then the same principle could be used between states, counties, cities, and households. Why would Texas allow Californian goods past the borders? Why would Fort Worth trade with Dallas ? Why would anyone go to the grocery or the computer store? Why would anyone give a flint axe for a bearskin…

The reductio ad absurdum of anti-trade policies is that everyone should become a Robinson Crusoe. Grow your own wheat (don’t forget to hybridize the triticale genes and build the diesel tractor factory), assemble your own computer out of sand, perform your own appendectomy (make sure to go easy on the anesthetic and make sure every scalpel is within reach before beginning).

There is no way to magically generate wealth by using arbitrary force to suppress voluntary trade. If cutting off trade could somehow “protect infant industries,” “end worker exploitation,” or provide any of the other economic wonders that xenophobic politicians promise, then Pol Pot’s Cambodia would have been the world’s greatest economy. But this is not what we observe; it is the nations with the freest trade that become the wealthiest . . . even if they start as barren rocks or swamps with sparse and destitute populations, like Hong Kong or Singapore .

Politicians conveniently forget all this economic nonsense in wartime. In war, the first move is to blockade the enemy, to isolate them from the global economy and comparative advantage. If trade were really bad for a nation’s economy, then the first act of every combatant would be to drop their own tariffs and open their ports to enemy merchant shipping. Of course this is never, ever done. In wartime, politicians demand torpedoes and minefields for enemy shipping, and open ports for the goods of allies. Then in peacetime, politicians go back to demanding that we blockade ourselves, claiming that now the effect of the interdiction of shipping will be beneficial. The fact that we listen to politicians instead of hitting them with stone axes only proves that we may actually be less intelligent than our hunter-gatherer ancestors.  

Economic resources are real things. Economic output cannot differentiate between trade in “goods” versus trade in “labor.” When you use software, can you tell whether the programmer wrote it in Bangalore or after immigration to Silicon Valley ? From a strictly economic point of view, there is no difference whatsoever between importing workers and exporting jobs. From an economic view, both are equally beneficial, and the only way to calculate their relative desirability is to compare the cost of air fares, apartment rents, shipping costs, etc.  

But Those Awful Foreigners!

From the very beginning of the Republic, American politicians have made emotional political capital out of fears of foreign devils. First, in the 1700s, it was those irresponsible Germans who would threaten our “essentially English” culture (presumably from their excessive punctuality and thrift). After the Germans had become our second-largest ethnicity, worry turned to the lazy, drunken Irish. The Irish in turn having become so popular that more people claim to be Irish than really are, other groups replaced them as the menace o’ the day. The stupid Swedes, the mindless Poles, the un-Christian Jews, the too-Catholic Italians, the over-inventive Croatians, all this teeming refuse and more deluged our shores. In 1910, 14.7 percent of US residents were foreign born, much higher than today’s 10 percent or so.

All this occurred without much real interference from politicians. Only the Chinese suffered from the Chinese Exclusion Act of 1882, passed because of the well-known racial inferiority of the Chinese. It was obvious to the Americans of 1882 that no nation composed of Chinamen would ever be able to excel in the sciences…

In the 1920s, more brilliant Aryan master-race schemes were passed by our Congressional geniuses. One group restricted were the Japanese, thus ensuring that hundreds of thousands of smart, ambitious people were forced to stay in Hirohito’s Japan and work for Mitsubishi, et al.

Fortunately, not all the European Jews were kept from escaping to America before WWII. Though many thousands kept out by immigration restrictions went to unnecessary deaths in the Holocaust, at least most of the nuclear physicists managed to escape involuntary employment under Hitler. Jingoists should think really hard about an alternate WWII where Germany had not only the best jet aircraft, the most advanced cruise and ballistic missiles, but nuclear bombs as well. When the best and brightest people flee to the most peaceful and freest nations, the whole world is better off.

Or Maybe It’s the Awful Natives?

The one legitimate-sounding fear of immigration is that immigrants might use their votes to vote themselves other people’s money. This is a real problem in a democracy that routinely ignores Constitutional restraints on “government transfer programs,” i.e., organized political crime. But it isn’t poor immigrants who control the political levers and drive policy. The big drains on the U.S. economy are welfare recipients like Archer Daniels Midland, Lockheed, Halliburton, etc.  This welfare overclass is not composed of immigrants.  

Those who claim to be concerned about “millions of Mexicans coming here and going on welfare” ought to give some thought to the millions of native-born American citizens who have come to form a permanent welfare class. The internal economic contradictions of the welfare state are not to be fixed by building a Berlin Wall along the entire Rio Grande . The solution to welfare problems is welfare reform, not totalitarian controls over human freedom of movement.  

What About the Poor Dictatorships?  

The final excuse for corralling our fellow men with border guards, barbed wire and minefields is that it’s not “fair” for repressive regimes to suffer “brain drains.” The argument is that even though it may be good for us in the developed world to drain the less free nations of talent (i.e., potential weapons designers), it’s bad for the remaining citizens of those hellholes because they will now suffer from shortages of doctors, nurses, soccer players, etc.  

Supposedly Africa is worse off because some African nurses go to higher-wage jobs elsewhere. But can’t the African now send some of her greater income back home? More to the point, the big need of African (or any other) medical systems is for cures, not labor. How much does it really help to have fully-staffed hospitals, but no cures for AIDS, malaria, Ebola, etc.? Far better to have an efficient global economy that can discover the vaccines and pills to end these miseries.  

Helping Third World dictators to imprison creative people within repressive regimes will not create a better life in those countries. What would really help free the oppressed (including the oppressed U.S. taxpayers) is an end to US “Aid To Dependent Dictators” programs. The U.S. government has given aid to tyrants from Idi Amin, to Pol Pot, to the Taliban regime. Even the Communist bloc nations received massive “loans” and other aid.  

Without U.S. aid, the gulags of the world would have to pay for more of their own barbed wire. The most evil dictator can’t change economic law; without outside money they would either have to allow their own economies to liberalize or collapse. Either way, their arbitrary power would be restrained.  

We Have Met the Enemy, and He Is Us

The truth is that in the long run, there is no way to profit by hurting your neighbor. We in the United States can hurt millions of our neighbors, by trade and/or immigration barriers. This will give us fewer customers, fewer and more expensive products to choose from, more desperate people for terrorists to recruit. More fundamentally, it means there are fewer brains working on the problems that affect us all; it will take longer to cure cancer, Alzheimer’s, heart disease, and all the rest of the enemies of health and mind. Impoverishing others impoverishes us.  

History shows that America can’t be destroyed by voluntary immigration or by voluntary trade. It could be hurt by arbitrary restrictions on either.