Free Trade, Free Capital, and Un-free Labor / by kevin murray

There are numerous advantages to free trade, that is to say trade, that recognizes no border restrictions, and hence no tariffs or excise taxes applied to goods being bought and sold from one sovereign nation to another, of which the advantages are that goods are in whole, cheaper to the consumer of such, sometimes substantially cheaper, because the goods, for example, are neither subject to restrictions or added governmental taxes, in addition to the fact that it is a more profitable and vibrant way for corporations to conduct their business, because they are then able to allocate their capital into physical locations that are more favorable overall for their business model.

 

This means, for better or for worse, we live in a world that is gravitating more and more to a world in which capital is no longer restricted to the country of its origin, but can be freely moved, through a click of a button, or whatever.  Whereas, labor, on the other hand, which is people, are to a large extent, stuck living in the country of their origin, although they can either legally petition for emmigration, which is often a long and arduous process with restrictions, or become a refugee seeking asylum, which typically is a reflection of significant internal upheaval or severe lack of economic opportunity within their country of origin.

 

The inherent problem that is created when you have free capital and free trade, whereas labor is not free to move, along with environment and regulation laws that vary significantly within nations and principalities is that capital can be deliberated allocated to wherever the laws for that business, favoritism for that business, or lack of invasive interference by government entities, exists.  Not too surprisingly, money talks, and most countries are eager to embrace investment of capital within their nation, for the perceived advantages of having that investment in the first place, or for the enrichment that money provides a select few well placed sources within that country, or for the fact that local labor will be employed, or all of these things.

 

This means, in a nutshell, that when capital searches for the country that best fits their need and function, that one of the more important considerations of the decision that is reached, is the cost of that labor and the skill of that workforce within that locale.  While this is obviously quite beneficial for those that become employed, especially if the wages are good, but even if they are just adequate, it also means for a certainty, that more expensive labor, by design, is deliberately bypassed.

 

The most significant reasons why wages for the middle class in America have remained stagnant over the 21st century is because the aspiring middle class are not just competing against other laborers in America, they are also competing against capital equipment reducing their employment opportunities, of which none of this is helped by the weakening of labor unions, and more often than ever they are also competing against world labor rates, and most foreign countries have significantly cheaper price points for their labor than America, with skill-sets that are at a minimum, acceptable.

 

If, this country continues to permit its capital to freely move from country to country, it will continue to find that those that benefit from such capital movement, directly or indirectly, will do quite well, and the consumers of such that have ready money will also be beneficiaries, but those struggling to achieve basic middle class goals, will struggle, are struggling, and a country without a vibrant middle class, will ultimately degenerate into the massive underclass inevitably serving the favored few.