Daddy Responds! A response about the Wal-Mart article I posted yesterday (below) from my dad, whose opinion I value highly:
Am I the only one who has read Adam Smith??? (Look him up if you have
to. Your encyclopedia will probably not fully express his place in
history. His influence in establishing free economies and democracies
in Europe is a phenomenal example of the pure power of ideas.)
Adam Smith simply says: if someone in another country wants to sell
(even underpriced subsidized) goods to you cheaper than you can make
them, –then LET HIM!! You get more of life’s basics for the same
price and therefore are in a position to produce higher value goods
yourself. Look at history. RCA was the big stock of the 1920’s
bubble. No radios have been produced in this country for years. Were
American workers thrown into mass unemployment? When Zenith, the last
domestic TV producer, quit, did the economy dive? Steelmaking made
America the dominant industrial power in the last century. Now there
is almost no primary steel production in this country. Automobile and
aircraft production are soon to go the same way. What happened in
these cases? America’s free economy just moved on to the next great
thing. As long as this economy remains the freest in the world, it
will also remain the strongest. Always innovating the next big
moneymaker. Always leading the way to the next economic step.
So why the gloom and doom? Resistance to change is one of the most
basic human reactions. (Read “inertia”.) No one likes to lose a job.
They will keep a dead ender because, by definition, they can’t see what
might be available in the future. This ability to view only the
present leads people who should know better to wring their hands over
“lost jobs”. The world is full of economists, credentialed, but not
credible, who simply do not understand history. If these people had
been one tenth right over the last decades, we would now have 80%
unemployment. And I don’t believe the new jobs will only be “service
jobs” as is so often said. Yes, that is where some end up, but the
rising generation of workers go into the rising industries. There are
not fewer jobs or worse jobs, just different jobs. That need for
change to different jobs is what frightens people and there are lots of
these diploma only economists who feed into this fear of change in the
people. Look at the example of Britain, an economic basket case in the
60’s. In the 80’s Margaret Thatcher shut down the unions, throwing 90%
of the mining industry out of work. And the result?? Britain has
regained its economic position in the world.
It is natural and easy to make decisions based on present conditions or
hardships. The problem is that those decisions will be aimed at
keeping things as they are. And keeping things as they are means
foregoing a future.
Thought question. We get very few of these subversive cheap goods from
South America and almost none from Africa. Why? They certainly have
an ocean of the absolute world’s cheapest labor.
Thought question. Japan, the world’s second largest economy, has been
stagnant for 15 years while America’s has grown apace and innovations
continue to come out of America. Why?
Thought question. India, with the world’s second largest pool of cheap
labor was on the other side of the world until just the last 10 years
and now work is going there daily. Why India all of a sudden?
In the fog of the recent political rhetoric about lost jobs going
overseas, has anyone noticed that the unemployment rate is falling?
Adam Smith might be dead, but his understanding of the world isn’t.
Adam Smith tells me not to be worried.